35.    Income Of Individuals And HUFs – As a Tax Payers Under Income Tax Act, 1961

The individual tax payers and also the HUFs while proceeding to calculate the net taxable income in the first phase are required to arrive at the gross total income under different heads of income.

 

Thus, the income derived by such individual and HUF from either salary income or income from house property or income from business or profession or from capital gains and also income from other sources are all to be added to arrive at the Gross Total Income for the whole year.

 

Now the individual or the HUF should proceed to deduct from the gross total income the deductions which are permissible under Chapter-VIA of the Income Tax Act, 1961. Under this Chapter VIA the important deductions which are available to individual and HUFs are …

 
  • the deductions pertaining to payment for Pension Plan under Section 8OCCC of the Income Tax Act, 1961,

  • for payment of medical insurance premium as per Section 80D,

  • for payments for maintenance and medical treatment of handicapped dependents u/s 8ODD,

  • deductions in respect of medical treatment, etc. as per Section 8ODDB of the Income Tax Act, 1961,

  • deduction in respect of certain donations paid to charitable trusts and institutions as per Section 80G of the Income Tax Act.

After calculating the deductions in respect of certain payments as mentioned above, the sum total of the deductions would be deducted from the gross total inome of the assessee and finally the net taxable income is arrived at.

 

On the Net Taxable Income, Income Tax Payable will have to be calculated.

 

Similarly, if the individual or HUF were carrying on certain business activities, then from its income from business or profession it is eligible to claim certain deductions in respect of its business income like …

  • the deduction in respect of profits and gains of New Industrial Undertaking or Enterprises engaged in Infrastructure Development as per Section 801A or

  • the deduction in respect of profits and gains from certain New Industrial Undertakings as per Section 801B of the Income Tax Act, 1961.

  • As per the Finance Act, 2007 deduction under Section 801E would be available to undertakings in North Eastern States of India.

Thus, after deducting the deductions permissible under various sections of Chapter VIA, the net taxable income of the individual tax payer is computed on which income tax would be calculated and would become payable.

 

In the said Chapter V1A certain other deductions are also permissible to the individual tax payers e.g., …

  • u/s 80U in respect of permanent physical disability. Thus, all the deductions as are permissible under various sections of Chapter VIA of the Income Tax Act, 1961, have to be deducted from the gross total income to arrive at the net taxable income of the individual tax payer.

For the HUF also the system of computation would remain the same. For the financial year 2010-2011, the total combined deduction under Section 80C, 8OCCC and 8OCCD is limited to ` 1 Lakh. For the A.Y. 2012-2013 a separate deduction would also be permissible for investment in infrastructure bonds and this deduction is limited to ` 20,000 per annum.

 

The deduction for investment in Infrastructure Bonds is not permissible for the A.Y. 2013-2014.
 
Sec. 143(3) : Scrutiny Assessments by Income Tax Department
“Penalties” Under Income Tax Act. 1956
How is a Search Operation Conducted by Income Tax Department ?
Surveys for Checking Ostentatious Expenditure
Surveys for Enforcing Compliance with Provisions of TDS
“Summon” U/s 131 of Income Tax Act.
Investigation by Income Tax Department:
Appellate Authorities of Income Tax Department
Power to Call for Information U/s Sec. 133(6) of Income Tax Act.
Specific Surveys U/s 133A(1) of Income Tax Act.
Types Of Income Subject To TDS [Deduction Of Tax At Source]
Pre-Requisite For Claiming Income Tax Refund
Benefits of Filing Income Tax Returnsn
Section-139(9): Defective Tax Return
 
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