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Income Tax(A.Y. 2009-10 & 2010-11)
INDEX1. Introduction2. Residential Status3. Tax Rates4. Income from Salary5. Income from House Property6. Income from Busi...
Contd…10.Set-off Carry Forward11.Deductions from Gross Total Income12.Agricultural Income13. Advance Tax14.Assessment Proc...
08/07/2009   4
Charge of Income Tax Income tax is charged in assessment year at rates  specified by the Finance Act applicable on 1st Ap...
Important Definitions1. Person u/s 2(31) includes,    i.   An Individual,    ii.  Hindu Undivided Family (HUF),    iii. A ...
Contd…2. Assessment Year u/s 2(9) means, the period of 12   months commencing on the 1st April every year. It is   the yea...
Contd…4. Gross Total Income (G.T.I) :- The aggregate   income under the 5 heads of income (viz. Salary,   House Property, ...
08/07/2009   9
Types of Residential StatusThe different types of residential status are:-                     Resident(R)             Not...
Residential Status of IndividualThe residential status of individual will be determined as under-             Assessee    ...
Contd…Basic Conditions u/s 6(1):i. He must be in India for a period of 182 days or more during    the previous year; orii....
Residential Status of HUFThe residential status of HUF depends upon the control andmanagement of its affairs.   – Resident...
Residential Status  According to section 6(3) an Indian Company is always  Resident in India. A foreign Company will be re...
Incidence of Tax                                                                        Tax Incidence                     ...
08/07/2009   16
RATES OF INCOME TAX (Assessment Year 2009-10)1.   In case of every Individual/ HUF/ AOP/BOI artificial juridical     Perso...
Contd…2.   In case of resident women below 65 years of age.               INCOME           INCOME             TAX RATE    ...
Contd…3.   In case of resident senior citizen i.e. age of 65 years or above               INCOME               INCOME     ...
Contd…                     PERSONS      TAX RATE     FIRMS                          30%     DOMESTIC COMPANY              ...
Surcharge & Cess                  PERSON                                               RATE OF SURCHARGEIndividual / AOP /...
08/07/2009   22
MeaningSalary includes [section17(1)] :-i. Wagesii. Any annuity on pensioniii. Any gratuityiv. Any fees, commission, bonus...
BASIS OF CHARGEIncome is taxable under head “Salaries”, only if there exists Employer -Employee Relationship between the p...
AllowancesAllowance is generally defined as a fixed quantity ofmoney or other substance given regularly in additionto sala...
Contd…3.    House Rent Allowance      Exemption In Respect Of House Rent allowance is regulated by      rule 2A. The least...
Contd…4. Entertainment allowance [sec.169(ii)]-     Entertainment allowance is first included in salary in come under     ...
Contd…5. Special allowances prescribed as exempt under   section 10(14) – In the cases given below the   amount of exempti...
Contd…Exemption is available on the aforesaid basis in the case of following allowances             :-     NAME OF ALLOWAN...
Contd…6. When exemption does not depend upon   expenditure - In the cases given below, the   amount of exemption does not ...
Contd…      Name of allowance                            Exemption as specifiedin rule 2BBSpecial Compensatory            ...
Contd…      Name of Allowance                          Exemption as Specified in Rule 2BBCompensatory modified area       ...
Contd…7. Allowance to Government employees outside   India [Sec. 10( 7)] - Any allowance paid or   allowed outside India b...
Contd…11.Allowance to High Court and Supreme Court   Judges - Any allowance paid to High Court   Judges under section & 22...
PERQUISITESPerquisite may be defined as any Casual Emolumentor Benefit attached to an office or position in Addition toSal...
“Perquisites” as defined u/s 17 (2)The term “perquisites” is defined by section 17 (2)as including the following items:1.T...
Contd…3. The value of any benefit or amenity granted or provided   free of cost or at concessional rate in any of the   fo...
Contd…4. Any sum paid by the employer in respect of any   obligation which but for such payment would have been   payable ...
TERMINAL BENEFITS 1.     Gratuity [Sec.10(10)] – Gratuity is a retirement benefit. It is generally        payable at the t...
Contd…  2.     PENSION [SEC. 17(1)(ii)] - Pension is chargeable tax as follows :-                                         ...
Contd…3.Annuity [Sec. 17(1)(ii)] – An annuity payable by a present  employer is taxable as salary even if it is paid volun...
Contd…5. Compensation received at the time of   Voluntary Retirement [sec.10 (10C)] -   Compensation received at the time ...
Provident FundProvident Fund Scheme is a welfare schemefor the benefit of employees. The employeecontributes certain sum t...
LEAVE SALARYEncashment of leave by surrendering leave standing to one’s credit isknown as “leave salary”.                 ...
Deductions Admissible in Computing     Income under head ‘SALARIES’1. Entertainment allowance granted by employer   [Sec.1...
Relief in respect of    Advance or Arrears of Salary u/s 89   When an assessee is in receipt of a sum in the   nature of s...
08/07/2009   47
Basis of Charge   The basis of charge of income under the head   ‘income from house property’ is the Annual Value of   the...
Conditions to be Satisfied1. The property must consist of buildings or lands   appurtenant to such buildings.2. The assess...
Computation of Gross Annual Value             (GAV)  Step 1 : Calculate Expected Rent as follows:-                        ...
Contd…Step 2 : Compare Expected Rent & Actual Rent        Receivable (ARR).  Where the property or any part thereof is let...
Net Annual Value (NAV)   Net Annual Value is the sum computed after   deducting from Gross Annual Value, the taxes   levie...
Meaning1. Municipal Valuation :- For collecting municipal taxes,   local authorities make a periodical survey of all   bui...
Self-occupied Property [Sec. 23(2)]Property is considered to be self – occupied where, the property consisting of house o...
Contd…   In case of Self-occupied House Property Net   Annual Value is always Zero.   Since NAV is zero, the municipal tax...
Deduction Admissible u/s 24i. Statutory deduction :- 30% of Annual Value (i.e.                             30% of NAV)ii.I...
Deduction for Interest on   Capital Borrowed in case of SOPMaximum limit of deduction in respect of interest oncapital bor...
Recovery of Unrealized Rent              [Section 25AA]   Any amount of rent realized by the assessee during   the previou...
Arrears of Rent [Section 25B]   Arrears of rent shall be deemed to be income   chargeable under the head “Income from hous...
08/07/2009   60
Basis of Charge [sec. 28]The following income is chargeable to tax under the head“Profits and gains of business or profess...
Contd…5. any profit on transfer of the Duty Entitlement Pass   Book Scheme.6. Any profit on the transfer of the duty free ...
Contd… 9. Any sum received under a Keyman insurance     policy including bonus; 10. Profits and gains of managing agency; ...
Expenses Expressly Allowed1. Rent, rates, taxes, repairs and insurance for building   [Sec. 30]2. Repairs and insurance of...
Contd…8. Bonus or commission to employees [Sec. 36(1)(ii)]9. Interest on borrowed capital [Sec. 36(1)(iii)]10. Employer’s ...
Contd…15. Banking cash transaction tax,      securities    transaction tax and commodities transaction    tax.16. Advertis...
EXPENSES NOT DEDUCTIBLE                     [Section 37(1)]1. Damages and penalty paid for transgressing the   terms of ag...
Contd…6. Expenditure on raising equity share capital and   preference share capital. However, expenditure on   issue of bo...
Contd…9. Payments made for acquisition of good will.10. Expenditure incurred for acquiring right over or in    land to win...
Contd…13. Tax paid by the assessee (who is defaulter by not    deducting tax at source under section 195) on behalf of    ...
Contd…18. Amount paid by a company to the Registrar of    Companies as filing fee for enhancement of capital    base of th...
Specific Disallowances1. Interest, Royalty, fees for Technical Services payable   outside India,if on such amount tax is d...
Contd…7. Interest paid by an AOP/ BOI to its members is not    allowed as deduction by virtue of sec. 40(ba)8. Payment to ...
Books of Accounts to be maintained          [Section 44AA]The persons carrying on specified professions are requiredto mai...
Tax Audit u/s 44AB   This section applies to following :-Person carrying on -         Accounts are to be audited for previ...
Special Provisions for Computing Income on     Estimated Basis 44AD, 44AE & 44AF Not withstanding anything contained in Se...
DEPRICIATION [Sec. 32]Depreciation allowance [Sec. 32] - Depreciation shall bedetermined according to the provisions of se...
Contd…   Block of Assets [Sec. 2(11)] - The term “block of   assets” means a group of assets falling within a   class of a...
Contd…   Written Down Value [Sec. 43(6)] - Written down value for   the assessment year 2009-10 will be determined as   un...
Contd… Meaning of “Actual Cost” [Sec. 43(1)] - It means the actual cost to the assessee as reduced by the proportion of th...
Contd…Additional depreciation @ 20% is available on new plant ormachinery acquired & installed after 31.03.05, if used inp...
PartnershipDeductibility of interest paid to partners by firm dependsupon following :- – Payment of interest should be aut...
Contd…  The maximum amount of salary paid to all the partners  during the previous year should not exceed the limits given...
Minimum Alternate Tax (MAT)Applicability of Minimum alternate tax (MAT) sec. 115JB :-•Minimum alternate tax (MAT) sec. 115...
Contd…• A company is allowed credit of tax paid u/s 115-  JB for the assessment year 2006-07 and  onwards in accordance wi...
08/07/2009   86
Basis of ChargeCapital Gain’s tax liability arises only when thefollowing conditions are satisfied:1.There should be a cap...
Capital Assets“Capital asset” is defined to include property of any kind,whether fixed or circulating, movable or immovabl...
Contd…3. Agricultural land in India provided it is not situated –   –    in any area within the territorial jurisdiction o...
Short-term / Long-term                  Capital Assets“Short term capital asset” means a capital asset held by anassessee ...
Important Terms1. Transfer of Capital Asset :- Transfer, in relation to capital   asset, includes sale, exchange or relinq...
Contd…4. Cost of Acquisition :- Cost of acquisition of an asset   is the value for which it was acquired by the   assessee...
Contd…6. Indexed Cost of Acquisition :- the amount which bears   to the COA, the same proportion as CII for the year in   ...
Capital Gain Exemption1. Profit on sale of property used for residence [S. 54]:-   Available to Individual & HUF on transf...
Contd…3. Investment in certain bonds [S.54EC] :-    Available to all assesses on transfer of any    long-term capital asse...
Contd…4. Capital gain on transfer of certain capital assets   not to be charged in case of investment in   residential hou...
Contd…5. Compulsory acquisition of land & building   [S.54D]:- Available to all assesses on   Compulsory acquisition of la...
Contd…6. Shifting of undertaking to rural area [Sec.54G]:-   Available to all assesses on Transfer of plant,   machinery o...
Contd…7. Shifting of undertaking to SEZ [Sec.54GA]:-   Available to all assesses on Transfer of plant,   machinery or land...
Computation of Short-term                    Capital Gains                                       Particulars              ...
Computation of Long-term                  Capital Gains                                    Particulars                   A...
Indexed Cost                                      Cost Inflation Index                       Cost of       (CII) for the f...
08/07/2009   103
General [Section 56(1)]   Income of every kind, which is not to be   excluded from the total income and not   chargeable t...
Specific Income [Section 56(2)]1. Dividends.2. Lottery winnings etc.: Winnings from lotteries,   crossword puzzles, races ...
Contd…5. Income from letting on hire of Plant, machinery or   furniture belonging to the assessee, if not chargeable   to ...
Contd…8. Any sum received under a Keyman insurance policy   including the sum allocated by way of bonus on such   policy, ...
08/07/2009   108
Cases where Clubbing Applies1. Transfer of income without transfer of asset [Sec.   60] :– The income from the asset would...
Contd…4. An individual is assessable in respect of income   from assets transferred to spouse:- When the asset   is transf...
Contd…6. An individual is assessable in respect of income from   assets transferred to a person for the benefit of   spous...
Contd…8. An individual is assessable in respect of income of   his minor child [Sec. 64(1A)] :- The income of minor   will...
Undisclosed Income / Investments1. Cash credit [Sec. 68] - Where any sum is found   credited in the books of an assessee  ...
Contd…2. Unexplained investments [Sec.69] – Where in   the financial year immediately preceding the   assessment year, the...
Contd…3. Unexplained money, etc [sec. 69A] - Where in   any financial year the assessee is found to be   the owner of any ...
Contd…4. Amount of investments, etc., not fully disclosed in   books of account [Sec.69B] – Where in any financial   year ...
Contd…5.Unexplained expenditure, etc. [Sec. 69C] – Where in any  financial year an assessee has incurred any expenditure &...
08/07/2009   118
Process of Set-off & Carry ForwardThe process of setting off of losses and their carry forward may becovered in the follow...
Unabsorbed DepreciationWhile dealing with unabsorbed depreciation one should keep in mindthe following points:            ...
Inter-Source Set Off [Section 70]Loss arising from one source of income under a head can beset off against income arising ...
Inter-Head Set-off [Section 71]Loss arising under one head of income can be set off againstincome under any other head, ex...
Provisions relating to carry forward             and setoff of losses                                          Income agai...
08/07/2009   124
Meaning“Agricultural Income” means:1. Any rent or revenue derived from land which is situated in   India and used for agri...
Partially Agricultural & Partially Business     Income [Rules 7, 7a, 7b And 8]                                            ...
The Scheme of Partial Integration ofNon-Agricultural Income with Agricultural Income  The scheme of partial integration of...
Contd…   Income-tax will be computed for the assessment year   2009-10 in the following manner:Step 1    Net agricultural ...
08/07/2009   129
Introduction Deductions to be made [Section 80A] : The total income of an assessee is to be computed after making deductio...
Deduction for Payment ofLife Insurance Premia, etc., [Section 80C]Deduction under this section is allowed as follows –Ded...
Contribution To Certain Pension Funds             [Section 80CCC]• Amount paid or deposited by individual in the previous ...
Contribution to Pension Scheme of CentralGovernment or any Other Employer [Sec. 80CCD]• Deduction in respect of: Deduction...
Aggregate Limit u/s 80C, 80CCC & 80CCD         The    aggregate    amount of         deductions under section 80C,        ...
Deduction In Respect Of     Health Insurance Premia [Sec. 80D]• Deduction is available in respect of the amount paid to  e...
Maintenance of A Dependant Being    Person With Disability [Section 80DD]• Deduction is available in respect of –   – expe...
Deduction in respect of    Medical Treatment, etc. [Sec. 80DDB]• Deduction is available in respect of sum actually paid  d...
Deduction in respect of Interest on Loan taken for Higher Education [Sec.80E]• Deduction in available in respect of sum  p...
Deduction in respect of Donations           [Section 80G]• Deduction is allowed under this section to all assesses  in res...
Deductions in respect of Rents Paid           [Sec.80GG]• Rent actually paid for any furnished or  unfurnished residential...
Deduction in respect of person with          Disability [Section 80U]• Eligible Assessee: Individual resident in  India, w...
Other Deductions Deduction in respect of certain Donations for Scientific Research or Rural Development [Sec.80GGA] Deduct...
Contd…   Deduction available to certain Undertakings in certain   Special category States [Sec.80IC]   Profits & Gains fro...
Contd…   Deduction from incomes of Off-shore Banking Units   & International Financial Services Centre [Sec.80LA]   Deduct...
08/07/2009   145
Liability to pay Advance Tax   Every person is liable to pay tax on income in   advance i.e. from completion of the previo...
Due Dates                              Amount payble by Corporate     Amount payble by Non-             Due Date          ...
Default in payment of Advance Tax               [Sec. 234B]  Under section 234B(1), interest is payable as follows:  When ...
Deferment of Advance Tax                   [Sec. 234C]Interest is payable under section 234C if anassessee has not paid ad...
08/07/2009   150
Time for filing Return of Income              [Sec. 139(1)]             Different Situations              Due Date for fil...
Filing of Return in Electronic Form                [Sec. 139D]Section 139D has been inserted from June 1, 2006. Itprovides...
Filing of Return after Due Date                [Sec. 139(4)]  If the return is not furnished within the timeallowed under ...
Consequences of Late SubmissionIf return is submitted after the due date of submission ofreturn of income, the following c...
Interest for defaults in furnishing    Return of Income [Section 234A]If any person fails to furnish his return of income ...
INCOME TAX-------------------THE END-------------------             Prepared & EDITIED BY                         GIRIDHAR...
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42 income tax__ppt_finance_act_2008_

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42 income tax__ppt_finance_act_2008_

  1. 1. Income Tax(A.Y. 2009-10 & 2010-11)
  2. 2. INDEX1. Introduction2. Residential Status3. Tax Rates4. Income from Salary5. Income from House Property6. Income from Business & Profession7. Capital Gains8. Income from Other Sources9. 08/07/2009 Clubbing of Income 2
  3. 3. Contd…10.Set-off Carry Forward11.Deductions from Gross Total Income12.Agricultural Income13. Advance Tax14.Assessment Procedures 08/07/2009 3
  4. 4. 08/07/2009 4
  5. 5. Charge of Income Tax Income tax is charged in assessment year at rates specified by the Finance Act applicable on 1st April of the relevant assessment year. It is charged on the total income of every person for the previous year. Total Income is to be computed as per the provisions of the Act. Income tax is to be deducted at source or paid in advance wherever required under the provision of the Act.08/07/2009 5
  6. 6. Important Definitions1. Person u/s 2(31) includes, i. An Individual, ii. Hindu Undivided Family (HUF), iii. A Company, iv. A Firm, v. An Association of Persons(AOP) or Body of Individuals (BOI), vi. A Local Authority, vii. Every other Artificial Juridical Person08/07/2009 6
  7. 7. Contd…2. Assessment Year u/s 2(9) means, the period of 12 months commencing on the 1st April every year. It is the year (just after previous year) in which income is earned is charged to tax. The current Assessment is 2009-2010.3. Previous Year u/s 2(34) means, the year in which income is earned.08/07/2009 7
  8. 8. Contd…4. Gross Total Income (G.T.I) :- The aggregate income under the 5 heads of income (viz. Salary, House Property, Business or Profession, Capital Gains & Other Sources) is termed as “Gross Total Income”.5. Total Income (T.I) :- Total Income of assessee is gross total income as reduced by the amount permissible as deduction under sections 80C to 80U. Index08/07/2009 8
  9. 9. 08/07/2009 9
  10. 10. Types of Residential StatusThe different types of residential status are:- Resident(R) Not Ordinarily Resident (NOR) Non-Resident (NR)08/07/2009 10
  11. 11. Residential Status of IndividualThe residential status of individual will be determined as under- Assessee Basic Condition Additional Condition He must satisfy at one of the basic Resident Not required. conditions. He must satisfy either one or both He must satisfy at least one of the Not Ordinarily Resident the additional conditions given u/s basic conditions. 6(6). Should not satisfy any of the basic Non-Resident Not required. conditions.08/07/2009 11
  12. 12. Contd…Basic Conditions u/s 6(1):i. He must be in India for a period of 182 days or more during the previous year; orii. He must be in India for a period of 60 days or more during the previous year and 365 days or more during the four years immediately preceding the previous year.Additional Conditions u/s 6(6):i. He must be a non-resident in India in nine out of the ten previous years preceding that year; orii. He must be in India during 7 preceding previous years for aggregate period of 729 days or less. 08/07/2009 12
  13. 13. Residential Status of HUFThe residential status of HUF depends upon the control andmanagement of its affairs. – Resident HUF: If the control and management of the affairs of HUF is situated wholly or partly in India then HUF is said to be Resident in India. – Non- Resident HUF: If the control and management of the affairs of HUF is situated wholly outside India then HUF is said to be Non- Resident in India. – Not Ordinarily Resident HUF: A resident HUF is said to be ‘Not Ordinarily Resident’ in India if Karta or manager thereof, satisfies any of the additional conditions u/s 6(6). 08/07/2009 13
  14. 14. Residential Status According to section 6(3) an Indian Company is always Resident in India. A foreign Company will be resident in India if Control or Management of its affairs is wholly situated in India. Residential Status of a firm or AOP or other person depends upon control and management of its affairs. Resident: If the control and management of the affairs of a firm or AOP or other person is situated wholly or partly in India then such a firm or AOP or other person is said to be resident in India. Non-Resident: If the control and management of the affairs of a firm or AOP or other person is situated outside India then such a firm or AOP or other person is said to be non-resident in India. 08/07/2009 14
  15. 15. Incidence of Tax Tax Incidence Particulars R NOR NR Income received in India by or on behalf of assessee Yes Yes Yes Income deemed to received in India by or on behalf of assessee Yes Yes Yes Income accruing or arising in India Yes Yes Yes Income deemed to accrue or arise in India Yes Yes Yes Income which accrues or arise outside India Yes No No Index08/07/2009 15
  16. 16. 08/07/2009 16
  17. 17. RATES OF INCOME TAX (Assessment Year 2009-10)1. In case of every Individual/ HUF/ AOP/BOI artificial juridical Person. INCOME INCOME TAX RATE (A.Y. 2009-10) (A.Y. 20010-11) Up to 150000 Up to 160000 NIL Next 150000 Next 140000 10% Next 200000 Next 200000 20% Above 500000 Above 500000 30%08/07/2009 17
  18. 18. Contd…2. In case of resident women below 65 years of age. INCOME INCOME TAX RATE (A.Y. 2009-10) (A.Y. 2010-11) Up to 180000 Up to 190000 NIL Next 120000 Next 110000 10% Next 200000 Next 200000 20% Above 500000 Above 500000 30%08/07/2009 18
  19. 19. Contd…3. In case of resident senior citizen i.e. age of 65 years or above INCOME INCOME TAX RATE (A.Y. 2009-10) (A.Y. 2010-11) Up to 225000 Up to 240000 NIL Next 75000 Next 60000 10% Next 200000 Next 200000 20% Above 500000 Above 500000 30%08/07/2009 19
  20. 20. Contd… PERSONS TAX RATE FIRMS 30% DOMESTIC COMPANY 30% FOREIGN COMPANY 40% LOCAL AUTHORITIES 30% CO-OPERATIVE SOCIETIES Up to 10000 10% 10000-20000 20% Above 20000 30%08/07/2009 20
  21. 21. Surcharge & Cess PERSON RATE OF SURCHARGEIndividual / AOP / BOI / HUF / Artificial 10% of tax liability if Income Exceeds Rs 10 LacsJuridical PersonFirm 10% of tax liability, if Income exceeds Rs. 1 CroreDomestic Company 10% of tax liability, if Income exceeds Rs. 1 CroreForeign company 2.5% of tax liability, if Income exceeds Rs. 1 CroreCo-operative Society N.A.Local Authority N.A.Education Cess and Secondary & Higher Education Cess is applicableon every person @ 2% & 1% respectively on tax liability and surchargeapplicable, if any. 08/07/2009 Index 21
  22. 22. 08/07/2009 22
  23. 23. MeaningSalary includes [section17(1)] :-i. Wagesii. Any annuity on pensioniii. Any gratuityiv. Any fees, commission, bonus, perquisite on profits in lieu of or in addition to any salary on wagesv. Any advance of salaryvi. Any earned leavevii.Employers contribution (taxable) towards recognized provident fund. 08/07/2009 23
  24. 24. BASIS OF CHARGEIncome is taxable under head “Salaries”, only if there exists Employer -Employee Relationship between the payer and the payee. The followingincomes shall be chargeable to income-tax under the head“Salaries”:-1.Salary Due2.Advance Salary [u/s 17(1)(v)]3.Arrears of Salary Note: (i)Salary is chargeable on due basis or receipt basis, whichever is earlier. (ii)Advance salary and Arrears of salary are chargeable to tax on receipt basis only.08/07/2009 24
  25. 25. AllowancesAllowance is generally defined as a fixed quantity ofmoney or other substance given regularly in additionto salary for the purpose of meeting some particularrequirement connected with the services rendered bythe employee or as compensation for unusualconditions of that service.1.Dearness Allowance - It is Always Taxable.2.City Compensatory Allowance - It is Always Taxable.08/07/2009 25
  26. 26. Contd…3. House Rent Allowance Exemption In Respect Of House Rent allowance is regulated by rule 2A. The least of the three given below is Exempt from Tax. An Amount Equal to 50 % of Salary. Where Residential House in situated at Bombay, 1 Calcutta, Delhi or Madras and An Amount Equal to 40 % of Salary where Residential House is situated at any Other Place. House Rent Allowance Received by The Employee in Respect of The Period during which 2 Rental Accommodation is Occupied by the Employee during the Previous Year. 3 The Excess of Rent Paid over 10 % of Salary.08/07/2009 26
  27. 27. Contd…4. Entertainment allowance [sec.169(ii)]- Entertainment allowance is first included in salary in come under the head “salaries” and thereafter a deduction is given on the basis enumerated below: Status of Employee Non- Government Government Least of the Following is deductible : Nothing is deductible 1. Rs. 5000 2. 20 % of basic salary 3. Amount of entertainment allowance grated during the previous year08/07/2009 27
  28. 28. Contd…5. Special allowances prescribed as exempt under section 10(14) – In the cases given below the amount of exemption under section 10(14) is :– i. The amount of the allowance ; or ii.The amount utilized for the specific purpose for which allowance is given. Whichever is lower.08/07/2009 28
  29. 29. Contd…Exemption is available on the aforesaid basis in the case of following allowances :- NAME OF ALLOWANCE NATURE OF ALLOWANCETravelling Allowance/ Transfer Any allowance granted to meet the cost of travel on tour or on transferAllowance (including sum paid in connection with transfer, packing and transportation of personal effects on such transfer).Conveyance Allowance Conveyance allowance granted to meet the expenditure on conveyance in performance of duties of an office (expenditure for covering the journey between office and residence is not to be included).Daily Allowance Any allowance whether granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from this normal place of duty. 08/07/2009 kamal maghani 29
  30. 30. Contd…6. When exemption does not depend upon expenditure - In the cases given below, the amount of exemption does not depend upon expenditure incurred by the employee. Regardless of the amount of expenditure, the allowances given below are exempt to the extent of – i. the amount of allowance ; or ii. the amount specified in rule 2BB, Whichever is lower.08/07/2009 30
  31. 31. Contd… Name of allowance Exemption as specifiedin rule 2BBSpecial Compensatory Amount exempt from tax varies from Rs. 300 per mount to Rs. 7,000 per(Hill Areas) Allowance month The amount of exemption varies from Rs. 200 Per month to Rs. 1,300 perBorder area allowance monthTribal areas/ scheduled areas Rs. 200 Per Monthallowance The amount of exemption is-Allowance for transport a.70 per cent of such allowance; oremployees b.Rs. 6,000 per month, whichever is lower. The amount exempt is limited to Rs. 100 per month per child up to aChildren education allowance maximum of two children. It is exempt from tax to the extent of Rs. 300 per month per child up to aHostel expenditure allowance maximum of two children.Compensatory field area Exemption is limited to Rs. 2,600 per month in some cases.allowance 08/07/2009 31
  32. 32. Contd… Name of Allowance Exemption as Specified in Rule 2BBCompensatory modified area Exemption is limited to Rs.1,000 per month in some cases.allowanceCounter insurgency allowance Exemption is limited to Rs.3,900 per month in some cases. It is exempt up to Rs. 800 per month (Rs. 1,600 per month in the case ofTransport allowance an employee who is blind or orthopedically handicapped)Underground allowance Exemption is limited to Rs. 800 per month. It is exempt from tax up to Rs. 1,060 per month (for altitude of 9,000 toHigh altitude allowance 15,000 feet) or Rs. 1,600 per month (for altitude above 15,000 feet).Highly active field area It is exempt from tax up to Rs. 4,200 per month.allowanceIsland duty allowance It is exempt up to Rs. 3,250 per month. 08/07/2009 32
  33. 33. Contd…7. Allowance to Government employees outside India [Sec. 10( 7)] - Any allowance paid or allowed outside India by the Government to an Indian citizen for rendering service outside India is wholly exempt from tax.8. Tiffin allowance - It is taxable.9. Fixed medical allowance – It is taxable.10.Servant allowance - It is taxable.08/07/2009 33
  34. 34. Contd…11.Allowance to High Court and Supreme Court Judges - Any allowance paid to High Court Judges under section & 22C of the High Court Judges (Conditions of Service) Act, 1954 is not chargeable to tax.12. Allowance received from a United Nations Organization - Allowance paid by a United Nations Organization to its employees is not taxable by virtue of section 2 of the UN (Privileges and Immunities) Act, 1974.08/07/2009 34
  35. 35. PERQUISITESPerquisite may be defined as any Casual Emolumentor Benefit attached to an office or position in Addition toSalary or Wages. It also denotes something thatbenefits a man by going in to his own pocket.Perquisites may be provided in cash or in kind.Perquisites are included in salary income only if theyare received by an employee from his employer.08/07/2009 35
  36. 36. “Perquisites” as defined u/s 17 (2)The term “perquisites” is defined by section 17 (2)as including the following items:1.The value of Rent-free Accommodation provided tothe assessee by his employer2.The value of any concession in the matter of rentrespecting any accommodation provided to theassessee by his employer08/07/2009 36
  37. 37. Contd…3. The value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases : i. By a company to an employee who is a director thereof ; ii. By a company to an employee, being a person who has substantial interest in the company ; iii. By any employer (including a company) to an employee to whom provisions of (i) and (ii) above do not apply and whose income under the head “salaries” exclusive of the value of all benefits or amenities not provided for by way of monetary benefits, exceeds Rs. 50,000 08/07/2009 37
  38. 38. Contd…4. Any sum paid by the employer in respect of any obligation which but for such payment would have been payable by the assessee. Obligation of Employee met by Employer.5. Any sum payable by the employer, whether directly or through a fund other than a recognized provident fund or approved superannuation fund or a deposit-linked insurance fund, to effect an assurance on the life of the assessee or to effect a contract for an annuity6. The value of any other fringe benefits or amenity as may be prescribed 08/07/2009 38
  39. 39. TERMINAL BENEFITS 1. Gratuity [Sec.10(10)] – Gratuity is a retirement benefit. It is generally payable at the time of cessation of employment and on the basis of duration of service. Tax treatment of gratuity is given below: Status of Employee Status of Employee Government Employee Government Employee Non-government employee Non-government employee Non-government employee not Non-government employee not covered by the payment of covered by the payment of covered by the payment of covered by the payment of Gratuity Act, 1972 Gratuity Act, 1972 Gratuity Act, 1972 Gratuity Act, 1972It is fully exempt fromtax under section10(10)(i) Least of following is exempt: Least of following is exempt: 1)“15 days’ salary” x “Length of 1)“½ month avg. salary” x “Length of service” service” 2)Rs. 3, 50, 000 2)Rs. 3, 50, 000 3)Gratuity actually received. 3)Gratuity actually received. 08/07/2009 39
  40. 40. Contd… 2. PENSION [SEC. 17(1)(ii)] - Pension is chargeable tax as follows :- PENSION COMMUTED UNCOMMUTED Government Non-Government Employee Employee Taxable for If Gratuity If Gratuity not Government as well Entire Commuted Received Received as Non-Government Pension is exempt employeeswhether or not Gratuity received. 1/3 of commuted 1/2 of commuted pension is pension is exempt exempt 08/07/2009 40
  41. 41. Contd…3.Annuity [Sec. 17(1)(ii)] – An annuity payable by a present employer is taxable as salary even if it is paid voluntarily without any contractual obligation of the employer. An annuity received from an ex-employer is taxed as profit in lieu of salary.4.Retrenchment compensation [Sec. 10(10B)] – Compensation received by a workman at the time of retrenchment is exempt from tax to the extent of the lower of the following: a. an amount calculated in accordance with the provisions of sec. 25F(b) of the Industrial Disputes Act, 1947; or b. such amount as notified by the Government (i.e., Rs, 5, 00, 000); or c. the amount received. 08/07/2009 41
  42. 42. Contd…5. Compensation received at the time of Voluntary Retirement [sec.10 (10C)] - Compensation received at the time of voluntary retirement is exempt from tax, subject to certain conditions. Maximum amount of exemption is Rs. 500000.08/07/2009 42
  43. 43. Provident FundProvident Fund Scheme is a welfare schemefor the benefit of employees. The employeecontributes certain sum to this fund everymonth and the employer also contributescertain sum to the provident fund inemployees A/c. the employers contributionto the extent of 12% is not chargeable to tax.08/07/2009 43
  44. 44. LEAVE SALARYEncashment of leave by surrendering leave standing to one’s credit isknown as “leave salary”. LEAVE ENCASHMENT Retirement / Leaving the Job During Employment Government Non-Government Chargeable to Employee Employee Tax Least of following is exempt :- 1)Earned Leave on the basis of Average Fully Exempt Salary 2)10 x Average monthly salary 3)Rs. 300000 4)Leave Salary Received08/07/2009 44
  45. 45. Deductions Admissible in Computing Income under head ‘SALARIES’1. Entertainment allowance granted by employer [Sec.16(ii)]: This deduction is available in case of Government employees only.2. Employment Tax / Professional Tax [Sec.16(iii)]: Any sum paid by assessee on account of a tax on employment within the meaning of Article 276(2). Under the said article employment tax cannot exceed Rs. 2500 p.a.08/07/2009 45
  46. 46. Relief in respect of Advance or Arrears of Salary u/s 89 When an assessee is in receipt of a sum in the nature of salary, being paid in arrears or in advance, due to which his total income is assessed at a rate higher than that at which it would otherwise have been assessed, Relief is granted on an application made by the assessee to the assessing officer.08/07/2009 Index 46
  47. 47. 08/07/2009 47
  48. 48. Basis of Charge The basis of charge of income under the head ‘income from house property’ is the Annual Value of the property. Annual Value is inherent capacity of the property to earn an income. It is the amount for which the property might reasonably be expected to let from year to year. Income from house property is charged to tax on Notional Basis, as generally tax is not on receipt of income but on the inherent potential of the house property to generate income.08/07/2009 48
  49. 49. Conditions to be Satisfied1. The property must consist of buildings or lands appurtenant to such buildings.2. The assessee must be the owner of such house property.3. The property should not be used by the owner thereof for the purpose of any business or profession carried on by him, the profits of which are chargeable to tax.08/07/2009 49
  50. 50. Computation of Gross Annual Value (GAV) Step 1 : Calculate Expected Rent as follows:- Particulars Amount Amount (a) Fair Rent of the House xxx (b) Municipal Value of House xxx (c) Whichever is more of (a) and (b) XXX (d) Standard Rent xxx Expected Rent [whichever is less of (c) and (d)] XXX08/07/2009 50
  51. 51. Contd…Step 2 : Compare Expected Rent & Actual Rent Receivable (ARR). Where the property or any part thereof is let out, If ARR is more than ER referred to in Step 1, then, GAV = ARR If ARR is less than ER and it is due the vacancy of property then, GAV = ARR If ARR is less than ER not owing to vacancy GAV = ER Note: ARR = Rent Received / Receivable less Unrealized Rent08/07/2009 51
  52. 52. Net Annual Value (NAV) Net Annual Value is the sum computed after deducting from Gross Annual Value, the taxes levied by any local authority in respect of the property. NAV = GAV – Municipal Taxes Paid08/07/2009 52
  53. 53. Meaning1. Municipal Valuation :- For collecting municipal taxes, local authorities make a periodical survey of all building in their jurisdiction. Such valuation may be taken as strong evidence representing the earning capacity of a building.2. Fair Rent of the Property :- Fair rent of the property can be determined on the basis of a rent fetched by a similar property in the same or similar locality.3. Standard Rent :- Standard rent is the maximum rent which a person can legally recover from his tenant under a Rent Control Act. 08/07/2009 53
  54. 54. Self-occupied Property [Sec. 23(2)]Property is considered to be self – occupied where, the property consisting of house or part thereof is in the occupation of the owner for the purposes of his own residence; or such property cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him.08/07/2009 54
  55. 55. Contd… In case of Self-occupied House Property Net Annual Value is always Zero. Since NAV is zero, the municipal taxes paid by the owner of the house are not deductible.08/07/2009 55
  56. 56. Deduction Admissible u/s 24i. Statutory deduction :- 30% of Annual Value (i.e. 30% of NAV)ii.Interest payable on capital borrowed for acquisition, construction, repair, renewal or reconstruction of house property :- Actual amount of interest for the year on accrual basis plus 1/5th of the interest, if any, pertaining to the pre- acquisition or pre-construction period.08/07/2009 56
  57. 57. Deduction for Interest on Capital Borrowed in case of SOPMaximum limit of deduction in respect of interest oncapital borrowed in case of a Self-occupied propertywhose annual value is assessed at NIL, is Rs. 1,50,000 MAXIMUM DEDUCTION CASE Interest on capital borrowed on or after 1-4-1999 for acquisition or construction of house 1,50,000 In any other case 30,00008/07/2009 57
  58. 58. Recovery of Unrealized Rent [Section 25AA] Any amount of rent realized by the assessee during the previous year, which he could not realize from a property let to a tenant, shall be deemed to be income chargeable under the head “Income from house property”. 100% of the amount actually received is taxable in the previous year in which it is realized.08/07/2009 58
  59. 59. Arrears of Rent [Section 25B] Arrears of rent shall be deemed to be income chargeable under the head “Income from house property”. It shall be charged to income tax as income of previous year in which it is received. Taxable amount is computed as under :- PARTICULARS AMOUNT The amount received as arrears of rent XXX Less: 30% of such amount xxx Amount taxable as arrears of rent XXX08/07/2009 Index 59
  60. 60. 08/07/2009 60
  61. 61. Basis of Charge [sec. 28]The following income is chargeable to tax under the head“Profits and gains of business or profession”:1.Profits and gains of any business or profession;2.Any compensation or other payments due to or receivedby any person specified in section 28(ii);3.Income derived by a trade, professional or similarassociation from specific services performed for itsmembers;4.The value of any benefit or perquisite, whether convertibleinto money or not, arising from business or the exercise of aprofession; 08/07/2009 61
  62. 62. Contd…5. any profit on transfer of the Duty Entitlement Pass Book Scheme.6. Any profit on the transfer of the duty free replenishment certificate;7. Export incentive available to exporters;8. Any interest, salary, bonus, commission or remuneration received by a partner from firm; Any sum received for not carrying out any activity in relation to any business or not to share any know-how, patent, copyright, trademark, etc.08/07/2009 62
  63. 63. Contd… 9. Any sum received under a Keyman insurance policy including bonus; 10. Profits and gains of managing agency; and 11. Income from speculative transaction. Income from the aforesaid activities is computed in accordance with the provisions laid down in section 29 to 44D.08/07/2009 63
  64. 64. Expenses Expressly Allowed1. Rent, rates, taxes, repairs and insurance for building [Sec. 30]2. Repairs and insurance of machinery, plant and furniture [Sec. 31]3. Depreciation allowance [Sec. 32]4. Tea/coffee/rubber development account [Sec. 33AB]5. Expenditure on acquisition of patent rights and copyrights [Sec. 35A]6. Insurance premium [Sec. 36 (1) (i)]7. Premier for insurance on health of employees [Sec. 36(1) (ib)] 08/07/2009 64
  65. 65. Contd…8. Bonus or commission to employees [Sec. 36(1)(ii)]9. Interest on borrowed capital [Sec. 36(1)(iii)]10. Employer’s contribution to recognized provident fund and approved superannuation fund [Sec. 36(1)(iv)]11. Contribution towards approved gratuity fund [Sec. 36(1)(v)]12. Employee’s contribution towards staff welfare schemes13. Bad debts [Sec. 36(1)(vii)]14. Family planning expenditure [Sec. 36(1) (ix)]08/07/2009 65
  66. 66. Contd…15. Banking cash transaction tax, securities transaction tax and commodities transaction tax.16. Advertisement expenses [Sec. 37(2B)].17. General Deduction [Sec. 37(1)].08/07/2009 66
  67. 67. EXPENSES NOT DEDUCTIBLE [Section 37(1)]1. Damages and penalty paid for transgressing the terms of agreement with the State.2. Penalty and damages paid in connection with infringement of law.3. Litigation expenditure incurred for curing any defect in the title of assets or completing that title.4. Litigation expenses for registration of shares.5. Fees paid for increase of authorized capital.08/07/2009 67
  68. 68. Contd…6. Expenditure on raising equity share capital and preference share capital. However, expenditure on issue of bonus shares id deductible.7. Amount paid for acquiring technical know-how which is to be utilized for the purpose of manufacturing any new article and such know-how is to become the property of the assessee at the end of the stipulated period.8. Amount expended for acquiring a business or a right of permanent character or an asset which generates income or for avoiding compensation in business. 08/07/2009 68
  69. 69. Contd…9. Payments made for acquisition of good will.10. Expenditure incurred for acquiring right over or in land to win minerals.11. Fees paid to obtain license to investigate and search minerals.12. Payment made in consideration of acquiring a monopoly right to manufacturer a producer (royalty payable on the basis of goods produced under the same arrangement is, however, deductible).08/07/2009 69
  70. 70. Contd…13. Tax paid by the assessee (who is defaulter by not deducting tax at source under section 195) on behalf of non-resident.14. Compensation paid to contracting party with the object of avoiding an unnecessary investment in capital assets.15. Expenditure on shifting of registered office.16. Insurance premia paid by a firm on life insurance policies of its partners.17. Amount paid by liquor contractor to police staff and other officer to enable it to make unauthorized purchases and sales of liquor. 08/07/2009 70
  71. 71. Contd…18. Amount paid by a company to the Registrar of Companies as filing fee for enhancement of capital base of the company.19. Payment made by assessee company which was partner in a firm, to outgoing partners of firm on account of their agreeing to restrain from carrying on similar business for a period of 15 years.08/07/2009 71
  72. 72. Specific Disallowances1. Interest, Royalty, fees for Technical Services payable outside India,if on such amount tax is deductible but tax has not been deducted or deposited with Government. [Sec. 40(a)(i)]2. Fringe Benefit Tax [Sec. 40(a)(ic)]3. Income-Tax [Sec. 40(a)(ii)]4. Salary Payable Outside India without Tax Deduction [sec. 40(a)(iii)]5. Provident Fund Payment without tax Deduction at Source [Sec. 40(a)(iv)]6. Certain specified expenses in case of Partnership Firm 08/07/2009 72
  73. 73. Contd…7. Interest paid by an AOP/ BOI to its members is not allowed as deduction by virtue of sec. 40(ba)8. Payment to relatives in excess of fair value – not deductible [Section 40A(2)]9. Expenditure in excess of Rs. 20,000 in aggregate in a day paid otherwise than by account payee cheque drawn on a bank or account payee bank draft – Not allowable [Section 40A(3))]10. Amount not deductible in respect of certain unpaid liabilities [Sec.43B]08/07/2009 73
  74. 74. Books of Accounts to be maintained [Section 44AA]The persons carrying on specified professions are requiredto maintain specified books of account only if the grossreceipts of their profession have exceeded Rs. 1,50,000Every other person carrying on business or professionshall keep and maintain such books of account and otherdocuments as may enable the Assessing Officer tocompute his total income in accordance with the provisionsof this Act. a) If his income from business or profession exceeds Rs. 1,20,000; b) Total sales/turnover/gross receipts thereof exceeds Rs.10,00,000 c) the assessee has claimed his income lower than deemed profits08/07/2009 74
  75. 75. Tax Audit u/s 44AB This section applies to following :-Person carrying on - Accounts are to be audited for previous year in which -Business Total sales, turnover or gross receipts exceed Rs. 40,00,000Profession Gross receipts exceed Rs. 10,00,000Business covered u/s 44AB, He has claimed his income to be lower than the profits or gains44AE, 44AF, 4BB and 44BBB so deemed under the respective section. The assessee is required to get his accounts of such previous year audited by a Chartered Accountant before 30th September of the assessment year. 08/07/2009 75
  76. 76. Special Provisions for Computing Income on Estimated Basis 44AD, 44AE & 44AF Not withstanding anything contained in Sections 28 to 43C, the following provisions will apply. Sec. 44 AD Sec. 44 AE Sec. 44AFBusiness of Civil construction or supply of Plying, hiring or leasing goods Retail trade in anyAssessee labour for it. carriages owned by him. goods or merchandise.This Section Gross receipts of such Goods carriages owned by Total businessapplies if business during the previous assessee at any time during turnover in that year do not exceed Rs. 40 previous year doesn’t exceed previous year lacs. 10 lacs doesn’t exceed Rs. 40 lacs.Deemed 8% of Gross receipts (No. of heavy goods 5% of Gross receiptsProfits vehicle x Rs. 3500 x NM) + or such higher sum (No. of other vehicles x Rs. as declared by him 3150 x NM) in his Return of NM = No. of months Income. kamal maghani 76
  77. 77. DEPRICIATION [Sec. 32]Depreciation allowance [Sec. 32] - Depreciation shall bedetermined according to the provisions of section 32.Conditions for claiming Depreciation - In order to availdepreciation, one should satisfy the following conditions: – Asset must be owned by the assessee. – It must be used for the purpose of business or profession. – It should be used during the relevant previous year. – Depreciation is available on tangible as well as intangible assets.08/07/2009 77
  78. 78. Contd… Block of Assets [Sec. 2(11)] - The term “block of assets” means a group of assets falling within a class of assets comprising – – tangible assets, being buildings, machinery, plant or furniture; – intangible assets, being know-how, patents, copyrights, trade marks, licenses, franchises or any other business or commercial rights of similar nature. – In respect of which the same percentage of depreciation is prescribed.08/07/2009 78
  79. 79. Contd… Written Down Value [Sec. 43(6)] - Written down value for the assessment year 2009-10 will be determined as under: Find out the depreciated value of the block on the April 1, 2008. Step 1 To this value, add “actual cost” of the asset (falling in the block) acquired during the previous year 2008-09. Step 2 From the resultant figure, deduct money received/receivable (together with scrap value) in respect of that asset (falling within the block of assets) which is sold, discarded demolished or destroyed during the previous year 2008-09. Step 308/07/2009 79
  80. 80. Contd… Meaning of “Actual Cost” [Sec. 43(1)] - It means the actual cost to the assessee as reduced by the proportion of the cost thereof, if any, as has been met, directly or indirectly, by any other person or authority. If written down value of the block of asset is reduced to zero, though the block is not empty - No depreciation is admissible. If the block of assets is empty or ceases to exist on the last day of the previous year though the written down value is not zero - No depreciation is admissible.08/07/2009 80
  81. 81. Contd…Additional depreciation @ 20% is available on new plant ormachinery acquired & installed after 31.03.05, if used inproduction or manufacturing.If asset is used for less than 180 days during the previous year,in which its purchased, then deprecation & additionaldepreciation is restricted to 50% of actual depreciation.However in subsequent year full depreciation is allowedirrespective of use.When a depreciable asset(on which depreciation is claimed on straight line basis) of a power generating unit is disposed in a previous year, then terminal depreciation (loss) is deductible or balancing charge (gain) is taxable.08/07/2009 81
  82. 82. PartnershipDeductibility of interest paid to partners by firm dependsupon following :- – Payment of interest should be authorized by the partnership deed – Payment of interest should pertain to the period after the partnership deed. – Rate of interest should not exceed 12 percentDeduction of Remuneration to Partners can be claimedif paid :- – to a Working Partner – According to the Partnership Deed – Does not exceed the Permissible Limits.08/07/2009 82
  83. 83. Contd… The maximum amount of salary paid to all the partners during the previous year should not exceed the limits given below :-In case of a firm carrying of a profession referred to in section 44AAOn the first Rs. 1,00,000 of the book profit or in Rs. 50,000 or at the rate of 90 percent of the bookcase of a loss profit, whichever is moreOn the next Rs. 1,00,000 of the book profit At the rate of 60 percentOn the balance of the book profit At the rate of 40 percentIn the case of any other firmOn the first Rs. 75,000 of the book profit or in case Rs. 50,000 or at the rate of 90 percent of the bookof a loss profit, whichever is moreOn the next Rs. 75,000 of the book profit At the rate of 60 percentOn the balance of the book profit At the rate of 40 percent kamal maghani 83
  84. 84. Minimum Alternate Tax (MAT)Applicability of Minimum alternate tax (MAT) sec. 115JB :-•Minimum alternate tax (MAT) sec. 115 JB MAT isapplicable in case of companies only.•If tax liability of a company under normal provision islower than 10% of book profit.•In such case, book profit shall be deemed as total income& 10% of book profits should be deemed as tax liability.•Up to assessment year 2001-02 these provisions werecovered by sec. 115 JA. 08/07/2009 84
  85. 85. Contd…• A company is allowed credit of tax paid u/s 115- JB for the assessment year 2006-07 and onwards in accordance with the provisions of section 115-JAA.• MAT credit can be carried forward for a period of seven years. Index08/07/2009 85
  86. 86. 08/07/2009 86
  87. 87. Basis of ChargeCapital Gain’s tax liability arises only when thefollowing conditions are satisfied:1.There should be a capital asset.2.The capital asset is transferred by the assessee3.Such transfer takes place during the previous year.4.Any profit or gains arises as a result of transfer.5.Such profit or gains is not exempt from tax under section 54, 54B, 54D, 54EC, 54F, 54G, and 54GA08/07/2009 87
  88. 88. Capital Assets“Capital asset” is defined to include property of any kind,whether fixed or circulating, movable or immovable, tangible orintangible. However, following are excluded from the definitionof “capital assets”:1.Any stock-in-trade, consumable stores or raw material held forthe purposes of business or profession.2.Personal effects of the assessee, that is to say, movableproperty including wearing apparel and furniture held for hispersonal use or for the use of any member of his family dependent upon him. However, Jewellery, Archaeological Collections, Drawings, Paintings, Sculptures, or Art Work will not be considered as “personal effects”. 08/07/2009 88
  89. 89. Contd…3. Agricultural land in India provided it is not situated – – in any area within the territorial jurisdiction of a municipality or cantonment board, having a population of 10,000 or more; or – in any notified area.3. 6½ percent Gold Bonds, 1977 or 7 percent Gold Bonds, 1980 or National Defense Gold Bonds, 1980 issued by the Central Government.4. Special Bearer Bonds, 1991.5. Gold Deposit Bonds issued under Gold Deposit Scheme, 1999. 08/07/2009 89
  90. 90. Short-term / Long-term Capital Assets“Short term capital asset” means a capital asset held by anassessee for not more than 36 months, immediately prior toits date of transfer. In other words, if a capital asset is heldby an assessee for more than 36 months, then it is knownas “long term capital asset.”However in following cases 36 months will be replaced by12 months :-• Equity or preference shares in a company•Listed Securities•Units of UTI•Units of a mutual fund specified under section 10(23D)•Zero coupon bonds 08/07/2009 90
  91. 91. Important Terms1. Transfer of Capital Asset :- Transfer, in relation to capital asset, includes sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof under any law [sec. 2(47)].2. Full Value of Consideration :- The expression “full value” means the whole price without any deduction whatsoever.3. Expenditure on Transfer :- The expression “expenditure on transfer” means expenditure incurred which is necessary to effect the transfer. 08/07/2009 91
  92. 92. Contd…4. Cost of Acquisition :- Cost of acquisition of an asset is the value for which it was acquired by the assessee. In case of Depreciable Asset COA is the WDV of asset in the beginning of the year. In case of Slump Sale COA is the Net Worth of the undertaking.5. Cost of improvement :- Cost of improvement is capital expenditure incurred by an assessee in making any additions/ improvement to the capital asset.08/07/2009 92
  93. 93. Contd…6. Indexed Cost of Acquisition :- the amount which bears to the COA, the same proportion as CII for the year in which the asset is transferred bears to the CII for the first year in which the asset was held by the assessee or on 01.04.1981, whichever is later.7. Indexed Cost of Improvement :- an amount which bears to the COI, the same proportion as CII for the year in which the asset is transferred bears to the CII for the year of improvement.08/07/2009 93
  94. 94. Capital Gain Exemption1. Profit on sale of property used for residence [S. 54]:- Available to Individual & HUF on transfer of Long-term Residential Property and new residential House property is purchased or constructed.2. Capital gains on transfer of agricultural land [S.54B]:- Available to Individual on transfer of Agricultural land used by individual or his parent for agricultural purposes during 2 year preceding date of transfer and Agricultural land (urban or rural) is purchased. 08/07/2009 94
  95. 95. Contd…3. Investment in certain bonds [S.54EC] :- Available to all assesses on transfer of any long-term capital asset for purchase of Bonds, redeemable after 3 years issued by(a) National Highway authority of India; or(b) Rural Electrification Corporation,08/07/2009 95
  96. 96. Contd…4. Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house [S. 54F]:- Available to Individual & HUF on transfer of Long-term Asset other than Residential house Property and residential House property is purchased or constructed.08/07/2009 96
  97. 97. Contd…5. Compulsory acquisition of land & building [S.54D]:- Available to all assesses on Compulsory acquisition of land or building which was used in the business of industrial undertaking during 2 years prior to date of transfer, if New land or building for the industrial undertaking is purchased or constructed.08/07/2009 97
  98. 98. Contd…6. Shifting of undertaking to rural area [Sec.54G]:- Available to all assesses on Transfer of plant, machinery or land or building for shifting industrial undertaking from under area to rural area, if (a) Purchase/ Construction of plant, machinery, land or building in such rural area or, (b) Shifting original assets to that area or, (c) Incurring notified expenses.08/07/2009 98
  99. 99. Contd…7. Shifting of undertaking to SEZ [Sec.54GA]:- Available to all assesses on Transfer of plant, machinery or land or building for shifting industrial undertaking from urban area to special Economic Zone, if (a) Purchase/ Construction of plant, machinery, land or building in such SEZ or (b) Shifting the original asset to SEZ or, (c) Incurring notified expenses.08/07/2009 99
  100. 100. Computation of Short-term Capital Gains Particulars AmountFull Value of Consideration XXXLess: Expenses incurred wholly and exclusively for such transfer xxx Net Consideration XXXLess: Cost of Acquisition xxxLess: Cost of Improvement xxxLess: Exemption u/s 54B, 54D, 54G, 54GA xxx Taxable Short -term Capital gains XXX 08/07/2009 100
  101. 101. Computation of Long-term Capital Gains Particulars AmountFull Value of Consideration XXXLess: Expenses incurred wholly and exclusively for such xxx transfer Net Consideration XXXLess: Indexed Cost of Acquisition xxxLess: Indexed Cost of Improvement xxxLess: Exemption u/s 54, 54B, 54D, 54EC, 54F, 54G, 54GA xxx Taxable Long- term Capital gains XXX08/07/2009 101
  102. 102. Indexed Cost Cost Inflation Index Cost of (CII) for the first yearIndexed Cost acquisition / in which the asset was of improvement held by the assessee x Cost or for the year Acquisition / inflation Index beginning onImprovement of the year of 1.4.1981, whichever is transfer later / the year of improvement08/07/2009 Index 102
  103. 103. 08/07/2009 103
  104. 104. General [Section 56(1)] Income of every kind, which is not to be excluded from the total income and not chargeable to tax under any other head, shall be chargeable under the head “Income from Other Sources”.08/07/2009 104
  105. 105. Specific Income [Section 56(2)]1. Dividends.2. Lottery winnings etc.: Winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever.3. Any sum received by an employer-assessee from his employees as contributions to any welfare fund, if the same is not chargeable under the head ‘Profits and Gains of Business or Profession.’4. Income by way of interest on securities if not chargeable as Profits and Gains of Business or Profession 08/07/2009 105
  106. 106. Contd…5. Income from letting on hire of Plant, machinery or furniture belonging to the assessee, if not chargeable to under the head ‘Profits and Gains of Business or Profession’.6. Income from letting on hire of machinery, plant or furniture and also buildings, and the letting of buildings is inseparable from letting of such machinery, plant or furniture, if the same is not chargeable to income tax under the head ‘Profits and Gains of Business or Profession.’7. Interest on bank deposits and loans08/07/2009 106
  107. 107. Contd…8. Any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy, if the same is not chargeable to income-tax under the head ‘Profits and Gains of Business or Profession’ or under the head “Salaries.”9. Cash Gifts exceeding Rs. 50,00010.Interest on foreign government securities11.Agricultural income received from outside India12.Income from sub-letting13.Director’s fee14.Income of race establishment08/07/2009 Index 107
  108. 108. 08/07/2009 108
  109. 109. Cases where Clubbing Applies1. Transfer of income without transfer of asset [Sec. 60] :– The income from the asset would be taxable in the hands of the transferor.2. Revocable transfer of assets :- Income from such asset is taxable in the hands of the transferor.3. An individual is assessable in respect of remuneration of spouse [Sec. 64(1)(ii)] :- When Spouse is employed in the concern without any technical or professional knowledge or experience or when he/ she has substantial interest in that concern. 08/07/2009 109
  110. 110. Contd…4. An individual is assessable in respect of income from assets transferred to spouse:- When the asset is transferred otherwise than (a) for adequate consideration, or (b) in connection with an agreement to live apart.5. An individual is assessable in respect of income from assets transferred to son’s wife [Sec. 64(1) (vi)]:- When the asset is transferred otherwise than (a) for adequate consideration08/07/2009 110
  111. 111. Contd…6. An individual is assessable in respect of income from assets transferred to a person for the benefit of spouse [Sec. 64(1)(vii)] :- It is transferred for the immediate or deferred benefit of his/her spouse. The transfer is without adequate consideration.7. An individual is assessable in respect of income from assets transferred to a person for the benefit of son’s wife [Sec. 64(1)(viii)] :- It is transferred for the immediate or deferred benefit of his/her son’s wife. The transfer is without adequate consideration.08/07/2009 111
  112. 112. Contd…8. An individual is assessable in respect of income of his minor child [Sec. 64(1A)] :- The income of minor will be included in the income of that parent whose total income [excluding the income includible under section 64(1A)] is greater.9. Clubbing in case of transfer of property to HUF [Section 64(2)] :- When Income from asset transferred to HUF for inadequate consideration.08/07/2009 112
  113. 113. Undisclosed Income / Investments1. Cash credit [Sec. 68] - Where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.08/07/2009 113
  114. 114. Contd…2. Unexplained investments [Sec.69] – Where in the financial year immediately preceding the assessment year, the assessee has made investments which are not recorded in the books of account maintained by him and the assessee offers no explanation about the nature and source of the investments, the value of the investments may be deemed to be the income of the assessee of such financial year.08/07/2009 114
  115. 115. Contd…3. Unexplained money, etc [sec. 69A] - Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery, or other valuable article which are not recorded in the books of account maintained by him and the assessee offers no explanation about the nature and source of acquisition then value of such things may be deemed to the income of the assessee for such financial year.08/07/2009 115
  116. 116. Contd…4. Amount of investments, etc., not fully disclosed in books of account [Sec.69B] – Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the A.O. finds that the amount expended on making such investments or in acquiring such things exceeds the amount recorded in the books of account maintained by the assessee, and he offers no explanation about such excess amount, the excess amount may be deemed to be the income of the assessee, for such financial year. 08/07/2009 116
  117. 117. Contd…5.Unexplained expenditure, etc. [Sec. 69C] – Where in any financial year an assessee has incurred any expenditure & he offers no explanation about the source of such expenditure, the amount covered by such expenditure, may deemed to be the income of the assessee for such financial year.6.Amount borrowed or repaid on hundi [Sec. 69D] – Where any amount is borrowed on a hundi, or any amount due thereon is repaid otherwise than through an account payee cheque, the amount so borrowed or repaid shall be deemed to be the income of the person borrowing or repaying for the previous year in which the amount was borrowed or repaid. 08/07/2009 Index 117
  118. 118. 08/07/2009 118
  119. 119. Process of Set-off & Carry ForwardThe process of setting off of losses and their carry forward may becovered in the following steps: Step 1 Inter-source adjustment under the same head of income Inter-head adjustment in the same assessment year. Step 2 is applied Step 2 only if a loss cannot be set off under Step 1. Carry forward of loss. Step 3 is applied only if a loss cannot be set off Step 3 under Steps 1 and 2.08/07/2009 119
  120. 120. Unabsorbed DepreciationWhile dealing with unabsorbed depreciation one should keep in mindthe following points: Depreciation allowance of the previous year is first deductible from the income chargeable under the head “Profits and gains of business or profession”. Step 1 If depreciation allowance is not fully deductible under the head “Profits and gains of business or profession” because of absence or inadequacy of profits, it is deductible from income chargeable under other heads of income Step 2 [except income under the head “Salaries”] for the same assessment year. If depreciation allowance is still unabsorbed, it can be carried forward to the subsequent assessment year(s) by the same assessee. Step 308/07/2009 120
  121. 121. Inter-Source Set Off [Section 70]Loss arising from one source of income under a head can beset off against income arising from any other source under thesame head, except in the following cases – Loss Set-off allowed against Long-term capital Loss Long-term Capital Gain Speculation business loss Speculation business gain Loss from business of owning and Income from business of owning and maintaining race horse maintaining race horse Loss from lottery, card games, gambling Income from lottery, card games, gambling betting etc. betting etc. 08/07/2009 121
  122. 122. Inter-Head Set-off [Section 71]Loss arising under one head of income can be set off againstincome under any other head, except in the following cases –1.Loss arising under the head capital gain cannot be setofffrom income under any other head2.Losses under the head “Profits and gains of business orprofession” cannot be set off against income under the head“Salaries”. Note: Unabsorbed depreciation of past year(s) is carried forward u/s 32(2); therefore, the same can be set-off against income under the head ‘Salaries’. 08/07/2009 122
  123. 123. Provisions relating to carry forward and setoff of losses Income against which the No. of years for which itSec. Loss to be carried forward loss can be setoff can be carried forward71B Loss from house property Income from house property 8 years from the end of the relevant A.Y.72 Losses under ‘Profits & Gains of Profits of any 8 years from the end of the Business or Profession’, except Business/Profession relevant A.Y. speculation business loss. (including speculation business profits also)73 Losses in speculation business. Income from speculation 4 years from the end of the business relevant A.Y.74 Losses under the head Capital Capital Gains 8 years from the end of the gains. relevant A.Y.74A Loss incurred in activity of Income from owning and 4 years from the end of the owning and maintaining race maintaining race horses relevant A.Y. horses. 08/07/2009 Index 123
  124. 124. 08/07/2009 124
  125. 125. Meaning“Agricultural Income” means:1. Any rent or revenue derived from land which is situated in India and used for agricultural purposes [sec. 2(1A) (a)].2. Any income derived from such land by agricultural operations including processing of the agricultural produce, raised or received as rent-in-kind so as to render it fit for the market or sale of such produce [sec. 2(1A)(b)].3. Income attributable to a farm house subject to certain conditions.4. With effect from the assessment year 2009-10, any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income.08/07/2009 125
  126. 126. Partially Agricultural & Partially Business Income [Rules 7, 7a, 7b And 8] BUSINESS AGRICULTURAL INCOME INCOME INCOMEGrowing and manufacturing tea in India 40% 60%Sale of centrifuged latex or cenex or latex basedcreps (such as pale latex crepe) or brown crepes 35% 65%(such as estate brown crepe, remilled crepe,smoked blanket crepe or flat bark crepe) ortechnically specified block rubbers manufactured orprocessed from field latex or coagulum obtainedfrom rubber plants grown by the seller in IndiaSale of coffee grow and cured by seller 25% 75%Sale of coffee grown, cured, roasted and grounded 40% 60%by seller in India with or without mixing chicory orother flavoring ingredients08/07/2009 126
  127. 127. The Scheme of Partial Integration ofNon-Agricultural Income with Agricultural Income The scheme of partial integration of non-agricultural income with agricultural income is applicable if the following conditions are satisfied – The taxpayer is an individual, a Hindu undivided family, a body of individual, an association of persons or an artificial juridical person. Condition 1 The taxpayer has non-agricultural income exceeding the amount of exemption limit [i.e., Rs. 1,80,000(in case a resident woman below 65 years), Rs. 2,25,000 (in case of a resident senior citizen 65 years or more) and Rs. 1,50,000 (in case of any other individual or every HUF for the assessment Condition 2 year 2009-10] The agricultural income of the taxpayer exceeds Rs. 5,000. Condition 3 08/07/2009 127
  128. 128. Contd… Income-tax will be computed for the assessment year 2009-10 in the following manner:Step 1 Net agricultural income is to be computed as if it were income chargeable to income-tax.Step 2 Agricultural & non-agricultural income of the assessee will then be aggregated & income-tax is calculated on the aggregate income.Step 3 The net agricultural income will then be increased by the amount of exemption limit and income- tax is calculated on net agricultural income, so increased, as if such income was the total income of the assessee.Step 4 The amount of income-tax determined at Step two will be reduced by the amount of income-tax determined under Step three.Step 5 Find out the balance. Add surcharge; education cess & SHEC.Step 6 The amount so arrived will be the total income-tax payable by the assessee. Index 08/07/2009 128
  129. 129. 08/07/2009 129
  130. 130. Introduction Deductions to be made [Section 80A] : The total income of an assessee is to be computed after making deductions permissible u/s 80C to 80U. However, the aggregate amount of deductions cannot exceed the Gross Total Income. No deduction from certain (following) Incomes : Long term Capital Gains referred u/s 112, and Short Term Capital gains referred u/s 111A. Winnings from lotteries, races, etc. as referred to in section 115BB. Incomes referred to in section 115A (1) (a), 115AC, 115ACA, 115AD, 115BBA and 115D.08/07/2009 130
  131. 131. Deduction for Payment ofLife Insurance Premia, etc., [Section 80C]Deduction under this section is allowed as follows –Deduction is available only in respect of ‘specifiedsums’ actually paid or deposited during the previousyear (sum not actually paid and outstanding is notallowed)Specified sums must have been paid/deposited by anIndividual or HUF; andThe total amount of deduction under this section is subject to a maximum limit of Rs.1,00,000.08/07/2009 131
  132. 132. Contribution To Certain Pension Funds [Section 80CCC]• Amount paid or deposited by individual in the previous year – – out of his income chargeable to tax – to effect or keep in force a contract for any annuity plan of LIC or any other insurer – for receiving pension from the fund referred to in section 10(23AAB).• Quantum of Deduction: Deduction shall be allowed to the extent of lower of the following – – Amount so paid or deposited; or – Rs. 1,00,000 08/07/2009 132
  133. 133. Contribution to Pension Scheme of CentralGovernment or any Other Employer [Sec. 80CCD]• Deduction in respect of: Deduction is available in respect of both of the following – – Sum deposited by assessee in his account in notified pension scheme; and – Contribution made by Central Govt. or any other employer to assesse’s A/c.• Quantum of Deduction: Deduction shall be allowed to the extent of aggregate of the following - Sum paid/deposited by assessee to the credit of his a/c or 10% of salary, whichever is lower Sum contributed by the employer in assesse’s A/c or 10% of salary, whichever is lower 08/07/2009 133
  134. 134. Aggregate Limit u/s 80C, 80CCC & 80CCD The aggregate amount of deductions under section 80C, section 80CCC and section 80CCD shall not, in any case, exceed Rs.1,00,000. 08/07/2009 134
  135. 135. Deduction In Respect Of Health Insurance Premia [Sec. 80D]• Deduction is available in respect of the amount paid to effect or to keep in force health insurance under a scheme – – made by General Insurance Corporation of India (GIC) and approved by Central Government; or – made by any other insurer and approved by Insurance Regulatory and Development Authority.• Deduction shall be to the extent of lower of – – Health insurance premia paid in respect of health of any member of that HUF; or – Rs. 15,000 (Rs. 20,000 in case the insured is a senior citizen). 08/07/2009 135
  136. 136. Maintenance of A Dependant Being Person With Disability [Section 80DD]• Deduction is available in respect of – – expenditure incurred for medical / treatment / nursing / training/ rehabilitation, or – amount paid under scheme LIC / UTI other insurer approved by CBDT for maintenance, of a “dependant”, being a person with disability.• Deduction shall be allowed to the extent of – – Rs. 50,000 (Rs. 75,000 in case of dependant suffering with severe disability), irrespective of expenditure incurred or sum paid. 08/07/2009 136
  137. 137. Deduction in respect of Medical Treatment, etc. [Sec. 80DDB]• Deduction is available in respect of sum actually paid during previous year for medical treatment of prescribed disease or ailment for the following – – In case of individual: himself or his spouse, children, parents, brothers and sisters, – In case of HUF: its member(s), – dependant mainly on such individual or HUF for his support and maintenance.• Deduction shall be available to the extent of lower of the following – – sum actually paid; or – Rs. 40,000 (Rs. 60,000 in case of a senior citizen). 08/07/2009 137
  138. 138. Deduction in respect of Interest on Loan taken for Higher Education [Sec.80E]• Deduction in available in respect of sum paid by the assessee in the previous year, out of his income chargeable to tax, by way of interest on loan taken – – for his higher education, or – for the higher education of his relative.• 100% of the amount of interest on such loan Deduction will be admissible.08/07/2009 138
  139. 139. Deduction in respect of Donations [Section 80G]• Deduction is allowed under this section to all assesses in respect of donations of sum of money in the following manner – – 100% deduction will be allowed if donations are given to any of the 19 specified funds. – 50% deduction will be allowed if donations made to any of the 5 specified funds. – 100% deduction shall be allowed subject to the qualifying amount if donations are made for promoting family planning. – 50% deduction shall be allowed subject to the qualifying amount if donations are made towards any of the 5 specified purposes.08/07/2009 139
  140. 140. Deductions in respect of Rents Paid [Sec.80GG]• Rent actually paid for any furnished or unfurnished residential accommodation occupied by the Individual, who is not in receipt of any House Rent Allowance (HRA).• The deduction shall be allowed to the extent of least of the following – – Rs. 2,000 per month; – 25% of adjusted total income; – Rent paid less 10% of adjusted Total Income.08/07/2009 140
  141. 141. Deduction in respect of person with Disability [Section 80U]• Eligible Assessee: Individual resident in India, who, at any time during the previous year, is certified by the medical authority to be a person with disability• Deduction: Rs. 50,000 (Rs. 75,000 for severe disability). Severe disability means 80% or more of disability.08/07/2009 141
  142. 142. Other Deductions Deduction in respect of certain Donations for Scientific Research or Rural Development [Sec.80GGA] Deduction in respect of Contribution to Political Parties [Sec. 80GGB & 80GGC] Profits & Gains from Industrial Undertaking engaged in Infrastructure Development [Sec. 80 IA] Profits & Gains from Undertaking engaged in Development of SEZs [Sec. 80IAB] Profits & Gains from Industrial Undertaking engaged in other than in Infrastructure Development [Sec.80IB]08/07/2009 142
  143. 143. Contd… Deduction available to certain Undertakings in certain Special category States [Sec.80IC] Profits & Gains from business of Hotels & Convention Centre in Specified Areas [Sec. 80ID] Special provisions in respect of certain Undertakings in North-Eastern States [Sec. 80IE] Deduction available to assessee in the business of Collecting & Processing Bio-Degradable Waste [Sec.80JJA] Deduction in respect of Employment of New Workmen [Sec. 80JJAA]08/07/2009 143
  144. 144. Contd… Deduction from incomes of Off-shore Banking Units & International Financial Services Centre [Sec.80LA] Deduction in respect of income of Co-operative Society [Sec. 80P] Deduction in respect of Royalty Income, etc. of Author of certain Books other than Text Books [Sec.80QQB] Deduction in respect of Royalty Income of Patents [Sec. 80 RRB] Index08/07/2009 144
  145. 145. 08/07/2009 145
  146. 146. Liability to pay Advance Tax Every person is liable to pay tax on income in advance i.e. from completion of the previous year (advance tax) if tax payable is Rs. 5,000 or more. All items of income are liable for payment of advance tax. However, from Assessment 2010-2011 liability to pay advance tax arises, if the tax payable is Rs. 10,000 or more08/07/2009 146
  147. 147. Due Dates Amount payble by Corporate Amount payble by Non- Due Date Assessee Corporate AssesseeOn or before June 15 of the Up to 15 percent of advance -previous year tax payableOn or before September 15 of Up to 45 percent of advance Up to 30 percent of advancethe previous year tax payable tax payableOn or before December 15 of Up to 75 percent of advance Up to 60 percent of advancethe previous year tax payable tax payableOn or before March 15 of the Up to 100 percent of advance Up to 100 percent of advanceprevious year tax payable tax payable08/07/2009 147
  148. 148. Default in payment of Advance Tax [Sec. 234B] Under section 234B(1), interest is payable as follows: When interest is Interest is Rate of interest Period for which interest is payable payable payable onAn assessee who is Interest is Simple interest @ 1 From April 1 of the assessmentliable to pay payable on percent for every year to the date of determination ofadvance tax, has accessed tax month or part of income under section 143(1) orfailed to pay such month where regular assessment is madetax to the date of regular assessmentAn assessee who Assessed tax Simple interest @ 1 From April 1 of the assessmenthas paid advance minus advance percent for every year to the date of determination oftax but the amount tax month or part of income under section 143(1) orof advance tax paid month where regular assessment is madeby him is less than to the date of regular assessment90 percent ofassessed tax. 08/07/2009 148
  149. 149. Deferment of Advance Tax [Sec. 234C]Interest is payable under section 234C if anassessee has not paid advance tax orunderestimated installments of advance tax.Simple Interest at the rate of 1% per month ispayable for period 3 months for each installmentdue. Index08/07/2009 149
  150. 150. 08/07/2009 150
  151. 151. Time for filing Return of Income [Sec. 139(1)] Different Situations Due Date for filing Return1. Where the assessee is a company September 302. Where the assessee is person other than acompany –a)In case where accounts of the assessee are September 30required to be audited under any lawb)Where the assessee is “working partner” ina firm whose accounts are required to be September 30audited under any lawc)In any other case July 3108/07/2009 151
  152. 152. Filing of Return in Electronic Form [Sec. 139D]Section 139D has been inserted from June 1, 2006. Itprovides that the Board may make rules providing for theclass or classes of persons who shall be required to furnishthe return of income in electronic form; the form and themanner in which the return of income in electronic form maybe furnished; the documents, statements, receipts,certificates or audited reports which may not be furnishedalong with the return of income in electronic form but shall beproduced before the Assessing Officer on demand; the computer resource or the electronic record to which the return of income in electronic form may be transmitted. 08/07/2009 152
  153. 153. Filing of Return after Due Date [Sec. 139(4)] If the return is not furnished within the timeallowed under section 139(1) or within the timeallowed under section 142(1), the person may(before the assessment is made), furnish the returnof any previous year at any time before the end ofone year from the end of relevant assessmentyear.08/07/2009 153
  154. 154. Consequences of Late SubmissionIf return is submitted after the due date of submission ofreturn of income, the following consequences will beapplicable. These rules are applicable even if a belatedreturn is submitted within the time-limit given above – – The assessee will be liable for penal interest u/s 234A. – A penalty of Rs. 5,000 may be imposed u/s 271F if belated return is submitted after the end of assessment year. – If return of loss is submitted after the due date, a few losses cannot be carried forward. – If return is submitted belated, deduction under section 10A, 10B, 80-IA, 80-IB, 80IC, 80-ID and 80-IE will not be available. 08/07/2009 154
  155. 155. Interest for defaults in furnishing Return of Income [Section 234A]If any person fails to furnish his return of income u/s 139 forany assessment year or furnishes such return after duedate specified in section 139(1), then, he will liable to payinterest at the rate of 1% per month for the period beginningfrom the date immediately following the due date offurnishing return of income and ending on the Date offurnishing the return or completion of assessment,whichever is earlier, calculated on theamount of self-assessment tax payable. Index08/07/2009 155
  156. 156. INCOME TAX-------------------THE END------------------- Prepared & EDITIED BY GIRIDHAR(IPCC) 156

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