Mrs. Diya Varwani
Income Tax
Introduction & Definitions
Introduction – In Indian Economy, the Govt. plays a crucial role by making heavy investments / expenditure on core areas like heavy industries, infrastructure, defense, internal security, education, poverty alleviation, employment generation, health, etc. For this purpose Govt. raises funds by levying various taxes, other receipts & also borrowings from market. Types of Taxes – Direct Taxes & Indirect Taxes
Direct Taxes Taxes – Tax Tax which is paid by a person on whom it is legally imposed & the burden of which can not be shifted to any other person is called a direct tax. Tax payer is the tax bearer. Eg. Income Tax, Wealth Tax, Capital gains Tax, etc. Indirect Taxes – Tax, the burden of which can be shifted to others. Tax payer is not the tax bearer. Eg. Sales tax, Excise Duty, Customs Duty, VA VAT, etc. et c. What is Income Tax? Tax? Income Tax Tax is a tax on income earned by a person. Any person, who is having the income in excess of non-taxable limit, is required to pay tax. Income Tax Tax in India – Income Tax was first introduced in India in 1860but a systematic legislation was passed only in 1866. Since then, there have been constant changes in the structure of this law. The whole act was completely revised in 1961. The result was the Income Tax Act, 1961 which came in force from 01-04-1962. This act undergoes changes every year when the budget is passed by the parliament. The Income Tax Tax is the machinery, machinery, which determines who is i s to be charged tax and in respect of what income. But the income is classified under various heads and then it is taxed. But the income tax does not prescribe the rates at which different persons and different income would be taxed. The rates of taxation are prescribed every year by the Finance Act. Definitions Assessee Section 2(7) – “Assessee means a person by whom any tax or any other sum of money (i.e. Penalty or Interest) is payable under the act”. The term assessee includes the following: 1. A person [sec. 2(31)] by whom any tax or any other sum of money (including Penalty or Interest) is payable under the act. 2. Ev Ever ery y pers person on in resp respec ectt of who hom m any any proc procee eedi ding ng un unde derr this this act act has has been been take taken n for for the the assessment of – i) his his own own inco income me or or inco income me of of any any othe otherr pers person on in in resp respec ectt of whom whom he he is asse assess ssabl ablee or ii) ii) the the los losss sus susta tain ined ed by him him or or suc such ho oth ther er pers person on or iii) iii) the the amo amoun untt of of ref refun und d due due to him him or or suc such h oth other er pers person on.. 3. Every person who is Deemed to be an Assessee under the provisions of this Act. For e.g. an agent of a non-resident, the guardian of a minor, a trustee, on the death of a person his legal representative shall be treated as assessee. 4. Every person who is Deemed to be Assessee in Default under any provisions of this Act. Act. E.g. i) a person who fails to pay installment of advance tax ii) ii) a per perso son n who who is is lia liabl blee to to dedu deduct ct tax tax at sour source ce but but doe doess not not dedu deduct ct it iii) iii) a perso person n who who deduc deducts ts the the tax tax a t source source but fails fails to to pay pay it to the the Gove Governm rnment ent.. Assessment Section 2(8) – “An Assessment includes reassessment”. An Assessment Assessment means the process of determining and computing the amount of income and the tax due of a person. Assessment Year Section 2(9) – “The period of 12 months commencing on the first day of April every year”. MBA(BU) – III Sem
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Mrs. Diya Varwani
Income Tax st
st
Thus an assessment year begins on 1 April and ends 31 March. For eg. The current assessment year 2008-09, has begun on 1st April 2008 and will end on 31 st March 2009. Income earned in Previous year is taxed in assessment year which is following the previous year. Income Section 2(24) - Income includes – 1. Prof Profit itss & Gains ains 2. Divide idend ndss 3. Voluntary oluntary Contribution Contributionss received received by a charitable charitable or religious religious trust or institution institution or approved scientific research association or sports association. 4. Value of perquis perquisites ites or profit profit in lieu lieu of salary salary.. 5. Any special allowance or benefit specially granted to the assessee to meet expenses wholly, reasonably and exclusively for the performance of his duties (eg. Entertainment Allowance). Allowance). 6. Any allowance granted to the assessee – to meet his personal expenses at the place where he perfo performs rms his duties duties or to compe compensa nsate te him for the increase increased d cost cost of living living (eg. (eg. Dearn Dearness ess Allowance) 7. The Value Value of any benefit or perquisite, whether convertible into money or not, which is obtained ob tained from a company by – a director or his relative or a person who has a substantial interest in the company or his relative. It also includes any sum paid by the company in respect of any obligation which otherwise would have been payable by aforesaid persons. 8. The value value of any benefit or perquisi perquisite, te, convertibl convertiblee into money or not, obtained obtained by a trustee trustee on behalf of the beneficiary. 9. Any sum chargeable to income tax under section 28(ii), 28(ii), (iii); or section 41 or section 59. - Section 28(ii) deals with any compensation received by a person for termination of agency - Sect Sectio ion n 28 28(i (iii ii)) deal dealss with with inco income me deri derive ved d by a trad tradee or prof profes essi sion onal al asso associ ciat atio ion n for for specific services rendered to its members - Section Section 41 deals deals with with profits profits charg chargeable eable to tax tax as incom incomee from busin business. ess. E.g. E.g. recover recovery y of bad debts, sale of scientific research asset, etc. - Section Section 59 deals deals with with profits profits charge chargeable able to to tax as income income from from other other sources sources e.g. recovery recovery of expenses claimed earlier 10. Profit on sale of an import license taxable u/s 28(iiia) 11. Export Export cash cash assist assistanc ancee receiv received ed or receiv receivabl ablee by any perso person n again against st export exportss und under er any Government Scheme taxable u/s 28(iiib) 12. Refund of customs duty or excise duty or receivable against exports, taxable u/s 28(iiic) 13. The value of any benefit or perquisite whether convertible into money or not, taxable u/s 28(iv) i.e. arising from any business or profession. For e.g. A gift received received by a doctor from a patient 14. Any Interest, salary, bonus, commission or remuneration, by whatever name called, due to or received by a partner of a firm from the firm taxable u/s 28(v) 15. Capital gains chargeable u/s 45 16. Profits of any business of insurance carried on by a mutual insurance company or a cooperative society taxable u/s 44. 17. Income of a banking business of a co-operative society 18. Any winning from lotteries, crossword puzzles, races including horse races, card games, game show, show, entertainment programme on television in which people compete to win prizes, gambling, betting, etc. 19. Any sum received by the employer from his employees as contribution to any provident fund or superannuation fund or any fund set up under employees state insurance act, 1948, or any other MBA(BU) – III Sem
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Income Tax
fund for the welfare of the employees (only if received by employer & not paid to the fund before the due date). 20. Any sum received under a keyman insurance policy including policy the sum allocated by way of bonus on such policy. 21. Any sum exceeding Rs. 50,000 received without consideration (i.e. gift) from non-relatives by an individual or an HUF after 01-04-2006 shall be treated as income and chargeable to Tax. Tax. The following important points should be noted in this regard: Regular and definite source The term ‘income’ in normal course denotes a periodical monetary return coming in with some sort of regularity or expected regularity from definite sources. Different Forms of Income Income may be received in cash or in kind. When income is received in kind, its valuation is to be made according to income tax rules. Illegal income The income tax act does not make any distinction between legal and illegal incomes, both of which are equally liable to tax. Thus, income earned by a honest teacher is charged to tax at the same rate as income earned by a smuggler. smuggler. Basis Income may be taken either on accrual basis or on receipt basis depending upon the facts and nature of income. Gift A personal personal gift, such as gifts at the time of marriage or gifts at birthday b irthday celebrations, etc., received from relatives is not income chargeable to tax in the hands of person who receives it. However gift received by professionals in appreciation of their professional skill is considered as an income. Loss The term ‘Income’ also includes loss. Loss is to be taken as minus income. Lumpsum Receipt If a receipt is an income, then whether it is received in lumpsum or in installments would not affect its taxability, for example, if a person receives arrears of salary in a lumpsum amount, it would still be his income. Real Income Income must be real and not imaginary. A person can not earn income by trading with himself or from transferring his funds from one account to another. No income can arise in a transfer of goods from head office to a branch office even if the goods are invoiced at a price higher than cost. Similarly, no income can arise on passing entries in the accounts a ccounts on mere revaluation of assets or on mere production or purchase of goods till the goods goo ds are actually sold. Mutual Activity Income has to arise from an outside source. Thus, a co-operative society (or a club) does not earn any income when it collects contributions from its members for common expenses, as the amounts are not received from an outsider. The members who contribute the money are the same members who obtain the common benefits and amenities. Such amounts, whose contributors and beneficiaries are the same, are known as receipts from ‘Mutual activity’ which which are not treated as income. Person Section 2(31) - Person includes – i) An Individual; MBA(BU) – III Sem
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Income Tax
ii) A Hindu Undivided Family; iii) A Company; iv) A Firm; v) An Association of person (AOP) or a body of Individuals (BOI), whether incorporated or not; vi) A Local Authority; vii) Every artificial juridical person not falling within any of the preceding sub-clauses. Explanations Individual - Individual means a natural person i.e. a human being. Individual also includes a minor or a person of unsound mind. Hindu Undivided Family - A Hindu Undivided Family consists of persons governed by Hindu code who are lineally descended from common ancestors and includes their wives, sons and unmarried daughters. Company - A Company is taxable entity (person) distinct from its shareholders. Section 2(17) of the Act defines “company” as follows: (i ) any Indian Co Company, (ii) (ii) any body body corpor corporate ate incorpo incorpora rated ted unde underr the laws laws of a coun country try outs outside ide India, India, (iii) (iii) any instit instituti ution, on, associ associati ation, on, or body which which is/was is/was assess assessed/ ed/ass assess essabl ablee as a company company for assessment year on before 1st April 1970. (iv) (iv) any insti institut tution ion,, associa associatio tion, n, or body wheth whether er incorp incorpora orated ted or not and and whether whether Indian Indian or not, which is declared by the Central Board of Direct Taxes Taxes (CBDT) to be a Company. Thus, a company means, in brief, an Indian company, a foreign Company, any entity assessed as a company up to the assessment year 1970-71, and an entity declared to be a company by the CBDT. CBDT. Firm - A firm means a partnership firm, whether registered or un-registered. For the purpose of income tax act, a ‘Firm’ is treated as an entity separate and distinct from its partners, though under the partnership law, a firm has not been accorded such a separate entity. Association of Persons or Body of Individuals - An ‘Association of Persons’ (AOP) means an association in which two or more ‘persons’ join for a common purpose or a common purpose or a common action for earning income. An SOP can have any ‘person’ i.e. an individual, a firm, a HUF, HUF, a Company, etc. as a member. Following are the examples of an association of persons – (i ) Firm attempted to be form ormed but where due to legal defect in partnership deed, partnership is not valid (ii) (ii) Member Memberss of former formerss Hindu Hindu Undivi Undivided ded Fami Family ly earnin earning g income income joint jointly ly even even after after partit partition ion of the HUF (iii) (iii) A compan company y joinin joining g with with two two other other comp compani anies es in a joint joint ventu venture re (iv) A trust (v) A Club (vi) (vi) A co-o co-op perati rative ve soci societ ety y Body of Individual (BOI) - BOI means a team of individuals carrying on some activity with the object of earning income. There are two major differences between ‘Association ‘Association of persons’ and ‘Body of Individuals’. 1) An associati association on of persons may consist consist of non-individua non-individuals ls but a body of individuals individuals consists consists of only ‘individuals’ or human beings and can not have any other person (e.g. a firm, a HUF, etc.) as a member. MBA(BU) – III Sem
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Income Tax
2) Further, Further, an association association of persons denotes a voluntary, voluntary, deliberate or contractual coming together together.. A body of individuals, on the other hand, may arise due to operation of law e.g. heirs of a deceased person earning income from property inherited under law of succession. Local Authority - Local authority includes a Municipality District Board, Port Trust, Trust, Gram Panchayat, Munic Mu nicipa ipall Corpor Corporati ation on or any other other author authority ity entrus entrusted ted by the gov govern ernme ment nt with with the contro controll and management of a local fund. Artificial Juridical Person - The term Artificial Juridical Person covers any entity having a separate legal existence, not covered under any of the above categories i.e. all such persons who can not be included under any of the first six categories. It is a residency category. It includes a university, a bar council, LIC etc. Previous Year Section 2(34) – Previous year means the previous year as defined in section 3 of the Income tax. Section 3 defines previous year as “Financial Year Year immediately preceding the assessment year”. Financial Year Year generally st st means a year starting from 1 April & ends on 31 March. Previous Year in case of newly setup business or profession - Previous Year commences on the date of setting up of business / profession or on the date when new source of business comes into existence & ends on 31st March immediately following. In this case duration of 1 st Previous year can be 12 months or less. In Case of Closure of Business / Profession – In case of existing business, which gets closed in the financial year, Previous year will be starting from 1 st April & ends on the day business / profession is closed. Exceptions to above rule:
1. Shippi Shipping ng Busine Business ss of Non-Re Non-Resid siden entt 2. Non-Resident owns a ship, carries passengers, livestock, goods or mail shipped at a port in India, NR may or may not have an agent / representative in India. 3. Pers Person onss leavi leaving ng Indi India. a. 4. Bodies Bodies form formed ed for for short short durat duration ion.. 5. Person likely to transfer property to avoid tax. 6. Discontinued Business.
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Income Tax
Scope of Total Total Income & Residential Status Calculation of Total Income Income under different heads Salary House Property Profits/Gains from Business or Profession Capital Gains Other Sources Gross Total Income Less ess: Dedu eductio ctions ns un unde derr chapt hapter er VI-A I-A (u/ (u/s. 80 80C C to 80 80U U) Total Income
XX XX XX XX XX XXX XX XXX
Basis of Charge or Charge of Income In come Tax Tax Section 4
1. 2. 3. 4.
Income Income Tax is is an annu annual al tax tax Income Income Tax Tax is charged charged on on every person person as defined defined u/s. u/s. 2(31) Income Tax Tax is charged in in the assessment assessment year, on the the Total Total Income of the Previous Previous Year Year Income Income Tax Tax Act Act does not specify specify rates at which which tax is to be levied. levied. The rates are are prescribed prescribed for each assessment year by the respective Finance Act (i.e. Budget). 5. Income tax is also deducted at source or paid in advance as per the provisions of the Act.
Rules of determining Residential status 1. Sec. 2(42) defines Resident as a person who is resident in India within the meaning of section 6.
2. Resident Residential ial status status is is differe different nt from from citizen. citizen. 3. The Residential Residential status of an assessee assessee is to be determined in respect of each each previous year. year. 4. For the purpose of determining residential status, assesses have been grouped into 5 categories – Individual, HUF, HUF, Firm, Company & Every other person. Person (Assessee) Individual / HUF
Resident (R)
Resident and Ordinarily Resident (R & OR)
All Other Assessees
Non-Resident (NR) Resident (R) Non-Resident (NR)
Resident and Not Ordinarily Resident (R & NOR)
Residential Status – Individual Section 6(1)
An Individual is said to be Resident in India if he satisfies any one of the following two conditions: 1. He is in India for a period or periods amounting in all to 182 days or more in the relevant previous year: OR 2. He is in India for 60 days or more during the relevant previous year and has been in India for 365 days or more during four previous years immediately preceding the relevant previous year. year. MBA(BU) – III Sem
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Income Tax
Exceptions: 1. In case of Individual who is a citizen of India and who leaves India for the purpose of employment outside India or as a member of the crew of an Indian ship, the period of 60 days in condition no. 2 above shall be substituted with 182 days. 2. In case of Individual who is a citizen of India, or a person of Indian origin, who being outside India, comes on a visit to India, the period of 60 days in condition no. 2 above shall be substituted with 182 days. Resident & Ordinarily Resident Section 6(6)
An Individual is said to be Not Ordinarily Resident in India if he satisfies any one of the following conditions: 1. He has been a non-resident in India in 9 out of 10 previous years immediately preceding the relevant previous year; OR 2. He has been in India for a period of 729 days or less in 7 previous years immediately preceding the relevant previous year. year. This says that An Individual is said to be ordinarily resident if he satisfies both the following conditions: 1. He has been been Resident Resident in India for at least least 2 out of 10 previous years years immedia immediately tely preceding preceding the the relevant previous year; And 2. He has been been in India for 730 days or more, during during 7 previous previous years immedia immediately tely preceding preceding the the relevant previous year. Illustration 1: Indian Citizen & businessman Shri Raj Gopal, who resides in Jaipur, went to germany for employment purposes on 15-08-2007 and came back to India on 10-11-2008. He has never been out of India in the past. a) Determine residential of Shri Raj Gopal for the assessment year 2008-09. b) Will Will your answer be different if ha had gone for leisure trip? Illustration 2: ‘U’ was born in 1975 in India. His parents were also born in India in 1948. His grand parents were, however, born in England. ‘U’ was residing in India till 15-03-2005.Thereafter, he migrated to England and took the citizenship of that country on 15-03-07. He visits India during 200708 for 90 days. Determine the residential status of ‘U’ for assessment year 2008-09. Residential Status – HUF Section 6(2)
A HUF is said to be resident in India in any previous year in every case except where during the year the control & management of its affairs is situated wholly outside India. Place of Control and Management of the Affairs of a HUF
Wholly in India
Wholly out of India
Resident
Non- Resident
Partly in India & partly outside India Resident
A HUF is said to be resident & ordinarily resident in India if the Karta of the HUF satisfies both the following conditions: 1. He must must be Resident Resident in at least least 2 out out of 10 previou previouss years years immediat immediately ely precedin preceding g the relevan relevantt previous year. And MBA(BU) – III Sem
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Mrs. Diya Varwani Income Tax 2. He must be in India for 730 days or more during 7 previous years immediately preceding the
relevant previous year. Residential Status – Firm, AOP AOP, BOI & all others (Except Companies) Section 6(4)
A Firm, AOP or BOI is said to be resident in India in any previous year in all cases except where during the year the control & management of its affairs is situated wholly outside India. Control & Management in case of Firm is in the hands of Partners. Residential Status – Companies Section 6(3)
A company is said to be Resident in India in any previous year if: a) It is an Indian Company; OR b) During the relevant previous year, the control and management of its affairs is situated wholly in India. That means a company is said to be Non- Resident in India – a) it is not a Indian Company And b) the control & management o its affairs is situated wholly or partially outside India. COMPANY Indian Company
Foreign Company
Place of Control & Management
Place of Control & Management
Wholly in India
Wholly out of India
Partly in India Partly outside India
Wholly in India
Wholly out of India
Partly in India Partly outside India
Resident
Resident
Resident
Resident
Non-Resident
R & OR Taxable
R but NOR Taxable
NR Taxable
Taxable
Taxable
Taxable
Taxable
Taxable
Not Taxable
Taxable
Not Taxable
Not Taxable
Not Taxable
Not Taxable Not Taxable
Non-Resident
Scope of Total Income / Incidence of Tax Section 5 Particulars of Income Inco Income me rece receiv ived ed in Indi Indiaa or deem deemed ed to be received, whether earned in India or elsewhere Income Income which which accrues accrues or arises arises or deemed deemed to accrue or arise in India, whether received in India or elsewhere Income which accrues or arises outside India and receiv received ed outsi outside de India India from from a busine business ss controlled from India Income which accrues or arises outside India from any other source Income which accrues or arises outside India and receiv received ed outsi outside de India India during during the years years preceding the previous years and remitted to India during the previous year
Note: Any item of income which is exempt under the provisions of the Act, it is to be excluded from the scope of Income MBA(BU) – III Sem 8
Mrs. Diya Varwani Highlights of provisions of Incidence of Tax:
Income Tax
(a) Ay Income Income which which is either either receive received d in India or deemed deemed to be receive received d in India is taxabl taxablee in India, irrespective of the residential status. (b) Ay Income which is either earned in India or is deemed to be earned in India is taxable in India, irrespective of the residential status. (c) For a Resident in India (For Individual Individual & HUF, HUF, resident and ordinarily ordinarily resident resident in India) all global Income, wherever earned / received is taxable in India. (d) For a Non Resident, Resident, an Income is taxable only if it is either earned earned in India or received in in India. (e) For not ordinarily resident, resident, income earned and received outside India will will be taxable only only when it is from a business or profession controlled or set up in India. Important Note – Receipt and Remittance - Receipt of income means the first occasion when the money comes under the control or profession of the receiver. After After the first occasion of receipt, if money is sent to another place it is a mere remittance of money and not receipt of income. Illustration - M receives $ 20,000 in USA on July 31, 2007. Out of that, he remits Rs. 1,00,000 to his son R in India on November 9, 2007. In this case, income is received outside India on 31 July, 2007. Cash or Kind - Income may be received in cash or in kind. For example a Doctor may receive a car in lieu of fees from a rich patient; this would be receipt of income in kind and taxable. When income is received in kind, amount of income is taken to be equal to the fair market value of the item on the date of receipt. Receipt by assessee or on his behalf - Income directly received by the assessee is no doubt taxable in his hands. But income received on behalf of the assessee by another person is also taxable in his hands. Thus income received on behalf of the assessee by his agent or his bankers is taxable in his hands. Receipt and accrual - Income is said to be received when it reaches the assessee, on the other hand, when the right to receive the incomes becomes vested with the assessee, income is said to accrue or arise. Thus, accrual denotes right to receive any income while receipt denotes actual receipt of income. Generally, Generally, income must accrue first Receipt normally is after such accrual. Actual receipt and deemed receipt - It is not necessary that an income should be actually received in India in order to attract tax liability. An income deemed to be received India in the previous year is also included in the taxable income of the assessee. Section 7 enumerates the incomes deemed to received in India. Income deemed to accrue or arise in India - In some cases, income is deemed to accrue or arise in India under section 9 even though it may actually accrue or arise outside India. Accrued and Due - For example, Salary ‘accrue’ every day, but may become ‘due’ on the last day of the month. Methods of Accounting - Income ‘arises’ when it is shown as income in books. If the assessee’s accounts are maintained on mercantile basis, income is taxable when it accrues or arises. If the assessee’s assessee’s accounts are maintained on cash basis, income is taxable when it is actually received. However, However, this is subject to the specific provisions of the Act. Act. Thus the Act provides that Salary is taxable on accrual or receipt whichever is earlier, irrespective of the method of accounting followed by the assessee. Income deemed to be received in India [Section 7] 1. The annual accretion in the previous year to the balance of an employee to the extent MBA(BU) – III Sem
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Mrs. Diya Varwani
2. 3.
4. 5.
Income Tax
(a) the contrib contributi ution on made made by the employ employer er in excess excess of 12 per cent cent of the salary salary of the employee; (b) interest credited on the the balance to the credit of the employee employee at a rate exceeding exceeding a rate of 9.5%. Transf ransferr erred ed bal balanc ancee in in RPF RPF The contribution made by central government or any other employer in the previous year, to the account of employee under a pension scheme. Tax deducted deducted at source source is deemed deemed to be receiv received ed in the hands hands of the payee. payee. Investments, expenditure, cash credits detected during the previous year which is unexplained and cash, bullion, gold, jewellery, or other valuable articles in respect of which the assessee offers no satisfactory explanation about the nature and source of its acquisition shall be treated as income deemed to be received.
Incomes which are deemed to accrue or arise in India [Section 9]
1. 2. 3. 4. 5.
Income Income from from a business business connection connection in India. India. Income Income from any propert property y, asset asset or source of of income income situated situated in India. India. Income Income from the the transfer transfer of a capital capital asset asset situate situated d in India. India. Any income income which which falls falls under the the head salarie salaries, s, if it is earned earned in India. India. Salary Salary payable payable by the government government to an Indian Indian citizen citizen / national for service servicess rendered rendered outside outside India. 6. Intere Interest st paya payable ble outs outside ide Indi India. a. 7. Royalt Royalty y Payabl Payablee outsid outsidee India India.. 8. Fee for techni technical cal services services outside outside India. India. Illustration 3: The following are particulars of income of R for the previous year 2007-08: Rent from a Property in Delhi received in USA 80,000 Income from a business in USA controlled from Delhi 1,20,000 Income from a business in Bangalore controlled from USA 1,80,000 Rent Rent from from a proper property ty in USA receiv received ed there there but subse subseque quentl ntly y remitt remitted ed to India India 60,000 60,000 Interest from deposits with an Indian Company received in USA 20,000 Profits for the year 2006-07 of a business in USA remitted remitted to India during the Previous year 2007-08 (Not Taxed earlier) 75,000 Gifts received from his parents 45,000 Compute his income for the assessment year 2008-09 if he is: (i) (i) Resi Reside dent nt & Ordi Ordina nari rily ly Resi Reside dent nt in Indi India. a. (ii) Not Or Ordinari arily Re Resident. (ii (iii) Non Non-Res -Resid iden entt in in Ind Indiia.
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Income Tax Incomes which do not form part of Total Total Income
Section 10(1)
10(2)
10(2A)
10(10D)
10(15)
10(1 10(16) 6)
10(17)
10(17A)
10(32)
10(3 10(34) 4)
Description Agricultural Income
Conditions Agricu Agricultu ltural ral Income Income means means – (a) any any rent rent or reven revenue ue der derived ived from rom land and situat uated in Indi Indiaa & is used used for agricu agricult ltura urall purpos purposes es (b) any income come der derived by agricultural operations including processing or agricultural produce, raised or received as rent-in-kind, or sale of such agricultural produce (c) Income attributable to Farm House (Income from land used for non-agricultural purposes is not exempt) Receipts by a Any sum received by a member of o f a HUF out of – member of HUF Inco Income me of the the Fami Family ly,, Inco Income me of impa impart rtib ible le esta estate te belonging to the family Share of Profit Sum Received by a partner from a firm as his share in the from the Firm total income of the firm, which is separately taxed o nits Income Amount Re Received Sum Received under a life insurance insurance policy, policy, including including the under a life sum allocated by way of bonus on such policy. insurance policy Following sum received will not be exempt u/s. 10(10D) Amou Amount nt Recei Received ved und under er Keym Keyman an Insu Insura rance nce polic policy y & amount received under a policy issued on or after 01-04-03 in respect of which premium payable for any of the years duri during ng the the term term of poli policy cy excee exceeds ds 20% of actua actuall sum sum assured. Interest, premium Intere Interest st on Specif Specified ied Securi Securitie tiess like like Post Post Offic Officee Saving Saving or bonus on Bank A/c, National Relief Bonds, R.B.I. Relief Bonds, etc. specified investments Scho Schollarsh arship ipss (a) (a) Gran Grante ted d to meet meet the the cost cost of educ educat atio ion n (b) (b) Scho Schola lars rshi hip p may be for a course not leading to a degree (c) Cost of education covers tuition fees & other incidental expenses related to education
Exemption Fully Exempt
Fully Exempt (to avoid double taxation) Fully Exempt.
Fully Exempt
Fully Exempt
Fully Exempt (irr (irres espec pecti tive ve of actual expenditure done) Allowance of Dail Daily y allo allowa wance ncess rece receiv ived ed or allo allowa wance ncess recei received ved by Fully Emempt MP’s & MLA’s reas reaso on of his his memb member ersship hip unde underr the Memb Member erss of Parliament (constituency Allowance ) Rules, 1986 or any Constituency allowance received by a MLA Awards & Any Any amou amount nt rece receiv ived ed whet whethe herr in cash cash or kind kind,, (i) (i) in Fully Exempt Rewards pursuance to any reward instituted in the public interest by Central Govt. or by State Govt. or by any other body appro approved ved by Cent Centra rall Govt Govt.. (ii) (ii) as a rewa reward rd by Cent Centra rall Govt. or State Govt. for such purpose as is approved by Central Govt. in public interest. Income of Minor Any Income arising to a minor child of an assessee is Full Fully y Exemp Exemptt if added & clubbed to the parents income, however section Income < 1,500 10(3 10(32) 2) give givess exem exempt ptio ion n from from such such club clubbi bing ng to the the maximum amount of Rs. 1,500. Divi Divide dend nd Inco Income me Any Any sum sum rece receiv ived ed by by sha share reho hold lder erss as as Div Divid iden end d fro from m a Full Fully y Exem Exempt pt in in
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Mrs. Diya Varwani
MBA(BU) – III Sem
Income Tax Domestic company, on which such domestic company has the hands of paid tax. shareholders
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