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INTRODUCTION
DEFINATION OF DIRECT TAX
A tax that is paid directly by an individual or organization to the imposing entity. A taxpayer pays a direct tax to a government for different purposes, including real property tax, personal property tax, income tax or taxes on assets. Direct taxes are different from indirect taxes, where the tax is levied on one entity, such as a seller, and paid by another, such a sales tax paid by the buyer in a retail setting. A government levy on the income, property, or wealth of people or companies. A direct tax is borne entirely by the entity that pays it, and cannot be passed on to another entity. Examples include corporation tax, income tax, and social security contributions. Unlike consumption taxes see indirect tax!, direct taxes are based on the ability to pay principle but they sometimes work as a disincentive to work harder and earn more because that would mean paying more tax. "ee also progressive tax.
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2.1. METHADOLOGY
#he data collect for this pro$ect is secondary data collected from various internet websites and articles on net
2.2. OBJECTIVES
#he main ob$ectives of this pro$ect is to learn and understand different heads of %ncome and to study how to file online retuns
3. HEADS OF INCOME
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3.1. Salari !
C r"ai# $ri#% & # $i"! "' & "a( ) a! * r+,i!i" ! i# "- -a#)! '$ .*l'/ ! 0S 1"i'# 123245 R la" ) a. #). #" i# ! 1"i'#!6 7832AA4 & 119:M i! #he &inance 'o.(! Act, ())* has delivered the long standing demand of the corporates to abolish &+#. "ection ,,-./ has been inserted to provide that the provisions of 0hapter 1%%23 relating to &ringe +enefit #ax shall not apply in relation to A.4.(),)2,, and thereafter. ii! 3owever, the actual tax burden on fringe benefits would not be completely eliminated but would be shifted from the employer to the employee. #he employer, instead of paying &+#, would now have to deduct tax at source from the employees in respect of certain fringe benefits, including E"56s and contribution to superannuation fund in excess of the prescribed limit. #hese would now be taxed as per7uisites in the hands of the employees. iii! Accordingly, the following fringe benefits have been brought under the scope of per7uisites taxable in the hands of the employees by amending section ,8 (! 9 ,! the value of any specified security or sweat e7uity shares allotted or transferred, directly or indirectly, by the employer or former employer, free of cost or at concessional rate to the assessee. "pecified security means :securities; as defined in section ( h! of the "ecurities 0ontracts <egulation! Act, ,*-=. %t also includes the securities offered under employees stock option plan or scheme. "weat e7uity shares means e7uity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know2how or making available rights in the nature of intellectual property rights or value additions, by whatever name called. #he value of specified security or sweat e7uity shares shall be the fair market value of such security or shares on the date on which the option is exercised by the assessee, as reduced by any amount actually paid by, or recovered from, the assessee in respect of such security or shares. #he fair market value means the value determined in accordance with the method as may be prescribed by the 0+D#. :5ption; means a right but not an obligation granted to an employee to apply for the specified security or sweat e7uity shares at a pre2determined price. N'" 9 0onse7uently, when these securities or shares are transferred by the assessee, the capital gains would be computed by taking the fair market value of the securities or shares, which has been taken into account for per7uisite valuation, as the cost of ac7uisition of such securities or sweat e7uity shares. (! the amount of any contribution to an approved superannuation fund by the employer in respect of the assessee, to the extent it exceeds <s., lakh
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>! the value of any other fringe benefit or amenity as may be prescribed by the 0+D#. Effective from A.4. (),)2,,!
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3a4 D $i#i"i'# '$ <&l'1= '$ a!! "!> a! * r ! 1"i'# 23114 "' a**l/ $'r all *,r*'! ! '$ "I#1'. ?"a( A1" 0S 1"i'# 323145 i! At present, the term ?block of assets? has been defined both in section ( ,,! and in Explanation > to section >( ,!. "ince the definitions are not exactly the same in the two sections, it causes difficulty in interpretation. ii! %n order to remove this difficulty, Explanation > of section >( ,! has been amended to delete the definition of :block of assets; provided therein. 3ereafter, Explanation > to section >( ,! would define only the meaning of :assets; and not :block of assets;. As a result, the meaning of :block of assets; has to be derived only from section ( ,,!. Effective from A.4.(),)2,,! 3&4 S1'* '$ & # $i" '$ @ i%-" ) ) ),1"i'# '$ 19AB $'r i#?-',! r ! ar1- a#) ) C l'*. #" (*a#) ) 0S 1"i'# 3932AB45 i! "ection >- (A+! provides a weighted deduction of ,-)@ to a company engaged in the business of biotechnology or in the business of manufacture or production of drugs, pharmaceuticals, electronic e7uipments, computers, telecommunication e7uipments, chemicals or any other article or thing notified by the 0+D#, if it has incurred expenditure on scientific research excepting on land and building! on in2house research and development facility approved by the prescribed authority. ii! #his benefit of weighted deduction has now been extended to all companies engaged in the business of manufacture or production of any article or thing except those specified in the list of the Eleventh "chedule! in order to promote research and development extensively in all sectors of the economy. Effective from A.4.(),)2,,! 314 I#"r'),1"i'# '$ <i#C !". #"?li#= ) "a( i#1 #"iC !> $'r !* 1i$i ) &,!i# !! ! 0N @ S 1"i'# 39AD5 <elated amendment in sectionsA (B, C>, -)+, 8>A D B)2%A i! Although there are a plethora of tax incentives available under the %ncome2tax Act, they do not fulfill the intended purpose of creating infrastructure since these incentives are linked to profits and conse7uently have the effect of diverting profits from the taxable sector to the tax2 free sector. #herefore, with the specific ob$ective of creating rural infrastructure and environment friendly alternate means for transportation of bulk goods, investment2linked tax incentives have been introduced for specified businesses, namely, 9 E setting2up and operating Fcold chainG facilities for specified productsH E setting2up and operating warehousing facilities for storing agricultural produceH
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E laying and operating a cross2country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network. ii! ,))@ of the capital expenditure incurred during the previous year, wholly and exclusively for the above businesses would be allowed as deduction from the business income. 3owever, expenditure incurred on ac7uisition of any land, goodwill or financial instrument would not be eligible for deduction. iii! &urther, the expenditure incurred, wholly and exclusively, for the purpose of specified business prior to commencement of operation would be allowed as deduction during the previous year in which the assessee commences operation of his specified business. A condition has been inserted that such amount incurred prior to commencement should be capitalized in the books of account of the assessee on the date of commencement of its operations. iv! #he specified business should fulfill the following conditions 2 ,! it should not be set up by splitting up, or the reconstruction, of a business already in existenceH (! it should not be set up by the transfer to the specified business of machinery or plant previously used for any purposeH %n order to satisfy this condition, the total value of the plant or machinery so transferred should not exceed ()@ of the value of the total plant or machinery used in the new business. &or the purpose of this condition, machinery or plant would not be regarded as previously used if it had been used outside %ndia by any person other than the assessee provided the following conditions are satisfiedA a! such plant or machinery was not used in %ndia at any time prior to the date of its installation by the assesseeH b! the plant or machinery was imported into %ndia from a foreign countryH c! no deduction in respect of depreciation of such plant or machinery has been allowed to any person at any time prior to the date of installation by the assessee. >! %n respect of the business of laying and operating a cross2country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network, such business,I a! should be owned by a company formed and registered in %ndia under the 0ompanies Act, ,*-= or by a consortium of such companies or by an authority or a board or a corporation established or constituted under any 0entral or "tate ActH
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b! should have been approved by the 6etroleum and 'atural Jas <egulatory +oard and notified by the 0entral Jovernment in the 5fficial Jazette. c! should have made not less than one2third of its total pipeline capacity available for use on common carrier basis by any person other than the assessee or an associated personH and d! should fulfill any other prescribed condition. v! #he assessee shall not be allowed any deduction in respect of the specified business under the provisions of 0hapter K%2A under the heading :0 9 Deductions in respect of certain incomes;. vi! #he assessee cannot claim deduction in respect of such expenditure incurred for specified business under any other provision of the %ncome2tax Act in the current year or under this section for any other year. vii! #he benefit will be available 9 a! in a case where the business relates to laying and operating a cross country natural gas pipeline network for distribution, if such business commences its operations on or after the ,st April, ())8H and b! in any other case, if such business commences its operation on or after the ,st April, ())*. 0onse7uently, profit2linked deduction provided under section B)2%A to the business of laying and operating a cross country natural gas distribution network has been discontinued. As a result, any person availing of this incentive can now avail of the benefit under section >-AD. viii! &or the previous year ())*2,), an assessee carrying on the business of laying and operating a cross country natural gas pipeline network for distribution, including storage facilities being an integral part of such network, would be allowed a deduction of ,))@ of the capital expenditure other than on land, goodwill and financial instrument! incurred during any earlier previous year, if the business has commenced operation between ,.C.())8 and >,.>.())*. #his will be available in addition to any other capital expenditure excluding land, goodwill and financial instrument! incurred during the previous year ())*2,). 3owever, no deduction for such amount should have been allowed or allowable to the assessee in any earlier previous year. ix! :0old chain facility? means a chain of facilities for storage or transportation of agricultural and forest produce, meat and meat products, poultry, marine and dairy products, products of horticulture, floriculture and apiculture and processed food items under scientifically controlled conditions including refrigeration and other facilities necessary for the preservation of such produce. An :associated person; in relation to the assessee means a personI
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,! who participates directly or indirectly or through one or more intermediaries in the management or control or capital of the assesseeH (! who holds, directly or indirectly, shares carrying not less than twenty2six per cent of the voting power in the capital of the assesseeH >! who appoints more than half of the +oard of directors or members of the governing board, or one or more executive directors or executive members of the governing board of the assesseeH or C! who guarantees not less than ,)@ of the total borrowings of the assessee. x! Example A Ltd. commenced operations of the business of laying and operating a crosscountry natural gas pipeline network for distribution on ,st April, ())*. #he company incurred capital expenditure of <s.C) lakh during the period Manuary to /arch, ())* exclusively for the above business, and capitalized the same in its books of account as on ,st April, ())*. &urther, during the financial year ())*2,), it incurred capital expenditure of <s.,-) lakh out of which <s.-) lakh was for ac7uisition of land! exclusively for the above business. 0ompute the deduction under section >-AD for the A.4.(),)2,,, assuming that A Ltd. 3as fulfilled all the conditions specified in section >-AD. #he amount of deduction allowable under section >-AD for A.4.(),)2,, would be 9 6articulars 0apital expenditure incurred during the 6.4.())*2,) excluding the expenditure incurred on ac7uisition of land! N <s.,-) lakh 9 <s.-) lakh 0apital expenditure incurred prior to ,.C.())* i.e., prior to commencement of business! and capitalized in the books of account as on ,.C.())* #otal deduction under section >-AD for A.4.(),)2,, <s. ,)) lakh
xi! .here any goods or services held for the purposes of the specified business are transferred to any other business carried on by the assessee, or vice versa, and if the consideration for such transfer does not correspond with the market value of the goods or services then the profits and gains of the specified business shall be computed as if the transfer was made at market value. &or the above purpose, :market value; means the price such goods or services would ordinarily fetch in the open market, sub$ect to statutory or regulatory restrictions, if any. xii! #he deduction shall be allowed to the assessee only if the accounts of the assessee for the relevant previous year have been audited by a chartered accountant and the assessee furnishes the
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audit report in the prescribed form,duly signed and verified by such accountant along with his return of income. xiii! .here it appears to the Assessing 5fficer that the assessee derives more than ordinary profits from the specified business due to close connection between the assessee and any other person, or due to any other reason, the Assessing 5fficer may consider such profits as may be reasonably deemed to have been derived from the specified business for the purpose of computing deduction under this section. xiv! 0lause vii! has been inserted in section (B to provide that any sum received or receivable, in cash or kind, on account of any capital asset in respect of which deduction has been allowed under section >-AD! being demolished, destroyed, discarded or transferred shall be treated as income of the assessee, chargeable to tax under the head :6rofits and gains of business or profession;. xv! 'ew section 8>A has been inserted to provide that any loss computed in respect of the specified business shall be set off only against profits and gains, if any, of any other specified business. #he unabsorbed loss, if any, will be carried forward for set off against profits and gains of any specified business in the following assessment year and so on. #here is no time limit specified for carry forward and set2off and therefore, such loss can be carried forward indefinitely for set2off against income from specified business. xvi! Explanation ,> has been inserted in section C> ,! to provide that the actual cost of any capital asset, on which deduction has been allowed or is allowable to the assessee under section >-AD, shall be nil. #his would be applicable in the case of transfer of asset by the assessee where 2 ,! the assessee himself has claimed deduction under section >-ADH or (! the previous owner has claimed deduction under section >-AD. #his would be applicable where the capital asset is ac7uired by the assessee by way of 2 a! gift, will or an irrevocable trustH b! any distribution on li7uidation of the companyH c! any distribution of capital assets on total or partial partition of a 3U&H d! any transfer of a capital asset by a holding company to its ,))@ subsidiary company, being an %ndian companyH e! any transfer of a capital asset by a subsidiary company to its ,))@ holding company, being an %ndian companyH f! any transfer of a capital asset by the amalgamating company to an amalgamated company in a scheme of amalgamation, if the amalgamated company is an %ndian companyH
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g! any transfer of a capital asset by the demerged company to the resulting company in a scheme of demerger, if the resulting company is an %ndian companyH h! any transfer of a capital asset or intangible asset by a firm to a company as a result of succession of the firm by a company in the business carried on by the firm, or any transfer of a capital asset to a company in the course of demutualization or corporatisation of a recognized stock exchange in %ndia as a result of which an association of persons or body of individuals is succeeded by such company fulfilling the conditions specified!H i! any transfer of a capital asset or intangible asset by a sole proprietory concern to a company, where the sole proprietory concern is succeeded by a company fulfilling the conditions specified!. xvii! &or the purposes of computing the net worth of the assets in case of slump sale under section -)+, the value of capital assets in respect of which whole of the expenditure has been allowed as deduction under section >-AD would be 'il. Effective from A.4.(),)2,,! 3)4 :i"-)ra@al '$ 1'..')i"i ! "ra#!a1"i'# "a( 0S 1"i'# 3D3143(Ci45 i! 0ommodities transaction tax was introduced by the &inance Act, ())B. 3owever, it had not been notified. ii! 0lause xvi! was inserted in section >= ,! last year to provide that any amount of commodities transaction tax paid by the assessee during the year in respect of taxable commodities transactions entered into in the course of business shall be allowed as deduction sub$ect to the condition that such income from taxable commodities transactions has been included under the head Fprofits and gains of business or professionG. iii! 3owever, this tax has been withdrawn this year. 0onse7uently, this deduction has been removed by omitting clause xvi!. Effective from A.4.())*2,)! 3 4 S1'* '$ ) ),1"i'# ,#) r ! 1"i'# 3D3143Ciii4 (*a#) ) "' i#1l,) &,!i# !! '$ *r'Ci)i#% l'#%?" r. $i#a#1 $'r ) C l'*. #" '$ -',!i#% i# I#)ia i! "ection >= ,! viii! provides deduction in respect of any special reserve created and maintained by a specified entity.
ii! #he 7uantum of deduction, however, should not exceed ()@ of the profits derived from eligible business computed under the head :6rofits and gains of business or profession; carried to such reserve account. iii! #he eligible business for different entities specified are given in the table below 9
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. iv! #he 'ational 3ousing +ank is a notified &inancial 0orporation under section CA of the 0ompanies Act, ,*-=. 3owever, since it is not engaged in the long2term financing for construction or purchase of houses in %ndia for residential purpose as re7uired in clause iii! of column >! of serial no., in the table given above, there has been a view that it is not entitled to the benefit under section >= ,! viii!. v! #herefore, this section has been amended to provide that corporations engaged in providing long2term finance including re2financing! for development of housing in %ndia will be eligible for the benefit under section >= ,! viii!. T- r $'r E 1la,! 3iii4 '$ 1'l,.# 3 '$ Sl. N'.1 @',l) #'@ r a) a! ? <3iii4 ) C l'*. #" '$ -',!i#% i# I#)ia>. 'ote 2 'ational 3ousing +ank '3+! is wholly owned by <eserve +ank of %ndia and is engaged in promotion and regulation of housing finance institutions in the country. %t provides re2 financing support to housing finance institutions, banks, etc., for the develoment of housing in %ndia. Effective from A.4.(),)2,,! f! %ncrease in limits for deductibility of remuneration paid to partners by a firm O"ection C) b! v!P
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i! 6ayment of remuneration to working partners is allowed as deduction if it is authorized by the partnership deed and is sub$ect to the overall ceiling limits specified in section C) b! v!. ii! #he limits for partnersG remuneration under section C) b! v! has revised upwards and the differential limits for partnersG remuneration paid by professional firms and non2professional firms have been removed. iii! 5n the first <s.> lakh of book profit or in case of loss, the limit would be the higher of <s.,,-),))) or *)@ of book profit and on the balance of book profit, the limit would be =)@. iv! Example %f a firm has paid <s.8,-),))) as remuneration to its partners for the 6.4.())*2 ,) in accordance with its partnership deed, and it has a book profit of <s.,) lakh, then, the allowable remuneration calculated as per the limits specified in section C) b! v! would be 2 6articulars 5n first <s.> lakh of book profit O>,)),))) Q *)@P 5n balance <s.8 lakh of book profit O8,)),))) Q =)@P <s. (,8),))) C,(),))) =,*),)))
#he excess amount of <s.=),))) i.e., <s.8,-),))) 9 <s.=,*),)))! would be disallowed as per section C) b! v!. Effective from A.4.(),)2,,! g! %ncrease in limit for attracting disallowance under section C)A >!R >A! from <s.(),))) to <s.>-,))) for payments to transport operators i! "ection C)A >! provides for disallowance of expenditure incurred in respect of which payment or aggregate of payments made to a person in a day exceeds <s.(),))), and such payment or payments are made otherwise than by account payee che7ue or account payee bank draft. "ection C)A >A! provides for deeming a payment as profits and gains of business or profession if the expenditure is incurred in a particular year but the payment or aggregate of payments to a person in a day! is made in any subse7uent year in a sum exceeding <s.(),))) otherwise than by an account payee che7ue or by an account payee bank draft. 3owever, the provisions of this section are sub$ect to exceptions as provided in <ule =DD of the %ncome2tax <ules, ,*=(. ii! #his limit of <s.(),))) has been raised to <s.>-,))) in case of payment made to transport operators for plying, hiring or leasing goods carriages. #herefore, payment or aggregate of payments up to <s.>-,))) in a day can be made to a transport operator otherwise than by way of account payee che7ue or account payee bank draft. iii! %n all other cases, the limit would continue to be <s.(),))). Effective from ,st 5ctober, ())*!
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h! %ncrease in presumptive income for transport operators O"ection CCAEP i! Under section CCAE, a presumptive scheme is available to assessees engaged in business of plying, hiring or leasing goods carriages. #he scheme applies to an assessee, who owns not more than ,) goods carriages at any time during the previous year. "uch assessees opting for the presumptive scheme are not re7uired to maintain books of account under section CCAA or get them audited under section CCA+. ii! #he presumptive income per vehicle of transport operators under this scheme has been increased from <s.>,,-) per month to <s.C,-)) per month for vehicles other than heavy vehicles and from <s.>,-)) per month to <s.-,))) per month for heavy vehicles with effect from A.4.(),,2,(. /onth includes part of a month also!. iii! 3owever, the assessee has the option to declare in his return of income, an amount higher than the presumptive income so calculated, claimed to have been actually earned by him from such vehicle. iv! Example Let us take the case of /r.4, who owns - heavy goods vehicles and > light goods vehicles. &or the 6.4.())*2,), his presumptive income under section CCAE would be <s.(=,*-) O - Q >,-))! S > Q >,,-)!P. &or the 6.4.(),)2,,, his presumptive income under section CCAE would be <s.>B,-)) O - Q -,)))! S >Q C,-))!P. #herefore, conse7uent to this amendment, his presumptive income would go up by <s.,,,--) i.e., <s.>B,-)) 9 <s.(=,*-)! for the A.4.(),,2,(. Effective from A.4.(),,2,(! i! %ncrease in scope of coverage of presumptive tax provisions O'ew section CCADP <elated amendment in sectionsA CCA&, CCAA D CCA+ i! #he presumptive taxation scheme, so far restricted to civil construction and retail trade, would now cover all small businesses with total turnoverRgross receipts of up to <s.C) lakh. "ection CCAD has been substituted, to include within its scope all such businesses except the business of plying, hiring and leasing goods carriages covered under section CCAE!. 0onse7uently, section CCA& dealing with presumptive taxation for retail trade would not be applicable w.e.f. A.4.(),,2 ,( since retail trade would also fall within the scope of section CCAD . ii! <esident individuals, 3U&s and partnership firms but not LL6s! would be covered under this scheme. iii! #he scheme would not apply to an assessee who is availing deductions under sections ,)A, ,)AA, ,)+, ,)+A or deduction under any provisions of 0hapter K%A under the heading :0.I Deductions in respect of certain incomes; in the relevant assessment year.
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iv! #he presumptive rate of tax would be B@ of total turnover or gross receipts. 3owever, the assessee has the option to declare in his return of income, an amount higher than the presumptive income so calculated, claimed to have been actually earned by him. v! All deductions allowable under sections >) to >B shall be deemed to have been allowed in full and no further deduction shall be allowed. 3owever, in the case of a firm, salary and interest would be allowed as deduction sub$ect to the conditions and limits prescribed under section C) b!. vi! #he written down value of any asset of such business shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of depreciation for each of the relevant assessment years. vii! #he intention of widening the scope of this scheme is to reduce the compliance and administrative burden on small businessmen and relieve them from the re7uirement of maintaining books of account. "uch assessees opting for the presumptive scheme are not re7uired to maintain books of account under section CCAA or get them audited under section CCA+. viii! &urther, they would also be relieved from the re7uirement of advance tax payments. %t would be sufficient compliance if they pay their tax while filing their return of income before the due date. ix! An assessee with turnover of upto <s.C) lakh, who shows an income below the presumptive rate prescribed under these provisions, will, in case his total income exceeds the taxable limit, be re7uired to maintain books of accounts under section CCAA and also get them audited under section CCA+. #hus, merely because an eligble assessee does not opt for presumptive taxation under section CCAD, it would not make him liable to maintain books of account under section CCAA or get the same audited under section CCA+. 3e will have to comply with these re7uirements only if his total income exceeds the taxable limit. %f his total income does not exceed the taxable limit, the re7uirement of maintaining books of accounts under section CCAA and having the same audited under section CCA+ would not arise. x! %n order to determine whether an assessee, who is engaged in multiple businesses, is eligble to opt for section CCAD, the limit of <s.C) lakh should be applied business2 wise and not by aggregating the turnover of all businesses of the assessee. xi! Example Let us take the case of an assessee, say /r. 1, who has > businesses, the details of which are given hereunder 9 +usiness #urnover during the 6.4.(),)2,,
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%n this case, /r.1 can opt for presumptive taxation under section CCAD in respect of his retail trade business and catering business, but not in respect of civil construction business since the turnover of this business exceeds <s.C) lakh!. %f /r.1 opts for presumptive taxation scheme, then his income from retail trade business would be <s.(.B) lakh i.e., B@ of <s.>- lakh! and his income from catering business would be <s.(.C) lakh i.e., B@ of <s.>) lakh!. 3e is not re7uired to maintain books of account for retail trade and catering business. 3owever, since he cannot avail presumptive taxation scheme in respect of civil construction business, he has to maintain books of account under section CCAA and get them audited under section CCA+. Effective from A.4.(),,2,(! N'" F #he amendments to section CCAE and CCAD given in h! and i! above are effective only from A.4.(),,2,(. #herefore, they are not applicable for students appearing in /ay (),) and 'ovember (),) examinations. 3G4 F,ll ) *r 1ia"i'# "' & ) ),1" ) "' arriC a" "- @ri"" # )'@# Cal, ,#) r ! 1"i'# 733D4 i# 1a! ! '$ 1'.*'!i" i#1'. 1'C r ) ,#) r R,l ! 2AE 2B & H al!' i! As per section >( ,! ii!, depreciation to be allowed has to be computed at the prescribed percentage on the written down value .DK! of any block of assets. As per section C> =! b!, in the case of assets ac7uired before the previous year, the .DK shall be computed by taking the actual cost to the assessee less all depreciation :actually allowed; to him under the %ncome2tax Act. ii! <ules 8A, 8+ and B of the %ncome tax <ules, ,*=(, deal with the computation of income in cases of composite income where income is derived in part from agricultural operations and in part from business chargeable to tax under the head :6rofits D Jains of +usiness or 6rofession;. #hese rules prescribe the method of computation in the case of manufacture of rubber, coffee and tea. %n such cases, the income which is brought to tax as :business income; is a prescribed fixed percentage of the composite income. iii! #he 3onGble "upreme 0ourt, in the case of 0%# v. Doom Dooma %ndia Ltd ())*! >,) %#< >*(, has held that the language used in section C> =! b! is deduction of depreciation :actually allowed;. #herefore, in composite income cases, where income is partly agricultural and partly chargeable to tax under the head :6rofits D Jains of +usiness or 6rofession;, the depreciation deducted in arriving at the taxable income alone can be taken into account for computing the .DK in the subse7uent year. iv! &or instance, <ule B prescribes the taxability of income from the manufacture of tea. Under the said rule, income derived from the sale of tea grown and manufactured by seller shall be computed as if it were income derived from business, and C)@ of such income shall be deemed to be income liable to tax.
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&or instance, if the turnover is <s.() lakh, the depreciation is <s., lakh and other expenses <s.C lakh, then the income would be <s.,- lakh. +usiness income would be <s.= lakh being C)@ of <s.,- lakh!. As per the 0ourt decision, only the depreciation :actually allowed; i.e., <s.C),))), being C)@ of <s., lakh, has to be deducted to arrive at the written down value. 3owever, the correct legislative intent is that the .DK is re7uired to be computed by deducting the full depreciation attributable to composite income i.e. <s., lakh in this case. #he ambiguity in this case has arisen on account of the interpretation of the meaning of the phrase :actually allowed; used in section C> =! b!. v! #herefore, in order to clarify the correct legislative intent, Explanation 8 has been inserted to provide that in cases of Fcomposite incomeG, for the purpose of computing written down value of assets ac7uired before the previous year, the total amount of depreciation shall be computed as if the entire composite income of the assessee is chargeable under the head :6rofits and Jains of business or profession;. #he depreciation so computed shall be deemed to have been :actually allowed; to the assessee. Effective from A.4.(),)2,,! 3=4 Ta(a"i'# '$ i#C !". #" i#1'. Il'!! '$ N'#?li$ i#!,ra#1 &,!i# !! 0R,l 9 '$ "- Fir!" S1- ),l "' "- I#1'. ?"a( A1"5 i! #he profits and gains of non2life insurance business has to be determined in the manner laid down under section CC read with <ule - of the &irst "chedule. ii! <ule - re7uires that the profits disclosed in the annual accounts, after ad$ustments for unexpired risk and disallowances under sections >) to C>+ be taken as the profits and gains of non2life insurance business. <eference is made to the annual accounts, copies of which are re7uired under the %nsurance Act, ,*>B, to be furnished to the 0ontroller of %nsurance. iii! %n the year ,***, the %nsurance Act, ,*>B was amended and the %nsurance <egulatory Development Authority %<DA! was created. %n the financial year ()),2)(, %<DA introduced :%<DA 6reparation of &inancial "tatements and AuditorGs <eport of %nsurance 0ompanies! <egulations, ())(?. #he regulations re7uired fresh guidelines and formats for preparation of accounts by Jeneral %nsurers. #he new norms re7uired a non2life insurance company to include profit or loss on realizationRsale of investment in the profit and loss account or revenue account. #his treatment is also in line with the international best practice on taxation of investment income of non2life insurance companies. iv! Accordingly, <ule - of the &irst "chedule to the %ncome2tax Act now provides that the profits and gains of non2life insurance business would be the profit before tax and appropriations as disclosed in the profit and loss account prepared in accordance with the provisions of the %nsurance Act, ,*>B or the %<DA Act, ,***, after ad$ustment for unexpired risk and disallowances under sections >) to C>+. &urther, any increase in respect of any amount taken credit for in the accounts on account of appreciation of or gains on realization of investments in accordance with the regulations prescribed by %<DA shall be treated as income and included in the computation of the total income. "imilarly, deduction shall be allowed in respect of any amount either written off or provided in the accounts to meet diminution in or loss on realisation
Page 16
of investments in accordance with the regulations prescribed by %<DA. Effective from A.4.(),,2,(! N'" F "ince this amendment is effective only from A.4.(),,2,(, it is not applicable for students appearing in /ay (),) and 'ovember (),) examinations.
Page 17
i! "ection -)0 provides that where the consideration received or accruing as a result of the transfer of a capital asset, being land or building or both, is less than the value adopted or assessed by an authority of a "tate Jovernment stamp valuation authority! for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration received or accruing as a result of such transfer for computing capital gain. ii! 3owever, the scope of section -)0 does not include within its ambit, transactions which are not registered with stamp duty valuation authority, and executed through agreement to sell or power of attorney. #herefore, in order to prevent tax evasion on this account, section -)0 has been amended to provide that where the consideration received or accruing as a result of transfer of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by an authority of a "tate Jovernment for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration received or accruing as a result of such transfer for computing capital gain. #he term :assessable; has been added to cover transfers executed through power of attorney. iii! Explanation ( has been inserted after section -)0 (! to define the term FassessableG to mean the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty. Effective from ,st 5ctober, ())*!
Page 18
R la" ) a. #). #" i# ! 1"i'#!6 23274 & 78374 i! As per section -= (! vi!, any Fsum of moneyG exceeding rupees fifty thousand received without consideration by an individual or 3U& will be chargeable to income2tax in the hands of the recipient under the head F%ncome from other sourcesG. 3owever, receipts from relatives or on the occasion of marriage or under a will would not be treated as income. Likewise, anything which is received in kind having FmoneyGs worthG like property! would be outside the ambit of section -=. ii! 'ew clause vii! has been inserted in section -= (! to bring within its scope, the value of any property received without consideration or for inade7uate consideration. &or this purpose, :property; means immovable property being land or building or both, shares and securities, $ewellery, archaeological collections, drawings, paintings, sculptures or any work of art. iii! %f an immovable property is received without consideration, the stamp duty value of such property would be taxed as the income of the recipient if it exceeds <s.-),))). %n case an immovable property is received for inade7uate consideration, and the difference between the stamp duty value and such consideration exceeds <s.-),))), such difference would be taxed as the income of the recipient. %f the stamp duty value of immovable property is disputed by the assessee, the Assessing 5fficer may refer the valuation of such property to a Kaluation 5fficer. %n such a case, the provisions of section -)0 and section ,-- ,-! shall, as far as may be, apply for determining the value of such property. iv! %f movable property is received without consideration, the aggregate fair market value of such property on the date of receipt would be taxed as the income of the recipient if it exceeds <s.-),))). %n case movable property is received for inade7uate consideration, and the difference between the aggregate fair market value and such consideration exceeds <s.-),))), such difference would be taxed as the income of the recipient. #he 0+D# would prescribe the method of determination of fair market value of a movable property. v! #he table below summarises the new scheme of taxability of gifts with effect from ,st 5ctober, ())* 9
Page 19
vi! 3owever, any sum of money or value of property received 2 a! from any relativeH or b! on the occasion of the marriage of the individualH or c! under a will or by way of inheritanceH or d! in contemplation of death of the payer or donor, as the case may beH or e! from any local authority as defined in the Explanation to section ,) ()!H or f! from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in section ,) (>0!H or g! from any trust or institution registered under section ,(AA would be outside the ambit of section -= (! vii!. vii! #he definition of income under section ( (C! would now include any sum of money or value of property referred to in section -= (! vii!. viii! "ub2section C! has been inserted in section C* to provide that where the capital gain arises from the transfer of such property which has been sub$ect to tax under section -= (! vii!, the cost of ac7uisition of the property shall be deemed to be the value taken into account for the purpose of section -= (! vii!.
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ix! Example /r. T received the following gifts during the 6.4.())*2,) from his friend /r.4, 2 ,! 0ash gift of <s.,,)),))) on his birthday, ,*th Mune, ())*. (! -) shares of + Ltd., the fair market value of which was <s.,,)),))), on his birthday, ,*th Mune, ())*. >! ,)) shares of A Ltd., the fair market value of which was <s.--,))) on the date of transfer. #his gift was received on the occasion of Diwali. /r. 4, had originally purchased the shares on ,282())* at a cost of <s. C),))). &urther, on ,8th December, ())*, /r.T purchased land from his brotherGs father2in2law for <s.>,-),))). #he stamp value of land was <s.-,)),))). 5n ,st /arch, (),), he sold the ,)) shares of A Ltd. for <s.B),))) 0ompute the income of /r.T chargeable under the head :%ncome from other sources; and :0apital Jains; for A.4.(),)2,, C'.*,"a"i'# '$ <I#1'. $r'. '"- r !',r1 !> '$ Mr.J $'r "- A.Y.2A1A?11 6articulars <s. ,! 0ash gift received before ,.,).())* is taxable uRs -= (! vi! since it exceeds <s.-),))) (! Kalue of shares of + Ltd. gifted by /r.4 on ,*th Mune, ())* is not taxable since only gift of property after ,st 5ctober, ())* is chargeable to tax uRs -= (! vii!. >! &air market value of shares of A Ltd. is taxable since the gift was made after ,st 5ctober, ())* and the aggregate fair market value exceeds <s.-),))). C! 6urchase of land for inade7uate consideration on ,8.,(.())* would attract the provisions of section -= (! vii!, since the difference between the stamp value and consideration exceeds <s.-),))). +rotherGs father2inlaw does not fall within the definition of :relative; uRs -= (!. "tamp Kalue -,)),))) LessA 0onsideration >,-),))) %ncome from 5ther "ources ,,-),))) >,)-,))) ,,)),)))
--,)))
Page 21
C'.*,"a"i'# '$ <Ca*i"al Gai#!> '$ Mr.J $'r "- A.Y.2A1A?11 "ale 0onsideration LessA 0ost of ac7uisition Odeemed to be the fair market value charged to tax under section -= (! vii!P S-'r"?" r. 1a*i"al %ai#! Effective from ,st 5ctober, ())*! B),))) --,))) (-,)))
28 b!%nterest received on compensationRenhanced compensation deemed to be income in the year of receipt and taxable under the head :%ncome from 5ther "ources; O"ections -= (! viii! D ,C-AP <elated amendment in sectionA -8 i! As per section ,C- ,!, income chargeable under the head :6rofits and gains of business or profession; or :%ncome from other sources;, shall be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. ii! &urther, the 3onGble "upreme 0ourt has, in <ama +ai v. 0%# ,**)! ,B, %#< C)), held that arrears of interest computed on delayed or on enhanced compensation shall be taxable on accrual basis. #he tax payers are facing genuine difficulty on account of this ruling, since the interest would have accrued over a number of years, and conse7uently the income of all the years would undergo a change. iii! #herefore, to remove this difficulty, clause b! has been inserted in section ,C-A to provide that the interest received by an assessee on compensation or on enhanced compensation shall be deemed to be his income for the year in which it is received, irrespective of the method of accounting followed by the assessee. iv! 0lause viii! has been inserted in section -= (! to provide that income by way of interest received on compensation or on enhanced compensation referred to in clause b! of section ,C-A shall be assessed as :%ncome from other sources; in the year in which it is received. v! 0lause iv! has been inserted in section -8 to allow a deduction of -)@ of such income. %t is further clarified that no deduction would be allowable under any other clause of section -8 in respect of such income.
Page 22
Page 23
3&4 D ),1"i'# i# r !* 1" '$ 1'#"ri&,"i'# "' N;S (" #) ) "' ! l$? .*l'/ ) i#)iCi),al! al!' 0S 1"i'# HACCD5 i! "ection B)00D provides for deduction of employeeGs and employerGs contribution to 'ew 6ension "ystem notified by the 0entral Jovernment. 3owever, if the amount contributed exceeds ,)@ of salary, then the deduction would be restricted to ,)@ of salary. #his restriction is applicable both in the case of employeeGs contribution and employerGs contribution to such scheme. ii! #he benefit of deduction under this section is currently available only to individuals employed by the 0entral Jovernment or any other employer on or after ,.,.())C. iii! #his deduction is now extended also to self2employed individuals. #he deduction in the case of a self2employed individual would be restricted to ,)@ of his gross total income in the previous year. iv! "ub2section >! provides that the amount standing to the credit of the assessee in the pension account for which deduction has already been claimed by him under this section! and accretions to such account, shall be taxed as income in the year in which such amounts are received by the assessee or his nominee on 2 a! closure of the accountH or b! his opting out of the said schemeH or c! receipt of pension from the annuity plan purchased or taken on such closure or opting out. v! 3owever, it is now provided that the assessee shall be deemed not to have received any amount in the previous year if such amount is used for purchasing an annuity plan in the same previous year. Effective from A.4.())*2,)! 314 I#1r a! i# ) ),1"i'# $'r a * r!'# @i"- ! C r )i!a&ili"/ 0S 1"i'# HAU5 a#) $'r .ai#" #a#1 i#1l,)i#% . )i1al "r a". #" '$ a ) * #) #" @i"- ! C r )i!a&ili"/ 0S 1"i'# HADD5 i! Under section B)2DD, deduction is allowable to an individual or 3U&, who is a resident in %ndia, in respect of the followingAI a! Expenditure for the medical treatment including nursing!, training and rehabilitation of a dependant, being a person with disabilityH and b! Amount paid to L%0 or other insurance in respect of a scheme for the maintenance of a disabled dependant.
Page 24
ii! #he present limit for deduction is <s.-),))) if the dependant is suffering from disability and <s.8-,))) if the dependant is suffering from severe disability. iii! #he deduction in respect of maintenance or medical treatment of a dependent with severe disability has been increased from <s.8-,))) to <s., lakh. 3owever, the deduction in respect of maintenance or medical treatment of a dependent with disability will continue to be <s.-),))). iv! Under section B)U, deduction of <s.8-,))) is available in computing the total income of a resident individual, who is certified by the medical authority to be a person with severe disability. #his deduction has also been increased to <s.,,)),))). #he deduction under section B)U for a person with disability will, however, continue to be <s.-),))). Effective from A.4.(),)2,,! d! Expansion of scope of section B)E to cover all fields of study after 0lass 1%%, including vocational study, for the purpose of interest deduction in respect of loan taken for pursuing such courses i! "ection B)E provides for a deduction to an assessee, being an individual, on account of any amount paid by him in the previous year by way of interest on loan taken from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or higher education of his relative. ii! 6resently, the deduction is available only for pursuing full time studies for any graduate or post2graduate course in engineering, medicine, management or for post2graduate course in applied sciences or pure sciences including mathematics and statistics. iii! #he scope of this section has now been expanded to cover all fields of studies including vocational studies! pursued after passing the "enior "econdary Examination or its e7uivalent from any school, board or university recognised by the 0entral Jovernment or "tate Jovernment or local authority or by any other authority authorized by the 0entral Jovernment or "tate Jovernment or local authority to do so. #herefore, interest on loan taken for pursuing any course after 0lass 1%% or its e7uivalent, will 7ualify for deduction under section B)E. iv! &urther, the definition of :relative;, in relation to an individual, has been amended to include, in addition to spouse and children of the individual, the student for whom the individual is the legal guardian. Effective from A.4.(),)2,,! e! 5ne2time approval for institutions and funds for the purpose of recognition under section B)J i! "ection B)J -! vi! provides that the institutions or funds to which the donations are made have to be approved by the 0ommissioner of %ncome2tax in accordance with the rules prescribed. ii! #he proviso to this clause provides that any approval granted under this clause
Page 25
shall have effect for such assessment year or years, not exceeding fiveassessment years, as may be specified in the approval. iii! #he approved institutions and funds face genuine hardship in renewing their approvals from time to time on account of this restriction imposed on the validity of such approvals. iv! #herefore, in order to mitigate the hardship and to reduce the burden on the tax administration, the proviso has been omitted, implying that the approval once granted shall continue to be valid in perpetuity. v! "ince this amendment would be effective from ,st 5ctober, ())*, the existing approvals expiring on or after ,st 5ctober, ())* shall be deemed to have been extended in perpetuity unless specifically withdrawn. 3owever, approvals expiring before ,st 5ctober, ())* will have to be renewed and post2renewal, these shall continue to be valid in perpetuity, unless specifically withdrawn. Effective from ,st 5ctober, ())*! 3$4 E(" #!i'# '$ !,#! " 1la,! $'r "a( -'li)a/ ,#) r ! 1"i'# HA?IA $'r *'@ r! 1"'r ,#) r"a=i#%! a#) i#),!"rial *ar=! i! "ection B)2%A C! iii! provides for deduction in respect of any undertaking which develops, develops and operates or maintains and operates an industrial park notified by the 0entral Jovernment on or before >,.>.())*. #he time limit has been extended by two years i.e. the deduction would be available in respect of such industrial parks notified by the 0entral Jovernment on or before >,.>.(),,. ii! "ection B)2%A C! iv! provides for deduction in respect of profits and gains derived by an undertaking which 9 ,! is set up in %ndia for generation or generation and distribution of power, if it begins to generate power on or before >,st /arch, (),)H (! starts transmission or distribution by laying a network of new transmission or distribution lines on or before >,st /arch, (),)H >! undertakes substantial renovation and modernization of the existing network of transmission or distribution lines on or before >,st /arch (),).#his time limit has been extended by one year i.e., from >,st /arch, (),) to >,st /arch, (),,, to enable undertakings which start generation, or transmission or distribution of power during the period between ,st April, (),) and >,st /arch, (),, or which undertakes substantial renovation and modernization of the existing network of transmission or distribution lines between ,st April, (),) and >,st /arch, (),, to avail benefit of deduction under this section. Effective from A.4.())*2,)!
Page 26
iii! Under section B)2%A C! v!, an undertaking owned by an %ndian company and set up for reconstruction or revival of a power generating plant is eligible for a ,) year tax benefit if it fulfils the following conditionsA2 ,! such company is formed before >).,,.())- with ma$ority e7uity participation by public sector companies for enforcing the security interest of the lenders to the company owning the power generating plantH (! such %ndian company is notified by the 0entral Jovernment before >,.,(.())-H and >! the undertaking begins to generate or transmit or distribute power before >,st /arch, ())B. #he terminal date for commencing the activity of generation, transmission or distribution of power in case of such undertaking has been extended from>,.>.())B to >,.>.(),,. Effective retrospectively from A.4.())B2)*! 3%4 Ta( -'li)a/ ,#) r ! 1"i'# HA?IA #'" aCaila&l i# r !* 1" '$ @'r=! 1'#"ra1" i! "ection B)2%A ,! provides a ten year tax holiday in respect of profits and gains derived by an undertaking or an enterprise from an eligible business i.e., business referred to in sub2section C!. ii! #he Explanation to the said section has been substituted to clarify that the tax holiday under section B)2%A would not be available in relation to a business referred to in sub2section C! which is in the nature of a works contract awarded by any person including the 0entral or "tate Jovernment! and executed by the undertaking or enterprise referred to in section B)2%A ,!. Effective retrospectively from A.4.()))2),! 3-4 E(" #!i'# '$ "i. li.i" $'r r $i# ri ! i# "- *riCa" ! 1"'r "' & %i# r $i#i#% '$ .i# ral 'il a#) (*a#!i'# '$ !1'* '$ "a( -'li)a/ ,#) r ! 1"i'# HA?IB384 i! Under section B)2%+ *!, a ,))@ deduction is allowed in respect of profits and gains derived from commercial production or refining of mineral oil. ii! #he deduction under this sub2section is available to an undertaking for a period of seven consecutive assessment years including the initial assessment year 9 ,! in which the commercial production under a production sharing contract has first startedH or (! in which the refining of mineral oil has begun. iii! 3owever, deduction under this sub2section would be allowed to an undertaking which begins refining of mineral oil on or after ,.C.())* only if it fulfills the following conditions 2
Page 27
,! it is wholly owned by a public sector company or any other company in which a public sector company or companies hold at least C*@ of the voting rightsH (! it is notified by the 0entral Jovernment in this behalf on or before >,st /ay, ())BH and >! it begins refining not later than >,st /arch, (),(. iv! #herefore, the refineries in the private sector have to commence refining of mineral oil on or before the >,st /arch, ())*. v! "ince a very short notice period was given to private sector entrepreneurs to complete the execution of their refinery pro$ect, conse7uently, entrepreneurs who had undertaken substantial investment in anticipation of the tax holiday suffered serious financial setback. vi! #herefore, sub2section *! has been substituted to allow them a further period of three years i.e. upto the >,st /arch, (),( to begin refining of mineral oil and avail the tax benefit. #he new terminal date will, therefore, be the same for both the public and the private sector. Effective from ,.C.())*! vii! &urther, the scope of tax holiday under section B)2%+ *!, which was up to now available in respect of profits arising from the commercial production or refining of mineral oil, has been extended to commercial production of natural gas in blocks which are licensed under the 2 ,! K%%% <ound of bidding for award of exploration contracts ?'EL62K%%%?! under the 'ew Exploration Licencing 6olicy announced by the Jovernment of %ndia vide <esolution 'o.52 ,*),BR((R*-25'J.D5.KL, dated ,)th &ebruary, ,***H or (! %K <ound of bidding for award of exploration contracts for 0oal +ed /ethane blocks and begins commercial production of natural gas on or after ,st April, ())*. Effective from A.4.(),)2,,! 3i4 All &l'1=! li1 #! ) ,#) r a !i#%l 1'#"ra1" "' & "r a" ) a! a !i#%l <,#) r"a=i#%> 0S 1"i'# HA?IB3845 6resently, there is no definition of the term ?undertaking? in sub2section *!. Accordingly, an Explanation has been inserted in sub2section *! to clarify that for the purposes of claiming deduction under sub2section *!, all blocks licensed under a single contract, which has been awarded 2 ,! under the 'ew Exploration Licencing 6olicy announced by the Jovernment of %ndia vide <esolution 'o.52,*),BR((R*-25'J.D5.KL, dated ,).(.,*** or (! in pursuance of any law for the time being in force or
Page 28
>! by 0entral or a "tate Jovernment in any other manner shall be treated as a single ?undertaking?. #his definition of ?undertaking? will be applicable both in relation to mineral oil and natural gas. Effective retrospectively from A.4.()))2),! 3G4 F,r"- r 1'#)i"i'#! "' & !a"i!$i ) &/ a# ,#) r"a=i#% ) C l'*i#% a#) &,il)i#% -',!i#% *r'G 1"! $'r 1lai.i#% & # $i" '$ ) ),1"i'# ,#) r ! 1"i'# HA?IB31A4 i! "ection B)2%+ ,)! provides for ,))@ deduction of the profits derived by an undertaking from developing and building housing pro$ects. #his benefit is available sub$ect to fulfillment of certain conditions, namely 2 a! #he pro$ect is approved by a local authority before >,st /arch, ())8. #his time limit has been extended by one more year. 'ow, pro$ects approved by a local authority before >,st /arch, ())B would 7ualify for deduction. b! #he pro$ect is constructed on a plot of land having a minimum area of one acre. c! #he built2up area of each residential unit should not exceed ,,))) s7.ft. in the cities of Delhi and /umbai including areas falling within (- kms. 5f municipal limits of these cities! and ,,-)) s7.ft. in other places. d! #he built2up area of the shops and other commercial establishments included in the housing pro$ect should not exceed - per cent of the total built2up area of the housing pro$ect or (,))) s7.ft. whichever is less. e! #he pro$ect has to be completed within C years from the end of the financial year in which the pro$ect is approved by the local authority. ii! #hough the main purpose of the tax benefit for housing pro$ects is to build housing stock for low and middle income households, which has been ensured by limiting the size of the residential unit, the developers bypass the same by entering into agreement to sell multiple ad$acent units to one buyer. iii! Accordingly, further conditions have been imposed and the undertaking which develops and builds the housing pro$ect shall not be allowed to allot more than one residential unit in the housing pro$ect to the same person, not being an individual. .here the person is an individual, no other residential unit in such housing pro$ect should be allotted to any of the following personsA2 ,! the individual himself or spouse or minor children of such individualH (! the 3indu undivided family in which such individual is the kartaH >! any person representing such individual, the spouse or minor children of
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such individual or the 3indu undivided family in which such individual is the karta. Effective from A.4.(),)2,,! iv! #he main aim of the tax concession under section B)2%+ ,)! is to provide tax benefit to the person undertaking the investment risk i.e. the actual developer. 3owever, any person undertaking pure contract risk is not entitled to the tax benefit. v! Accordingly, an Explanation has been inserted after sub2section ,)! of section B)2%+ to provide that the benefit under sub2section ,)! would not be available to any undertaking which executes the housing pro$ect as a works contract awarded by any other person including the 0entral or "tate Jovernment!. Effective retrospectively from A.4.()),2)(! 3=4 D ),1"i'# ,#) r ! 1"i'# HA?IB (" #) ) "' a# ,#) r"a=i#% ) riCi#% *r'$i" $r'. "- &,!i# !! '$ *r'1 !!i#%E *r ! rCa"i'# a#) *a1=a%i#% '$ . a" a#) . a" *r'),1"! 'r *',l"r/ 'r .ari# 'r )air/ *r'),1"! 0S 1"i'# HA?IB311A45 i! An undertaking deriving profit from the business of processing, preservation and packaging of fruits and vegetables or from the integrated business of handling, storage and transportation of foodgrains is eligible for deduction under section B)2%+ ,,A!, ii! #he amount of deduction shall be ,))@ of the profits and gains derived from such business for - assessment years beginning with the initial assessment year i.e. the assessment year relevant to the previous year in which the undertaking begins such business. #hereafter, the deduction allowable is (-@ >)@ in the case of a company!. #he total period of deduction should not exceed ,) consecutive assessment years. iii! #he benefit of deduction under section B)2%+ ,,A! has now been extended to an undertaking deriving profit from the business of processing, preservation and packaging of meat and meat products or poultry or marine or dairy products, if it begins to operate such business on or after ,.C.())*.
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&4 ;a!!@'r) r ! " . now you can send new password at alternate email id also. %f old id is not operative or your tax adviser is not in your contact then you can set password through re7uest at email validateUincometaxindia.gov.in
7ou can re$et /a$$)ord &er* ea$#l* . To re$et pa$$)ord *ou %a&e t%ree opt#on$ (re$et pa$$)ord no).!5eta#l ;xplanat#on -o) to re$et pa$$)ord #$ '#&en %ere .
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Important Message :T%ou'% 4e$et pa$$)ord )#ll .e $ent to alternate ema#l #d *et *our old ema#l #d rema#n$ pr#mar* ema#l #d . To update pr#mar* ema#l #d , o' #n to *our account and 'o to m* account and $elect update p%one6;ma#l num.er T<( #n drop 5o)n menu.
,. B. ;r'&l . a" "- "i. '$ )'@#l'a)i#% Ea1"iCa"i#% a#) $illi#% ITR $'r.!.
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*. %n case the return is not digitally signed, A duly signed %#<2K form should be mailed to:%ncome #ax Department 9 060, 6ost +ag 'o 2 ,, Electronic 0ity 6ost 5ffice, +engaluru 2 -=),)), Varnataka, ; +4 5<D%'A<4 65"# 5< "6EED 65"# 5'L4 within ,() days of transmitting the data electronically. ,). #hats all. .hich &orm to be usedA%f you have income from salaryRsalary ,3ouse property,income from other source then you should use %#<2, saha$!&orm .%f you have capital gain then use %#<2(. %f %ncome After deduction less than ,) Lakh , whether e filing mandatory W Example AJross total %ncome N<s ,,,)),)))R2 less A deduction uRs B)0N<s,)))))R2 less A deduction uRs B)00&N<s ())))R2 'et #axable %ncome N<s *B))))R2 Ans A%n above case as the taxable income is less than ,) lakh after deductions ! then e filing of %ncome tax return is not mandatory. ,,. H'@ "' )'@#l'a) $ili#% F'r. A 4ou may download %#<2, and %#<2( in excel format from links given below. &or other %#< form Kisit this link ?Download e filing Excel softwares ay (),(2,>! ,(. H'@ "' '* # Ji* Fil A %f you have problem in opening %#<2efiling &orms then you can download excel file directly without zip folder from here . ,>. H'@ "' a1"iCa" Ma1r'!IB,""'#! GiC i# "- !i) '$ Ea1- !- " 6 li= Vali)a" EC'.*," "a( E G # ra" .A#he excel sheet for e filing is based on Excel macro .#o activate these button you have enable macro in your excel sheet. #o start activation, Must save and close the sheet and reopen it and look for the security warning as shown in the picture below ,between worksheet and /enu of excl workbook.
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1li1= '# "- O*"i'#! "a& E# @ )ial'%, B'( @ill '* # .I# # @ &'( ! l 1" '*"i'# K #a&l "-i! 1'#" #" a! !-'@# i# "- *i1",r & l'@ a#) *r !! OL . All &,""'# !"ar" @'r=i#%.
:-i1- a.',#" i! "' & $ill ) i# ITR?1 i# !alar/ I#1'. @i"- r $ r #1 "' F'r. 1DM %n form ,= salary word is used with gross salary , add per7uisites , less allowance etc etc . +ut in income tax return we have to fill amount shown against the description ? %ncome 0hargeable under the head salary ? .%n standard &orm ,= ,this is given at sr number =. +ut these days employers are using non standard forms also,. #o dealt with non standard form
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$ust look out figure after all the addition and deduction from the salary in form ,= .&igure related to salary which comes last. :-a" i$ I$ I -aC !alar/ $r'. "@' .*l'/ r!A Even if you have salary from two employer ,you may use %#<2,if you have income only from "alaryRpension Rinterest R3ouse property. #o start with total your income chargeable under the head salary as explained above chargeable income under head salaries! from both the employers and &ill in the %#<2, sr 'umber 2,. income from salaryRpension!.&urther you have to provide #D" details from both the employers in "r number (> in #D" sheetR#ab also.6lease note that #D" details of both the employers must be shown separately . : -aC i#1'. $r'. !alar/ a! @ ll a! I#1'. $r'. * #!i'#6 %f you have income form salary as well as pension even then no problem . Must take %ncome taxable in salary and add income taxable in pension and put total figures in "r number one in %#<2,. E.*l'/ r -a! #'" all'@ ) HRA & # $i"6 #he /ost common 7uestion is that my employer has not given me deduction of 3<A . 4es you can claim deduction Rexemption if your employer has not allowed the deduction of house rent allowance.#o claim these you have to take action as under, ,. take %ncome chargeable under the head salaries as per form ,= A<s 11111 (A Less A Exemption of 3<A as per your calculation calculate here!A<s 11111 > 'et taxable salary A ,2(! N1111 &igure calculated as per sr number > should be filled at "r number one of %#<2,.however 6lease note that in sr number (> tds sheet!,income as per form ,= is to be shown not calculated taxable salary as shown above . "o in such case salary shown in %#<2, sr no2, should be less than salary shown at sr number (> tds sheet! of %#<2,. E.*l'/ r #'" 1'#!i) r SaCi#% *r''$! ,#) r ! 1"i'# HACEHACCFEHACCCE HAD 'r #'" all'@ ) '"- r ) ),1"i'#! @i"- '"- r@i! all'@ ) 6 'othing to worry you can show actual saving under section B)0 or B)00& or can shown B)D deduction for medicalR3ealth insurance even then it has not been considered by employer in form ,=. "imilarly if you are eligible for other deduction as well then you can claim it while filing the income tax return form. Ba#= Ha! ) ),1" ) Ta( N 1A B E B," I a. ,#) r 2AI3AB !la& E D' I -aC "' *a/ Bala#1 "a(6 4es you have to pay balance tax if you comes under higher tax slabs or +ank has not deducted tax on your saving bank interest or &D< bank interest and after considering these income balance tax is shown by %#< utility then you must pay balace tax online.Use 0hallan 'umber %#'" (B) to pay balance atx Rself assessment tax .
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<ead details from 3ow to pay balance #ax R"elf assessment tax . I -aC &ala#1 "a( "' *a/ E@-a" "' )'A Juidline has been shown as above already. I -aC "ri ) .a#/ "i. ! &," #'" a&l "' 1li1= '# SaC XML $il 'r !aC XML li#= i! #'" a1"iCa" ) E@-a" "' D' A #here may be many reasons read the messages shown in pop up carefully .3int is given in itself . +ut most common reason is not selecting the ?#ax status ? correctly . 6lease check <ow number >( of %ncome details as shown in 6icture . "elect correct option as per actual .%f you have negligible amount in refund for exemple one rupee then also you must select #ax status as #ax refundable.
Ta( !"a",! rr'r.H'@ "' 1'rr 1" A As shown above select correct option from ? #ax refundable ,?#ax payable ? and ?'il #ax +alance ? 3ow 0an % Vnow my ward 0ircle 'umberA &or filing of return this field is not mandatory ,so keep it +lank .&ields with red color descriptions are mandatory. 3owever you want to check then visit this link , fill pan number and Vnow your pan name , ward circle Rarea code etc will be shown. .hat is /%0< code .A/icr code is * digit bank branch code which is printed on check books.#his code is a mark to identify the +ank branch.#his field is mandatory even no refund is due.
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,. &irstly you should go to %ncome tax department e filing website incometaxindiaefiling.gov.in (. 0lick on R %i!" r given on right hand top corner and #hen select I#)iCi),alor HUF whichever is applicable to you and hit C'#"i#, . >. &ill the details like 6A', surname, middle name, first name, date of birth, Email id and mobile number and other details &ill these fields carefully and hit continue. C. 4ou will need to active your account. 4ou can active you account in two ways. &irstly a "/" will be sent to your mobile containing 5#6 5ne time password! fill this 5#6 on income tax website. 5r 4ou can activate your account by email which is sent to your email address filled in earlier step. -. 'ow you can fill you income tax return form online or you can download %ncome tax return form which is an excel utility.4ou $ust need to fill necessary details in this form. %t will automatically prepare all the figures. 4ou should select applicable income tax return form. &or example like most of people whose source of income is salary only. #hey should
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choose form %#<2,. %f someone has salary as well as income from interest or family pension he should also select %#<2,. "imilarly you can select other forms as applicable.
=. Log in to your account. 3ere your user %D will be your 6A'. if you want to fill income tax return data online navigate to step B. +ut if you want to use excel utility form you can download re7uired form by D'@#l'a) ITR link given under O,i1= li#= on left hand side. 8. 5pen this excel utility on your computer. Enable .a1r'! to use this form properly. &ill all the details one by one from your form ,= if you have! and hit N (" button given on . After filling all the details Cali)a" this form. %t will give you sheet is 5V message. 'ow click on G # ra" button to make xml file from this utility. B. Again log in to your income tax department e filling account. %f you are filling all the data online, 0lick on Xuick e2file %#< link under 7uick link on left hand side. "elect %#<2, As applicable! pre fill address and do you want to digitally sign as N'. &ill all the details under applicable tabs. 6ay tax if any tax is payable and submit you return. *. +ut if you have used offline income tax return excel utility. Jo to U*l'a) R ",r# under 7uick links. "elect assessment year %#< form type. +rowse the %#< xml generated in earlier step. and select Do you want to digitally sign as N'. 3it "ubmit. ,). After successfully uploading %#< xml file. 6ay tax if any tax is payable. 5therwise it will give you confirmation on successful uploading of income tax return. 4ou will be emailed a copy of your income tax return filed which is called %#<2K. Download this 6D& file. ,,. #o open income tax return form, 6ut password as your 6A' in lowercase and date of birth e.g. aaaaaBBBBn(C)-,*B,(. #ake a printout of %#<2K form and sign on it. 4ou will need to send to :%ncome #ax Department 9 060, 6ost +ag 'o 9 ,, Electronic 0ity 6ost 5ffice, +engaluru 9 -=),)), Varnataka;, by 5<D%'A<4 65"# 5< "6EED 65"# 5'L4, within ,() days from
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date of transmitting the data electronically. <eceipt of this form will be sent to your registered email address by income tax department. #hat is it. .e have tried to explain all the steps with full details. %f you still face any problem while filing income tax return online. Must comment below. .e will try to answer your 7uestion at the earliest. %n this way you can e file your income tax return online by $ust following above simple steps.
B. <E&E<E'0E
1. %ttp:66))).#n&e$toped#a.com 2. %ttp:66tax#nd#a.p=10.com 3. %ttp:66)))..u$#ne$$d#ct#onar*.com
4. https://incometaxindiaefiling.gov.in
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