Income Tax- SPA 2010

Income TaxIncome TaxIncome TaxIncome Tax

From CA Shailesh PrajapatiFrom CA Shailesh PrajapatiDefinitionsDefinitionsDefinitionsDefinitions

Contents of the CourseContents of the CourseContents of the CourseContents of the Course

Framework & Basic PrinciplesFramework & Basic PrinciplesFramework & Basic PrinciplesFramework & Basic PrinciplesHeads of IncomeHeads of IncomeTaxability of Income from SalariesTaxability of Income from SalariesTaxability of Income from SalariesTaxability of Income from SalariesTaxability of Business IncomesTaxability of Business IncomesTaxability of Capital GainsTaxability of Capital GainsTaxability of Capital GainsTaxability of Capital GainsDeductions & ExemptionsDeductions & ExemptionsT t t f LT t t f LTreatment of LossesTreatment of Losses

Shailesh PrajapatiShailesh Prajapati

Section 4 as charging sectionSection 4 as charging sectionSection 4 as charging sectionSection 4 as charging section

Income Tax

Tax on Income of a person charged annually

- Income- Scope of IncomeScheme of the Act

-Person-Assessee

-Assessment Year-Previous Year

- Scheme of the Act


Person & AssesseePerson & AssesseePerson & AssesseePerson & Assessee

IndividualIndividualIndividualIndividualHindu Undivided FamilyHindu Undivided FamilyCCCompany Company FirmFirmAOP/BOIAOP/BOILocal AuthorityLocal AuthorityLocal AuthorityLocal AuthorityFor Income Tax these all are For Income Tax these all are –– An AssesseeAn Assessee


PersonPerson -- IndividualIndividualPerson Person IndividualIndividual

For the Assessment year 2010For the Assessment year 2010--20112011For the Assessment year 2010For the Assessment year 2010 20112011SlabSlab--wise Tax Rateswise Tax Rates

FirstFirst RsRs.. 160160,,000000//-- NilNilFirstFirst RsRs.. 160160,,000000// NilNilNextNext RsRs.. 140140,,000000//-- 1010%%NextNext RsRs.. 200200,,000000//-- 2020%%BalanceBalance 3030%%NoNo SurchargeSurcharge isis leviableleviable forfor assesseesassessees otherother thanthan

iicompaniescompaniesEducationEducation cesscess-- 22%% andand SECSEC –– 11%% ofof IncomeIncome TaxTax andandsurchargesurcharge asas thethe casecase maymay bebe


surchargesurcharge asas thethe casecase maymay bebe

PersonPerson –– Individual (Senior Citizen)Individual (Senior Citizen)Person Person Individual (Senior Citizen)Individual (Senior Citizen)






PersonPerson –– Individual (Woman)Individual (Woman)Person Person Individual (Woman)Individual (Woman)






PersonPerson –– HUFHUF -- ConceptConceptPerson Person HUF HUF ConceptConcept

Mr. AMr. A -- Mrs. AMrs. AMr. A Mr. A Mrs. AMrs. AMrMr BB (son)(son) && MrsMrs.. BB

MrMr CC (grandson)(grandson) && MrsMrs.. CCMrMr DD (greatgrandson)(greatgrandson) && MrsMrs DD

MrMr EE (greatgreatgrandson)(greatgreatgrandson) && MrsMrs EEMsMs.. FF (unmarried(unmarried grandgrand--daughter)daughter)

Karta Karta –– Mr. A Mr. A (manages the property & business) (manages the property & business)

CoCo--parceners parceners –– B, C & DB, C & Dpp ,,


PersonPerson –– CompanyCompanyPerson Person CompanyCompany

Distinct entity from shareholders/ directorsDistinct entity from shareholders/ directorsDistinct entity from shareholders/ directorsDistinct entity from shareholders/ directorsDirectors’ remuneration deductible Directors’ remuneration deductible Dividend liable for double taxationDividend liable for double taxationDividend liable for double taxationDividend liable for double taxationFlat rate of tax Flat rate of tax

IndianIndian companiescompanies 3030%%IndianIndian companiescompanies 3030%%ForeignForeign companiescompanies 4040%%

Surcharge @10% will be applicable if the NetSurcharge @10% will be applicable if the NetSurcharge @10% will be applicable if the Net Surcharge @10% will be applicable if the Net Income is more than Rs. 1 Income is more than Rs. 1 CroreCrore. In Case of Foreign . In Case of Foreign Companies it is @ 2.5%Companies it is @ 2.5%

Shailesh PrajapatiShailesh PrajapatiEC and SEC will be 2% as well as 1%.EC and SEC will be 2% as well as 1%.

CompanyCompany-- MATMATCompanyCompany MATMAT

If book Profit does not exceeds Rs 1If book Profit does not exceeds Rs 1 crorecroreIf book Profit does not exceeds Rs. 1 If book Profit does not exceeds Rs. 1 crorecroreITIT-- 1515%% ofof BookBook ProfitProfit ++ ECEC-- 22%% andand SECSEC-- 11%%

If b k P fit d R 1If b k P fit d R 1If book Profit exceeds Rs. 1 If book Profit exceeds Rs. 1 crorecroreITIT-- 1515%% ofof BookBook ProfitProfitSurchargeSurcharge 1010%%ECEC-- 22%% andand SECSEC-- 11%%

Book Profit is as per the calculation under Book Profit is as per the calculation under section 115JA. section 115JA.


PersonPerson –– Firm/ LLPFirm/ LLPPerson Person Firm/ LLP Firm/ LLP

Distinct entity for taxation but no separate legal statusDistinct entity for taxation but no separate legal statusDistinct entity for taxation but no separate legal statusDistinct entity for taxation but no separate legal status“Agreement” & “Business” are necessary conditions“Agreement” & “Business” are necessary conditionsPayments to partners deductible subject to conditionsPayments to partners deductible subject to conditionsPayments to partners deductible subject to conditionsPayments to partners deductible subject to conditionsFlat Firm Tax Rate 30% Flat Firm Tax Rate 30% Share of profits exempt in hands of the partner [SecShare of profits exempt in hands of the partner [SecShare of profits exempt in hands of the partner [Sec. Share of profits exempt in hands of the partner [Sec. 10(2A)]10(2A)]No Surcharge isNo Surcharge is leviableleviable forfor assesseesassessees otherotherNo Surcharge is No Surcharge is leviableleviable for for assesseesassessees other other than companiesthan companiesEC d SEC ill b 2% ll 1%EC d SEC ill b 2% ll 1%


EC and SEC will be 2% as well as 1%.EC and SEC will be 2% as well as 1%.

PersonPerson -- OthersOthersPerson Person OthersOthers

Local AuthorityLocal AuthorityLocal Authority Local Authority TaxableTaxable @@ 3030%%SurchargeSurcharge isis notnot applicableapplicableSurchargeSurcharge isis notnot applicableapplicableEC=EC= 22%% andand SHECSHEC == 11%%

AOP/ BOIAOP/ BOI-- Same as IndividualSame as IndividualAOP/ BOIAOP/ BOI Same as IndividualSame as IndividualCoCo--operative Societyoperative Society

UpUp toto RsRs 1000010000//-- 1010%%UpUp toto RsRs.. 1000010000// 1010%%RsRs.. 1000010000-- 2000020000//-- 2020%%RsRs.. 2000020000 andand aboveabove 3030%%


RsRs.. 2000020000 andand aboveabove 3030%%

Charged annuallyCharged annuallyCharged annuallyCharged annually

Each year an independent yearEach year an independent yearEach year an independent yearEach year an independent yearCommon Financial YearCommon Financial YearAAAssessment YearAssessment Year

periodperiod ofof twelvetwelve monthsmonths startingstarting fromfrom thethe 11stst AprilApril ofof everyeveryyearyear andand endingending onon 3131stst MarchMarch ofof thethe nextnext yearyearyearyear andand endingending onon 3131stst MarchMarch ofof thethe nextnext yearyearDenotedDenoted asas 20102010--20112011,, etcetcForFor ourour SyllabusSyllabus thethe AA..YY.. isis 20102010--20112011ForFor ourour SyllabusSyllabus thethe AA..YY.. isis 20102010 20112011


Previous YearPrevious YearPrevious YearPrevious Year

GenerallyGenerallyGenerallyGenerally11stst AprilApril toto 3131stst MarchMarch

In case of new businessIn case of new businessIn case of new businessIn case of new businessStartStart ofof businessbusiness toto 3131stst MarchMarch

Assessment Year vs. Previous YearAssessment Year vs. Previous YearAYAY 20102010--20112011 PYPY 11--44--20092009 toto 3131..33..20102010TDSTDS andand AdvanceAdvance TaxTax toto paypay inin PreviousPrevious yearyearAssessment,Assessment, filingfiling ofof ReturnReturn andand SS..AA.. TaxTax inin thetheAssessmentAssessment YearYear..


Taxability of IncomesTaxability of IncomesGeneral Propositions & ExceptionsGeneral Propositions & Exceptions

Capital receipts not taxable unless specifiedCapital receipts not taxable unless specifiedCapital receipts not taxable unless specifiedCapital receipts not taxable unless specifiedRetirementRetirement benefits,benefits, CapitalCapital Gains,Gains, etcetc

P l i t t t bl GiftP l i t t t bl GiftPersonal receipts not taxable eg. GiftsPersonal receipts not taxable eg. GiftsLotteries,Lotteries, winningswinnings fromfrom gamegame showsshows

Mutual Activities do not result in income eg. Mutual Activities do not result in income eg. CoCo--operative societiesoperative societies

InsuranceInsurance companiescompanies


Scope of IncomeScope of IncomeScope of IncomeScope of Income

--Residential Nexus----Residential Nexus--

Non ResidentResidentPerson

IncomeNex

us--

TaxableTaxableIn India

Income

ritor

ial N

Non TaxableTaxableOutside India--Te

rr


Residential Status Residential Status –– IndividualsIndividuals--Section 6Section 6

Basic Conditions: To satisfy atleast one condition.Basic Conditions: To satisfy atleast one condition.yy1. He is in India in the P.Y for 182 day or more 1. He is in India in the P.Y for 182 day or more OROR2. He is in India for 60 day or more in the P.Y. and 365 days 2. He is in India for 60 day or more in the P.Y. and 365 days in 4 years immediately preceding the P Yin 4 years immediately preceding the P Yin 4 years immediately preceding the P.Y.in 4 years immediately preceding the P.Y.Exceptions:Exceptions:-- extended period from 60 to 182 daysextended period from 60 to 182 days

IndianIndian citizenscitizens takingtaking employmentemployment abroadabroad oror asas aa crewcrew ofof anan IndianIndianShiShiShipShipIndianIndian citizens/PIOcitizens/PIO visitingvisiting IndiaIndia duringduring thethe PP..YY..

Resident but Ordinary ResidentResident but Ordinary ResidentHeHe hashas beenbeen inin IndiaIndia forfor aa periodperiod ofof 730730 daysdays oror moremore inin 77 yearsyears ANDANDHeHe hashas beenbeen residentresident inin IndiaIndia inin atat leastleast 22 outout ofof 1010 yearsyears immediatelyimmediatelyprecedingpreceding thethe relevantrelevant previousprevious yearyear..


Residential Status Residential Status –– IndividualsIndividuals--Section 6Section 6

Resident but Not ordinary Resident:Resident but Not ordinary Resident:Resident but Not ordinary Resident:Resident but Not ordinary Resident:AnAn IndividualIndividual whowho satisfiessatisfies atat leastleast oneone ofof thethebasicbasic conditionsconditions butbut doesdoes notnot satisfysatisfy thethe twotwoadditionaladditional conditionsconditions isis treatedtreated asas RNORRNOR..AnAn IndividualIndividual whowho satisfiessatisfies atat leastleast oneone ofof thetheb ib i ditiditi b tb t dd ti fti f thth ll ffbasicbasic conditionsconditions butbut doesdoes satisfysatisfy thethe onlyonly oneone ofofthethe twotwo additionaladditional conditionsconditions isis treatedtreated asas RNORRNOR..

NonNon-- ResidentResident::NonNon-- ResidentResident::AnAn IndividualIndividual isis NRNR ifif hehe satisfysatisfy nonenone ofof thethe basicbasicconditionsconditions.. AdditionalAdditional ConditionsConditions areare notnot relevantrelevant..


Residential StatusResidential Status -- OthersOthersResidential Status Residential Status OthersOthers

CompaniesCompaniesCompaniesCompaniesIndianIndian companiescompanies

AlwaysAlways residentresident inin IndiaIndia

OtherOther companiescompaniesResidentResident inin IndiaIndia ifif controlcontrol && managementmanagement whollywholly inin IndiaIndia

Oth AOth AOther AssesseesOther AssesseesResidentResident inin IndiaIndia ifif controlcontrol && managementmanagement partlypartly inin IndiaIndia

C t l & M tC t l & M tControl & Management:Control & Management:HeadHead andand Brain,Brain, whichwhich directsdirects thethe policy,policy, finance,finance, disposaldisposalofof profits,profits, andand vitalvital thingsthings concerningconcerning thethe MgtMgt ofof aa CoCo..


ofof profits,profits, andand vitalvital thingsthings concerningconcerning thethe MgtMgt ofof aa CoCo..

Scope of IncomeScope of IncomeScope of Income Scope of Income PersonPerson Resident & Resident & Resident but Resident but Non ResidentNon Resident

IncomeIncome

Ordinarily Ordinarily ResidentResident

not Ordinarily not Ordinarily ResidentResident

In IndiaIn IndiaAccruedAccruedDeemed to AccrueDeemed to Accrue

TaxableTaxable TaxableTaxable TaxableTaxable

ReceivedReceivedDeemed to receiveDeemed to receive

i ll d fi ll d f blbl blblBusiness controlled from Business controlled from IndiaIndia

TaxableTaxable TaxableTaxable Non Non TaxableTaxable

Outside IndiaOutside India TaxableTaxable Non TaxableNon Taxable Non Non


TaxableTaxable

Scope of IncomeScope of IncomeScope of IncomeScope of Income

Income Accrued in India : It is chargeable to tax in allIncome Accrued in India : It is chargeable to tax in allIncome Accrued in India : It is chargeable to tax in all Income Accrued in India : It is chargeable to tax in all cases irrespective of the Residential Status of the cases irrespective of the Residential Status of the Assessee.Assessee.Income Received in IndiaIncome Received in IndiaIncome Deemed to accrue or arise in India Income Deemed to accrue or arise in India (Section 9)(Section 9)


Income Deemed to Accrue in Income Deemed to Accrue in IndiaIndia

Certain Income are deemed to accrue or arise in India Certain Income are deemed to accrue or arise in India even though they may actually accrue or arise outside even though they may actually accrue or arise outside IndiaIndia

II ff B iB i C iC i ii I diI diIncomeIncome fromfrom BusinessBusiness ConnectionConnection inin IndiaIndiaProperty,Property, Asset,Asset, SourceSource inin IndiaIndiaSalariesSalaries earnedearned inin IndiaIndiaSalariesSalaries earnedearned inin IndiaIndiaSalarySalary paidpaid byby GovernmentGovernment toto IndianIndian citizencitizenDividendDividend byby IndianIndian companycompanyInterestInterestRoyaltiesRoyaltiesFeesFees forfor TechnicalTechnical ServicesServices


FeesFees forfor TechnicalTechnical ServicesServices

Scheme of the ActScheme of the ActConcept of IncomeConcept of Income

CapitalCapital vsvs RevenueRevenue

Income

CapitalCapital vsvs.. RevenueRevenueExemption

•• ExemptionsExemptionsI1 I3I2 I4 I5

Aggregation

•• Heads of IncomeHeads of Income•• Aggregation RulesAggregation Rules Aggregation

Deductions

•• Aggregation Rules Aggregation Rules

•• DeductionsDeductionsIncome

Person•• Tax LiabilityTax Liability

Shailesh PrajapatiShailesh PrajapatiTAX

Heads of IncomeHeads of Income

SalariesSalaries Employer Employer –– Employee Employee SalariesSalaries p yp y p yp yRelationshipRelationship

Income from House Income from House Buildings not used for Buildings not used for b ib iPropertyProperty businessbusiness

Business IncomeBusiness Income Agreements & IntentionAgreements & Intention

Capital GainsCapital Gains Transfer of a Capital AssetTransfer of a Capital Asset

I f OthI f Oth R id H d f IR id H d f IIncome from Other Income from Other SourcesSources

Residuary Head of IncomeResiduary Head of Income


Incentives under the ActIncentives under the ActIncentives under the ActIncentives under the ActExemptionsExemptionspp

GeneralGeneral ExemptionsExemptions (( SectionSection --1010))HeadHead--wisewise ExemptionsExemptions (subj(subj.. toto conditions)conditions)NotNot aa partpart ofof incomeincome atat allall (( AgricultureAgriculture Income)Income)

DeductionsDeductionsFirstFirst IncludedIncluded inin IncomeIncome andand thenthen deducteddeductedFirstFirst IncludedIncluded inin IncomeIncome andand thenthen deducteddeductedInfluencedInfluenced byby otherother incomes/lossesincomes/losses

Rebates & ReliefRebates & ReliefRebates & ReliefRebates & ReliefDeductionDeduction fromfrom taxestaxes payablepayable



From CA Shailesh PrajapatiFrom CA Shailesh PrajapatiIncome from SalariesIncome from SalariesIncome from SalariesIncome from Salaries

Salaries: The beginners...Salaries: The beginners...Salaries: The beginners...Salaries: The beginners...

Test:Test: EmployerEmployer –– Employee RelationEmployee RelationTest:Test: Employer Employer Employee RelationEmployee Relation

i f Chi f Ch A l iA l iBasis of Charge:Basis of Charge: Accrual or Receipt Accrual or Receipt whichever is earlierwhichever is earlier

Scheme (Taxation):Scheme (Taxation): Primarily Gross BasisPrimarily Gross Basis( )( ) yy


Scheme of TaxationScheme of TaxationScheme of TaxationScheme of TaxationBasic SalaryBasic SalaryyyAdd Allowances Add Allowances (to the extent not exempt)(to the extent not exempt)

Add Perquisites Add Perquisites (as valued)(as valued)qqAdd Retirement Benefits Add Retirement Benefits (to the extent not exempt)(to the extent not exempt)

Less : Profession TaxLess : Profession TaxLess: Entertainment Allowance Less: Entertainment Allowance


AllowancesAllowancesAllowancesAllowances

Exemption based on expenditure and multipleExemption based on expenditure and multipleExemption based on expenditure and multiple Exemption based on expenditure and multiple limitslimits

HouseHouse RentRent AllowanceAllowanceHouseHouse RentRent AllowanceAllowanceLeaveLeave TravelTravel Concession/AllowanceConcession/Allowance

E ti b d ditE ti b d ditExemption based on expenditure Exemption based on expenditure Exemption based on monetary limitsExemption based on monetary limits


Expenditure AllowancesExpenditure AllowancesExpenditure AllowancesExpenditure AllowancesAllowance is based on expenditureAllowance is based on expenditurepp

TourTour AllowanceAllowanceTransferTransfer AllowanceAllowanceDailyDaily AllowanceAllowance whilewhile onon tourtourHelperHelper AllowanceAllowanceResearchResearch AllowanceAllowanceResearchResearch AllowanceAllowanceUniformUniform AllowanceAllowanceConveyanceConveyance AllowanceAllowance (does(does notnot includeinclude fromfrom residenceresidence totoffiffi dd b k)b k)officeoffice andand back)back)


Monetary AllowancesMonetary AllowancesMonetary AllowancesMonetary AllowancesHill Area AllowanceHill Area Allowance Underground AllowanceUnderground AllowanceBorder Area AllowanceBorder Area AllowanceTribal Area AllowanceTribal Area AllowanceAll f T tAll f T t

ggHigh Altitude AllowanceHigh Altitude AllowanceActive Field AllowanceActive Field AllowanceI l d D t AllI l d D t AllAllowance for Transport Allowance for Transport

EmployeesEmployeesCompensatory Field Area Compensatory Field Area

Island Duty AllowanceIsland Duty AllowanceChildren Education Children Education Allowance Allowance Rs. 100Rs. 100

AllowanceAllowanceCompensatory Modified Compensatory Modified Area AllowanceArea Allowance

Hostel Allowance Hostel Allowance Rs.300Rs.300Conveyance Allowance Conveyance Allowance (from residence to office &(from residence to office &Area AllowanceArea Allowance

Counter Insurgency Counter Insurgency AllowanceAllowance

(from residence to office & (from residence to office & back) back) Rs. 800Rs. 800


House Rent AllowanceHouse Rent AllowanceHouse Rent AllowanceHouse Rent AllowanceExemption is least ofExemption is least ofpp

ExcessExcess ofof RentRent PaidPaid overover 1010%% ofof SalarySalary5050%% ofof salarysalary forfor metrometro cities,cities, 4040%% forfor othersothersActualActual ReceiptReceipt

SalarySalary meansmeans BasicBasic DA(ifDA(if itit formsforms aa partpart ofofSalarySalary meansmeans Basic,Basic, DA(ifDA(if itit formsforms aa partpart ofofretirementretirement benefits)benefits) && CommissionCommission (if(if itit isis paidpaid asas aaspecificspecific percentagepercentage ofof salessales achievedachieved byby thetheemployee)employee)


Leave Travel ConcessionLeave Travel ConcessionLeave Travel ConcessionLeave Travel ConcessionFareFare

BasedBased onon thethe modemode ofof traveltravel

for self or familyfor self or familySpouse,Spouse, children*,children*, dependentsdependents

For travel to any place in IndiaFor travel to any place in IndiaFor 2 journeys in a block of 4 calender yearsFor 2 journeys in a block of 4 calender years

FromFrom 19981998--20012001 (( JanJan-- DecDec ))FromFrom 20022002--20052005FromFrom 20062006--20092009FF 20102010 20132013


FromFrom 20102010-- 20132013

PerquisitesPerquisitesPerquisitesPerquisites

Value of benefits received in kindValue of benefits received in kindValue of benefits received in kindValue of benefits received in kindIf purely for official purposes, cannot be taxed If purely for official purposes, cannot be taxed PerquisitesPerquisitesPerquisitesPerquisites

CategoryCategory ‘A’‘A’ TaxableTaxable inin allall casescases..CategoryCategory ‘B’‘B’ ExemptExempt fromfrom taxtax inin casecase ofof allallCategoryCategory BB ExemptExempt fromfrom taxtax inin casecase ofof allallemployeesemployeesCategoryCategory ‘C’‘C’ TaxableTaxable onlyonly inin thethe handshands ofofg yg y yyspecifiedspecified employeesemployees..


Valuation of PerquisitesValuation of PerquisitesValuation of PerquisitesValuation of Perquisites

Rent Free/ Concessional AccommodationRent Free/ Concessional AccommodationRent Free/ Concessional AccommodationRent Free/ Concessional AccommodationCentralCentral andand StateState GovernmentGovernment EmployeesEmployees::

VOP=VOP= LicenceLicence FeesFees determineddetermined byby SGSG minusminus RentRent actuallyactually paidpaid bybyEmployeeEmployee

PrivatePrivate SectorSector EmployeesEmployees :: (( AccommodationAccommodation ownedowned bybyEmployerEmployer ))p oyep oye ))

77..55%% ofof salarysalary (( PopulationPopulation <=<= 1010 LakhsLakhs ))1010%% ofof SalarySalary (( PopulationPopulation >>1010 LakhsLakhs uptoupto 2525 LacsLacs ))1515%% ff S lS l (( P l tiP l ti >> 2525 L kL k ))1515%% ofof SalarySalary (( PopulationPopulation >> 2525 LaksLaks ))IfIf employeeemployee isis payingpaying somesome rent,rent, deductdeduct fromfrom thethe valuevalueInIn respectrespect ofof thethe periodperiod duringduring whichwhich thethe saidsaid accommodationaccommodation waswas


occupiedoccupied byby thethe employeeemployee duringduring thethe previousprevious yearyear..


Rent Free/ Concessional AccommodationRent Free/ Concessional AccommodationRent Free/ Concessional AccommodationRent Free/ Concessional AccommodationPrivatePrivate SectorSector EmployeesEmployees :: (( AccommodationAccommodation takentaken ononLeaseLease oror RentRent byby EmployerEmployer andand providedprovided toto Employee)Employee)ValueValue ofof PerquisitesPerquisites wouldwould bebe thethe LowerLower ofof thethe followingfollowing::ActualActual AmountAmount ofof leaselease rentalrental paidpaid oror payablepayable byby thetheemployeremployer ororemployeremployer oror1515%% ofof SalarySalaryThisThis wouldwould bebe reducedreduced byby thethe rentrent ifif anyany actuallyactually paidpaid bybyThisThis wouldwould bebe reducedreduced byby thethe rent,rent, ifif any,any, actuallyactually paidpaid bybythethe employeeemployeeSALARY=SALARY= Basic+Basic+ DADA whichwhich formsforms partpart ofof salary,salary, taxabletaxable


allowances,allowances, bonus,bonus, commissioncommission payablepayable monthlymonthly oror anyanymonetarymonetary benefitsbenefits byby whateverwhatever namename calledcalled..


Rent Free/ Concessional Furnished AccommodationRent Free/ Concessional Furnished AccommodationRent Free/ Concessional Furnished AccommodationRent Free/ Concessional Furnished AccommodationValueValue ofof UnfurnishedUnfurnished accomodationaccomodation asas aboveaboveAddAdd :: ValueValue ofof FurnitureFurniture

IfIf ownedowned byby employeremployer :: 1010%% pp..aa.. ofof OriginalOriginal CostCostIfIf hiredhired fromfrom thirdthird partyparty :: ActualActual hirehire chargescharges borneborne byby thetheemployeremployeremployeremployer

LessLess:: AnyAny chargescharges paidpaid oror payablepayable byby employeesemployeesNoteNote –– furniturefurniture includesincludes TT..VV..,, radioradio set,set, refrigerators,refrigerators,otherother householdhousehold appliances,appliances, AA..CC.. etcetc..


Valuation of PerquisitesValuation of PerquisitesValuation of PerquisitesValuation of PerquisitesObligation of an employee paid by the employerObligation of an employee paid by the employerg p y p y p yg p y p y p yPremiums Paid for Life Assurance/AnnuityPremiums Paid for Life Assurance/Annuity

ExceptionException :: ContributionContribution toto RecognisedRecognised PF/PF/SuperannuationSuperannuation Fund,Fund, GroupGroup GratuityGratuity etcetc..

The Value of any specified security or sweat equity The Value of any specified security or sweat equity shares allotted or transferred directly or indirectly byshares allotted or transferred directly or indirectly byshares allotted or transferred, directly or indirectly, by shares allotted or transferred, directly or indirectly, by employer or former employer, free of cost or any employer or former employer, free of cost or any concessional rate to concessional rate to assesseeassessee..The amount of any contribution to an approved The amount of any contribution to an approved superannuation fund by the employer in respect of the superannuation fund by the employer in respect of the assesseeassessee to the extern it exceeds Rs 1to the extern it exceeds Rs 1 LacsLacs


assesseeassessee, to the extern it exceeds Rs. 1 , to the extern it exceeds Rs. 1 LacsLacs

Valuation of PerquisitesValuation of PerquisitesValuation of PerquisitesValuation of PerquisitesService of Sweeper, Service of Sweeper, gardnergardner, watchman or personal , watchman or personal p ,p , gg , p, pattendant :attendant :

NotNot taxabletaxable ifif thethe employeeemployee isis aa nonnon-- specifiedspecified employeeemployeell hh ll d dd d bbVOP=VOP= ActualActual CostCost toto thethe employeremployer asas reducedreduced byby anyany

amountamount recoveredrecovered /paid/paid byby thethe employeesemployeesSupply of Gas, electricity or water for householdSupply of Gas, electricity or water for householdSupply of Gas, electricity or water for household Supply of Gas, electricity or water for household purposespurposes

NotNot taxabletaxable ifif thethe employeeemployee isis aa nonnon-- specifiedspecified employeeemployeeVOP=VOP= ActualActual CostCost toto thethe employeremployer asas reducedreduced byby anyanyamountamount recoveredrecovered /paid/paid byby thethe employeesemployees



Education facility to employees family membersEducation facility to employees family membersEducation facility to employees family membersEducation facility to employees family membersNotNot taxabletaxable ifif thethe employeeemployee isis aa nonnon-- specifiedspecified employeeemployeeProvidingProviding freefree educationeducation facilityfacility toto andand trainingtraining ofof thethegg yy ggemployeeemployee isis notnot taxabletaxablePaymentPayment ofof SchoolSchool feesfees oror reimbursementreimbursement ofof schoolschool feesfees isistaxabletaxabletaxabletaxable..ThereThere wouldwould bebe nono perquisitesperquisites ifif thethe costcost ofof educationeducation doesdoesnotnot exceedsexceeds RsRs.. 10001000//-- pp..mm..ppFixedFixed EducationEducation AllowanceAllowance andand HostelHostel ExpensesExpenses isis exemptexempttoto thethe extentextent ofof RsRs..100100//-- andand RsRs.. 300300//-- perper childchild perper monthmonth(( ii tt tt hild )hild ) ti lti l


(( maximummaximum uptoupto twotwo children)children) respectivelyrespectively

Valuation of PerquisitesValuation of PerquisitesValuation of PerquisitesValuation of PerquisitesThe value of any other fringe benefit or amenity as The value of any other fringe benefit or amenity as y g yy g ymay be prescribed by the CBDTmay be prescribed by the CBDTInterest Free/ Concessional LoansInterest Free/ Concessional Loans

SimpleSimple InterestInterest (as(as chargedcharged byby SBISBI asas onon thethe firstfirstdayday ofof thethe relevantrelevant previousprevious yearyear )) onon maximummaximumoutstandingoutstanding monthlymonthly balancebalance exceptexcept inin followingfollowingoutstandingoutstanding monthlymonthly balancebalance exceptexcept inin followingfollowingcasescases::

MedicalMedical LoanLoan forfor specifiedspecified diseasesdiseases NilNiled ced c oo oo spec edspec ed d se sesd se sesPettyPetty LoansLoans uptoupto RsRs.. 2000020000//-- NilNil



Mode of valuation Perquisites in respect of use of Movable AssetsComputer/

Laptop or C A th A tCar Any other Assets

Owned by Employer

Taken on hire by Employer

Step :1- Find out cost to the employer Nil 10% p.a. of AC

Amount of Rent paid or Payable

Step: 2- Less: AmountStep: 2- Less: Amount recovered from the employee Nil

Recovery from Employee

Recovery from Employee

Taxable value of the


perquisites ( Step 1-Step 2 Nil

Balancing positve amount


Valuation of PerquisitesValuation of PerquisitesValuation of PerquisitesValuation of PerquisitesMode of valuation Perquisites in respect of sale of Movable Assets

Electronic Items/ Computers Motor Car Any other Asset

Step :1- Find out cost of the Asset to the employer

Actual Cost to the employer

Actual Cost to the employer Actual Cost to the employer

Step: 2- Less: Normal Wear and tear for completed years

50% for each completed year by Reducing balance Method

20% for each completed year by Reducing balance Method

10% for each completed year by SLM

St 3 L A t C id ti C id tiStep 3 - Less: Amount recovered from the employee

Consideration received from the employee



Taxable value of the perquisites ( Step 1 Step 2 Balancing Balancing positve


perquisites ( Step 1- Step 2-Step 3 )


Balancing positve amount Balancing positve amount


Fixed Medical Allowance is always taxableFixed Medical Allowance is always taxableFixed Medical Allowance is always taxableFixed Medical Allowance is always taxableMedical Facilities Exempt ifMedical Facilities Exempt if

InIn aa hospitalhospital maintainedmaintained byby thethe employeremployerInIn aa GovernmentGovernment hospitalhospitalInIn anan approvedapproved hospitalhospital forfor prescribedprescribed diseasesdiseasesMediclaimMediclaim Premium,Premium, GroupGroup MediclaimMediclaim,, ppOtherOther MedicalMedical TreatmentTreatment uptoupto RsRs.. 1500015000//--OverseasOverseas MedicalMedical TreatmentTreatment

TreatmentTreatment CostCostTreatmentTreatment CostCostCostCost ofof TravelTravel && StayStay forfor selfself && familyfamilyCostCost ofof TravelTravel && StayStay forfor oneone attendantattendantCostCost ofof TravelTravel excludedexcluded onlyonly ifif grossgross incomeincome << 22 lakhslakhs


CostCost ofof TravelTravel excludedexcluded onlyonly ifif grossgross incomeincome << 22 lakhslakhs


Free MealsFree MealsActualActual CostCostExemptExempt ifif

Meals/Meals/ RefreshmentsRefreshments duringduring officeoffice hourshours atat officeoffice premisespremisesNonNon TransferableTransferable MealMeal VouchersVouchersNonNon TransferableTransferable MealMeal VouchersVouchersCostCost notnot exceedingexceeding RsRs.. 5050 perper mealmeal

GiftsGiftsAtAt CostCostExemptExempt ifif inin kindkind andand amountamount isis belowbelow RsRs.. 50005000//-- perper


annumannum


Club MembershipClub MembershipClub MembershipClub MembershipActualActual PaymentsPaymentsExemptionExemption forfor initialinitial corporatecorporate membershipmembership feesfeesExemptionExemption forfor initialinitial corporatecorporate membershipmembership feesfeesNotNot aa perquisiteperquisite ifif forfor officialofficial purposespurposes

C di C dC di C dCredit CardsCredit CardsActualActual PaymentsPaymentsNotNot aa perquisiteperquisite ifif forfor officialofficial purposespurposes



Valuation of perquisites in respect of traveling,Valuation of perquisites in respect of traveling,Valuation of perquisites in respect of traveling, Valuation of perquisites in respect of traveling, touring, accommodationtouring, accommodation

WhereWhere suchsuch facilityfacility isis availableavailable uniformlyuniformly toto allallyy yyemployeesemployees

ExpenditureExpenditure incurredincurred byby employeremployer lessless recoveryrecovery fromfromemployeesemployeesemployeesemployees

WhereWhere suchsuch facilityfacility isis notnot availableavailable uniformlyuniformly totoallall employeesemployeesp yp y

ValueValue atat whichwhich suchsuch facilitiesfacilities areare offeredoffered byby otherotheragenciesagencies toto thethe publicpublic LessLess recoveryrecovery fromfrom thethe employeeemployee


Valuation of PerquisitesValuation of PerquisitesValuation of PerquisitesValuation of PerquisitesMotor Car used for official purposes is not a Motor Car used for official purposes is not a p pp pperquisiteperquisiteMotor Car used for personal purposes Motor Car used for personal purposes –– actual cost to actual cost to

l i l di d i l d ll i l di d i l d lemployer including driver’s salary and normal wear employer including driver’s salary and normal wear and tear @ 10% of the actual costand tear @ 10% of the actual costMotor Car used for both the purposesMotor Car used for both the purposesMotor Car used for both the purposesMotor Car used for both the purposes

ProportionateProportionate basedbased onon loglog bookbook oror presumptivepresumptive amountsamountsMoreMore thanthan oneone car,car, onlyonly oneone forfor mixedmixed use,use, othersothers forfor,, yy ,,privateprivate useuse


Motor Car PerquisiteMotor Car PerquisiteMotor Car PerquisiteMotor Car PerquisiteCar is owned by the employerCar is owned by the employery p yy p y

< 1600< 1600 > 1600> 1600 DriverDriver< 1600 < 1600 c.c.c.c.

> 1600 > 1600 c.c.c.c.

DriverDriver

Expenses by theExpenses by the 12001200 16001600 600600Expenses by the Expenses by the employeremployer

12001200 16001600 600600

Expenses by the Expenses by the 400400 600600 600600

Car is owned by the employeeCar is owned by the employee

p yp yemployeeemployee


ActualActual expenditureexpenditure ((--)) amountsamounts specifiedspecified aboveabove

Retirement BenefitsRetirement BenefitsRetirement BenefitsRetirement Benefits

Provident FundProvident FundProvident FundProvident FundSuperannuation FundSuperannuation FundPensionsPensionsPensionsPensionsGratuityGratuityE h t f tili d lE h t f tili d lEncashment of unutilised leaveEncashment of unutilised leaveRetrenchment CompensationRetrenchment CompensationVoluntary Retirement CompensationVoluntary Retirement Compensation


Provident FundProvident FundProvident FundProvident Fund

StatutoryStatutory RecognisedRecognised UnrecogniseUnrecogniseStatutory Statutory Prov. FundProv. Fund

Recognised Recognised Prov. FundProv. Fund

UnrecogniseUnrecognised Prov. Fundd Prov. Fund

Employers’ Employers’ ExemptExempt Exempt Exempt uptoupto Exempt. Not Exempt. Not p yp yContributionContribution

pp pp pp12% of salary12% of salary

ppTaxable yearlyTaxable yearly

Employees’ Employees’ C t ib tiC t ib ti

Eligible for Eligible for 80C80C

Eligible for Eligible for b t 80Cb t 80C

Not eligible Not eligible f b tf b tContributionContribution 80C80C rebate 80Crebate 80C for rebatefor rebate

InterestInterest ExemptExempt Exempt upto a Exempt upto a notified rate (notified rate (

Exempt. Not Exempt. Not Taxable yearlyTaxable yearlynotified rate ( notified rate (

9.5%)9.5%)Taxable yearlyTaxable yearly

WithdrawalsWithdrawals Exempt. Exempt. ii

Exempt if Exempt if l dl d

TaxableTaxable


Section 10Section 10 completed 5 completed 5 yearsyears

Approved Superannuation FundApproved Superannuation FundApproved Superannuation FundApproved Superannuation FundEmployers’ Contribution exempt from TaxEmployers’ Contribution exempt from Taxp y pp y pEmployees’ Contribution eligible for deduction U/S Employees’ Contribution eligible for deduction U/S 80C80CInterest is exemptInterest is exemptPension on retirement is taxablePension on retirement is taxableCommutation on retirement partly exemptCommutation on retirement partly exemptPayment on death totally exemptPayment on death totally exemptIn all other cases, taxableIn all other cases, taxable


PensionsPensionsPensionsPensions

Uncommuted PensionsUncommuted PensionsUncommuted PensionsUncommuted PensionsReceivedReceived byby thethe retiredretired employeeemployee TaxableTaxable asasSalariesSalariesReceivedReceived byby thethe legallegal heirheir TaxableTaxable asas IncomeIncome fromfromotherother SourcesSources

Commuted Pensions on retirementCommuted Pensions on retirementIfIf receivingreceiving gratuitygratuity also,also, 11//33rdrd ofof thethe PensionPension

hi hhi h hh llll titl dtitl d tt ii ii ttwhichwhich hehe normallynormally entitledentitled toto receivereceive isis exemptexemptIfIf notnot receivingreceiving gratuity,gratuity, ½½ isis exemptexemptForFor Go ernmentGo ernment emplo eesemplo ees totalltotall e empte empt


ForFor GovernmentGovernment employees,employees, totallytotally exemptexempt

GratuityGratuityGratuityGratuityGovernment Employees Government Employees –– ExemptExemptp yp y ppCovered by the Payment of Gratuity Act Covered by the Payment of Gratuity Act

1515 daysdays ** lastlast drawndrawn salarysalary forfor eacheach yearyear ofof serviceserviceRsRs 350000350000//RsRs.. 350000350000//--ActualActual ReceiptReceiptSalary=Salary= BasicBasic +DA+DA butbut doesdoes notnot includeinclude bonus,bonus,

i ii i HRAHRA OTOT dd hh llllcommission,commission, HRA,HRA, OTOT andand anyany otherother allowanceallowanceSalarySalary ofof 1515 daysdays isis calculatedcalculated byby dividingdividing salarysalary lastlastdrawndrawn byby 2626 ii..ee maximummaximum numbernumber ofof workingworking daysdaysLengthLength ofof ServiceService-- IfIf periodperiod ofof serviceservice isis 66 monthsmonths oror lesslessthanthan 66 months,months, itit shallshall bebe ignoredignored forfor thisthis purposepurpose..ConverselyConversely ifif periodperiod isis moremore thanthan 66 monthsmonths itit shallshall bebe takentakenasas aa oneone fullfull yearyear LeastLeast ofof aboveabove isis exemptexempt fromfrom TaxTax


asas aa oneone fullfull yearyear.. LeastLeast ofof aboveabove isis exemptexempt fromfrom TaxTax

GratuityGratuityGratuityGratuityNot Covered by the Payment of Gratuity ActNot Covered by the Payment of Gratuity Acty y yy y y

½½ months’months’ averageaverage salarysalary forfor eacheach completedcompleted yearyear ofofserviceserviceRsRs.. 350000350000//--RsRs.. 350000350000//ActualActual ReceiptReceiptSalary=Salary= BasicBasic ++ DADA ifif termsterms ofof employmentemployment provides,provides,CommissionCommission ifif fixedfixed %% ofof TurnoverTurnoverCommissionCommission ifif fixedfixed %% ofof TurnoverTurnoverAverageAverage monthlymonthly salary=salary= AverageAverage salarysalary ofof 1010 monthsmonthsimmediatelyimmediately precedingpreceding thethe monthmonth inin whichwhich anan employeeemployee isisretiredretired..retiredretired..OnlyOnly fullyfully completedcompleted yearyear ofof serviceservice isis toto bebe consideredconsidered..TheThe leastleast ofof aboveabove shallshall bebe exempt,exempt,


Encashment of Leave SalaryEncashment of Leave SalaryEncashment of Leave SalaryEncashment of Leave SalaryDuring continuity of employment:During continuity of employment:

Govt/NonGovt/Non GovtGovt employeesemployees :: ChargeableChargeable toto TaxTaxGovt/NonGovt/Non GovtGovt employeesemployees :: ChargeableChargeable toto TaxTaxAt the time of Retirement/Leaving JobAt the time of Retirement/Leaving Job

GovtGovt EmployeesEmployees :: ExemptExemptp yp y ppNonNon GovtGovt EmployeesEmployees :: TaxableTaxable subjectsubject toto exemptionexemption

At the time of Retirement to other employeesAt the time of Retirement to other employeesPeriodPeriod ofof earnedearned LeaveLeave (( inin numbernumber ofof months)months) toto creditcredit ofofemployeeemployee atat thethe timetime ofof retirementretirement oror leavingleaving jobjob XX averageaveragemonthlymonthly SalarySalaryyy yy1010 XX AverageAverage monthlymonthly salarysalaryRsRs.. 300000300000//--A lA l R iR i


ActualActual ReceiptReceiptLeastLeast ofof thethe aboveabove isis exemptexempt fromfrom taxtax

Other Retirement BenefitsOther Retirement BenefitsOther Retirement BenefitsOther Retirement BenefitsRetrenchment Compensation Sec 10 ( 10 B)Retrenchment Compensation Sec 10 ( 10 B)

RsRs 55 0000 000000RsRs.. 55,,0000,,000000AmountAmount calculatedcalculated underunder IndustrialIndustrial DisputesDisputes ActActTheThe amountamount receivedreceivedLL ff thth bb ii tt ff ttLowerLower ofof thethe aboveabove isis exemptexempt fromfrom taxtax

Voluntary Retirement Compensation Sec 10 ( 10 C)Voluntary Retirement Compensation Sec 10 ( 10 C)AppliesApplies toto allall employees,employees, ResultsResults inin reductionreduction ofof workforceworkforce whichwhich isispppp p y ,p y ,notnot filledfilled upupCompletedCompleted 1010 yearsyears ofof service/service/ 4040 yearsyears ofof age,age, EmployeeEmployee isis notnot rere--employedemployed inin samesame company/groupcompany/groupAmountAmount receivedreceived notnot toto exceedexceed 33 monthsmonths salarysalary forfor eacheach completedcompletedyearyear oror uncompleteduncompleted monthsmonthsOROR SalarySalary atat thethe timetime ofof retirementretirement multipliedmultiplied byby thethe balancebalance monthsmonths ofof

ii l ftl ft b fb f thth d td t ff hihi ti tti t ii


serviceservice leftleft beforebefore thethe datedate ofof hishis retirementretirement oror serviceservice..

Other Retirement BenefitsOther Retirement BenefitsOther Retirement BenefitsOther Retirement BenefitsVoluntary Retirement Compensation Sec 10 (10C)Voluntary Retirement Compensation Sec 10 (10C)Least of the following is exemptedLeast of the following is exemptedLeast of the following is exempted Least of the following is exempted ––

ActualActual amountamount receivedreceived..RsRs..55,,0000,,000000M iM i ffMaximumMaximum ofof

LastLast downdown salarysalary **33** CompletedCompleted yearyear ofof service,service, ororLastLast drawndrawn salarysalary ** BalanceBalance monthsmonths ofof serviceservice leftleft..

M i f lM i f lMeaning of salary Meaning of salary BasicBasic ++ DADA (if(if formingforming partpart ofof retirementretirement benefit)benefit) ++ FixedFixedcommissioncommission onon turnoverturnover..

O i lif tiO i lif tiOnce in lifetime Once in lifetime ThisThis exemptionexemption cancan bebe claimedclaimed byby assesseeassessee onlyonly onceonce inin lifetimelifetime..


DeductionsDeductionsDeductionsDeductions

Standard deduction : NilStandard deduction : NilStandard deduction : NilStandard deduction : NilEntertainment allowance :Entertainment allowance :

i l G li l G lExemption only to Government employeesExemption only to Government employees2020 %% ofof salarysalary (excluding(excluding allowances,allowances, benefitsbenefits oror

hh i ii i ))otherother perquisitesperquisites ))RsRs.. 55,,000000//--ActualActual ReceiptReceipt

Profession Tax paid by the employeeProfession Tax paid by the employee



From CA Shailesh PrajapatiFrom CA Shailesh PrajapatiIncome from House PropertyIncome from House PropertyIncome from House PropertyIncome from House Property

ChargeabilityChargeabilityChargeabilityChargeability

Annual Value of PropertyAnnual Value of PropertyAnnual Value of PropertyAnnual Value of PropertyConsisting of any Building or lands Consisting of any Building or lands appurtenant thereto of whichappurtenant thereto of whichappurtenant thereto, of which appurtenant thereto, of which The assessee is owner,The assessee is owner,Is chargeable to tax under the headIs chargeable to tax under the headIncome from House propertyIncome from House propertyp p yp p ySection 22.Section 22.


Three ConditionsThree ConditionsThree ConditionsThree Conditions

The property should consist of any building orThe property should consist of any building orThe property should consist of any building or The property should consist of any building or lands appurtenant theretolands appurtenant theretoThe assessee should be the owner of theThe assessee should be the owner of theThe assessee should be the owner of the The assessee should be the owner of the propertypropertyTh h ld b d b hTh h ld b d b hThe property should not be used by the owner The property should not be used by the owner for the purpose of any business or profession for the purpose of any business or profession

i d b hi h fi f hi hi d b hi h fi f hi hcarried on by him, the profits of which are carried on by him, the profits of which are chargeable to tax.chargeable to tax.


Deemed ownerDeemed ownerDeemed ownerDeemed owner

Property transferred to spouse ( not being aProperty transferred to spouse ( not being aProperty transferred to spouse ( not being a Property transferred to spouse ( not being a transfer in connection with an arrangement to transfer in connection with an arrangement to live apart or minor child ( not being a marriedlive apart or minor child ( not being a marriedlive apart or minor child ( not being a married live apart or minor child ( not being a married daughter ) without adequate consideration.daughter ) without adequate consideration.Holder of impartible estateHolder of impartible estateHolder of impartible estateHolder of impartible estateProperty held by a member of coProperty held by a member of co--op op S i / /AOPS i / /AOPSociety/company/AOPSociety/company/AOPProperty acquired under a POA transaction.Property acquired under a POA transaction.


Certain typical casesCertain typical casesCertain typical casesCertain typical casesHouse Property in a Foreign CountryHouse Property in a Foreign Countryp y g yp y g y

RORROR-- TaxableTaxable underunder HH..PP..RNORRNOR-- TaxableTaxable underunder HH..PP.. butbut rentrent mustmust bebe receivedreceived ininI diI diIndiaIndiaNRNR-- TaxableTaxable underunder HH..PP.. butbut rentrent mustmust bebe receivedreceived inin IndiaIndia

Disputed OwnershipDisputed OwnershipDisputed OwnershipDisputed OwnershipTheThe IncomeIncome shallshall bebe taxabletaxable inin thethe handshands ofof recipientsrecipients.. ButButDepartmentDepartment hashas aa powerpower toto decidedecide whetherwhether thethe assesseeassessee isisthethe ownerowner andand isis chargeablechargeable toto taxtax underunder sectionsection 2222thethe ownerowner andand isis chargeablechargeable toto taxtax underunder sectionsection 2222


Certain typical casesCertain typical casesCertain typical casesCertain typical cases

Property held as stock in tradeProperty held as stock in tradeProperty held as stock in tradeProperty held as stock in tradeItIt willwill bebe chargedcharged asas HouseHouse PropertyProperty IncomeIncome

S litti f it R tS litti f it R tSplitting up of a composite RentSplitting up of a composite RentIfIf itit isis separableseparable thanthan rentrent willwill bebe coveredcovered inin HH..PP..HeadHead andand otherother FacilitiesFacilities incomeincome coverscovers inin OtherOtherHeadHead andand otherother FacilitiesFacilities incomeincome coverscovers inin OtherOtherSourcesSources HeadHead..IfIf itit isis notnot separableseparable::--ThanThan allall receiptreceipt willwill bebe covercover ininotherother sourcessources headhead..


Property Income Exempt from taxProperty Income Exempt from taxProperty Income Exempt from taxProperty Income Exempt from taxIncome from Farm house Sec.10(1)Income from Farm house Sec.10(1)One place of an exOne place of an ex--ruler. Sec.10(19)Aruler. Sec.10(19)AProperty income of a local authority Sec.10(20)Property income of a local authority Sec.10(20)Property income of an approved Scientific research association Property income of an approved Scientific research association Sec 10(21)Sec 10(21)Sec.10(21)Sec.10(21)Property income of an Education Institution and Hospital Property income of an Education Institution and Hospital Sec.10(23)CSec.10(23)CProperty income of a Trade Union. Sec.10(24)Property income of a Trade Union. Sec.10(24)Property income of a Political party Sec.13AProperty income of a Political party Sec.13AProperty held for Charitable purpose Sec.11Property held for Charitable purpose Sec.11Property Income of a Political PartyProperty Income of a Political PartyP d f b i f iP d f b i f iProperty used for own business or professionProperty used for own business or professionOne Self Occupied PropertyOne Self Occupied Property


Computation of Income from a let Computation of Income from a let out propertyout property

Gross Annual Value …………Gross Annual Value …………Less: Municipal Taxes …………Less: Municipal Taxes …………Net Annual Value …………Net Annual Value …………Less: Deduction under Sec.24 …………Less: Deduction under Sec.24 …………Standard Deduction …………Standard Deduction …………Interest on borrowed capital …………Interest on borrowed capital …………

================Income from house property Income from house property

================


Reasonable Expected RentReasonable Expected RentReasonable Expected RentReasonable Expected RentCompute Reasonable Expected RentCompute Reasonable Expected Rentp pp pFind out Municipal ValuationFind out Municipal Valuation (a)(a)

PeriodicalPeriodical SurveySurvey ofof MunicipalMunicipal AuthorityAuthorityFi d t F i R tFi d t F i R t (b)(b)Find out Fair RentFind out Fair Rent (b)(b)

ItIt cancan bebe determineddetermined onon thethe basisbasis ofof aa rentrent fetchedfetched byby aasimilarsimilar propertyproperty inin thethe samesame localitylocality

Standard Rent under Rent Control Acts Standard Rent under Rent Control Acts (c)(c)SRSR isis thethe maximummaximum rentrent whichwhich aa personperson cancan legallylegally recoverrecoverfromfrom hishis tenanttenant underunder aa RentRent ControlControl ActAct..

The higher of (a) and (b), subject to maximum of (c) The higher of (a) and (b), subject to maximum of (c) is Reasonable expected rent.is Reasonable expected rent.


Actual Rent Received/ReceivableActual Rent Received/ReceivableActual Rent Received/ReceivableActual Rent Received/Receivable

Find Rent actually Received or receivableFind Rent actually Received or receivableFind Rent actually Received or receivableFind Rent actually Received or receivableItIt doesdoes notnot includeinclude rentrent ofof thethe periodperiod forfor whichwhich thethepropertyproperty remainsremains vacantvacantRentRent ofof aa previousprevious yearyear (( oror PartPart ofof thethe year)year) forforwhichwhich thethe propertyproperty isis availableavailable forfor lettingletting outout toto

kk ttworkwork outoutLessLess:: UnrealisedUnrealised RentRent (( ifif fewfew conditionsconditions arearesatisfiedsatisfied ))satisfiedsatisfied ))LessLess:: RentRent ofof VacantVacant periodperiodTheThe resultantresultant figurefigure isis RentRent recd/receivablerecd/receivable


TheThe resultantresultant figurefigure isis RentRent recd/receivablerecd/receivable

Gross Annual ValueGross Annual ValueGross Annual ValueGross Annual Value

Property let out throughout the yearProperty let out throughout the yearProperty let out throughout the yearProperty let out throughout the yearLet out Property vacant for part of the yearLet out Property vacant for part of the yearS lf O i dS lf O i dSelf Occupied PropertySelf Occupied PropertyHouse property let House property let ––out for part of the year out for part of the year and self occupied for part of the yearand self occupied for part of the yearDeemed to be Let out Property Deemed to be Let out Property p yp yHouse Property, a portion let out and a House Property, a portion let out and a portion self occupiedportion self occupied


portion self occupiedportion self occupied

Unrealised RentUnrealised RentUnrealised RentUnrealised Rent

Conditions:Conditions:Conditions:Conditions:TheThe tenancytenancy isis bonafidebonafideTheThe defaultingdefaulting tenanttenant hashas vacatedvacated oror stepssteps havehaveTheThe defaultingdefaulting tenanttenant hashas vacatedvacated oror stepssteps havehavebeenbeen takentaken toto compelcompel himhim toto vacatevacate thethe propertypropertyTheThe defaultingdefaulting tenanttenant isis notnot occupationoccupation ofof anyanyotherother propertyproperty ofof thethe assesseeassesseetakentaken allall reasonablereasonable stepssteps toto instituteinstitute legallegalproceedingsproceedings forfor recoveryrecovery ofof thethe unpaidunpaid rentrent ororproceedingsproceedings forfor recoveryrecovery ofof thethe unpaidunpaid rentrent ororsatisfiessatisfies AA..OO.. thatthat thethe samesame isis useuse lessless


Municipal TaxesMunicipal TaxesMunicipal TaxesMunicipal Taxes

Deduct Municipal Taxes from GAVDeduct Municipal Taxes from GAVDeduct Municipal Taxes from GAVDeduct Municipal Taxes from GAVDeductible only ifDeductible only if

ThTh tt bb bb ththTheseThese taxestaxes areare borneborne byby thethe ownerownerAndAnd actuallyactually paidpaid byby himhim duringduring thethe previousprevious yearyear

The remaining amount left after deduction is The remaining amount left after deduction is NET ANNUAL VALUENET ANNUAL VALUE


Deduction under Section 24Deduction under Section 24Deduction under Section 24Deduction under Section 24

Standard deduction:Standard deduction:Standard deduction:Standard deduction:3030%% ofof NAVNAV isis deductibledeductible irrespectiveirrespective ofof anyanyexpenditureexpenditure incurredincurred byby thethe taxtax payerpayerexpenditureexpenditure incurredincurred byby thethe taxtax payerpayer..

Interest on borrowed capitalInterest on borrowed capitalItIt ii ll dll d ll ifif it lit l b db d ff hhItIt isis allowedallowed onlyonly ifif capitalcapital borrowedborrowed forfor purchase,purchase,construction,construction, repair,repair, renewalrenewal oror reconstructionreconstruction ofofthethe propertypropertythethe propertyproperty..


Interest borrowed on capitalInterest borrowed on capitalInterest borrowed on capitalInterest borrowed on capital

Deductible on accrual basisDeductible on accrual basisDeductible on accrual basisDeductible on accrual basisEven though it is not actually paid during the yearEven though it is not actually paid during the yearInterest on unpaid interest is not deductibleInterest on unpaid interest is not deductibleInterest on unpaid interest is not deductibleInterest on unpaid interest is not deductibleNo deduction for brokerage on LoanNo deduction for brokerage on LoanNo ceiling limit ( in case of let out )No ceiling limit ( in case of let out )No ceiling limit ( in case of let out )No ceiling limit ( in case of let out )Interest of preInterest of pre--construction period is deductible in 5 construction period is deductible in 5 equal installment commencing from the previous yearequal installment commencing from the previous yearequal installment commencing from the previous year equal installment commencing from the previous year in which the house is constructed.in which the house is constructed.


Income from SOPIncome from SOPIncome from SOPIncome from SOP

Property occupied for own business purposeProperty occupied for own business purpose ––Property occupied for own business purpose Property occupied for own business purpose no income is chargeable under IFHP.no income is chargeable under IFHP.When more than one property is occupied forWhen more than one property is occupied forWhen more than one property is occupied for When more than one property is occupied for own residential purposes, one house of his own residential purposes, one house of his choice shall be considered as deemed to be letchoice shall be considered as deemed to be letchoice shall be considered as deemed to be let choice shall be considered as deemed to be let out.out.N S d d d d i N M i i lN S d d d d i N M i i lNo Standard deduction, No Municipal taxes. No Standard deduction, No Municipal taxes. Interest on borrowed capital is allowed.Interest on borrowed capital is allowed.


Interest on Borrowed capitalInterest on Borrowed capitalInterest on Borrowed capitalInterest on Borrowed capital

Capital is borrowed after April 1, 1999Capital is borrowed after April 1, 1999Capital is borrowed after April 1, 1999Capital is borrowed after April 1, 1999The acquisition or construction should be completed The acquisition or construction should be completed with in three yearswith in three yearsyyThe maximum limit is Rs. 1.50 The maximum limit is Rs. 1.50 LacsLacsIf amount used for repairs reconstruction then theIf amount used for repairs reconstruction then theIf amount used for repairs, reconstruction, then the If amount used for repairs, reconstruction, then the limit is Rs. 30,000/limit is Rs. 30,000/--Loan taken prior to April 1, 1999, will carry Loan taken prior to April 1, 1999, will carry o e p o o p , 999, w c yo e p o o p , 999, w c ydeduction of Rs. 30000/deduction of Rs. 30000/--Interest on Unpaid interest is not deductibleInterest on Unpaid interest is not deductible..


Interest on Unpaid interest is not deductibleInterest on Unpaid interest is not deductible..

UR realised subsequentlyUR realised subsequentlyUR realised subsequentlyUR realised subsequentlyUR was allowed as deduction<=2001UR was allowed as deduction<=2001--02.02.

SubsequentSubsequent realisationrealisation shallshall bebe taxedtaxed asas underunder thethe headheadIFHPIFHP inin thethe yearyear ofof recoveryrecovery..T blT bl ifif thth hh ii tt dd ii thth ffTaxableTaxable eveneven ifif thethe househouse isis notnot ownedowned inin thethe yearyear ofofrecoveryrecovery..

UR was allowed as deduction >=2001UR was allowed as deduction >=2001--0202SubsequentSubsequent realisationrealisation (( toto thethe extentextent itit hashas notnot beenbeenincludedincluded inin AnnualAnnual valuevalue earlierearlier shallshall bebe taxedtaxed asas underunder thetheheadhead IFHPIFHP inin thethe yearyear ofof recoveryrecoveryheadhead IFHPIFHP inin thethe yearyear ofof recoveryrecovery..TaxableTaxable eveneven ifif thethe househouse isis notnot ownedowned inin thethe yearyear ofofrecoveryrecovery..


Arrears of RentArrears of RentArrears of RentArrears of Rent

The tax payer is or was the owner of the propertyThe tax payer is or was the owner of the propertyThe tax payer is or was the owner of the propertyThe tax payer is or was the owner of the propertyReceived amount by way of arrears, not charged to Received amount by way of arrears, not charged to income tax for any prev. yearincome tax for any prev. yeary p yy p yAmount received (after deducting 30% shall be Amount received (after deducting 30% shall be deemed to be the income chargeable under IFHPdeemed to be the income chargeable under IFHPggTaxable in the year in which it is receivedTaxable in the year in which it is receivedTaxable even if the assessee is not the owner of that Taxable even if the assessee is not the owner of that b e eve e ssessee s o e ow e ob e eve e ssessee s o e ow e oproperty in the year in which he has received arrears property in the year in which he has received arrears of rentof rent



From CA Shailesh PrajapatiFrom CA Shailesh PrajapatiIncome from Business & ProfessionIncome from Business & ProfessionIncome from Business & ProfessionIncome from Business & Profession

Taxability of Business IncomeTaxability of Business IncomeTaxability of Business IncomeTaxability of Business IncomeTax on Net Income from BusinessTax on Net Income from BusinessNet Income = (+) Gross Receipts (Net Income = (+) Gross Receipts (--) Expenses) ExpensesRole of Accounting for both (+) & (Role of Accounting for both (+) & (--))g ( ) (g ( ) ( ))Net Income is therefore as determined by the books Net Income is therefore as determined by the books of accounts & method of accounting followedof accounts & method of accounting followedExpenses related to nonExpenses related to non--taxable businesses cannot be taxable businesses cannot be adjusted against incomes of taxable businessesadjusted against incomes of taxable businesses


Format of determining net incomeFormat of determining net incomeFormat of determining net incomeFormat of determining net income

To ExpensesTo Expenses By SalesBy SalesTo Expenses To Expenses By SalesBy Sales

To AmortizationsTo Amortizations By Other IncomeBy Other Incomeyy

To Income TaxTo Income Tax

To ProvisionsTo Provisions

To Net ProfitTo Net Profit


Differing Objectives lead to Differing Objectives lead to disturbance of the basedisturbance of the base

Net Profit as per Profit & Loss AccountNet Profit as per Profit & Loss AccountNet Profit as per Profit & Loss AccountNet Profit as per Profit & Loss AccountAdd:Add:

ItemsItems debiteddebited butbut notnot allowedallowedItemsItems debiteddebited butbut notnot allowedallowedItemsItems notnot creditedcredited butbut taxabletaxable

Less:Less:ItemsItems creditedcredited butbut exempt/exempt/ taxabletaxable elsewhereelsewhereItemsItems notnot debiteddebited butbut allowedallowed

Taxable IncomeTaxable Income


What are these adjustments?What are these adjustments?What are these adjustments?What are these adjustments?

Expenses specifically allowedExpenses specifically allowedExpenses specifically allowedExpenses specifically allowedExpenses disallowedExpenses disallowed

id Cid CResiduary CategoryResiduary CategoryNotNot CapitalCapitalNN Vi l iVi l i ff LLNotNot ViolationViolation ofof LawLawForFor thethe PurposesPurposes ofof BusinessBusiness

D i tiD i tiDepreciationDepreciation


Expenses specifically allowed :Expenses specifically allowed :AmortizationsAmortizations

Patents (over 14 year period)Patents (over 14 year period)Telecom Licence Fees (over licence period)Telecom Licence Fees (over licence period)Telecom Licence Fees (over licence period)Telecom Licence Fees (over licence period)Preliminary Expenditure (over 5 year period)Preliminary Expenditure (over 5 year period)M E di ( 5 i d)M E di ( 5 i d)Merger Expenditure (over 5 year period)Merger Expenditure (over 5 year period)VRS Payments (over 5 year period)VRS Payments (over 5 year period)Patents & Know how are depreciated as Patents & Know how are depreciated as intangible assets since 01.04.1998intangible assets since 01.04.1998


gg

Expenses specifically allowed:Expenses specifically allowed:Social Angle of Income Tax ActSocial Angle of Income Tax Act

Expenditure on Scientific ResearchExpenditure on Scientific ResearchExpenditure on Scientific ResearchExpenditure on Scientific ResearchInIn--househouse researchresearch

RevenueRevenue ExpenditureExpenditureRevenueRevenue ExpenditureExpenditureCapitalCapital ExpenditureExpenditureExpenditureExpenditure onon anan approvedapproved inin househouse researchresearch 3535((22AB)AB)pp pppp (( ))

PaymentPayment toto OutsidersOutsidersContributionContribution toto anan approvedapproved ScientificScientific researchresearch assoasso..ppppContributionContribution toto anan approvedapproved nationalnational laboratorylaboratoryContributionContribution toto anan IndianIndian scientificscientific researchresearch companycompany



InIn--house researchhouse researchInIn--house research house research RevenueRevenue ExpenditureExpenditure

AllowedAllowed onlyonly ifif expensesexpenses relatesrelates toto thethe businessbusinessAllowedAllowed onlyonly ifif expensesexpenses relatesrelates toto thethe businessbusinessPrePre commencementcommencement periodperiod expensesexpenses incurredincurred butbutwithinwithin 33 yearsyears immediatelyimmediately beforebefore commencementcommencement ofofbusiness,business, allowedallowed asas anan expenseexpense inin thethe yearyear inin whichwhichbusinessbusiness commencedcommenced

CapitalCapital ExpenditureExpenditureCapitalCapital ExpenditureExpenditureWholeWhole ofof expensesexpenses incurredincurred isis allowedallowedPrePre commencementcommencement periodperiod expensesexpenses -- asas aboveabove


PrePre commencementcommencement periodperiod expensesexpenses -- asas aboveabove..


InIn--house researchhouse researchInIn house research house research ExpenditureExpenditure onon anan approvedapproved inin househouse researchresearch 3535((22AB)AB)--WeightedWeighted deductiondeduction

TheThe TaxTax payerpayer isis aa companycompanyItIt isis engagedengaged inin thethe businessbusiness ofof biobio--technologytechnology oror inin aa businessbusiness ofofmfgmfg oror productionproduction ofof anyany drugs,drugs, pharmaceuticals,pharmaceuticals, electronicelectronicequipments,equipments, computers,computers, telecommunicationtelecommunication equipmentsequipments asas notifiednotifiedbyby boardboardCostCost cancan bebe RevenueRevenue oror CapitalCapital (( NotNot beingbeing onon LandLand andand building)building)TheThe aboveabove expensesexpenses isis incurredincurred onon RR &D&D facilityfacility uptoupto 3131//0303//20122012IfIf aboveabove conditionsconditions areare satisfiedsatisfied then,then, aa sumsum equalequal toto oneone andand aa halfhalftimestimes ofof thethe expensesexpenses incurredincurred shallshall bebe allowedallowed asas deductiondeduction..


pp

Expenses specifically allowed:Expenses specifically allowed:Social Angle of Income Tax ActSocial Angle of Income Tax ActPaymentPayment toto OutsidersOutsidersPaymentPayment toto OutsidersOutsidersContributionContribution toto anan approvedapproved ScientificScientific researchresearchassoasso..

WeightedWeighted DeductionDeduction ofof oneone andand oneone forthforth timestimes ofofpaymentpayment mademade

ContributionContribution toto anan approvedapproved nationalnational laboratorylaboratoryWeightedWeighted DeductionDeduction ofof oneone andand oneone forthforth timestimes ofof

tt ddpaymentpayment mademade



ContributionContribution toto anan IndianIndian scientificscientific researchresearchcompanycompany

IntroducedIntroduced byby thethe AA..YY.. 20092009--20102010WithWith aa viewview toto encourageencourage outsourcingoutsourcing ofof ScientificScientificR hR h bb S llS ll S lS l C iC iResearchResearch byby SmallSmall ScaleScale CompaniesCompaniesWeightedWeighted deductiondeduction ofof 125125%% ofof thethe amountamount paidpaidPayeePayee companycompany cancan notnot claimclaim weightedweighted deductiondeduction underunderPayeePayee companycompany cancan notnot claimclaim weightedweighted deductiondeduction underundersectionsection 3535 ((22AB)AB)


Expenses specifically allowed:Expenses specifically allowed:Social Angle (Contd.)Social Angle (Contd.)

Donations to associations forDonations to associations forDonations to associations for Donations to associations for PromotingPromoting economiceconomic && socialsocial welfarewelfarecarryingcarrying outout ruralrural developmentdevelopment programmesprogrammesy gy g pp p gp gConservationConservation ofof naturalnatural resourcesresources

Family Planning ExpenditureFamily Planning ExpenditureAllowableAllowable asas deductiondeductionCapitalCapital ExpenditureExpenditure isis allowedallowed 11//55thth forfor thethe previousprevious year,year,b lb l ii tt ffbalancebalance inin nextnext fourfour yearsyears

Expenditure on Advertisement published by a Expenditure on Advertisement published by a political party not allowedpolitical party not allowed


political party not allowed.political party not allowed.

Expenses specifically allowedExpenses specifically allowedExpenses specifically allowedExpenses specifically allowed

Insurance PremiumsInsurance PremiumsInsurance Premiums Insurance Premiums forfor stocksstocks && employeesemployees healthhealth

Bonus & Commission to employeesBonus & Commission to employeesBonus & Commission to employeesBonus & Commission to employeesInterest on Borrowed CapitalInterest on Borrowed Capital

UsedUsed forfor thethe purposespurposes ofof businessbusinessp pp p

Contributions to Recognised Provident Fund, Contributions to Recognised Provident Fund, Superannuation Fund, Gratuity Fund, Staff Welfare Superannuation Fund, Gratuity Fund, Staff Welfare p yp ySchemeSchemeRent, rates, taxes, repairs and insurance of buildingRent, rates, taxes, repairs and insurance of building


Expenses specifically allowedExpenses specifically allowedExpenses specifically allowedExpenses specifically allowed

Bad DebtsBad DebtsBad DebtsBad DebtsThereThere mustmust bebe aa debtdebtDebtDebt mustmust havehave beenbeen takentaken intointo accountaccount ininDebtDebt mustmust havehave beenbeen takentaken intointo accountaccount inincomputingcomputing assessableassessable incomeincomeIfIf incomeincome alreadyalready considered/considered/ loanloan inin ordinaryordinaryIfIf incomeincome alreadyalready considered/considered/ loanloan inin ordinaryordinarycoursecourse ofof moneymoney--lendinglending businessbusinessWrittenWritten offoff inin booksbooks ofof accountsaccountsWrittenWritten offoff inin booksbooks ofof accountsaccountsSubsequentSubsequent RecoveryRecovery taxabletaxable


Residuary CategoryResiduary Categoryy g yy g y

For the purposes of businessFor the purposes of businessp pp pPersonalPersonal ExpenditureExpenditure notnot allowedallowed

Incurred during the previous yearIncurred during the previous yearIncurred during the previous yearIncurred during the previous yearPrePre--IncorporationIncorporation ExpensesExpensesMatchingMatching ConceptConceptMatchingMatching ConceptConceptLeaveLeave SalarySalary (need(need notnot bebe payable)payable)

N t f Vi l ti f L ( P lti )N t f Vi l ti f L ( P lti )Not for any Violation of Law (eg. Penalties)Not for any Violation of Law (eg. Penalties)


Amounts not deductibleAmounts not deductible

Income Tax/ Wealth Tax/FBT/Tax on Income Tax/ Wealth Tax/FBT/Tax on PerquisitesPerquisitesPayments to members of AOP/BOIPayments to members of AOP/BOIyyProvisions made for non statutory employee Provisions made for non statutory employee welfare fundswelfare fundsPayments to partners by a partnership firmPayments to partners by a partnership firm

RemunerationRemuneration inin excessexcess ofof limitslimitsInterestInterest onon capitalcapital inin excessexcess ofof 1212%% pp..aa..


Remuneration to Partners Remuneration to Partners --LimitsLimits

Professional FirmProfessional Firm Maximum AllowableMaximum AllowableProfessional FirmProfessional Firm Maximum Allowable Maximum Allowable

On First Rs. 3,00,000/On First Rs. 3,00,000/--or In case of Lossor In case of Loss

90% or Rs. 1.50 90% or Rs. 1.50 LacsLacswhichever is higherwhichever is higher

BalanceBalance 60%60%

Minimum Allowable Remuneration in case of loss or no profits is Rs. 1,50,000/-


Amounts not deductible:Amounts not deductible:Payments to relativesPayments to relatives

Payments to relatives in excess of fair valuePayments to relatives in excess of fair valuePayments to relatives in excess of fair valuePayments to relatives in excess of fair valueRelatives defined to include: spouse, brother, Relatives defined to include: spouse, brother, sister lineal ascendant and descendantsister lineal ascendant and descendantsister, lineal ascendant and descendantsister, lineal ascendant and descendantReceipts not coveredReceipts not coveredNo corresponding adjustment in the No corresponding adjustment in the assessment of the relativeassessment of the relative


Amounts not deductible:Amounts not deductible:Overseas PaymentsOverseas Payments

Overseas Payments are deductible only if theOverseas Payments are deductible only if theOverseas Payments are deductible only if the Overseas Payments are deductible only if the applicable taxes are deducted at source and applicable taxes are deducted at source and paidpaidpaidpaidIf the payments are disallowed in the current If the payments are disallowed in the current year because the taxes are not deducted oryear because the taxes are not deducted oryear because the taxes are not deducted or year because the taxes are not deducted or paid, they shall be allowed in the year of paid, they shall be allowed in the year of paymentpaymentpaymentpayment


Amounts not deductible :Amounts not deductible :Cash ExpenditureCash Expenditure

Expenditure above Rs. 20000/Expenditure above Rs. 20000/-- to be made byto be made byExpenditure above Rs. 20000/Expenditure above Rs. 20000/ to be made by to be made by account payee cheque otherwise a account payee cheque otherwise a disallowance of 100% is attracteddisallowance of 100% is attractedA Payment ( or aggregate of payments made to A Payment ( or aggregate of payments made to a person in a day) exceeds Rs. 20000/a person in a day) exceeds Rs. 20000/--p y)p y)Exceptions carved out in genuine cases likeExceptions carved out in genuine cases like

PaymentsPayments toto GovernmentGovernment Agencies,Agencies, paymentspayments onon aayy g ,g , p yp ybankbank holiday,holiday, paymentspayments inin aa villagevillage notnot servicedservicedbyby aa bank,bank, etcetc..


Amounts not deductible:Amounts not deductible:Unpaid Statutory DuesUnpaid Statutory Dues

Items coveredItems covered Payment to be Payment to be made bymade by

Effect of Effect of late pymt.late pymt.

Tax, duty or cessTax, duty or cessBonus/Commission to employeesBonus/Commission to employeesI L f fi i lI L f fi i l

Due date of Due date of filing the return filing the return of incomeof income

Deduction Deduction allowable in allowable in the year ofthe year ofInterest on Loan of financial Interest on Loan of financial

institutionsinstitutionsInt. on term loan of scheduled bankInt. on term loan of scheduled bank

of incomeof income the year of the year of paymentpayment

Leave Salary to employeeLeave Salary to employeeContribution to PF/ESIC/PTContribution to PF/ESIC/PT Due Date under Due Date under

the respectivethe respectiveDeduction Deduction nevernever


the respective the respective ActAct

never never allowedallowed

Depreciation: ConditionsDepreciation: ConditionsDepreciation: ConditionsDepreciation: Conditions

OwnershipOwnershipOwnershipOwnershipUse during the previous yearUse during the previous year

h f ih f iFor the purposes of BusinessFor the purposes of Business


Depreciation: ConceptDepreciation: ConceptDepreciation: ConceptDepreciation: Concept

Not on individual assets but on block of assetsNot on individual assets but on block of assetsNot on individual assets but on block of assetsNot on individual assets but on block of assetsWritten Down Value Method at rates specifiedWritten Down Value Method at rates specifiedIn the year of purchaseIn the year of purchaseIn the year of purchaseIn the year of purchase

FullFull year’syear’s depreciationdepreciation unlessunless thethe assetasset putput toto useuse forfor lesslessthanthan 180180 daysdays (half(half depreciation)depreciation)

In the year of saleIn the year of saleNoNo DepreciationDepreciation

Block of Assets Block of Assets –– Same group & same rateSame group & same rateAdditional Assets, Additional Depreciation of 20%Additional Assets, Additional Depreciation of 20%


Depreciation: Depreciation: Block of Assets & RateBlock of Assets & Rate

Buildings used for residential purposes (5%)Buildings used for residential purposes (5%)g p p ( )g p p ( )Other Buildings (10%)Other Buildings (10%)Furniture & Fixtures (10%)Furniture & Fixtures (10%)

l hi ( ) { ddl }l hi ( ) { ddl }Plant & Machinery (15%) {Addl Depn 20%}Plant & Machinery (15%) {Addl Depn 20%}Motor Cars (15%)Motor Cars (15%)Computers & Software (60%)Computers & Software (60%)Computers & Software (60%)Computers & Software (60%)Intangible Assets (25%)Intangible Assets (25%)Pollution Control Equipments (100%)Pollution Control Equipments (100%)o u o Co o qu p e s ( %)o u o Co o qu p e s ( %)Energy Saving Devices (80%)Energy Saving Devices (80%)


Depreciation: Written Down ValueDepreciation: Written Down ValueDepreciation: Written Down ValueDepreciation: Written Down Value

Opening WDV Opening WDV (a)(a) xxxxAdd Actual Cost of Assets PurchasedAdd Actual Cost of Assets Purchased

UsedUsed >> 180180 daysdays (b)(b) xxxxUsedUsed << 180180 daysdays (c)(c) xxxxUsedUsed << 180180 daysdays (c)(c) xxxx

Less Sale Price of Assets SoldLess Sale Price of Assets Sold (d)(d) xxxxCl i WDV ( ) ( + b +Cl i WDV ( ) ( + b + d)d)Closing WDV (e) = ( a + b + c Closing WDV (e) = ( a + b + c -- d)d) xxxx


Depreciation : WDV (Contd.)Depreciation : WDV (Contd.)Depreciation : WDV (Contd.)Depreciation : WDV (Contd.)If Closing WDV is negative If Closing WDV is negative g gg g

TreatTreat thethe amountamount asas ShortShort TermTerm CapitalCapital GainsGainsAdjustableAdjustable againstagainst businessbusiness losseslosses toto thethe extentextent ofof depreciationdepreciationwrittenwritten offoff

NoNo DepreciationDepreciation willwill bebe availableavailable eveneven ifif therethere areare otherotherassetsassets inin thethe blockblock

If Closing WDV is positive but there are no assets in If Closing WDV is positive but there are no assets in g pg pthe blockthe block

TreatTreat thethe amountamount asas ShortShort TermTerm CapitalCapital LossLossNoNo DepreciationDepreciation willwill bebe availableavailable eveneven thoughthough thethe WDVWDV isisNoNo DepreciationDepreciation willwill bebe availableavailable eveneven thoughthough thethe WDVWDV isispositivepositive


Depreciation : WDV (Contd.)Depreciation : WDV (Contd.)Depreciation : WDV (Contd.)Depreciation : WDV (Contd.)

If Closing WDV is positive and there areIf Closing WDV is positive and there areIf Closing WDV is positive and there are If Closing WDV is positive and there are assets in the blockassets in the block

DoDo notnot calculatecalculate profitprofit oror lossloss butbut provideprovidepp ppdepreciationdepreciation onon (e)(e)IfIf ee >> cc

DepreciationDepreciation == fullfull ** (a+b(a+b--d)d) ++ halfhalf ** ccIfIf ee << cc

D i tiD i ti h lfh lf **DepreciationDepreciation == halfhalf ** ee


Depreciation: Power UnitsDepreciation: Power UnitsDepreciation: Power UnitsDepreciation: Power Units

Undertaking engaged in generation andUndertaking engaged in generation andUndertaking engaged in generation and Undertaking engaged in generation and distribution of powerdistribution of powerCan claim depreciation in respect of assetsCan claim depreciation in respect of assetsCan claim depreciation in respect of assets Can claim depreciation in respect of assets acquired after 31.03.1997acquired after 31.03.1997Two MethodsTwo MethodsTwo MethodsTwo Methods

SLMSLMWDVWDVW VW V

Once the option is exercised, it shall be final Once the option is exercised, it shall be final and shall apply to all the subsequent yearsand shall apply to all the subsequent years


pp y q ypp y q y

Depreciation: Power UnitsDepreciation: Power UnitsDepreciation: Power UnitsDepreciation: Power UnitsTerminal Depreciation ( Loss on Transfer)Terminal Depreciation ( Loss on Transfer)p ( )p ( )

FindFind outout WDVWDV ofof thethe depreciabledepreciable assetsassets onon thethe firstfirst dayday ofofPP..YY.. inin whichwhich assetasset isis sold,sold, discarded,discarded, demolisheddemolished orordestroyeddestroyeddestroyeddestroyedFindFind outout SCSC (( ReceiptsReceipts ++ ScrapScrap ValueValue ifif anyany ))IfIf SC<WDV,SC<WDV, thenthen deficiencydeficiency isis deductibledeductible asas TDTD..

If the asset is sold in the P.Y in which it is put to use, If the asset is sold in the P.Y in which it is put to use, any loss there from is not to be allowed as TD but as any loss there from is not to be allowed as TD but as Capital LossCapital LossCapital Loss.Capital Loss.TD is allowed only if it is actually written off in the TD is allowed only if it is actually written off in the books of the assessee.books of the assessee.


books of the assessee.books of the assessee.

Depreciation: Power UnitsDepreciation: Power UnitsDepreciation: Power UnitsDepreciation: Power Units

Balancing ChargeBalancing ChargeBalancing ChargeBalancing ChargeSC>WDV,SC>WDV, thenthenTheThe amountamount equalequal toto thethe depreciationdepreciation alreadyalreadyTheThe amountamount equalequal toto thethe depreciationdepreciation alreadyalreadyclaimedclaimed isis taxabletaxable asas balancingbalancing chargecharge u/su/s 4141 ((22)) asasBusinessBusiness IncomeIncomeTheThe remainingremaining surplussurplus ifif anyany isis taxabletaxable accordingaccordingtoto thethe provisionprovision ofof sectionsection 4545 asas capitalcapital gaingain..IfIf thethe assetasset isis soldsold inin thethe PP YY inin whichwhich itit isis putput totoIfIf thethe assetasset isis soldsold inin thethe PP..YY inin whichwhich itit isis putput totouse,use, anyany profitprofit therethere fromfrom willwill notnot bebe chargeablechargeable asasbalancingbalancing chargecharge butbut willwill bebe treatedtreated asas capitalcapital gaingain..


gg gg pp gg

General Deductions Sec 37 (1)General Deductions Sec 37 (1)General Deductions Sec 37 (1)General Deductions Sec 37 (1)

It shouldIt shouldIt should It should Not be in the nature of capital expenditureNot be in the nature of capital expenditureNot be personal expenditure of assesseeNot be personal expenditure of assesseeNot be personal expenditure of assesseeNot be personal expenditure of assesseehave been incurred in the previous yearhave been incurred in the previous yearBe in respect of business carried outBe in respect of business carried outBe in respect of business carried outBe in respect of business carried outHave been expended wholly and exclusive for Have been expended wholly and exclusive for businessbusinessbusinessbusinessNot have been incurred for any purpose which is Not have been incurred for any purpose which is prohibited by Lawprohibited by Law


prohibited by Law.prohibited by Law.

General Deductions Sec 37 (1)General Deductions Sec 37 (1)General Deductions Sec 37 (1)General Deductions Sec 37 (1)

Interest on Delayed Payment to Micro SmallInterest on Delayed Payment to Micro SmallInterest on Delayed Payment to Micro Small Interest on Delayed Payment to Micro Small and Medium Enterprises not deductibleand Medium Enterprises not deductibleAmount spent by Assessee in connection withAmount spent by Assessee in connection withAmount spent by Assessee in connection with Amount spent by Assessee in connection with the inaugural function of its new project can the inaugural function of its new project can not be in the nature of capital expensesnot be in the nature of capital expensesnot be in the nature of capital expensesnot be in the nature of capital expensesAmount spent for exhibition can be allowed as Amount spent for exhibition can be allowed as

d d i i h i hi h i i dd d i i h i hi h i i da deduction in the year in which it is done a deduction in the year in which it is done irrespective of its benefits.irrespective of its benefits.


Income TaxIncome TaxIncome TaxIncome TaxFrom CA Shailesh PrajapatiFrom CA Shailesh PrajapatiIncome from Capital GainIncome from Capital Gain

Meaning of Capital AssetsMeaning of Capital Assets

Property of any kindProperty of any kindProperty of any kindProperty of any kindHeld by an assesseeHeld by an assessee

h h d i h hi b ih h d i h hi b iWhether or not connected with his business or Whether or not connected with his business or profession.profession.Certain exclusionsCertain exclusions


Capital AssetCapital AssetCapital AssetCapital AssetWide definitionWide definitionCannot however cover Cannot however cover

StockStock inin tradetradePersonalPersonal assetsassets && privilegesprivilegesAgriculturalAgricultural RuralRural LandLand (Population(Population << 1000010000))CertainCertain BondsBonds

Classification as short term & long termClassification as short term & long termEquity/PreferenceEquity/Preference Shares,Shares, OtherOther listedlisted securitiessecurities&& unitsunits –– 1212 monthsmonthsOthOth A tA t 3636 ththOtherOther AssetsAssets –– 3636 monthsmonths


TransferTransferTransferTransferExtended Definition of TransferExtended Definition of Transfer

Sale,Sale, Exchange,Exchange, RelinquishmentRelinquishmentExtinguishmentExtinguishment ofof RightsRightsgg ggCompulsoryCompulsory AcquisitionAcquisitionConversionConversion intointo StockStock inin tradetradeGivingGiving PossessionPossession underunder PartPart PerformancePerformance


TransferTransferTransferTransferExclusions from DefinitionExclusions from Definition

DistributionDistribution ofof AssetsAssets byby HUFHUFGift,Gift, Will,Will, IrrevocableIrrevocable TrustTrust,, ,,Holding/SubsidiaryHolding/Subsidiary TransactionsTransactionsMergers/DeMergers/De--mergersmergers –– company/holderscompany/holdersConversionConversion ofof debenturesdebentures // bondsbonds inin toto sharessharesConversionConversion ofof FirmFirm intointo companycompanyConversionConversion ofof ProprietaryProprietary concernconcern intointo aa companycompanyDistributionDistribution ofof AssetsAssets inin kindkind byby aa companycompany toto itsitsh h ldh h ld tt thth titi ff li id tili id tishareholdersshareholders atat thethe timetime ofof liquidationliquidation


Profit/Loss..Profit/Loss..Profit/Loss..Profit/Loss..

Sale PriceSale PriceSale PriceSale PriceDeductionsDeductions

C tC t ff A i itiA i itiCostCost ofof AcquisitionAcquisitionCostCost ofof ImprovementImprovementCostCost ofof TransferTransferDeductDeduct thethe exemptionsexemptions

Balancing amount is CGBalancing amount is CGIndexation for Long Term Capital gainIndexation for Long Term Capital gaing p gg p g


Conditions for Capital GainConditions for Capital GainConditions for Capital GainConditions for Capital Gain

There should be a Capital AssetsThere should be a Capital AssetsThere should be a Capital AssetsThere should be a Capital AssetsIt is transferred by AssesseeIt is transferred by Assessee

f k l d i h if k l d i h iTransfer takes place during the previous yearTransfer takes place during the previous yearProfit or Gain arises as a result of transferProfit or Gain arises as a result of transferExemptions are available under section Exemptions are available under section 54,54B,54D,54EC, 54F, 54G, 54GA54,54B,54D,54EC, 54F, 54G, 54GA, , , , , ,, , , , , ,


Special Considerations apply:Special Considerations apply:Special Considerations apply:Special Considerations apply:

Depreciable AssetsDepreciable AssetsDepreciable AssetsDepreciable AssetsGainsGains willwill alwaysalways bebe SHORTSHORT TERMTERM

I bl P tiI bl P tiImmoveable PropertiesImmoveable PropertiesReferenceReference toto StampStamp DutyDuty ValuationValuation

Self Generated AssetsSelf Generated AssetsCostCost isis NILNIL ifif specifiedspecified


Cost of Acquisition of Bonus sharesCost of Acquisition of Bonus sharesCost of Acquisition of Bonus sharesCost of Acquisition of Bonus sharesIf original shares and bonus shares are acquired before April1, 1981 : If original shares and bonus shares are acquired before April1, 1981 : Cost : Cost : Original shares : Actual cost or fair market value on April 1, 1981 Original shares : Actual cost or fair market value on April 1, 1981 whichever is morewhichever is moreBonus Shares : Fair Market Value on April 1 1981Bonus Shares : Fair Market Value on April 1 1981Bonus Shares : Fair Market Value on April 1, 1981Bonus Shares : Fair Market Value on April 1, 1981If Original Shares acquired before April 1, 1981 but bonus shares are If Original Shares acquired before April 1, 1981 but bonus shares are allotted after April 1, 1981 :allotted after April 1, 1981 :Cost : Cost : Original shares : Actual cost or fair market value on April 1, 1981 Original shares : Actual cost or fair market value on April 1, 1981 whichever is morewhichever is moreBonus Shares : NilBonus Shares : NilIf Original shares and Bonus Shares are acquired after April 1 1981If Original shares and Bonus Shares are acquired after April 1 1981If Original shares and Bonus Shares are acquired after April 1, 1981If Original shares and Bonus Shares are acquired after April 1, 1981Cost : Cost : Original shares : Actual cost Original shares : Actual cost Bonus Shares : NilBonus Shares : NilBonus Shares : NilBonus Shares : Nil


Cost Inflation IndexCost Inflation IndexCost Inflation IndexCost Inflation Index

19811981--19821982 10010019811981 19821982 10010020092009--20102010 632632It may be computed as under:It may be computed as under:It may be computed as under:It may be computed as under:Assets acquired before April 1,1981Assets acquired before April 1,1981A t i d ft A il 1 1981A t i d ft A il 1 1981Assets acquired on or after April 1 1981Assets acquired on or after April 1 1981Assets acquired on or after April 1, 1981 in Assets acquired on or after April 1, 1981 in

f th i t ifi d i 49(1)f th i t ifi d i 49(1)one of the circumstances specified in sec 49(1) one of the circumstances specified in sec 49(1) and originally acquired by the previous owner and originally acquired by the previous owner before April 1 1981before April 1 1981before April 1, 1981before April 1, 1981


Cost Inflation IndexCost Inflation IndexCost Inflation IndexCost Inflation Index

Assets acquired on or after April 1 1981 inAssets acquired on or after April 1 1981 inAssets acquired on or after April 1, 1981 in Assets acquired on or after April 1, 1981 in one of the circumstances specified in sec 49(1) one of the circumstances specified in sec 49(1) and originally acquired by the previous ownerand originally acquired by the previous ownerand originally acquired by the previous owner and originally acquired by the previous owner on or after April 1, 1981on or after April 1, 1981For all four type of situation there areFor all four type of situation there areFor all four type of situation, there are For all four type of situation, there are different calculation.different calculation.


Certain Special CasesCertain Special CasesCertain Special CasesCertain Special Cases

Capital Gain in the case of conversion ofCapital Gain in the case of conversion ofCapital Gain in the case of conversion of Capital Gain in the case of conversion of capital Assets into Stock in Trade (Sec 45 (2))capital Assets into Stock in Trade (Sec 45 (2))Capital Gain in case of compulsory acquisitionCapital Gain in case of compulsory acquisitionCapital Gain in case of compulsory acquisition Capital Gain in case of compulsory acquisition of an asset ( Section 45 (5 ))of an asset ( Section 45 (5 ))C i l G i i h f L d d B ildiC i l G i i h f L d d B ildiCapital Gain in the case of Land and Building Capital Gain in the case of Land and Building (Section 50 (c) )(Section 50 (c) )


Capital Gain Exempt from TaxCapital Gain Exempt from TaxCapital Gain Exempt from TaxCapital Gain Exempt from TaxCG arising from transfer of residential House CG arising from transfer of residential House gg[Section 54][Section 54]CG arising from transfer of land used for agricultural CG arising from transfer of land used for agricultural purpose [Section 54B]purpose [Section 54B]purpose. [Section 54B]purpose. [Section 54B]CG arising from compulsory acquisition of Land and CG arising from compulsory acquisition of Land and Buildings forming part of Industrial undertaking. [Sec Buildings forming part of Industrial undertaking. [Sec 54D]54D]54D]54D]CG not to be charged on Investment in certain Bonds. CG not to be charged on Investment in certain Bonds. [Section 54EC][Section 54EC][Sec o C][Sec o C]CG on transfer of long term capital asset other than a CG on transfer of long term capital asset other than a house property [Section 54EF]house property [Section 54EF]


LTCGLTCG ––Shares, securities, unitsShares, securities, unitsLTCG LTCG Shares, securities, unitsShares, securities, units

Two Options available with AssesseeTwo Options available with AssesseeTwo Options available with AssesseeTwo Options available with AssesseeOption :1 with IndexationOption :1 with Indexation-- Tax 20%Tax 20%O i 2 i h d iO i 2 i h d i 10%10%Option :2 without IndexationOption :2 without Indexation-- Tax 10%Tax 10%It should be Long Term capital AssetsIt should be Long Term capital AssetsAssets should be, Listed Securities except Assets should be, Listed Securities except Equity Shares, Units of UTI ( Listed or not ) or Equity Shares, Units of UTI ( Listed or not ) or q y , ( )q y , ( )bondsbonds


Rates of Tax for capital GainRates of Tax for capital GainRates of Tax for capital GainRates of Tax for capital Gain

Long Term Capital Gain : 20%Long Term Capital Gain : 20%Long Term Capital Gain : 20%Long Term Capital Gain : 20%Short Term Capital GainShort Term Capital Gain-- Add to the normal Add to the normal IncomeIncomeIncomeIncomeLong Term Capital Gain : Listed equity shares Long Term Capital Gain : Listed equity shares

d bj STT Nild bj STT Niland subject to STT : Niland subject to STT : NilEquity Shares not listed : LTCGEquity Shares not listed : LTCG-- 20%20%



From CA Shailesh PrajapatiFrom CA Shailesh PrajapatiIncome from Other SourcesIncome from Other SourcesIncome from Other SourcesIncome from Other Sources

Income From Other SourcesIncome From Other SourcesIncome From Other SourcesIncome From Other SourcesLast and residual head of IncomeLast and residual head of IncomeDividend under section 2 (22) (e)Dividend under section 2 (22) (e)Winning from LotteriesWinning from LotteriesggInterest on securitiesInterest on securitiesRental Income of Machinery, Plant or furnitureRental Income of Machinery, Plant or furnitureRental Income of Machinery, Plant or furniture and Rental Income of Machinery, Plant or furniture and building and the same is not separablebuilding and the same is not separableSum received under Key Man Insurance PolicySum received under Key Man Insurance PolicyGiftGift


Winning from Lotteries, crossword Winning from Lotteries, crossword puzzles, horse race, card game etcpuzzles, horse race, card game etcTaxableTaxableTaxableTaxableReceipt is chargeable @ 30% ( +SC +EC Receipt is chargeable @ 30% ( +SC +EC +SHEC)+SHEC)+SHEC)+SHEC)Taxable in the year of receiptTaxable in the year of receiptGross up if net winning is given after TDSGross up if net winning is given after TDSTDS is applicable if winning is more than Rs. TDS is applicable if winning is more than Rs. pp gpp g5000 except in the case of horse race where it 5000 except in the case of horse race where it is Rs. 2500/is Rs. 2500/--


Interest on SecuritiesInterest on SecuritiesInterest on SecuritiesInterest on Securities

Security of Central Government or StateSecurity of Central Government or StateSecurity of Central Government or State Security of Central Government or State GovernmentGovernmentTaxable on receipt basis if the books areTaxable on receipt basis if the books areTaxable on receipt basis if the books are Taxable on receipt basis if the books are maintained on cash basis otherwise on accrual maintained on cash basis otherwise on accrual basisbasisbasisbasisInterest exempt from tax u/s. 10 (15) to Interest exempt from tax u/s. 10 (15) to

l dl dexcludeexcludeGrossing up of Interest if TDS is deducted.Grossing up of Interest if TDS is deducted.


Income from Machines, Plant or Income from Machines, Plant or Furniture let on hire Furniture let on hire

Taxable if the same is not chargeable underTaxable if the same is not chargeable underTaxable if the same is not chargeable under Taxable if the same is not chargeable under business incomebusiness incomeComposite Letting is taxable under this headComposite Letting is taxable under this headComposite Letting is taxable under this headComposite Letting is taxable under this headThis rule is applicable even if the sum This rule is applicable even if the sum receivable for the two lettings is fixedreceivable for the two lettings is fixedreceivable for the two lettings is fixed receivable for the two lettings is fixed separately.separately.If building is let out but other assets likeIf building is let out but other assets likeIf building is let out but other assets like If building is let out but other assets like machine, furniture are not given on rent, then it machine, furniture are not given on rent, then it is not chargeable under this section.is not chargeable under this section.


gg

Receipts without considerationReceipts without considerationReceipts without considerationReceipts without consideration

The recipient is an individual or HUFThe recipient is an individual or HUFThe recipient is an individual or HUFThe recipient is an individual or HUFA sum of money received without A sum of money received without consideration after 01/04/2006 but beforeconsideration after 01/04/2006 but beforeconsideration after 01/04/2006 but before consideration after 01/04/2006 but before 1.10.20091.10.2009The aggregate amount received from anyThe aggregate amount received from anyThe aggregate amount received from any The aggregate amount received from any person exceeds Rs. 50000/person exceeds Rs. 50000/--Entire amount is chargeable to tax in the handsEntire amount is chargeable to tax in the handsEntire amount is chargeable to tax in the hands Entire amount is chargeable to tax in the hands of recipient. of recipient. It the amount received is < 50K, nothing isIt the amount received is < 50K, nothing is


It the amount received is 50K, nothing is It the amount received is 50K, nothing is taxable.taxable.

Receipts without considerationReceipts without considerationReceipts without considerationReceipts without consideration

GiftGift ofof anyany sumsum ofof moneymoney oror propertyproperty ororGiftGift ofof anyany sumsum ofof moneymoney oror propertyproperty orortransfertransfer ofof propertyproperty forfor inadequateinadequateconsiderationconsideration onon oror afterafter 11//1010//20092009 toto bebesubjectsubject toto taxtax inin thethe handshands ofof recipientrecipient ifif ititexceedsexceeds RsRs.. 5000050000//--MoneyMoneyImmovableImmovable PropertyPropertyp yp yMovableMovable PropertyProperty


Not applicable to followingNot applicable to followingNot applicable to followingNot applicable to following

Money received :Money received :Money received :Money received :from a relativefrom a relativeOn the occasion of the marriage of individualOn the occasion of the marriage of individualOn the occasion of the marriage of individualOn the occasion of the marriage of individualBy way of will/inheritanceBy way of will/inheritanceF l l th itF l l th itFrom local authorityFrom local authorityFrom university or education institution as From university or education institution as

ti d i ti 10 ( 23C)ti d i ti 10 ( 23C)mentioned in section 10 ( 23C)mentioned in section 10 ( 23C)From charitable instituteFrom charitable institute



Commission for realising dividend or interestCommission for realising dividend or interestCommission for realising dividend or interest Commission for realising dividend or interest on securityon securityRepairs, depreciation, insurance premium inRepairs, depreciation, insurance premium inRepairs, depreciation, insurance premium in Repairs, depreciation, insurance premium in the case of letting out of plant, machines, the case of letting out of plant, machines, furniture, buildingfurniture, buildingggStandard deduction in the case of family Standard deduction in the case of family pension pension -- Rs. 15000/Rs. 15000/-- or 33or 33--1/3 of such income 1/3 of such income ppwhichever is less ( paid to a person by the whichever is less ( paid to a person by the employer in event of death.)employer in event of death.)


DeductionsDeductions –– Section 57Section 57Deductions Deductions Section 57Section 57

Any other expenses for earning incomeAny other expenses for earning incomeAny other expenses for earning incomeAny other expenses for earning incomeSpentSpent whollywholly andand exclusivelyexclusively forfor earningearning incomeincomeMustMust notnot bebe inin aa capitalcapital naturenatureMustMust notnot bebe inin aa capitalcapital naturenatureMustMust notnot bebe inin aa personalpersonal naturenatureS tS t ii l t dl t d ii dd tt ii iiSpentSpent inin relatedrelated previousprevious yearyear andand notnot inin anyany priorprioryearyear



From CA Shailesh PrajapatiFrom CA Shailesh PrajapatiSet off and carried forward of LossesSet off and carried forward of LossesSet off and carried forward of LossesSet off and carried forward of Losses

Set off and Carried forward of Set off and Carried forward of LossesLosses

Step :1 :InterStep :1 :Inter –– Source adjustment under theSource adjustment under theStep :1 :Inter Step :1 :Inter Source adjustment under the Source adjustment under the same head of Incomesame head of IncomeStep :2: Inter head adjustment in the sameStep :2: Inter head adjustment in the sameStep :2: Inter head adjustment in the same Step :2: Inter head adjustment in the same assessment year. This is applied only if a loss assessment year. This is applied only if a loss can not be set off under step 1can not be set off under step 1can not be set off under step 1.can not be set off under step 1.Step : 3: Carry forward of loss. This is applied Step : 3: Carry forward of loss. This is applied

l if l b ff d 1 dl if l b ff d 1 donly if a loss cannot be setoff under step 1 and only if a loss cannot be setoff under step 1 and step 2step 2


InterInter –– Source AdjustmentSource AdjustmentInter Inter Source AdjustmentSource Adjustment

Loss of any Source can be adjusted against theLoss of any Source can be adjusted against theLoss of any Source can be adjusted against the Loss of any Source can be adjusted against the income of any other source for the same A.Y.income of any other source for the same A.Y.Exceptions:Exceptions:Exceptions:Exceptions:

LossLoss fromfrom speculationspeculation businessbusiness-- SameSame IncomeIncomeLossLoss fromfrom thethe activityactivity ofof owningowning andand maintainingmaintainingossoss oo t et e act v tyact v ty oo ow gow g a da d a ta ga ta gracerace horseshorses-- SameSame IncomeIncomeLossLoss cancan notnot bebe setset offoff againstagainst winningwinning fromfromlotteries,lotteries, crosswordcrossword puzzles,puzzles, horsehorse racesraces etcetcLossLoss fromfrom anan exemptexempt incomeincome cannotcannot bebe setset offoffagainstagainst ProfitProfit fromfrom TaxableTaxable sourcesource ofof IncomeIncome


againstagainst ProfitProfit fromfrom TaxableTaxable sourcesource ofof IncomeIncome..

InterInter –– Source Adjustment Sec 70Source Adjustment Sec 70Inter Inter Source Adjustment Sec 70Source Adjustment Sec 70Other pointsOther pointspp

LossLoss fromfrom aa HH..PP.. cancan bebe setset offoff againstagainst thethe incomeincome fromfromanyany otherother househouse propertypropertyLL ff NN l til ti b ib i bb tt ffff i ti tLossLoss fromfrom NonNon-- speculationspeculation businessbusiness cancan bebe setset offoff againstagainstincomeincome fromfrom speculationspeculation oror nonnon--speculationspeculation businessbusinessSTCLSTCL cancan bebe setset offoff againstagainst anyany capitalcapital gaingain(( whetherwhether shortshort termterm oror longlong term)term)LFOSLFOS exceptexcept exceptions,exceptions, cancan bebe setoffsetoff againstagainst anyany incomeincomeotherother thanthan winningwinning fromfrom lotterieslotteries etcetc....ggLossLoss ofof anyany sourcesource cancan notnot bebe adjustedadjusted againstagainst exemptexemptincomeincome..LTCLLTCL i ti t LTCGLTCG


LTCLLTCL againstagainst LTCGLTCGSTCLSTCL againstagainst LTCG/STCGLTCG/STCG

InterInter –– Head Adjustment Sec 71Head Adjustment Sec 71Inter Inter Head Adjustment Sec 71Head Adjustment Sec 71NetNet resultresult ofof computationcomputation inin respectrespect ofof anyany headhead ofof incomeincomepp pp yy(excluding(excluding CG)CG) isis aa loss,loss, thethe samesame cancan bebe setset offoff againstagainst thetheincomeincome fromfrom otherother headsheads (( includingincluding CG)CG)

E iE iExceptionsExceptionsLossLoss inin speculationspeculation businessbusinessLL ff ti itti it ff ii dd i t i ii t i i hhLossLoss fromfrom activityactivity ofof owningowning andand maintainingmaintaining racerace horseshorsesLossLoss cancan notnot bebe setset offoff againstagainst winningswinnings fromfrom lotterieslotteries etcetc..LossLoss underunder capitalcapital GainGain cancan notnot bebe setset offoff againstagainst anyany otherotherLossLoss underunder capitalcapital GainGain cancan notnot bebe setset offoff againstagainst anyany otherotherheadheadBusinessBusiness lossloss (( includingincluding unabsorbedunabsorbed depreciationdepreciation )can)can notnot


bebe setset offoff againstagainst SalarySalary..

InterInter –– Head Adjustment Sec 71Head Adjustment Sec 71Inter Inter Head Adjustment Sec 71Head Adjustment Sec 71Other PointsOther PointsSection 71 to follow only after Section 70Section 71 to follow only after Section 70Except exceptions mentioned, any loss can be setoff Except exceptions mentioned, any loss can be setoff p p , yp p , yagainst income under other heads for the same year. against income under other heads for the same year. Eg. Hp Loss against specu. ProfitsEg. Hp Loss against specu. ProfitsN d f i it i i O h ld t ff thN d f i it i i O h ld t ff thNo order of priority is given. One should set off those No order of priority is given. One should set off those loss for which there is no carried fwd.loss for which there is no carried fwd.No option is available to not to set off the lossNo option is available to not to set off the lossNo option is available to not to set off the loss.No option is available to not to set off the loss.Loss of any head can not be adjusted against exempt Loss of any head can not be adjusted against exempt incomeincome


Carried forward of LossCarried forward of LossCarried forward of LossCarried forward of Loss

Loss under Head “IFHP”Loss under Head “IFHP”Loss under Head IFHPLoss under Head IFHPLoss under Head “ Profit and gains of business Loss under Head “ Profit and gains of business or profession whether speculative or nonor profession whether speculative or nonor profession whether speculative or non or profession whether speculative or non SpeculativeSpeculativeL d H d C i l G i (ST d LT)L d H d C i l G i (ST d LT)Loss under Head Capital Gain (ST and LT)Loss under Head Capital Gain (ST and LT)Loss from the activity of owning and Loss from the activity of owning and maintaining race horses.maintaining race horses.Return of Loss should be filed before due dateReturn of Loss should be filed before due date


Order of set offOrder of set offOrder of set offOrder of set offOrder of Set off If profit is insufficientOrder of Set off If profit is insufficientpp

CurrentCurrent ScientificScientific researchresearch expenditureexpenditureCurrentCurrent DepreciationDepreciationBroughtBrought forwardforward BusinessBusiness LossesLossesUnabsorbedUnabsorbed FamilyFamily PlanningPlanning promopromo expensesexpensesUnabsorbedUnabsorbed depreciationdepreciationUnabsorbedUnabsorbed depreciationdepreciationUnabsorbedUnabsorbed ScientificScientific ResearchResearch CapitalCapital ExpenditureExpenditureUnabsorbedUnabsorbed developmentdevelopment allowanceallowanceUnabsorbedUnabsorbed InvestmentInvestment allowanceallowance

Loss from exempt Income can not be carried forwardLoss from exempt Income can not be carried forward



From CA Shailesh PrajapatiFrom CA Shailesh PrajapatiDeductions from GTIDeductions from GTIDeductions from GTIDeductions from GTI


Generally available only to residentsGenerally available only to residentsGenerally available only to residentsGenerally available only to residentsSubject to the existence of incomeSubject to the existence of income

d C id C iBroad CategoriesBroad CategoriesForFor certaincertain paymentspaymentsForFor certaincertain incomesincomesInIn certaincertain situationssituations


Deductions from GTIDeductions from GTIDeductions from GTIDeductions from GTI

Deduction in respect of insurance premia,Deduction in respect of insurance premia,Deduction in respect of insurance premia, Deduction in respect of insurance premia, contribution to PF, PPF etc.. ( Section 80 C)contribution to PF, PPF etc.. ( Section 80 C)

AvailableAvailable fromfrom GTIGTIOnlyOnly toto anan IndividualIndividual oror HUFHUFOnlyOnly onon qualifiedqualified InvestmentsInvestmentsMaximumMaximum amountamount shouldshould notnot exceedexceed >> RsRs.. 100000100000//--togethertogether withwith 8080C,C, 8080CCC,CCC, 8080CCDCCD

Deduction in respect of Pension Fund(80CCC)Deduction in respect of Pension Fund(80CCC)Deduction in respect of Pension Fund(80CCC)Deduction in respect of Pension Fund(80CCC)Contribution to Pension scheme of Central Contribution to Pension scheme of Central Government or notified by Central Govt (80CCD)Government or notified by Central Govt (80CCD)


Government or notified by Central Govt. (80CCD)Government or notified by Central Govt. (80CCD)

Medical Insurance Premia (Sec 80D)Medical Insurance Premia (Sec 80D)Medical Insurance Premia (Sec 80D) Medical Insurance Premia (Sec 80D)

Individual or HUFIndividual or HUFPaid by any other mode other than cashPaid by any other mode other than cashRental Income of Machinery, Plant or furnitureRental Income of Machinery, Plant or furniturey,y,Paid out of the income chargeable to taxPaid out of the income chargeable to taxOn the health of Taxpayer, spouse, dependant parents On the health of Taxpayer, spouse, dependant parents and dependant children or member of HUF.and dependant children or member of HUF.Deduction : Rs. 15000/Deduction : Rs. 15000/-- for self and family ( Rs. for self and family ( Rs. 5000/5000/ f i iti ) Additi l R 15000/f i iti ) Additi l R 15000/ ff5000/5000/-- for senior citizen ), Additional Rs. 15000/for senior citizen ), Additional Rs. 15000/-- for for parents and Rs. 5000/parents and Rs. 5000/-- if paid for senior citizen if paid for senior citizen parent.parent.


pp

Medical Treatment of dependant Medical Treatment of dependant being a person with disabilitybeing a person with disability

Section 80DDSection 80DDSection 80DDSection 80DDTax Payer is resident in IndiaTax Payer is resident in IndiaSpent amount for medical treatment or depositedSpent amount for medical treatment or depositedSpent amount for medical treatment or deposited Spent amount for medical treatment or deposited under any scheme framedunder any scheme framedDependant means the spouse children brothersDependant means the spouse children brothersDependant means the spouse, children, brothers, Dependant means the spouse, children, brothers, sisters, of the individualsisters, of the individualSuch person has not claimed any deduction u/s 80USuch person has not claimed any deduction u/s 80USuc pe so s o c ed y deduc o u/s USuc pe so s o c ed y deduc o u/s UForm 10IA is required from the Medical PractitionerForm 10IA is required from the Medical PractitionerRs 50000/Rs 50000/-- If having severe disability Rs 100000/If having severe disability Rs 100000/--


Rs. 50000/Rs. 50000/ . If having severe disability, Rs. 100000/. If having severe disability, Rs. 100000/

Medical Treatment ( 80DDB)Medical Treatment ( 80DDB)Medical Treatment ( 80DDB)Medical Treatment ( 80DDB)Tax payer is resident in IndiaTax payer is resident in Indiap yp yIndividual or HUFIndividual or HUFActually paid any amount of a specified diseaseActually paid any amount of a specified diseasey p y py p y pDependant means the spouse, children, brothers, Dependant means the spouse, children, brothers, sisters, of the individualsisters, of the individualCertificate in form 10I from such specialist working Certificate in form 10I from such specialist working in a Govt. Hospitalin a Govt. HospitalD d ti R 40000/D d ti R 40000/ t l hi ht l hi hDeduction : Rs. 40000/Deduction : Rs. 40000/-- or actual expenses whichever or actual expenses whichever is lower. For Senior Citizen Rs. 60000 or actual is lower. For Senior Citizen Rs. 60000 or actual expenses which ever is lowerexpenses which ever is lower


pp

Repayment of Loan taken for higher Repayment of Loan taken for higher studies Section 80Estudies Section 80E

The The assesseeassessee is an Individualis an IndividualTaken loan from any Financial InstitutionsTaken loan from any Financial InstitutionsTaken for pursuing higher education for own or for Taken for pursuing higher education for own or for p g gp g ghis relatives his relatives i.ei.e spouse or child. Any courses after spouse or child. Any courses after Class XII (from A.Y. 2010Class XII (from A.Y. 2010--11) or its equivalent, 11) or its equivalent, including vocational Studiesincluding vocational Studiesincluding vocational Studiesincluding vocational StudiesAmt. is paid out of Income chargeable to taxAmt. is paid out of Income chargeable to taxInterest is deductible from the year in whichInterest is deductible from the year in which assesseeassesseeInterest is deductible from the year in which Interest is deductible from the year in which assesseeassesseestarts paying the Interest and seven assessment years starts paying the Interest and seven assessment years or till the Interest paid in full whichever is earlier.or till the Interest paid in full whichever is earlier.


Donations Section 80GDonations Section 80GDonations Section 80GDonations Section 80G

Available to any tax payerAvailable to any tax payerAvailable to any tax payerAvailable to any tax payerFind out Gross Qualifying AmountFind out Gross Qualifying Amount

AggregateAggregate ofof donationsdonations mademade toto anyany ofof thethe institutionsinstitutionsAggregateAggregate ofof donationsdonations mademade toto anyany ofof thethe institutionsinstitutionsDonationDonation inin KindKind isis notnot bebe includedincluded

Find out Net Qualifying AmountFind out Net Qualifying AmountQ y gQ y gLimitedLimited toto 1010%% ofof adjustedadjusted GTIGTIAdjustedAdjusted GTI=GTI= GTIGTI ––[[8080CC toto 8080UU--ExemptExempt IncomeIncome--LTCGLTCG--STCG)STCG)ThisThis ceilingceiling isis notnot applicableapplicable forfor certaincertain donationsdonations..

P f f P t t b b itt dP f f P t t b b itt dShailesh PrajapatiShailesh Prajapati

Proper proof of Payment must be submittedProper proof of Payment must be submitted

DonationsDonations –– the matrixthe matrixDonations Donations the matrixthe matrixNo LimitNo Limit 10% Limit10% Limit

100%100% National Defence FundNational Defence FundPM National Relief FundPM National Relief FundCM Relief FundCM Relief Fund

Sports AssociationsSports AssociationsFamily Planning AssociationsFamily Planning AssociationsPlanning & Devpt of TownPlanning & Devpt of Town

National Foundation for Communal HarmonyNational Foundation for Communal HarmonyPrescribed UniversitiesPrescribed UniversitiesNational Sports fundNational Sports fundDisaster Relief Funds Disaster Relief Funds –– earthquakes, cyclones, etc.earthquakes, cyclones, etc.

Interest of minority communitInterest of minority communit

50%50% Jawaharlal Nehru Relief FundJawaharlal Nehru Relief FundPM Drought Relief FundPM Drought Relief FundNational Children’s FundNational Children’s FundIndira Gandhi Memorial FundIndira Gandhi Memorial Fund

Approved Charitable Approved Charitable OrganizationsOrganizationsAny Notified TampleAny Notified Tample

Indira Gandhi Memorial FundIndira Gandhi Memorial FundRajiv Gandhi FoundationRajiv Gandhi Foundation

80 GGA separately covers research associations rural development


80-GGA separately covers research associations, rural development, conservation of natural resources, poverty eradication, afforestation.

Deduction in respect of rent paid Deduction in respect of rent paid Section 80 GGSection 80 GG

The Taxpayer is an individualThe Taxpayer is an individualp yp ySelf employed person. Alternatively,Self employed person. Alternatively,Employee who does not get HRA at any time during Employee who does not get HRA at any time during pre io s earpre io s earprevious yearprevious yearHe or his relatives, i.e spouse, minor child or HUF of He or his relatives, i.e spouse, minor child or HUF of which he is a member does not own any residential which he is a member does not own any residential yyaccommodation where he resides or perform duties.accommodation where he resides or perform duties.If the tax payer owns a residential house at any other If the tax payer owns a residential house at any other place other than the place noted above then theplace other than the place noted above then theplace other than the place noted above, then the place other than the place noted above, then the exemption of SOP is not claimed by him.exemption of SOP is not claimed by him.Declaration in form 10BA is submitted for rent paid.Declaration in form 10BA is submitted for rent paid.


Deduction in respect of rent paid Deduction in respect of rent paid Section 80 GGSection 80 GG

Amount of DeductionAmount of Deduction-- Least of followingLeast of followingAmount of DeductionAmount of Deduction Least of followingLeast of followingRsRs.. 20002000//-- perper monthmonth2525%% ofof totaltotal income*income* (*(* asas givengiven below)below)(( gg ))ExcessExcess ofof rentrent paidpaid overover 1010%% ofof totaltotal incomeincome*Gross*Gross TotalTotal IncomeIncome XXXXXXLessLess:: LTCGLTCG XXXXXXLessLess:: STCGSTCG u/su/s111111AA @@1515%% XXXXLL II // 115115AA XXXXLessLess:: IncomeIncome u/su/s115115AA XXXXLessLess:: DeductionDeduction u/su/s8080CC--8080UU XXXXTotalTotal IncomeIncome forfor thethe purposepurpose ofof 8080GGGG XXXXXX


TotalTotal IncomeIncome forfor thethe purposepurpose ofof 8080GGGG XXXXXX

Deduction in respect of donation for Deduction in respect of donation for scientific research 80GGAscientific research 80GGA

An Assessee other than whose GTI includes incomeAn Assessee other than whose GTI includes incomeAn Assessee other than whose GTI includes income An Assessee other than whose GTI includes income from profits and gains of business or professionfrom profits and gains of business or professionFollowing payment are allowedFollowing payment are allowedg p yg p y

ScientificScientific researchresearch associationassociationUniversity,University, collegecollege toto bebe usedused forfor researchresearchApprovedApproved associationassociation oror Institutions,Institutions, publicpublic sectorsectorcompanycompany forfor carryingcarrying outout thethe eligibleeligible projectsprojectsSS idid tt ti lti l f df d tifi dtifi d bb CGCGSumSum paidpaid toto nationalnational fundfund asas notifiednotified byby CGCGPaidPaid toto NationalNational UrbanUrban PovertyPoverty EradicationEradication FundFund


Other DeductionsOther DeductionsOther DeductionsOther DeductionsContribution given by companies to Political Parties ( Contribution given by companies to Political Parties ( g y p (g y p (Sec. 80GGB)Sec. 80GGB)Contribution given by any person to Political Parties ( Contribution given by any person to Political Parties (

))Sec. 80GGC)Sec. 80GGC)Deduction in respect of Profits and gains from Deduction in respect of Profits and gains from Industrial Undertakings engaged in InfrastructureIndustrial Undertakings engaged in InfrastructureIndustrial Undertakings engaged in Infrastructure Industrial Undertakings engaged in Infrastructure development ( Sec 80development ( Sec 80-- IA )IA )Deduction in respect of Profits and gains from Deduction in respect of Profits and gains from educ o espec o o s d g s oeduc o espec o o s d g s oIndustrial Undertakings engaged in SEZ Industrial Undertakings engaged in SEZ development ( Sec 80development ( Sec 80-- IAB )IAB )


Other DeductionsOther DeductionsOther DeductionsOther Deductions

In respect of Profits and gains from IndustrialIn respect of Profits and gains from IndustrialIn respect of Profits and gains from Industrial In respect of Profits and gains from Industrial Undertakings other than Infrastructural development Undertakings other than Infrastructural development undertakings ( Sec 80undertakings ( Sec 80-- IB )IB )In respect of profits and gains of certain undertakings In respect of profits and gains of certain undertakings in certain special category of states ( Sec 80IC)in certain special category of states ( Sec 80IC)Hotels & convention centre in NCR(Sec80 ID)Hotels & convention centre in NCR(Sec80 ID)Undertaking in North Eastern States(Sec80 IE)Undertaking in North Eastern States(Sec80 IE)Person with a disability Sec 80 UPerson with a disability Sec 80 U-- Fixed deduction Fixed deduction of Rs. 50000/of Rs. 50000/--. Severe disability. Severe disability-- Rs. 100000/Rs. 100000/--..


Documents

Income Tax- SPA 2010