Guide to .. Tax Management ,Tax Planning and Tax Saving
 

Tax Ready Reckoner @ A.Y. 2019-20

Basic Knowledge/Concepts about Income Tax

INCOME under Income Tax Act. 1956
Person [Section 2(31)] : Defination under I.Tax
Definition of INCOME inder Income Tax [ Section 2(24)]
Income Deemed To Be Received In India - under Income Tax Act. 1956. (Section 7)
Incomes Which Accrue Or Arise In India OR Are Deemed To Accrue Or Arise In India [Section 9]
Income Arising From Business Connection In India [Section 9(1)(i)] -
Assessment Year [Section 2(9)] : Definition under Income Tax Act.
Gross Total Income(GTI) [Section-80B(5)] : Defination under I.Tax
Income is Taxed in the same Year in which it is Earned

Capital Vs. Revenue

Capital Expenses Vs. Revenue Expenses - under 'Capital Gains'
Capital Receipts vs Revenue Receipts - under 'Capital Gains'
Revenue Losses Vs. Capital Losses under Income Tax Act.

Residential Status

Residential Status of an Assessee
Residential Status Of A ' Company '- [Section 6(3)]
Residential Status of an 'Individual' (Section-6)
Residential Status of Firm, Association of Persons (AOP), Body of Individuals (BOI) and of Other Persons (except Companies) [Sections 6(2) and 6(4)]
Residential Status Of HUF (Hindu Undivided Family) - [Section 6(2)]

List of Exempted Incomes (Tax-Free) Under Section-10

List of Exempted Incomes (Tax-Free) Under Section-10
Section-wise Index of Exempted Incomes Under Section 10
Gratuity Received by a Non-Government Employee covered by Payment of Gratuity Act, 1972 [Section 10(10)(ii)]
Gratuity [Section 10(10)]
Commuted value of Pension Received is Exempt from Tax [Section 10(10A)]
Amount received as Leave Encashment on Retirement [Section 10(10AA)]
Retrenchment Compensation received by Workmen [Section 10(10B)]
'Retirement Compensation' from a Public Sector Company or any other Company is Exempt from Tax [Section 10(10C)]
Any sum received under a Life Insurance Policy [Section 10(10D)]
Exemption in respect of Amount Received from any Provident Fund (PPF/SPF/RPF/URPF) [Section 10(11), 10(12)]
Payment from Superannuation Fund [Section 10(13)]
House Rent Allowance-HRA [Section 10(13A) Read with Rule 2A]
Any Allowance given for meeting Business Expenditure [Section 10(14)]
Interest Incomes [Section 10(15)]
Income of certain Funds of National Importance, Educational Institutions and Medical Institutions [Section 10(23C) and Rules 2C and 2CA] :
Income of Core Settlement Guarantee Fund [Section 10(23EE)]
Any income of a Corporation established for Ex-Servicemen [Section 10(26BBB)]
Certain Interest to Non-Residents [Section 10(4)]
Leave Travel Concession or Assistance (LTC/LTA) [Section 10(5)]
Salary or Remuneration to Foreign Employee and Non-Resident Member of Crew [Section 10(6)]

Exempted Incomes ( Tax Free) [ Sec. 10(1) to Sec. 10(50)]

Section 10 gives list of incomes which are exempt from tax. In this part you can gain knowledge about various incomes which are exempt from tax under Section 10.

Tax Holiday ( Section 10A, 10AA, 10B & 10BA)

  1. Free Trade Zone (FTZ) – Special Provision in respect of Newly Established Undertaking in Free Trade Zone.         
    1. Conditions to be satisfied
    2. Amount of Deduction-General Provisions
    3. Period and Rate of Deduction
    4. Transfer under a Scheme of Amalgamation or Demerger
  2. Special Economic Zone (SEZ)- Special Provisions in respect of newly established units in special economic zone.
    1. Conditions to be satisfied
    2. Amount of Deduction
    3. Consequence for mercer and demerger.
  3. 100% Export Oriented Undertakings (100% E.O.U.)
    1. Conditions to be Satisfied
    2. Amount of Deduction
    3. Period of Deduction
    4. Transfer under a Scheme of Amalgamation or Demerger
  4. Income from Export of Artistic Handmade Wooden Articles
    1. Conditions to be Satisfied
    2. Amount of Deduction

Tax Holiday - Deduction

( Section 80-IA, 80-IAB, 80IB & 80IC)

  1. Deductions In Respect Of Profits And Gains From Industrial Undertakings Or Enterprises Engaged In Infrastructure Development. [Sec. 80-IA]
  2. Deductions In Respect Of Profits And Gains By An Undertaking Or Enterprise Engaged In Development Of Special Economic Zone[Sec. 80-IAB]
  3. Deduction In Respect Of Profits And Gains From Certain Industrial Undertakings Other Than Infrastructure Development Undertaking.
    [Sec. 80-IB]

  4. Special Provisions In Respect Of Certain Undertakings Or Enterprises In Certain Special Category States- How To Find Out [Sec. 80-IC]

Tax Rates
For the Financial Year 2017-2018 [ A.Y. 2018-2019]

Computation of Total Income

Income Under the Head 'Salary' [Section 15 to 17]

(A). Salary -Definition & Meaning

  1. Computation of " Salary " Income [Section 15-17]

  2. Definition of Word 'Salary' [Section 17(1)]

  3. Section-15 : Basis of Charge of Salary Income

  4. Important Points / Characteristics for Computing Salary Income

  5. List of Different Forms of Salary for Computation of Income under the head 'Salary'

(B). Provident Fund

Tax Treatment of Provident Funds (PF) for Salary Income

(C). Allowance

  1. ALLOWANCES - For Computing ‘Salary’ Income

  2. Fully Exempted Allowance for Computing Salary Income

  3. Fully Taxable Allowance fro Computing Salary Income

  4. House Remt Allowance [HRA] for Calculating Salary Income

  5. Prescribed Special Allowances which are Exempt to a certain extent - Section 10(14)

  6. Treatment of Entertainment Allowance for Calculating Salary Income

  7. List of Different 'Allowances' for Computation of 'Salary' Income

(D). Perquisites

  1. Definition of 'Perquisites' as per [Section 17(2)]

  2. Valuation of 'Perquisites' under the head 'income from Salary'

  3. Fringe Benefits or Amenities which shall be Taxable Perquisite in the hands of All Employees

  4. Taxable Perquisites in case of Specified Employees

  5. Tax Free Perquisites in case of all Employees

  6. Valuation of Rent Free Unfurnished & Furnished Accommodation [Rule 3(1)]

  7. Valuation of Perquisite of Motor Car and other Modes of Conveyance [Rule 3(2)] for Computing Salary Income

  8. Valuation of Perquisites in respect of Free or Concessional Education Facilities to any member of Employees' household : [Rule 3(5)]

  9. Valuation of  Perquisites in respect of Sweat Equity Shares or Employees Stock Option Plan (ESOP) [ Section 17(2)(vi) & Rule 3(8) & (9)]

  10. Perquisites Valuation of Medical Facilities [Proviso to Section 17(2)]

  11. Valuation of Leave Travel Concession or Assistance (LTC/LTA) in India. [Section 10(5) & 10(6)(i)]

  12. List of 'Perquisites' for Computation of Income under the head 'Salary'

(E). Profit in lieu of Salaly

  1. Receipts treated as Profit in Lieu of Salary [Section 17(3)] for Computing Salary Income

(F). Retirement Benefits

  1. Exemption of Death-Cum-Retirement Gratuity [Section 10(10)]

  2. Tax treatment of PENSION [Monthly and Commuted] for Computing Salary Income [Section 17(1)(ii)]

  3. Leave Encashment [Section-10(10AA)] for Computing Salary Income

  4. Retrenchment Compensation received by Workmen [Section 10(10B)]

  5. Compensation received on Voluntary Retirement [Section 10(10C)]

  6. Tax treatment of National Pension Scheme [ NPS] with Deduction under Section 80CCD

  7. Tax Planning for Retirement of the Employee

(G). Deductions

  1. Deduction from Salary Income (Section 16)

  2. Relief when Salary is paid in Arrear or in Advance, etc. [Section 89/Rule 21A]

  3. Qualifying Amount (Q.A.) for Deduction u/s 80C

(H). Table Presentation of Salary Income (Section 15 to 17)

  1. 'Charge' under head Salary (Section-15)

  2. Allowance under the head Salary

  3. Deduction U/s 16(ii) : Entertainment Allowance Vs. Deduction U/s 16(iii) : Professional Tax

  4. Specified Employee Vs. Non Specified Employee

  5. Section 17(2) : Perquisites - Category A

  6. Section 17(2) : Perquisites - Category B

  7. Section 17(2) : Fully Exemped Perquisites - Category C

  8. Taxability of Perquisites & Allowance - under the head Salary

  9. Provident Fund ( SPF, PPF, URPF, RPF )

  10. Section 10(10) - Gratuity ( Tax Treatment )

  11. Section 10(10A) - Pension ( Tax Treatment )

  12. Section 10(10AA) - Leave Salary ( Tax Treatment)

Income Under the Head 'House Property' [ Sec. 22 to 25]

  1. Definition of the Head ' Income from House Property ' - [Section 22]

  2. Deemed Owner of House Property (Section 27) for calculating ' Income from House Property'

  3. Exempted House Property Income for calculating ' Income from House Property '

  4. Computation of 'Annual Value' of a Houes Property [Section 23(1)] for calculating ' Income from House Property '

  5. How to Compute Taxable Income from Self-Occupied House Property

  6. Deductibility of Taxes Levied by Local Authority (i.e. Municipal taxes) of House Property Income

  7. DEDUCTIONS Out of Net Annual Value (NAV) of House Property Income (Section 24) for calculating ' Income from House Property '

'Profits and Gains of Business or Professions' [Section 28 to 44]

 

Define … ‘Profits and Gains of Business or Profession’ and its Computation (Section 28)

  1. Business Incomes Taxable under the head of ‘Profit and Gains of Business or Profession’ (Section 28).

  2. Business Income Not Taxable under the head ‘Profit and Gains of Business or Profession’

  3. Mode of Taxation on Certain Incomes (Section 145B)

  4. Basic Principles for Computing income Taxable under the head ‘Profit and Gains of Business or Profession’

Method of Accounting for Computing Business Income (Section 145)

  1. Income to be computed either on the basis of cash or mercantile system of accounting [Section 145(1)]

  2. Central Government empowered to notify income computation and disclosure standards [Section 145(2)]

  3. Assessing Officer empowered to make assessment in the manner provided under section 144 in certain cases [Section 145(3)]

  4. Method of accounting in Certain Cases [Sec. 145A] –

  5. Income Computation and Disclosure Standards (ICDS)

Principles for Allowing Business Deductions / Allowances from Profits and Gains of Business or Profession

Before studying the nature and amount of permissible and non-permissible deductions under sections 30 to 43D, it will be useful if one keeps in view the following principles governing admissibility of these deductions:

 

Expenses Allowed as Deductions against Profits and Gains of Business or Profession [Section-30-37]

  1. Rent, Rates, Taxes, Repairs And Insurance For Building [Section 30]

  2. Repairs and insurance of machinery, plant and furniture [Section 31]

  3. Depreciation [Section 32]

  4. Investment allowance in Notified Backward Area in Andhra Pradesh, Bihar, Telangana or West Bengal [Section 32AD]

  5. Tea/Coffee/Rubber Development Account [Section 33AB]

  6. Site Restoration Fund [Section 33ABA]

  7. Expenditure on Scientific Research [Section 35]

  8. Expenditure for Obtaining Right to use Spectrum for Telecommunication Services [Section 35ABA]

  9. Expenditure for obtaining Licence to operate Telecommunication Services [Section 35ABB]

  10. Deduction in respect Of Expenditure On Specified Business [Section 35AD]

  11. Payment to Associations and Institutions for carrying out Rural Development Programmes [Section 35CCA]

  12. Expenditure on Agricultural Extension Project [Section 35CCC]

  13. Expenditure on Skill Development Project [Section 35CCD]

  14. Amortisation of Preliminary Expenses [Section 35D]

  15. Amortisation of expenditure in case of Amalgamation / Demerger [Section 35DD]

  16. Amortisation of Expenditure under Voluntary Retirement Scheme [Section 35DDA]

  17. Amortisation of Expenditure on Prospecting etc., for Development of Certain Minerals. (Section 35E)

  18. Insurance Premium [Section 36(1)(i)]

  19. Bonus or Commission to Employees [Section 36(1)(ii)]

  20. Interest on Borrowed Capital [Section 36(1)(iii)]

  21. Discount on issue of Zero Coupon Bonds [Section 36(1)(iiia)]

  22. Employer’s Contribution to Recognised Provident Fund and Approved Superannuation Fund [Section 36(1)(iv)]

  23. Employer’s Contribution to National Pension Scheme (NPS) [Section 36(1)(iva)]

  24. Contribution towards Approved Gratuity Fund [Section 36(1)(v)]

  25. Employees’ Contribution to Staff Welfare Schemes [Section 36(1)(va)]

  26. Allowance in respect of Dead or Permanently useless Animals [Section 36(1)(vi)]

  27. Bad debts [Section 36(1)(vii)]

  28. Provision for Bad and Doubtful Debts relating to Rural Branches of Commercial Banks [Section 36(1)(viia)]

  29. Transfer to Special Reserve [Section 36(1)(viii)]

  30. Family Planning Expenditure [Section 36(1)(ix)]

  31. Securities Transaction Tax [Section 36(1)(xv)]

  32. Commodities Transaction Tax [Section 36(1)(xvi)]

  33. Expenditure by Co-Operative Society for purchase of Sugarcane [Section 36(1)(xvii)

  34. General Deductions [Section 37]

[Section 37(1)] : General Or Allowable Deductions under Business or Professions

  1. Conditions for Allowance of General Deduction from Business Income Under Section 37(1)

  2. List of Expenditure Allowable as a Deduction Under Section 37(1) from Business Income :

  3. List of Expenditures NOT Allowable as Deduction Under Section 37(1) from Business Income :

 

Business Losses Deductible under the head  'Profits and Gains of Business or Profession'

  1. Business Losses which are Deductible from Business Income

  2. Business Losses which are Not Deductible from Business Income

 

Expenses Not Deductible under the head 'Profits and Gains of Business or Profession (Section 40, 40A, 43B)

  1. Interest, Royalty, Fees for Technical Services Payable Outside India or Payable to a Non-Resident [Section 40(a)(i)] -

  2. Disallowance of Expenditure in respect of any Payment / Credit to a Resident [Section 40(a)(ia)]

  3. Default pertaining to Non-Deduction / Non-Deposit of Equalisation Levy [Section 40(a)(ib)] -

  4. Disallowance of royalty, licence fees, etc., in case of State Government Undertakings [Section 40(a)(iib)] -

  5. Salary Payable outside India without Tax Deduction [Section 40(a)(iii)] -

  6. Tax on Non-Monetary Perquisite paid by the Employer [Section 40(a)(v)] -

  7. Amounts Not Deductible in respect of Payment to Ralatives [Section 40A(2)]

  8. Amounts Not Deductible in respect of Expenditure exceeding Rs. 10,000 (Rs. 35,000 if an assessee makes payment for Plying, Hiring or Leasing Goods Carriages) [Section 40A(3)] -

  9. Disallowance in respect of Provision for Unapproved Gratuity Fund [Section 40A(7)]:

  10. Amount Not Deductible in respect of contributions to Non-Statutory Funds [Section 40A(9)] -

  11. Certain Deductions to be Allowed only on Actual Payment Basis [Section 43B]

 

DEEMED PROFITS Chargeable to Tax as Business Income Under Profits and Gains of Business or Professions [Section 41]

  1. Recovery against any Allowance or Deduction Allowed earlier [Section 41(1)]

  2. Balancing Charge on Assets of an undertaking engaged in Generation or Generation and Distribution of Power [Section 41(2)].

  3. Profit on Sale of Capital Assets used for Scientific Rresearch [Section 41(3)].

  4. Recovery out of Bad Debts Allowed as a Deduction [Section 41(4)]:

  5. Amount withdrawn from Special Reserve Created and Maintained by certain Financial Institutions [Section 41(4A)]:

  6. Adjustment of Loss [Section 41(5)] -

  7. Recovery after Discontinuance of Business or Profession [Section 176(3A), (4)]

Taxation of Undisclosed Business Income/Investments from Undisclosed Sources

  1. Cash Credit [Section 68] -

  2. Unexplained investments [Section 69] -

  3. Unexplained Money, etc. [Section 69A] -

  4. Amount of Investments, etc., not fully disclosed in books of account [Section 69B] -

  5. Unexplained Expenditure, etc. [Section 69C] -

  6. Amount Borrowed or Repaid on Hundi [Section 69D] -

 

Deduction in respect of Expenditure incurred on setting up of a Specified Business [Section-35AD] :

  1. To whom Deduction Under Section-35AD shall be allowed :

  2. Nature and Amount of Deduction Under Section-35AD:

  3. Expenditure incurred prior to commencement of operation to be allowed in the year of commencement of operation Under Section-35AD:

  4. Conditions to be satisfied by the Specified Business to apply the Section-35AD:

  5. Consequences Of Claiming Deduction Under Section 35AD -

 

When Maintenance of Books of Accounts becomes Compulsory (Section 44AA)

  1. Persons carrying on “Specified Professions” [Section 44AA(1)] :

  2. Persons carrying on “Non-Specified Professions” or any Business [Section 44AA(2)]

  3. When maintenance of Books of Account Not Necessary .

  4. Consequences of Failure to Keep Accounts, etc:

 

Compulsory Audit of Books of Accounts by Chartered Accountant (Section 44AB)

Find out the different Taxpayers who are required to get their Accounts Compulsorily Audited by a Chartered Accountant

 

Computation of Income On Estimated Basis Under Sections 44AD, 44ADA and 44AE

  1. Computation of 'Business Income' On Estimated Basis Under Section 44AD -

  2. Computation of 'Professional Income' on Estimated Basis Under Section 44ADA -

  3. Computation of Income on Estimated Basis in the case of Business of Plying, Leasing or Hiring Trucks / Goods Carriages [Section 44AE] -

 

Income Under the Head ' CAPITAL GAIN'

Capital Assets, Capital Gain & Transfer of Capital Assets for Taxation of 'Capital Gain'

  1. Basis of Charge in case of Capital Gain [Section 45(1)]

  2. Capital Asset for Computing Capital Gain [Section 2(14)]

  3. Types of Capital Sssets:

  4. Type of Capital Gains:

  5. Transfer of Capital Assets to arise Capital Gain

  6. Capital Gain should arise in the previous year in which Transfer took place.

Types of Capital Assets for Computing ‘Capital Gain'

  1. Short-Term Capital Asset - STCA [Section 2(42A)]

  2. Long-Term Capital Asset - LTCA [Section 2(29A)]

  3. Meaning of Capital Assets in Graphical Chat (Section 2(14)

Computation Of ‘Period Of Holding of an Asset' for Computing Gapital Gain [Explanation 1(i) to Section 2(42A)]

  1. The period of Holding of an Asset [Explanation 1(i) to Section 2(42A)] :

  2. Holding period in case of Shares or any other Security [Explanation 1(i)(e) and (f)]

Transfer Of A Capital Asset [Section 2(47)] for Computing Capital Gain

  1. What is Transfer of Capital Assets [Section 2(47)]:

  2. Transactions Not regarded as Transfer of Capital Assets [Sections 46 and 47]:

  3. Transfer in case of Immovable and Movable Property

  4. Transfer of Capital Asset in Table Chat Format [Section 2(47)]

Transactions Not regarded as ‘Transfer’ for Computing Capital Gain [Section 46 and 47]

For the purpose of Section 45, the following transactions are not regarded as transfers (in other words, in the following cases, there is no Capital Gain)—
 

Method of Computing Capital Gain [Section 48]

A format to compute the Capital Gain under Section 48 is given here ...
 

Deemed Cost of Acquisition of Asset for Computing Capital Gain

Deemed Cost of Acquisition of Assets for Computing Capital Gain and all the provisions under sub-clause of Section 49 has been described ...
 

[Section 55(2)] : Cost of Acquisiton of Assets for Computation of Capital Gain

  1. Cost of Acquisition being the Fair Market Value as on April 1, 2001 -

  2. Cost of acquisition of goodwill of a business or a trade mark or brand name associated with business or right to manufacture, produce or process any article or things or right to carry on any business or profession, tenancy rights, stage carriage permits or loom hours [Section 55(2)(a)]:

  3. Cost of Acquisition of Right Shares [Section 55(2)(aa)]:

  4. Cost of Acquisition of Bonus Shares or any other Financial Asset allotted without payment [Section 55(2)(aa)(iiia)]:

  5. Cost of Acquisition of Depreciable Assets [Section 50]:

  6. Compulsory Acquisition of a Capital Asset -

 

Capital Gain in various Special Cases - How to Find Out or Calculate

  1. Capital Gain from Zero Coupon Bonds

  2. Capital Gain in case of amount Received from an Insurer on account of Damage or Destruction of any Capital Asset [Section 45(1A)]:

  3. Capital Gain in the case of Transfer of Depreciable Assets [Section 50] -

  4. Capital Gain on Conversion of Capital Asset into Stock-in-Trade [Section 45(2)]-

  5. Capital Gain on Transfer of Capital Asset by a Partner/Memeber to a Firm/AOP/BOI as Capital contribution [Section 45(3)]-

  6. Capital Gain on Distribution of Capital Assets by a Firm, AOP/BOI to Partners at the time of Dissolution [Section 45(4)]-

  7. Capital Gain on Compulsory Acquisition of a Capital Asset [Section 45(5)]-

  8. Computation of Capital Gains in case of Joint Development Agreement [Section 45(5A)] [W.e.f. A.Y. 2018-19]

  9. Capital Gain on Conversion of Debentures / Bonds into Shares [Section 47(x), 49(2A) and rule 8AA] :

  10. Capital Gain on Transfer of Shares / Debentures in the hands of Non-Residents (Proviso 1 to Section 48 and Rule 115A) :

  11. Capital Gain on Transfer of Self-Generated Capital Assets :

  12. Capital Gain on Transfer of Bonus Shares -

  13. Capital Gain on Transfer of Right Entitlement -

  14. Capital Gain on Transfer of Securities in Demat Form -

  15. Capital Gains on Distribution of Assets by Companies in Liquidation [Section 46]:

  16. Computation of Capital Gains in the case of Transfer of Land and Building or in Real Estate Transactions [Section 50C] -

  17. Capital Gains on Purchase by Company of its Own Shares or Other Specified Securities [Section 46A]:

  18. Capital Gain on Sale of Land and Building to be computed separately in case of Building Constructed by the Assessee:

 

Capital Gains Accounts Scheme, 1988.

Salient Features of Capital Gains Accounts Scheme, 1988 are given ...
 

Types of Capital Gain

  1. Type of Capital Gains:

  2. Types of Capital Sssets:

  3. Computation of Tax on Short-Term Capital Gain if Security Transaction Tax (STT) is applicable (Section 111A).

  4. Computation of Tax on Long-Term Capital Gain

 

Tax on Long-Term Capital Gain in certain Cases (Section 112A)

  1. Conditions to be satisfied for applicability of Section 112A [Section 112A(1)]

  2. Tax Computation on Long-term Capital Gain under Section 112A

  3. Mode of Computation of Cost Of Acquisition for Computing Long-term Capital Gain under Section 112A [Section 55(2)(ac)] :

  4. Important Points on Computation of Tax on Long-term Capital Gain under Section 112A

 

Exemption of Capital Gains under Section 10 and 115JG

  1. Capital Gain on Transfer of US64 [Section 10(33)]

  2. Long-Term Capital Gain on Transfer of BSE-500 Equity Shares [Section 10(36)]

  3. Capital Gain on Compulsory Acquisition of Urban Agricultural Land [Section 10(37)]

  4. Tax Incentive for the Development of Capital of Andhra Pradesh [Section 10(37A)]

  5. Capital Gain Exemption Under Section 115JG(1)

  6. Compensation under Section 96 of RFCTLARR Act. 2013

Exemption of Capital Gains under Sections 54, 54B, 54D, 54EC, 54EE, 54F, 54G, 54GA and 54GB

(Section 54) : Exemption of Capital Gains from the Transfer of Residential House Property

  1. The Provisions of Section 54 towards Exemption of Capital Gains are given below –

  2. Scheme of Deposit in Capital Gains Accounts Scheme, 1988:

  3. A few points which are relevant for availing Exemption under Section 54 are given below-

(Section 54B) : Exemption of Capital Gain on Transfer of Land used for Agricultural Purposes

For the purpose of Section 45, the following transactions are not regarded as transfers (in other words, in the following cases, there is no Capital Gain)—

(Section 54D) : Exemption of Capital Gains on Compulsory Acquisition Of Land And Buildings forming part of Industrial Undertaking

The Provisions of Section 54D towards Exemption of Capital Gains on Compulsory Acquisition Of Land And Buildings forming part of Industrial Undertaking are given :

(Section-54EC) : Exemption of Capital Gain on Transfer of any Long Term Capital Asset on the basis of Investment in certain Bonds

The Provisions of Section 54EC towards Exemption of Capital Gains on Transfer of any Long Term Capital Asset on the basis of Investment in certain Bonds are given –
 

(Section 54EE) : Capital Gain not to be charged on Investment in Units of a Specified Fund

The Provisions of Section 54EE towards Exemption of Capital Gain not to be charged on Investment in Units of a Specified Fund are given –
 

[Section 54F] : Exemption of Capital Gain on Transfer Of Long-Term Capital Assets other than a House Property

  1. The Provisions of Section 54F towards Exemption of Capital Gains on Transfer Of Long-Term Capital Assets other than a House Property are given below –

  2. Scheme of Deposit in Capital Gains Accounts Scheme, 1988 :

  3. Consequences where the amount deposited in the Capital Gains Accounts Scheme is not utilised, wholly or partially, for the purchase or the construction of a residential house within the specified period:

  4. Consequences where the new house is transferred within a period of 3 years of its purchase or construction :

  5. Consequences where the assessee purchases, within a period of two years of the transfer of the original asset, or constructs, within a period of 3 years of transfer of such an asset, a residential house other than the new house bought / constructed, whose income is chargeable under the head Income from House Property:

 

[Section 54G] : Capital Gain on Shifting of Industrial Undertaking from Urban Areas to Non-Urban Areas :

  1. The Provisions of Section 54G towards Exemption of Capital Gains on Shifting of Industrial Undertaking from Urban Areas to Non-Urban Areas are given below –

  2. How much is Exempt (Quantum of Deduction):

  3. Scheme of Deposit in Capital Gains Accounts Scheme, 1988:

 

[Section 54GA] : Exemption of Capital Gain on transfer of assets in case of shifting of Industrial Undertaking from an urban area to any Special Economic Zone (SEZ)

The Provisions of Section 54GA towards Exemption of Capital Gain are given below –
 

(Section 54GB) : Exemption of Long term Capital Gain Tax on Transfer of Residential Property if Net Consideration is Invested in the Equity Shares of a new Start-up SME Company :

  1. Essential conditions to be satisfied to get Exemption Under Section 54GB :

  2. Consequence if equity shares or new asset is transferred within a period of 5 years from the date of its acquisition:

  3. Scheme of Deposit in Capital Gains Accounts Scheme, 1988:

  4. Consequences if the amount deposited in deposit scheme is not utilized for purchase of new asset:

 

(Section 54H) : Extension of time limit for acquiring new Asset or Depositing or Investing amount of Capital Gain, in case of Compulsory Acquisition :

The cumulative impact of Sections 45(5) and 54H is given here ...

Income under the head 'Income from Other Sources' and Its Computation

Scope of Income Chargeable under the head 'Income from Other Sources' (Section 56)

Taxability of Dividend Income [Section 56(2)(i)]

  1. What is Dividend
  2. Accumulated Profits for Distribution of Dividend
  3. Disbursements by the Company to the Shareholders, to the extent of Accumulated Profits.
  4. Deductions for Expenses from Dividend Income [Section 57(i) and 57(iii)]
  5. Tax on certain Dividends received from Domestic Companies [Section 115BBDA]
  6. Tax Treatment of Dividend in the hands of Shareholders

Winnings from Lotteries, Crossword Puzzles, Horse Races and Card Games [Section 56(2)(ib)]

  1. Special rate of Income-tax in case of winnings from lotteries, crossword puzzles, races, etc. [Section 115BB]
  2. Grossing up of Lottery Income, etc.

Interest on Securities under the head 'Income from Other Sources' [Section 56(2)(id)]

  1. Meaning of Interest on Securities
  2. Chargiability of Interest on Securities :
  3. Accrual of Interest on Securities :
  4. Grossing up of Interest on Securities :
  5. Deductions for Expenses from Interest on Securities [Section 57(i) and (iii)]:
  6. Avaoidance of Tax in respect of Interest on Securities (Section 94)

Income from Letting Out of Machinery , Plant or Furniture [Section 56(2)(ii)]

  1. Income from Composite Letting of Machinery, Plant or Furniture and Buildings [Section 56(2)(iii)]:
  2. Deductions permissible from Letting out of Machinery, Plant or Furniture and Buildings [Section 57(ii) and (iii)]:

Income from Composite Letting of Machinery, Plant or Furniture and Buildings [Section 56(2)(iii)]

If an assessee lets on hire machinery, plant or furniture and also building and letting of building is inseparable from letting of machinery, plant or furniture, income from such letting is taxable as income from other sources, if the same is not chargeable to tax under the head “Profits and gains of business or profession”.

On the basis of the judicial pronouncements, the following broad conclusions can be drawn:

Share Premium in excess of the Fair Market Value to be treated as Income [Section 56(2)(viib)]

Section 56(2)(viib) is applicable as follows –

Interest on Compensation or Enhanced Compensation [Section 56(2)(viii)]

As per section 145A(b), any interest received by an assessee on compensation or enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received.

Further, as per section 56(2)(viii), income by way of interest received on compensation or on enhanced compensation referred to in section 145A(b) above shall be taxable under the head income from other sources in the previous year in which such interest is received.

Forfeiture of Advance Received for Transfer of a Capital Asset to be Taxed under the head "Income from Other Sources" [Section 56(2)(ix)]

According to section 56(2)(ix), any sum of money, received as an advance or otherwise in the course of negotiations for transfer of a capital asset shall now be taxable under the head income from other sources if:

Income of any person to include not only gift of money from any person(s) but also the gift of property (whether movable or immovable) or property acquired for inadequate consideration [Section 56(2)(x), w.e.f. A.Y. 2018-19]

The following income, it shall be chargeable to income tax under the head "income from other sources" as per section 56(2)(x):

Amount Expressly Disallowed in computing the 'Income from Other Sources' (Section 58)

The following expenses are not deductible by virtue of section 58 in computing the income chargeable under the head 'Income from Other Sources' :

Deductions Allowed in computing the 'Income from Other Sources'(Section 57)

  1. Deduction in respect of Employee’s Contribution towards Staff Welfare Schemes [Section 57(ia)]
  2. Deductions permissible from Letting out of Machinery, Plant or Furniture and Buildings [Section 57(ii) and (iii)]
  3. Standard Deduction in the case of Family Pension [Section 57(iia)]
  4. Any other Expenses for Earning Income [Section 57(iii)]
  5. Deductions for Expenses from Dividend Income [Section 57(i) and 57(iii)]
  6. Deductions for Expenses from Interest on Securities [Section 57(i) and (iii)]

Taxable Incomes under the head 'Income from Other Sources' [Section 56(2)]

Sub-section (2) of Section 56 specifies 9 (nine) incomes which are always taxable under the head “Income from other sources”.

 

'Clubbing of Income'
( Income of Other Persons Included in Assessee's Total Income)

Income of an Individual to Include Income of Spouse (Husband/Wife of the Taxpayer) - Clubbing of Income [Section 64]

  1. Remuneration of Spouse from a concern in which the other Spouse has Substantial Interest [Section 64(1)(ii)]:

  2. When an Individual is Assessable in respect of Income from Assets Transferred to Spouse [Section 64(1)(iv)]:

  3. An Individual is Assessable in respect of Income from Assets Transferred to Son's Wife [Section 64(1)(vi)]:

  4. An Individual Is Assessable In Respect Of Income From Assets Transferred To A Person For The Benefit Of Spouse [Section 64(1)(vii)]

  5. An Individual Is Assessable In Respect of Income from Assets Transferred to a Person tor the Benefit of Son's Wife [Section 64(1)(viii)]

'Revocable Transfer of Assets' for Clubbing of Income (Section 61)

  1. Examples of Revocable Transfer with different situations :

  2. When a transfer is Revocable [Section 63]:

  3. Section 61 not applicable, if the transfer is Irrevocable for a specified period [Section 62]:

Clubbing of Remuneration of Spouse from a Concern in which the other Spouse has Substantial Interest [Section 64(1)(ii)]:

  1. No Clubbing if Remuneration is due to Technical or Professional Qualifications:

  2. Where both Husband and Wife have Substantial Interest and both are getting Remuneration from the concern:

  3. 'Substantial Interest' by an Individual - Meaning

  4. When both Husband and Wife have Substantial Interest :

Clubbing of Income in respect of Income from Assets Transferred to Spouse [Section 64(1)(iv)]:

Clubbing of Income in respect of Income from Assets Transferred to Son's Wife [Section 64(1)(vi)]:

An Individual Is Assessable In Respect Of Income From Assets Transferred To A Person For The Benefit Of Spouse [Section 64(1)(vii)]

An Individual Is Assessable In Respect of Income from Assets Transferred to a Person tor the Benefit of Son's Wife [Section 64(1)(viii)]

Clubbing of Income of a Minor Child [Section 64(1A)]

  1. Clubbing of Income of a Minor Child in the hands of Father or Mother -

  2. Certain incomes of Minor Child Taxable in the hands of Minor Child only:

  3. When Clubbing of Income of Minor Child is not Attracted -

  4. Exemption under Section 10(32) in case of Clubbing of Income of a Minor Child -

Income from Self-acquired Property Converted to Joint Family Property and subsequent Partition [Section-64(2)]

  1. Transactions are covered by Section 64(2) by an Individual , who is a member of HUF

  2. Clubbing of Income in the case of subsequent Partition of HUF :

  3. Income is to be Clubbed but Income On Income is Not to be Clubbed:

  4. 'Income includes Loss' for the purpose of Section 64.

 

'Set Off and Carry Forward of Losses'

> Sec.70 : Set-Off of Loss from one Source against Income from another Source Under the Same Head of Income.
> Sec.71 : Set-Off of Loss from one Head against Income from another Head
> Sec.71 B : Carry Forward and Set-Off of Loss Under the Head 'Income from House Property'
> Sec.72 : Carry Forward and Set-Off of Business Losses
> Sec.73 : Losses in the Speculation Business
> Sec.74 : Losses Under the Head 'Capital Gains'.
> Sec.74a : Losses from Certain Specified Sources Falling Under the Head 'Income from Other Sources'
> Table showing Set Off and Carry Forward of Losses

 

Deductions.

    1. Deduction in respect of Life Insurance Premia, Deferred Annuity, Contribution to PF, etc. [ Sec. 80 C ]
    2. Deduction in respect of Contribution to certain Pension Funds [Sec.80CCC]
    3. Deduction in respect of Contribution to Pension Scheme of Central Government or any other Employers [ Sec. 80 CCD]
    4. Deduction in respect of Health or Medical Insurance Premia [ Sec.80D]
    5. Deduction in respect of Maintenance Including Medical Treatment of a Dependent who is a person with Disability [ Sec. 80 DD ]
    6. Deduction in respect of Medical Treatment , etc. [ Sec. 80 DDB ]
    7. Deduction in respect of Interest of Loan taken for Higher Education [Sec.80 E ]
    8. Deduction in respect of Donations to certain Funds, Charitable Institutions , etc. [ Sec. 80 G ]
    9. Deduction in respect of Rents Paid [ Sec. 80 GG

Deductions in respect of certain Incomes

    1. Deduction in respect of Profit and Gains from Industrial Undertaking or Enterprises engaged in infrastructure Development [ Sec. 80 IA ]
    2. Deduction in respect of Profit and Gains from Industrial Undertakings or enterprises engaged in development of Special Economic Zone. [Sec. 80 IAB ]
    3. Deduction in respect of Profit & Gain from certain Industrial Undertaking other than Infrastructure Development Undertaking [Sec.80-IB]
    4. Special Provisions in respect of Certain Undertaking or Enterprises in certain special category States. [ Sec. 80-IC]
    5. Deduction in the case of Hotels and Convention center in NCR [Sec.80ID]
    6. Deduction in respect of certain undertaking in North-Eastern States [Sec.80-IE].
    7. Deduction In Respect Of Profit And Gains From Business Of Collecting And Processing Of Bio-Degradable Waste. [ Sec. 80-JJA]
    8. Deduction In Respect Of Employment Of New Workmen [ Sec. 80-JJAA]
    9. Deduction In Respect Of Certain Income Of Offshore Banking Units And International Financial Services Center. [ Sec. 80-LA]
    10. Deduction In Respect Of Income Of Co-Operative Societies. [ Sec. 80P ]
    11. Deduction In Respect Of Royalty Income, Etc., Of Authors Of Certain Books Other Than Text-Books [ Sec. 80-QQB ]
    12. Deduction In Respect Of Royalty On Patents [ Sec. 80-RRB ]

Other Deductions

    1. Deduction In Case Of A Person With Disability [ Sec. 80 U ]

Income Tax on Co-operative Cocieties

1.         Definition of Co-operative society [Section 2(19)]—
2.         Deduction in respect of income of co-operative societies [Section 80P]
3.        RATES OF INCOME-TAX FOR CO-OPERATIVE SOCIETIES [ A.Y. 2014-2015 & A.Y. 2015-2016]

Income Tax on Partnership Firms

1.      Meaning of Firm, Partner and Partnership—
2.      Liability of Partners of limited liability partnership in liquidation [Section 167C] —
3.      Assessment as a Firm [Section 184(1)]—
4.      First assessment as a firm [Section 184(2)]—
5.      Subsequent assessment as a firm [Sections 184(3) & 184(4)]—
6.      Failure of conditions mentioned in Section 144 [Section 184(5)]—
7.     Assessment when section 184 not complied with [Section 185]—
8.     Uls 40(b). Amounts deductable subject to limits.
9.     Special Provisions For Computation Of Income Of Certain Types Of Business
10.   Rates of Income-tax of Partnership Firms

Limited Liability Partnership

1.         Meaning of Limited Liability Partnership—
2.         Process to Start LLP
3.         Essential elements to incorporate LLP—
4.         Who can be partner in LLP—
5.         User Registration—
6.         Designated Partners and their role—
7.         Filing of LLP agreement (Form-3) and Partners’ details (Form-4)—
8.         Accounts, Audit and Returns—
9.         Conversion of existing firms, Companies and unlisted public company into an LLP—
9(a).    # Conversion of small company into LLP (Section 47(xiiib)]
10.         Winding up and dissolution of LLP—
11.       Difference between LLP and Partnership—
12.       Special provisions relating to certain limited liability patnerships— [Inserted bythe Finance Act, 2011, w.e.f. 1.04.2012].

Income Tax Authorities

  1. Various Authorities
  2. Power Of Income Tax Authorities Relating To Search And Seizure [ Section 132 ]
  3. Application Of Seized Or Requisitioned Assets [Section132(B)]
  4. Power Of Survey [ Section 133a ]
  5. Provision Relating To Power To Collect Certain Information [Section 133b]
  6. Disclosure Of Information Regarding Assessees To Certain Authorities [ Section 138 ]

Recovery of Tax and Refunds

  1. Payment of Tax
  2. Modes of recovery of Tax
  3. Refunds

Tax Deducted at Source (TDS)

    1. Introduction- Deduction of Tax at Source (TDS)
    2. Deduction of Tax from the “Salary” [ Sec-192]
    3. Deduction Of Tax From Interest On Securities [ Section-193]
    4. Deduction Of Tax From Deemed Dividend [ Section-194]
    5. Deduction Of Tax From Interest Other Than Interest On Securities [ Section 194A]
    6. Winning From Lottery Or Crossword Puzzle Or Card game And Game Of Any Sort [Section 194B]
    7. Winning From Horse Race [ Section 194BB]
    8. Payment To Contractor And Sub-Contractor [ Section 194C]
    9. Tax Deducted At Source From Insurance Commission [ Section 194D]
    10. Payments To Non-Resident Sportsmen Or Sports Associations [ Section 194E]
    11. Commission, Etc., On The Sale Of Lottery Tickets [Section 194G]
    12. Commission Or Brokerage [ Section 194H]
    13. Payment Of Rent [ Section 194 I ]
    14. Fees For Professional Or Technical Services [ Section 194J]

Filling of Return

  1. Introduction
  2. Time Limit For Filling Return Of Income [ Section 139(1)]
  3. When Return Of Loss Should Be Filed [ Section 139(3)]
  4. Can Return Be Filied Beyond Time [ Section 139(4)]
  5. Can Revised Return Be Filed [ Section 139(5)]
  6. What Is A Defective Or Incomplete Return [ Section 139(9)]
  7. Who Should  Sign The Return Of Income [ Section 140]
  8. Permanent Account Number (PAN)

Tax Planning , Tax Avoidance and Tax Evasion

1. Meaning of Tax Planning

1.1. Why Every Person Needs Tax Planning ?
1.2. How is Tool of Tax Planning Exercised ?
1.3. Methods Of Tax Planning

2. Tax Avoidance
Tax Evasion
4. The Difference Between ‘Tax Planning’ And ‘Tax Management’
5. The Difference Between ‘Tax Avoidance’ And ‘Tax Evasion’.

'PENALTIES' Under Income Tax Act. 1961.

[Section 270AA] : Immunity from Imposition of Penalty and Initiation of Proceedings under Section 276C or 276CC
Penalties for different Defaults under Income Tax Act.
Penalty for default in making payment of Self Assessment Tax [Section 221(1)]
Penalty For Under-Reporting And Mis-Reporting Of Income (Section 270A)
'PENALTIES' Under Income Tax Act. 1961.
Power of Commissioner to Grant Immunity from Penalty [Section 273AA]
Power to Reduce or Waive Penalty (Section 273A)
Types of Penalties imposed under Income Tax Act. 1961

Prosecutions By Income Tax Authorities

    1. For removing any Assets, Books of Account, Documents etc. found during search in contravention of order served U/s 132(3) [ Sec. 275A]

    2. Removal, concealment, transfer or delivery of property to avoid tax recovery [ Sec. 276 ]
    3. Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B. [ Sec. 276B]
    4. Failure to pay the tax collected at source. [ Sec. 276BB]
    5. Willful attempt to evade tax, etc. [ Section 276 (C)(1)]
    6. Failure to furnish returns of income [ Sec. 276CC]
    7. Failure to produce accounts and documents. [ Sec. 276D]
    8. Abetment of false return, etc. [ Sec. 278]
    9. Offences by companies. [ Sec. 278 B]
    10. Offences by Hindu undivided families. [ Sec. 278C]

Income Tax "Settlement Commisstions"

    1. Meaning of Settlement Commisions
    2. Setting Up Of Settlement Commission
    3. Constitution Of Settlement Commission [Section 245B]
    4. Jurisdiction And Powers Of Settlement Commission [Section 245BA]
    5. Vice-Chairman To Act As Chairman [Section 245 BB]
    6. Transfer Of Cases [Section 245 BC]
    7. Decision To Be Majority [Section 245 BD]
    8. Application For Settlement Of Cases [Section 245 C]
    9. Calculation Of Additional Income-Tax [Section 245C (IA)]
    10. Bar On Making Application [Section 245C (1E)]
    11. Procedure On Receipt Of Application [Section 245D]
    12. Payment Of Additional Income-Tax [Section 245D (2A)]
    13. Power Of Settlement Commission To Order Provisional Attachment To Protect Revenue [Section 245DD (1)]
 

Tax Management- Managerial & Financial Decisions

 

1. Tax Management with reference to -Location & Nature of Business.

1.1.       Tax Management  In Location Of The New Business
1.2.       Tax Management  In Nature Of  The New Business

2. Tax Management with reference to -Deemed Dividend

2.1.       Introduction
2.2.       Any Distribution Entailing Release Etc.
2.3.       Any Distribution By Way Of Debenture Etc.
2.4.       Distribution To Shareholders On Liquidation
2.5.       Distribution On Reduction Of Capital     
2.6.       Payment By Way Of Advance Or Loan To Shareholders
2.7.       Tax Planning Through Issue Of Bonus Shares
2.8.       Tax Planning Through Purchase Of Own Shares Or Distribution Of Dividend

3. Tax Management with reference to –Lease or Buy Decisions

4. Tax Management with Reference to - Repair, Replace and Make or Buy Decisions

4.1. Repair, Replace, Renewal Or Renovation

4.2. ‘Make Or Buy’  Decisions

5. Capital Gains on Distribution of Assets by Companies in Liquidation

6. Sale of Scientific Research Asset

7. Tax Management With Reference To Capital Structure

7.1. Capital Structure Decisions

7.2. Tax Considerations

7.3. Tax Planning

8. Conversion of Firm / Sole Proprietorship to Company

8.1. Conversion Of From Into Company [ Section 47 (Iii) ]

8.2. Conversion Of Sole Proprietary Business Into Company [Section 47(Xiv)]

8.3. Provisions Relating To Carry Forward And Set Off Of Accumulated Loss And Unabsorbed Depreciation Allowance In Case Of Succession [Section 72a(6)]

8.4. Withdrawal Of Exemption [ Section 47a(3)]

"Family Tax Planning"- More Income & Less Taxes

Special Provisions relating to 'Income Of Shipping Companies' [Chapter Xll-G of Income-Tax Act]

Security Transaction Tax (STT)

Commodities Transaction Tax - CTT

Tax Guide for NRI - Tax Planning, Tax Saving

FAQ ( Freequently Asked Question ) on Taxation

 

Assessment of Agricultural Income

  1. ‘DEFINITION’ Of Agricultural Income

  2. Tests To Determine Agricultural Income

  3. Types Of Agricultural Income

  4. Partly Agricultural and Partly Non-agricultural Income

  5. Illustrations Of Agricultural and Non-Agricultural Incomes

  6. Tax on Non-Agricultural Income if the Assessee has both Agricultural & Non-Agricultural Income

  7. Computation of Net Agricultural Income

Assessment of Companies

Company Taxation-Meaning and Definition
Types of Companies under Income Tax Act.
Residential Status Of A Company [Section 6(3)]
Incidence Of Tax—Scope Of Total Income (Section 5)
Types of Incomes (Section 7)
Carry Forward and Set Off of Business Losses ( Section 72)
Special Provisions Regarding Losses Relating To Companies Only (Section 72A, 72AA, 72AB)
Deductions Out Of Gross Total Income in case of Companies ( Section 80G to 80LA)
Provision of MAT ( Minimum Alternate Tax) for payment of Tax by certain Companies [Section 115JB]
Calculation of 'Book Profits' for the Purpose of MAT (Section 115JB)
Tax Credit in respect of Tax paid on Deemed Income under MAT Provisions (Section 115JAA)
Amounts Expressively Allowed as Deduction [Section 30 to 37]
Section 40A of Income Tax Act. ( Expenses or Payments not Deductible)
Expenditure on Scientific Research (Section 35)
Minimum Alternate Tax (MAT) [Section 115JB]
(Section 35D and Rule 6AB) : Amortization of Certain Preliminary Expenses

Assessment of Co-operative Cocieties

Meaning & Definition of 'Co-Operative Societies'
Deductions from Total Income of 'Co-Operative Societies' [Section 80P]
Rates of Income Tax - Co-operativer Societies

Assessment of AOP / BOI (Association of Persons / Body of Individual)

Assessment of Association of Persons (AOP)/Body of Individual (BOI)
How to Compute Income of Association of Persons (AOP) or Body Of Individuals (BOI)
How to determine Taxable Income of Members of AOP/BOI
How to find out Tax Liability of an AOP/BOI

Assessment of 'Firm'

What is Firm & 'Partnership Firm'
Conditions for Claiming Deduction in respect of Remuneration and Interest to Partner in case of Firm (Section 184)
Conditions to obtain Deduction of Interest Paid to Partners in case of Firm [Section 40(b)]
Conditions to obtain Deduction of Remuneration Paid to Partners in case of Firm [Section 40(b)]
How to find out Income and Tax Liability of a Firm
Alternate Minimum Tax (AMT) on all Persons other than Companies [Section 115JC to 115JF]

Assessment of Hindu Undivided Familty (HUF)

Hindu Undivided Family (HUF) - Concept, Assessment, Partition, School of Hindu Law
Residential Status of Hindu Undivided Family (HUF) [Section 6(2)]
Assessment after Partition of a Hindu Undivided Family(HUF) [Section 171]
Computation of Total Income of Hindu Undivided Family (HUF)

Assessment of Individual

Income Received from different Institutions by an Individual for Tax Calculation :
Incomes Of Other Persons To Be Included In Total Income Of An Individual : Section 60 to 64
Computation Of Total Income & Tax Liability of an Individual
Special Provisions Claimed by Non-Resident Indian (NRI) [Section 115C to 115-I]
 
 
 
 
 
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