Escolar Documentos
Profissional Documentos
Cultura Documentos
10/23/08 1
INCOME TAX TERMINOLOGY
10/23/08 3
Previous Year – (Sec 3)
10/23/08 4
Previous Year in the case of
newly set up business or
profession
• In case of a newly set up business or
profession or source of income newly
coming in to existence , the first previous
year will be the period commencing from
the date of setting of the business /
profession or as the case may be the date on
which the source of income newly comes in
to existence and ending on the immediately
following March 31.
10/23/08 5
Assessee – Sec 2 (7)
• “ Assessee” means a person by whom Income tax
or any other sum of money is payable under the
act.
• It includes every person in respect of whom any
proceeding under the act has been taken for the
assessment of his income or loss and the amount
of refund due to him.
• It also includes a person who is assessable in
respect of the income or loss of another or who is
deemed to be an assessee or an assessee in default
under the provisions of the act.
10/23/08 6
Residential status – General
Norms
• Assesses are either
• Resident in India
--- Resident and ordinarily resident
---- Resident but not ordinarily resident
• Non Resident In India
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Income from salaries
Salary Income
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Salary means and Includes
• Wages
• Any Annuity or pension
• Any gratuity
• Any fees , commissions, perquisites or
profit in lieu or in addition to any salary or
wages
• Any advance salary
10/23/08 9
Salary – cont..
• Any payment received by the employee in
respect of any period of leave not availed
by him
• Transferred balance in a recognized
provident fund to the extent it is taxable
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Leave salary
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• In case of employee of Central Government
or state government , any amount received
as cash equivalent of leave salary in respect
of the period of earned leave at his credit at
the time of retirement/ superannuation is
exempt from tax.
10/23/08 12
Taxability in case of non-
government employee
• Leave salary is exempt to the extent of least of the
following
• Cash equivalent of leave salary in respect of
earned leave to the credit of employee only at the
time of retirement ( earned leave can not exceed
30ndays for every year)
• 10 months “average salary”
• Rs. 3,00,000.00
• Actual leave salary received
10/23/08 13
Taxability of Gratuity
10/23/08 14
Gratuity to government employee
• Any death cum retirement gratuity received
by employee of central government , state
government or local authority is wholly
exempt from tax
10/23/08 15
Employee covered by payment of
gratuity act, 1972
• Exemption = least of the following
• 15 days salary ( 7 days in case of employees
of seasonal employment) for every
completed year of service based on salary
last drawn in excess of six months
• Rs.3,50,000.00
• Actual amount of gratuity.
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In case of other employees
• ½ months salary for each completed year of
service
• Rs. 3,50,000.00
• Actual amount of Gratuity
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Pension
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Payment in commutation of
pension received by other
• In case employee receives gratuity ,
commuted value of 1/3 of pension
• In other case ½ of such pension
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Provident Fund
Particulars Statutory Recognised Unrecognised Public
10/23/08 20
Employees stock option Plan
ESOP Taxable ESOPS Not Taxable
1. When the stock option plan is not 1. When the stock option confirms
in conformity with central with central government guidelines
government guidelines, it is taxable , ESOP is not taxable
2.Taxable as - Perquisits at the time 2. Any shares or security alloted
of Receipts and Capital Gain at the under notified ESOP are not
time of transfer of such shares or taxable as a perquisits, provided
stock the conditions prescribed under
the scheme are satisfied
10/23/08 21
Specified Employee
An Individual will be considered as specified
employee if-
Director- He is director employee of the
company
Voting Power- He holds 20% or more voting
power in company
Monthly salary in excess of Rs. 50000.00
10/23/08 22
Perquisits Taxable in the hands of Specified and non- specified Employee
Nature of Perquisit Specified Employee Non- specified Employee
Rent free / concessional accomodation Taxable Taxable
Watchman, Gardner, Sweeper, engaged by
employee and expenses are met by employer Taxable Taxable
Above servents provided in any other manner Taxable Not Taxable
Gas, Electricity, Water etc. connection in the name
of employee but expenses are met by employer Taxable Taxable
Above servents provided in any other manner Taxable Taxable
Eduction expenses , if bills are in the name of
employee , but met by employer Taxable Taxable
Above servents provided in any other manner Taxable
Transport Facility Taxable Taxable
Interest free Loans Taxable Taxable
Holiday Homes facility provided Taxable Taxable
Club Facility provided Taxable Taxable
Computer / Laptop provided by employer Not Taxable Not Taxable
Other Movable assets are provided by employer Taxable Taxable
Medical Facilities provided by employer Taxable Taxable
10/23/08 23
INCOME FROM HOUSE
PROPERTY
• Types of house property
• Self occupied
• Let out
• Deemed to be let out
10/23/08 24
Conditions for taxation
• Basis of chargeability is annual value
• The property must be building or land
appurtenant thereto
• The assessee must be owner of property
• The property may be used for any purpose
other than business or profession
10/23/08 25
Self Occupied House property Computation
Particulars Rs
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MORE THAN ONE HOUSE PROPERTY S.O
Particulars Rs
Determination of Annual Value
step 1- Compare Fair rent and Municipal Rent and
select whichever is higher
step- 2 Compare step 1 with standard rent, if
applicable
a) Step 1 > standard rent , then select standard rent
b) Step 2 < Standard rent, then select step 1
c) The selected figure is called selected rent xxxxxxxxx
Less - Municipal Taxes paid xxxxxxxxx
Net Annual Value xxxxxxxxx
Less - Deduction u/s 24
a) 30% of the net annual value
b) Interest ( no celling limit)
10/23/08 28
CAPITAL GAINS
10/23/08 29
Includes Excludes
Property of any kind , a) Stock in trade
whether or not connected b) Personal effects
with business or c) Rural Agriculture lands in
profession india
d) 6 1/2% gold bonds, 7% gold
bonds & National defence bonds
1980
f) Special Bearer bonds , 1991
g) Gold deposit bonds , 1999
10/23/08 30
Short term capital assets
10/23/08 32
Long term capital asset
10/23/08 33
Computation of short term capital gain Computation of Long term capital gain
Short term capital gain xxxxxxxx Long term capital gain xxxxxxxx
10/23/08 34
Exemption U/s 54
Transfer of Residential House property
Applicability Individual / HUF
Asset Transferred Residential House Property
Nature of Asset Long term asset
New Asset Aquired Residential House Property
Amount to be invested Long Term gain on transfer
Exemption amount Least of 1. Amount invested in house
2. Capital Gain
Time limit for
Investment For Purchase - 1 year before or 2 years after
For Construction - with in 3 yaers of transfer
Holding period of asset 3 Years from date of acquisition
Sale of asset with in
Holding period of asset Short term capital Gain
Less - cost of acquisition reduced by
Capial gains exempted u/s 54
10/23/08 35
Exemption U/s 54 EC
10/23/08 36
Exemption U/s 54 F
LTCG on tra nsfe r of a ny long te rm
ca pita l a sset othe r than a residential
House Prope rty
Applicability Individual / HUF
Any long term capital asset other than
Asset Transferred
Residential house property
Nature of Asset Long term asset
on the date of transfer of LTCA
Condition assessee should not own more than
one residential house property
New Asset Aquired Residential House Property
• Dividends
• Winning from Lotteries, crossword puzzles,
horse races, card games, gambling , betting
income
• Income from sub –letting of house property
• Casual and non – recurring income
• Family pension
10/23/08 38
Cont –
Total Income
10/23/08 42
Step -4 Compute tax liability on total income as follows
10/23/08 43
Step -5 Compute net tax after surcharge and education cess and relief
10/23/08 44
Deductions available to individuals
Amount of
Section Applicability Nature of Payment
deduction
Prescribed Maximum of
Individual
80-C Investments Rs.100000.00
LIC or other insurance Maximum of
80-CCC Individual
plans Rs.100000.00
Contribution to
Central Govt. Maximum of
80-CCD Approved pension
employees Rs.10000.00
funds
Maximum -
General -
10000.00,
80-D Individual Mediclaim Policy
Senior
citizens -
150000.00
General Rs.
Expenditure on 50000.00 ,
80-DD Resident individual handicaped Severe
dependents Disability Rs.
75,000.00
10/23/08 45
General -
Actual or
Rs.40000.00
whichever is
Expenditure on less. Senior
80- DDB Resident individual
Specified Dieseases citizens -
Actual or
Rs.60000.00
whichever is
less
Interest on Loan taken Any amount
80- E Individual
for Higher Eucation paid
100% or 50%
depend on
fund,Maximu
m limit -
donation
should not
1. Donations to notified
exceed 10%
80-G All Individuals Funds 2. Other
of adjusted
donations
total income,
Deduction -
Family
Planning
100% , others
50%
10/23/08 46
Tax Rates for Individuals
FOR RESIDENT INDIVIDUALS
IT SC EC
IT SC EC