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INCOME TAX
By : CA Anupam Parashar
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CHAPTER - 1
BASIC CONCEPT
What is Tax — Tax is a fee charged by a government There are two types
of taxes
IMPORTANT DEFINITIONS
ASSESSEE
Sec. 2(7)
'
PERSON
Sec. 2 (31)
INCOME
INDIA
DEEMED INCOME
MARGINAL RELIEF
CHAPTER 2
Basic condition
(2) 60 days or more during the relevant previous year 365 days or more during 4
previous years immediately preceding the relevant previous year.
ADDITIONAL CONDITIONS
a) 2 out of 10 And
SECTION 9
CHAPTER 3
Important concept
Type of Allowances
Section 10(13A)
Specified allowances
DUCHAT
Perquisites
↓ ↓ ↓ ↓
Taxable Tax Free Taxable in hands Other benefit
of under
For All for all specified (Chapter XII H)
employees
↓
→ (1) Rent Free →(6) Leave → (8) Water, gas Tax paid by
Accommodation Travel Employer
concession
Exempt for all
employees
→(2) Loan →(7) Medical →(9) Education
Retirement Benefits
Pension
Gratuity
Leave Salary
(i) (a) Three months salary for each completed years of service or
Retrenchment compensation
*Salary includes all but does not include bonus and employer's PF
contribution.
Chargeability
Section 22
Deemed owner
Section 27
Section 23(1)
Deductions
Section 24
No Deduction
Section 25
Section 25AA
Section 25B
Co-ownership
Section 26
Can Annual Value (Net Annual Value) be negative?
CHAPTER 5
Depreciation
Section 32
Proportionate Depreciation
Additional Depreciation
Written down value for purpose of charging depreciation if during the previous
" year there is a slump sale:
How to claim depreciation when the asset is not exclusively used for the
purpose of business or profession
Section 33AB
40%
Section (33ABA)
20%
Section 35
Section 41(3)
Section 35ABB
Sale of
licence
Expenditure on eligible projects or schemes
Section 35AC
Preliminary Expenses
Section 35 D
Section 35DD
Section 35DDA
Section 35 E
u/s 36(1)
General Deductions
Section 37(1)
Section 40 (a)
Section 40(b)
Section 40 A(2)
Payment in cash
Section 40 A(3)
Section 40 A(7)
Section 43 B
Maintenance of accounts
Section 44AA
Section 44AB
3. U/s 44AD/AE/AF:
Sec. 44AD/AE/AF
8%
3500/3150
5%
CHAPTER 6
Capital asset
Section 2(14)
Type of capital gains
Transfer
Section 2(47)
Sections 46 and 47
Section 51
Cost of improvement
Section 55(1)(b)
Section 2(48)
Section 45(1A)
Section 45(2)
Section 45(3)
Dissolution of firm
Section 45(4)
Compulsorily acquisition
Section 45(5)
Section 10(37)
Capital gain on conversion of debentures into shares:
Liquidation of a company
Section 46
Section 50C
Section 55A
Long-term capital gain on eligible equity shares exempt if the shares are
acquired within a certain period Section 10(36)
(Section 111A)
or
CHAPTER 7
Method of Accounting
Taxability of Dividend
Section 56(2)(i)
Dividend
Deemed Dividend
Section 2(22)
Winnings from Lotteries, Crossword Puzzles, Horse Races and Card Games
Section 56(2)(ib)
Section 10(15)
No deduction
Section 14A
Govt. Non-govt.
Tax-free Others Tax-free Others
Included in total
Income
X √ √ √
Grossing up
X X √ √ Or X
Section 94
(2) Loss arising from purchase and sale of securities not allowed in
certain cases (Section 94(7))
Section 56(2)(ii)
Section 56(2)(vi)
Contribution of the employee towards his welfare fund, deducted/received by
the employer [Section 56(2)(ic)]
Amounts not deductible in computing the income under the head 'Income from
Other Sources' [Section 58]
CHAPTER 13
CHAPTER 12
AGRICULTURAL INCOME
75%,65%,60%.
CHAPTER 8
CLUBBING OF INCOME
Section 60
Section 61
When a transfer is revocable [Section 63]:
Section 64
Section 64(1)(/V)
Section 64(l)(vi)
Income from assets transferred to any person for the benefit of the spouse of
the transferor Section 64(I)(vii)
Income from assets transferred to any person for the benefit of son's
wife
Section 64(I)(viii):
Section 64(1A)
Section 64(2)
CHAPTER 9
Losses of firms
Carry forward and set off of losses in case of certain companies
Section 79
DEDUCTIONS
Section 80C
80CCC
Section 80CCD
Section 80CCE:
Total deduction under section 80C, 80CCC and 80CCDcan not exceed Rs.
1,00,000.
Section 80D
15000/20000
Section 80DD
50000/75000
Section 80DDB
40000/60000
Section 80E
8year
Deductions for donations
Section 80G
Note:- GTI includes lottery income also. But for calculating Adjusted GTI
lottery has not been excluded. Therefore while calculating Adjusted GTI
lottery shall not be deducted.
Section 80GG
Section 80GGA
Section 80GGC
Development of infrastructure
Section 80- IA
100% of profits from such business for any 10 years out of 15 years
Development of SEZ
Section 80-IAB
100% of profits from such business for any 10 year-; out of 15 years
Section 80-IC
Amount of Deduction:-
In Sikkim or North East Region 100% of profits for 10 years starting
from the year in which starts
operations
In Himachal Pradesh or Uttaranchal 100% of profits for 5 years starting
from the year
Section 80-ID
Amount of deduction:-
Section 80-IE.
Amount of deduction:
100% of profits shall be allowed as deduction for 10 consecutive A/Y
commencing from the year in which it begins to manufacture or produce
articles or things, or completes substantial expansion.
Section 80JJA
Section 80JJAA
Section 80 QQB
Section 80RRB