Taxation

Income Tax Act: 1961

Taxation
Under Constitution of India Govt has right to collect Income Tax As per Income Tax Act,1961 Implemented according to rules laid down Administered by CBDT Interpreted by Income Tax Appellate Commissioner Income Tax Tribunal/High Court/ Supreme Court
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Taxation : Concepts
Assessment Year : Period of 12 months commencing on 1st April every year. Current Assessment year began on 1.4.2010 and will end on 31.3.2011. Relevance :Tax liability is calculated in Assessment year Previous Year : Financial year immediately preceding the assessment year For AY.2010-11 : Previous Year 1.4.2009 to31.3.2010.
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Taxation : Concepts
Relevance of Previous Year : (P.Y) It is the income earned during the previous year which is taxed. For our study : Relevant Previous Year : 1.4.2010 to 31.3.2011 : Income earned during this period will be charged to Tax Relevant A.Y. : 2011/12: Tax liability will be assessed in this year.
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Taxation : Concepts
Assessee : A person who is liable to pay any sum under Income Tax Act. Person: Includes: a) individual b) Hindu undivided family c) Company d) Firm e) association of persons or body of individuals f) Local authority g) Artificial juridical person
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Taxation - concepts
Individual: means natural person human being including male, female, minor or lunatic HUF : Hindu undivided family consists of all persons lineally descended from Hindu ancestors Company : i) Indian company ii) Any body corporate incorporated outside India iii) Declared by CBDT as company
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Taxation - Concepts
Firm : Taxable entity distinct from its partners. Association of Persons : Association in which two or more persons join in for a common purpose or a common action to earn income. AOP can have any person as member. Body of Individuals : A team of individuals carrying on some activity with object of earning income. Local Authority : Municipality, District Board, Port Trust etc. Artificial Juridical Person : Diety, idol, corporation established under separate Act, University, Bar Council

Taxation Concepts
Income : Includes : Profits and Gains Dividend Voluntary contributions received by a) charitable or religious trust or b) scientific research association c) sport association/ notified institution Value of perquisites under the head salaries for example, Rent free accommodation
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Taxation - concepts
Income continued : Special allowance or benefit specifically granted to an employee to meet expenses for performance of his duties : For example : Entertainment allowance. Allowance to an employee to meet the expenses increased cost of living . For example Dearness Allowance DA /City living allowance CLA.
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Taxation -concepts
Income cont Export Incentives Any interest, salary, bonus, commission or remuneration earned by a partner of the firm from such firm. Any capital gain chargeable to capital gains u/s 45 Profit and gains of any business of mutual insurance company or co operative society
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Taxation - concepts
Income Contd : Profit and gains of business of banking carried on by a co operative society with its members Winnings from lotteries, cross word puzzles, races including horse race card games, and any other games of any sort or from gambling or betting of any form or nature whatsoever.
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Taxation concepts
Income Contd : Any sum received by the assessee from his employer towards welfare fund contributions such as provident fund, superannuation fund etc. Any sum received under key man insurance policy including the sum allocated by way of bonus. No-compete fee and compensation for not sharing of any intangible asset such as know how, patent trade mark
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Taxation - Concepts
Income contd : Any gift referred to in sec.56:ie, Gift wef 1.4.2006 : Any sum of money, the aggregate value of which exceeds Rs.50000/- received from any person without consideration by an individual or Hindu Undivided Family However exemption is granted in respect of gift from : a) relative b) on the occasion of marriage of an individual c) under a will or by way of inheritance d ) From local authority/ foundation /university e) from charitable institutions registered under sec.12A.
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Taxation - Concepts
Observations on Income : Income as per its natural meaning Regularity of income thoguh important , is not essential. Income may be in cash or kind Income tainted with illegality is also taxable Capital Receipt is not income
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Taxation - Concepts
Capital Receipt v/s Revenue Receipt Distinction is important as capital receipt is not taxable except specially provided under law Capital Gains i) Circulating Capital and Fixed Capital Receipt on account of circulating capital is a revenue receipt , whereas receipt on account of fixed capital is capital receipt
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Taxation -concepts
Ii)Receipt in lieu of Source of Income or in lieu of Income: A receipt in lieu of source of income is capital receipt where as receipt in leiu of income is revenue income. iii) Income from wasting assets : Profit from a capital which is exhausted or consumed during the process of realisation is chargeable to tax : For example : Income from minine, querries

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Taxation - concepts
Insurance Receipts: A receipt under a General Insurance policy may be a capital receipt if policy relates to capital asset or may be revenue receipt if policy relates to circulating assets.

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Taxation - concepts
Deemed Income: Income Tax contains provisions to tax following notional / fictional Incomes: Income from self occupied property Presumptive Incomes Unexplained Credits Unexplained Investments Unexplained expenditure Amount borrowed or repaid on hundi otherwise than by way of account payee cheque.
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Taxation -concepts
Income deemed to be received in India: i)Employers contribution to recognised provident fund in India in excess of 12 % of salary. Interest credited to recognised P/F in excess of 9.5% Employers contribution and interest thereon transferred balance from unrecognised P/F to recognised P/F Contribution made by any employer in the previous year to the account of an employee under a pension scheme referred to in sec.80CCD.

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Taxation - Concepts
Income deemed to accrue and arise in India : Income accruing or arising through business connection in India Income through any property, asset or source of income in India Income through transfer of capital asset situated in India Salary Income earned in India Salary payable by the Govt to Indian citizens for services outside India Dividend paid by an Indian company outside India Interest , Royalty and Fees for technical services payable by Govt, resident / non resident individuals
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Taxation - Rates
Income of Rate individual above 65 years of age Nil Upto Rs. 2,40,000/Above 10% Rs.2,40,000/- but up to Rs.5,00,,000/Above Rs. 5,00,000 but up to 8,00,000 Above Rs. 8,00,000 Pluss 3% Ed.cess. 20% 30 %

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Taxation -Rates
Resident individual being woman below 65 years of age Income Rate of Tax Up to Rs.1,90,000/Nil Above Rs.1,90,000/- but 10% up to Rs.5,00,000/Above Rs. 5,00,000/20% But up to Rs.8,00,000/Above Rs. 8,00,000/30% Plus : 3% Edu.cess

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Taxation- Rates
Other Individuals Income Rate

Up to Rs. 1,60,000/ Above Rs.1,60,000/- but up to Rs.500,000/Above Rs.5,00,000/- but Up to Rs8,00,000/Above Rs.8,00,000/Plus : 3% Edu. Cess

Nil 10 % 20 % 30 %
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Taxation - Rates
HUF/ AOP/BOI/Artificial Juridical Persons Income Up to Rs.1,60,000/Above Rs.1,60,000/- but Up to Rs. 5,00,000/Above Rs.5,00,000/- but Up to Rs.800,000/Above Rs. 8,00,000/Plus : 3% Edu.cess Rate Nil 10% 20% 30%
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Taxation - Rates
Taxation of Firms & Cos. Basic Tax Rate Surhagre if Income exceeds 1 cr. Education Cess Effective Rate Firm Domestic Cos 30% 7.5% Foreign Cos 40% 2.5%

30% Nil

3% 30.90%

3% 33.225%

3% 42.23%
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Taxation Residential status

Individual

Resident

Non Resident

Resident & Ordinary Resident

Resident and Not ordinary Resident

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Taxation Residential Status

Residential Status is to be determined for every previous year and it may change from year to year. Residential status is different from citizenship : - An individual may be citizen of UK but resident in India. - Indian citizen may be Non resident. Residential status is important to decide whether foreign income of a person taxable or not.
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Taxation Residential Status

Resident : Two Basic Conditions and individual satisfies at least one condition: i) He is in India for a period of 182 days or more in that year ii) He is in India for 60 days or more in the previous year AND 365 days or more during 4 years preceding that previous year. If an individual satisfies at least one condition He is resident If he does not satisfy both these condtions he is Non Resident.
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Taxation- Residential Status

Illustration : Mr. A, a British national comes to Indiafor the first time and stays in India as under :F.Y 2004-05 : 55 days,2005-6 :60 days, 2006-07 :80 days, 2007-08:160 days 2008-09 : 70 days. Determine residential status for A.Y.200910.
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Taxation Residential Status

A.Y 2009-10 P.Y 2008-09 Mr. stays for 70 days First condition of 182 days is not satisfied. Second Condition : 60 days in PY. He stays for 70 days : Hence first part of this condition satisfied ,BUT In preceding four previous years :He stays for 355 days against the condition of 365 days ( 55+60+80+160) = 355.Hence Second condition is also not satisfied. Hence both conditions not being satisfied, Mr. A is Non Resident.

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Taxation Residential Status

Mr. B, a Malayasian citizen leaves India on 1.6.2006 after a stay of 10 years I India. During the F.Y. 2007-08, he comes to India for a period of 46 days. Later he returns to India for good on 10.10.2008. Determine his residential status for A.Y2009-10. Would your answer be different if his date of departure was 15.5.2006?
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Taxation-Residential status
For A.Y.2009-10 F.Y. 2008-09 His stay during 2008 -09 wef 10.10.2008 No. days stayed 173.- condition of 182 days not satisfied. But satisfies first part of second condition Stay in preceding 4 previous years : 2007-08 : 60 days 2006-07 : 365 days 2005-06 : 365 days 20040-05 : 366 days Hence, period of stay is more than 365 days He satisfies second part of second condition. In fact second condition is fully satisfied. Hence he is resident.
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Taxation -ResidentialStatus
Resident will have to be further sub divided into : Resident and Ordinary Resident ( ROR) Resident but not ordinarily resident (NOR)

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Taxation- Residential Status

Additional Two Conditions for Resident and Ordinarily Resident (ROR): i) He has been resident in India in at least 2 out of 10 preceding previous years AND Ii) He has been in India for 730 days or more in preceding 7 previous years If both these conditions are satisfied :ROR If both these conditions not satisfied and only one of these additional conditions is satisfied the individual is called Resident but Not Ordinarily Residenr ( NOR)
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Taxation Residential Status

Alternative conditions for Resident but Not Ordinarily Resident (NOR): He has been non resident in India in 9 out of 10 preceding previous years OR He is in India for a period not exceeding 729 days in 7 preceding previous years. Individual satisfying any one of the above conditions is NOR And if both these conditions are not satisfied : ROR
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Taxation Residential Sattus

In our earlier illustration : Malayasian citizen B is ROR. He would remain to be ROR if his date of departure in 2006-07 happens to be 15.5.2006.

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Taxation-Residential status
Exceptions : i) In respect of Indian Citizen leaving India for employment, or member of crew of Indian ship can be considered resident in India only if he stays in India for182 days or more. ii) Similarly, citizen of India or person of Indian origin residing outside India comes to India on a visit will be treated resident in India only if he stays in India for 182days or more. In other words, 60days in second condition are extended to 182 days.
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Taxation- Residential Status

Residential status of HUF : Determine the status of Karta as Resident, Non Resident Or as ROR and NOR Firm, AOP and every other person other than company can be Resident Or Non resident : If control and management is wholly or partly in India : Resident If control and management wholly outside India: Non Resident
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Taxation Residential status

Company : Following types of Companies are Resident in India: i) An Indian company Ii) Any other company whose control and management is wholly in India. In any other case it is considered ; Non Resident.
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Taxation- Significance of Residential status

Particalars
Income received or deemed to be received in India

ROR T T

NOR T T

NR T T

Income accruing or arising or deemed be accruing/arising in India Income accruing or arising outside India from i) Business / Profession controllled / set up in India ii) Any other source

T T

T NT

NT NT

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Incomes which do not form part of total income : Exempt Income

Sec.10 Incomes not included In total income Sec.10A New Undertaking in FTZ/ Export Processing Zone Sec.10AA New Undertaking in SEZ Sec.10B : 100%EOU Sec.10BA Export of certain articles Sec11 to 13 Charitable And Religious Trusts Sec.13A Income of political parties

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Taxation :Exempt Income u/s 10

Agricultural Income Receipt by a member from HUF Share of profit from partnership firm Compensation received by Bhopal gas victims Any sum received / receivable from : Central/ State Govt, Local Authority by individual/ his legal heir by way of compensation on account of disaster.
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Taxation: Exempt Incomes

Sum received from Life insurance policy including bonus but this exemption isnot available for: a) Scheme under sec.80DD Maintenance and medical treatment of dependant with disability b) Key man insurance policy c) Where annual premium exceeds 20% of actual capital sum assured.- however if amount is received on death of a person the entire amount is allowed without any restriction.
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Taxation Exempt Income

Income by way of interest, premium on redemption or other payment on securities bonds or certificates notified by Govt.: List of 21 Notified securities : Examples : Post office cash certificates National Plan certificates Post office savings bank accounts, cumulative time deposits NRI Bonds, Tax free bonds of HUDCO Gold deposit bonds etc. ( for Detailed List refer page 68/69 of the Text book)
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Taxation Exempt Income

Scholarship granted to meet cost of education

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Taxation- Exempt Incomes

In respect of Non residents : Interest on notified securities including redemptions Interest on Non resident external accounts An income by a foreign company by way of royalty or fees for technical services in pursuance of an agreement entered into with foreign govt for services in India or outside India for security of India and notified by theGovt.
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Taxation Exempt Incomes

Daily allowances of MP s and MLA s including constituency allowances Recipients of Gallantry awards ParamVir/ Mahavir or Vir Chakra pension / family pension as notified Former Rulers Annual value of one palace in occupation is exempt. Income of Research Institutions, News Agency, Professional Institutions approved funds, educational institutions and hospitals on certain conditions

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Taxation Exempt Incomes

Income of Mutual Funds registered under SEBI or set up by public sector bank / Institution authorised by RBI subject to conditions as may be notified by the Govt. Dividends Income of Registered Trade Unions

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Exempt Income Sec.10A &10B

Eligible Assessees: Newly established undertakings in - Free trade zone - Electronic Hardware Technology park - Electronic Software Technology park Sec.10A. - Newly established undertakings which are 100% Export oriented units Sec.10 B.
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FTZ
Kandla Free Trade Zone SEEPZ Santacruz Electronic Export Processing Zone Falta Export Processing Zone Madras Export Processing Zone Cochin Export Processing Zone

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Hardware/ Software Technology Parks

Any parks set up in accordance with EHTP or STP scheme, notified by Govt. of India, Ministry of Commerce & Industry. 100% EOU : Undertakings which are approved as 100% EOU by the board appointed in this behalf by Central Govt. under Inds. Development & Regulation Act, 1951.
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Common Conditions In Provisions 10A & 10B

Must begin manufacturing or production in
FTZ / EHTP / STP / 100% EOU

Should not be formed by splitting / reconstruction of business Should not be formed by transfer of old machinery Sale proceeds must be repatriated into India within six moths or extended time as permitted by RBI. Audit
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Period & Amount Of Deduction

The Deduction is available in respect of any profit and gains derived from the export of articles or things or computer software. For a period of 10 consecutive assessment years beginning with the assessment year relevant to previous year in which the unit began to mfg./ produce the articles/things/computer software.
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Computation of Deduction
FORMULA : Export Turnover ------------------------- x Total Profit Total Turnover

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Taxation Sec.10A,10B
Other Points: During period of deduction depreciation is deemed to have been allowed.Written down value shall be accordingly reduced. No deduction u/s 80 IA or Sec.80IB shall be allowed. Any unabsorbed depreciation or business loss or loss under capital gains shall be allowed to be carried forward and set off in subsequent years. In case of amalgamation or demerger, benefit of deduction shall be made available to the amalgamated or the resulting company as the case may be for the unexpired period.
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Taxation Sec.10A/10B
Option not to claim deduction. Export Turnover means consideration in respect of export of articles or things or computer software received in or brought into India in convertible foreign exchange within the time stipulated but does not include freight, insurance and telecommunication charges if incurred in fgn exchange in providing the technical services outside India.
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Illustration
Information from A ltd. Situated in FTZ for Fin.YE 31/3/07. Total Turnover (TT) : Rs. 12 Cr Export Turnover (ET) : Rs. 9.5 Cr Profit (P) : Rs. 2.2 Cr Computation of Deduction Under Sec 10A : ET ----- x P TT

= 9.5/12 *2.2 = 1.74

Taxable Profit =

Profit from undertaking 2.20 Cr Less: Deduction 1.74 Cr 0.46 Cr

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Taxation Units in SEZ

Unit to manufacture / produce articles or services in SEZ as defined in SEZ Act 2005. Production in SEZ on or after 1.4.2005 Unit is not set up by splitting or reconstruction of existing business. Not formed by transfer to a new business of machinery or plant previously used for any purpose. ( Value of used machinery transferred not to exceed 20 %)
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Taxation units in SEZ

Deduction for Profits and gains derived from export of services, articles or things produced . Computation amount of profit from export: Export Turnover ------------------------ x Total Profit Total Turnover
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Taxation Units in SEZ

Amount of deduction Period First 5 consecutive years Next 5 years Next 5 years Deduction 100% of profits 50 % of profits Any amount transferred to Special Economic zone Reinvestment Reserve or 50 % of profits which ever is lower.

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Taxation Units in SEZ

Conditions for utilisation of SEZ Reinvestment Reserve : For acquiring plant and machinery which is first put to use before the expiry of aperiod of3 years following the previous year in which reserve was created For the purpose of business of the undertaking other than for distribution by way of dividends or profits or remittance outside India as profits or for the creation of any asset outside India. Assessee to furnish the particulars of machinery along with return of Income.
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Taxation Units in SEZ

Withdrawal of emption
Violation Of Condition Tax Implications

1. Incase special reserve is The amount so utilized shall utilized for any purpose be chargeable to tax in the other than the specified one. year of such utilization. 2. In case the reserve is not utilized before the expiry of 3 years from the end of the previous year in which reserve was created. The amount of unutilized reserve shall be deemed to be the profits in the year immediately following the period of 3 years.
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Conversion of FTZ/EPZ to SEZ

The Unit located in FTZ/EPZ subsequently converted to SEZ , by reason of conversion of FTZ/EPZ into SEZ, tax deductions are allowed to FTZ/ EPZ for 10 years from the date of manufacture under sec 10AA. Unit initially setup in FTZ/EPZ and has completed 10Years will not get deductions if it is subsequently located in SEZ.
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Taxation Sec.10BA
Export of certain articles or things: Eligible articles or things: all hand made articles or things which are of artistic value and which require the use of wood as the main raw material. Conditions : Manufacture of articles or things without the use of imported raw materials Not formed by splitting up or reconstruction of existing business. Not formed transferof used machinery
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Taxation Sec.10BA
Conditions of Sec.10 BA Contd: 90%of sales to b e by way of exports Employment of 20 or more workers. Sales proceeds to be realised and brought into India within a period of 6 months or within extended time as per RBI approval. Certificate from C.A for correctness of claim.
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Taxation Sec.10 BA
Amount of Deduction : Export Turnover ------------------------ x Profit Total Turnover Exercise : 3.4 ( Page :91)

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Taxation Charitable Trusts / Institutions Sec.11-13.

The Income derived from the property held under Trust for charitable or religious purposes is exempt from tax subject to certain conditions. Sec.11. Voluntary contributions received ( not being corpus funds ) shall be deemed to be income of the trust.
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Taxation Charitable trust

Conditions : The Trust should be registered with Commissioner of Income Tax u/s 12A. The accounts of the trust for the previous year should be audited if total income exceeds Rs. 1,60,000/ At least 85 % of Income is required to be applied for the approved purposes, The unapplied income and money accumulated should be invested in the specified forms/ modes.
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Taxation charitable Trust

Charitable Purpose :Sec.2(15): It includes relief to the poor, education, medical relief, and the advancement of any other object of general public utility. Advancement of general public utility includes any object which will be beneficial even to a segment of the society not necessarily the whole mankind. However object should not be for the benefit of specified person.
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Taxation - Trust
Examples of advancement of general public utility : Chambers of Commerce ; Promotion and protection of trade , commerce and industry. State Bar Council : Beneficial for segment of public as distinct from general public utility. Institute of Chartered Accountants : It is a society for dissemination of knowledge .

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Taxation Charitable Trust

Corpus Donation :These are donations received with a specific instructions that the amount donated shall form part of the corpus of the Trust. Such donations are not treated as income but regarded as capital receipts and not chargeable to tax. Investment of corpus donations to be in approved investments and assets. Condition of audit applicable if such donation exceedRs.1,60,000/ Other voluntary donations are treated as income of the trust but exemption can be claimed subject to fulfillment of certain conditions.
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Taxation Charitable Trust

Registration: Application to Commissioner of Income Tax in Form10A On receipt of application commissioner may call for information. On being satisfied about genuineness of activities of trust/ institution, order of registration to be passed in writing. Otherwise order of refusal in writing . Time period for registration /refusal : within six months from date of application for registration. Refusal order is appealable before Income Tax Appellate Tribunal
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Taxation Charitable trust

Application of Income : Trust must utilise 85 % of income of the previous year for the objects of the trust. Utilisation of income for acquiring assets to promote the objects satisfies the condition. If income applied falls short of 85 % of income derived that year, due to the reason that part of the income has not been received during that year, can be applied in the following year. Non application of income for any other reason will be taxable.
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Taxation Charitable Trust

Application of Income contd : Amount equal to 15 % of the Income of the trust is exempt even if not spent. This 15 % is worked out after deducting depreciation and expenses incurred for earning income. Administrative , Misc. expenses, income tax and wealth tax paid are treated as amount spent on the objects of the trust. For calculating 15 % donations / contributions are considered.
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Taxation Charitable Trust

Accumulation of Income: Sec.12 The Trust can accumulate or set apart its income for a specified purpose by informing assessing officer. Period of accumulation not to exceed five years. The amount accumulated to be invested in specified investments. If income accumulated is not utilised for specified purpose in specified period, or immediately following year, it will be deemed to be income in the immediately following year. If trust is unable to apply income so accumulated for the purpose for which it was accumulated due to circumstances beyond control, Assessing officer may allow the application of such funds for other objects of the trust. Charitable trust is expected to make application for accumulation of funds alongwith return of income.

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Taxation Charitable trust

Accumulation of Income contd : Trust can spend or contribute to another trust in the year of earning income. However, if income is accumulated for specified purpose it can not be used for contribution to another trust. Even assessing officer can not authorise such use. Incase it is used for such contributions shall be deemed to be income chargeable tax in the year of such contribution.
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Taxation-Trust
Accumulation of Income : However, where the trust or Institute is dissolved, the assessing officer may allow application of such accumulated income towards contribution to another trust registered u/s 12AA or to any fund or institution or any university or educational institute or hospital or medical institute referred to u/s 10 ( 23) only in the year in which dissolution takes place.
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Taxation- Trust
Illustration of Trust Income: Acharitable Trust derives income, net of rxpenses,Rs.15 lakhs and corpus donation of Rs.8 lakhs for the year ending 31.3.2008. It accumulated Rs.10lakhs out of 15 lakhs for specified purpose and informs Assessing Officer. Out of the balance, spends Rs. 1 lakh for the objects of Trust. Determine Taxable income of Trust for A.Y. 2008-09.
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Taxation - Trust
Income Net of Expenses 15,00,000 Less 15 % Exempt 2,25,000 Balance 12,75,000 Less Amount accumulated 10,00,000 Balance Trust should utilise 2,75,000 Less Actual amount spent 1,00,000 Taxable Income of the Trust 1,75,000 Exercise : 3.10 Page 99
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Taxation Trust
Capital Gains : Where a capital asset is transferred and the whole of net consideration is utilised for acquiring another asset : Entire capital gain is deemed to have been applied for the objects of the trust. If only part of consideration is utilised : Amount of asset acquired less the original cost of asset will be deemed to be applied for the objects of the trust.
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Taxation - Trust
Illustration : Capital Gain of Trust : Trust sold the land for Rs. 22.5 lakhs and incurred expenses of Rs.50000/-. The land was acquired for Rs.7 lakhs. Advise Trust on taxable gain assuming Trust acquires another asset for A) Rs. 22 lakhs B) Rs. 18 lakhs.
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Taxation - Trust
Capital Gain : Sale Proceeds 22.5 lakh Less Expenses 00,5 lakh Less OriginalCost 7.00 lakh Capital Gain 15 lakh. A)New asset acquired Rs. 22 lakh : Entire capital gain is utisled and hence exempt B) New asset acquired Rs. 18 lakh :Exempt capital gain would be Rs.18 lakhs Rs. 7 lakhs= 11 lakhs. Taxable capital gain = 15 lakhs- Rs.11 lakhs as exempt =Rs. 4 lakhs taxable capital gain. Exercise : 3.12 Page 100.
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Taxation - Trust
Business Income: In case of a Trust or Institution, Income from business would be eligible for exemption , if the following conditions are satisfied : Business should be incidental to the attainment the objects of the trust/ institution. Separate books of account should be maintained in respect of such business.

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Taxation - Trust
Specified Investments :Se.11(5): Govt. savings certificates /securities issued by Central Govt under Small Savings Scheme Post Office Savings Bank account Deposit with any scheduled bank or a co operative society engaged in banking business Central / state Govt securities
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Taxation - Trust
Specified Investments Contd : Units of UTI Deposits with IDBI Deposits / Investments made in shares of public sector companies If public sector co. ceases to be public sector co.- shares acquired to be transferred within 3 years and other investments withdrawn on maturity Deposit/ Investment in bonds issued by Fin. Corporation engaged in providing long term funds for industrial development in India. Deposit / Investment in bonds of any public company providing finance for construction or purchase ofresidential houses in India Depodit / Investment in any bonds issued by a public co. providing long term finance ( Repayment in not less than 5 years Immovable property.

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Taxation - Trust
Cases where income shall not be exempt : Income from the property held under a trust for private religious purposes, which does not ensure benefit of the public. Income of a charitable trust or institution created for benefit of any particular religion, community or caste. Exception : Trust formed for benefit of backward classes, scheduled tribes or women and children.
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Taxation - Trust
Income Not EXEMPT Contd: Any income of a trust used directly or indirectly for the benefit of author, founder, manager or any person who made substantial contribution ( Rs. 50000/-and above in a year). Any shares in a company other than a) shares in public sector company b) shares prescribed as a mode of investment

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Taxation - Trust
Income not exempt contd: Income from business not incidental for the attainment of objectives and/ or where separate books of accounts have not been maintained. Any voluntary contribution in respect of which trust / institution does not maintain record of identity of person making contribution.( such donations are called anonymous donations and are charged at a flat rate of 30 %.
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Taxation Political Parties Sec.13A

Following income of political party is exempt: Income from house property Income from other sources Income by way of voluntary contributions Capital gains

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Taxation Political parties

Conditions : The political party is registered under Representation of Peoples Act,1951. Keeps and maintains books of accounts and other documents Keeps and maintains record ( name and address) of voluntary donations in excess of Rs.20000/ Accounts should be audited. Filing of report before Election Commissioner before due date of filing return with details of voluntary donations in excess of Rs. 20000/- received.
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