Income Tax Revision Notes December 2019-Executive-Revision

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REVISION NOTES
FROM EXAM POINT OF VIEW
TAX LAWS & PRACTICE
CS EXECUTIVE
DECEMBER 2019
Incorporating the Amendments by Finance Act,
2018
PART 1
INCOME TAX
BY
CA. AMIT TALDA

Please note: No major amendments from 1.12.2018 to 30.06.2019 from exam points of view.
More or less these notes are same as were Given for June 2019 exams. If you have printed
June 2019 Notes, then don’t print these notes. You can study from old notes.
1|P ag e CA. Amit Talda www.amittaldaclasses.com/

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Important Words/Phrases Used in Income Tax:
SOP Self-Occupied Property
GAV Gross Annual Value
NAV Net Annual Value
GTI Gross Total Income
TDS Tax Deducted at Source
COA Cost of Acquisition
WDV Written down value
AJP Artificial Juridical Person
PAN Permanent Account Number
TAN TDS Account Number
PGBP Profits or Gains from Business or Profession
IFOS Income from other sources
Notwithstanding When a clause begins with notwithstanding anything contained in this Act or
anything in some particular provision/provisions in the Act, it is with a view to give the
contained in enacting part of the section, in case of conflict, an overriding effect over the Act
or provision mentioned in the non obstante clause. It conveys that in spite of
the provisions or the Act mentioned in the non obstante clause, the enactment
following such expression shall have full operation. It is used to override the
mentioned law/provision in specified circumstances.
Adventure in When section 2(4) of the Indian Income-tax Act, 1922, refers to an adventure
nature of trade in the nature of trade, it clearly suggests that the transaction cannot properly
be regarded as trade or business. It is allied to transactions that constitute
trade or business but may not be trade or business itself. It is characterized by
some of the essential features that make up trade or business but not by all of
them; and so even an isolated transaction can satisfy the description of an
adventure in the nature of trade.
Apparent from The expression apparent from the record should not be equated with the
record expression apparent on the face of the record. The mistake to be rectified
should, however, be a mistake patent on the record and not a mistake which
may be discovered by a process of elucidation, argument or debate.
Has reason to The expression has reason to believe in section 147 of the Income-tax Act,
believe 1961, is stronger than the words is satisfied. The belief must be based on
reasons which are relevant and material. The court can examine whether the
reasons are relevant and have a bearing on the Matters with regard to which
he is required to entertain the belief before he can issue notice under section
148. If there is no rational and intelligible nexus between the reasons and the
belief, so that, on such reasons, no one properly instructed on facts and law
could reasonably
Entertain the belief, the inevitable conclusion is that the Assessing Officer
could not have reason to believe that any part of the income of the assessee
had escaped assessment.
Subject to The section which is subject to some ―other section‖ is to be applied after the
section to which it is subject to. Such other section will have overriding effect.
The gazette of It is a public journal and an authorized legal document of the government of
India India, published weekly by the department of publication, Ministry of Urban
development. The gazette is printed by GOI Press. As a public journal, the
gazette prints official notices from the government.

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INDEX
LIMITS (AMOUNT/TIMINGS) .......................................................................................... 4
FULL FORMS ................................................................................................................ 9
IMPORTANT SECTION NUMBERS .................................................................................. 9
IMPORTANT FORM NUMBERS....................................................................................... 9
INCOME WHICH DO NOT FORM PART OF TOTAL INCOME (EXEMPT INCOMES) .......... 10
RATES OF TAX ............................................................................................................ 14
SPECIAL RATES OF TAX ............................................................................................. 15
TEA/ COFFEE/ RUBBER ............................................................................................ 16
RESIDENTIAL STATUS ................................................................................................ 16
TAXABLE UNDER WHICH HEAD ?? ............................................................................. 20
PARTIAL INTEGRATION OF AGRICULTURAL INCOME .................................................. 22
INCOME UNDER THE HEAD SALARY .......................................................................... 23
INCOME UNDER THE HEAD HOUSE PROPERTY ......................................................... 31
PROFITS & GAINS FROM BUSINESS & PROFESSION .................................................. 38
PRESUMPTIVE TAXATION ........................................................................................... 53
CAPITAL GAIN............................................................................................................. 57
INCOME FROM OTHER SOURCES .............................................................................. 76
CLUBBING OF INCOME .............................................................................................. 80
SET OFF SET ON ........................................................................................................ 82
DEDUCTIONS UNDER CHAPTER VIA........................................................................... 83
RETURN OF INCOME .................................................................................................. 94
ADVANCE TAX & TDS ................................................................................................. 96
IMPORTANT PENALTIES ............................................................................................ 100
ASSESSMENTS & MISC TOPICS ................................................................................ 103

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LIMITS (AMOUNT/TIMINGS)
Maximum Amount of Deduction of Interest in case of Self
Occupied House Property in case Loan is for
Construction/Purchase of House Property on or after Rs. 2,00,000
01.04.1999 (Construction Completed within 5 years)

Construction/Purchase of House Property on or Before Rs. 30,000
01.04.1999 (Construction Not Completed within 5 years)

Repairs/Renovation of House Property (Date of borrowing is Rs. 30,000
irrelevant)
Maximum Amount of Deduction of Interest in case of Let out

Property No Limit
Pre-Construction Interest on Self Occupied Property/Let out

5 Years
Property is allowed in how many years?
(1/5th in each year)
Compulsory Audit of Account of a business u/s 44AB if
turnover of PY exceeds? Rs. 1,00,00,000/-
Compulsory Audit of Account of a Profession u/s 44AB if

turnover of PY exceeds? Rs. 50,00,000/-
Individual & HUF

Turnover>Rs. 25 Lakhs
Net Profit> 2,50,000
Compulsory Maintenance of books of Account u/s 44AA of a
business or Profession other than Specified Profession if
Other Assessee:
Turnover/Net Profit exceeds?
Turnover>10 Lakhs
Net Profit>Rs. 1,20,000
Compulsory Maintenance of books of Account of a Specified

Profession if Gross Proceeds exceeds? Rs. 1,50,000/-
If total turnover or gross

receipts which is
received by an Account
Payee Cheque or
Account Payee Bank
Draft or Electronic
How much is the Presumptive Income of a Business u/s
Clearing System through
44AD?
a bank account: 6%
In other case:
8% of Turnover or Gross
Receipts
Presumptive Scheme is available to a business u/s 44AD if its Less than or equal to 2
turnover is? Crores
How much is the Presumptive Income of a Specified Profession 50% of Gross Receipts
u/s 44ADA?
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Less than or equal to 50
Presumptive Scheme is available to a Specified Profession if its
Lacs
Gross Receipts is?
For Heavy Goods
Vehicle:
Rs. 1000 per ton for
every month or part
For other than Heavy

How much is the Presumptive Income of a Business u/s
Goods Vehicle:
44AE?
Rs. 7500 per month or
part thereof
Heavy Goods Vehicle

means gross vehicle
weight exceeds 1200 Kg
Assessee carrying on
Business of Plying,
Who is eligible for Presumptive scheme u/s 44AE? hiring or leasing goods
carriage owning Vehicles
not exceeding 10.
Due date of filing return of income u/s 139(1) – Audit Assessee
30th September of AY
Due date of filing return of income u/s 139(1) – Non - Audit
Assessee 31st July of AY
Due date of filing return of income u/s 139(1) – International

Transaction or Specified Domestic Transaction u/s 92C along
30th November of AY
with Audit Report
Maximum Deduction of Entertainment Allowance to a

Government Employee Rs. 5,000
Advance tax is payable by the Assessee under income tax act if

Rs. 10,000 or more
total tax payable after deducting TDS is?
Non Agri Income
Exceeds maximum
amount not chargeable
Partial Integration of Agriculture Income happens when?
to tax & Agri Income
Exceeds Rs. 5,000.
Exemption to the parent in whose income, Minor‘s income is Rs. 1,500 per child p.a.
clubbed
33.33% of Family
Pension or Rs 15,000
Exemption of Family Pension Received by Family Member
whichever is less.
50% of interest received

Exemption from Interest received on Compensation or on account of
Enhanced Compensation for Compulsory Acquisition under Compensation or
any Act Enhanced Compensation
5% of total donations or
Exemptions from Anonymous Donations received by a
Rs. 1,00,000 whichever
charitable trust
is higher

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100% of tax or Rs. 2,500
What is the Rebate available to Resident Individual u/s 87A whichever is less
Resident Individual
whose Income does not
Who is eligible for Rebate u/s 87A?
exceed Rs. 3,50,000
Standard deduction from Net Annual Value u/h House

30%
Property
5 years (Equal
Deduction of Capital Expenditure for promoting family
Installments)
planning
Disallowance of expenditure if the amount paid otherwise than
Rs. 10,000 (Rs. 35,000
Account Payee Cheque or Account Payee Draft or Use of
in case of Transporter)
Electronic Clearing System through a Bank Account and
Amount exceeds:
Application for Advance Ruling can be withdrawn in how many 30 days
days?
Application for Settlement Commission can be withdrawn in
Cannot be withdrawn
how many days?
Authority for Advance Rulings shall pass the ruling with how
6 Months
much time?
Application of Advance Ruling shall be made in how many 4 Copies
copies? Fees: Rs. 10,000/-
Which Country Introduced the Concept of GAAR First? Australia in 1981
Tax benefit exceeds Rs. 3
Applicability of General Anti Avoidance Rule?
Crores
Within how many days appeal has to be filed before CIT (A) 30 days
1 Year from the end of
Within how much time CIT(A) must dispose off the Appeal? FY in which appeal is
filed
Within how many days appeal has to be filed before ITAT 60 Days
Within how many days appeal has to be filed before High
120 Days
Court
Within how many days appeal has to be filed before Supreme
60 Days
Court
180 days (ITAT Can
extend but not more
ITAT can pass stay order of how many days?
than 365 days from the
beginning)
4 Years from the end of
Within how much time ITAT must dispose off the Appeal? FY in which Appeal is
filed
Who is the final fact finding authority? ITAT
Free/Concessional Loan shall not be a perquisite if the
Rs. 20,000
amount does not exceed?
What should be the Rate of Interest for chargeability of
perquisite of Free or Concessional Loan in the hands of SBI Rate as on 1st April
employees?
Exemption from perquisite for free meal Rs. 50 per meal
Exemption from perquisite of education of household members
Rs. 1,000 p.m.
of employees
Nil, Exemption withdraw
Exemption from medical reimbursement in the hands of
Now, Entire amount
employees
received shall be taxable
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2 Trips in a block of 4
Leave Travel Assistance for employees
Calendar years
What is limit for classification of transactions as Specified
Rs. 20 Crores in PY
Domestic Transactions u/s 92BA
What is the Permissible variation between ALP and Transfer
3% of Actual Price
price?
What is the time limit for rectification of mistakes apparent
4 Years
from record u/s 154?
What is the Time available to Dispute Resolution Panel for
9 Months
issuing directions?
What is the time limit available to Assessee for filing an 30 days of receipt of
application to Dispute Resolution Panel u/s 144C? draft order
What is the time limit for issue of Intimation of tax or interest 1 year from end of FY in
u/s 143(1)? ROI is filed
6 Months from the end
What is the time limit within which notice u/s 143(2) for
of FY in which ROI is
Scrutiny Assessment can be issued?
filed
What is the maximum period for which an Advance Pricing
5 Years
Agreement can remain valid?
Information relating to International Transactions is required 8 Years from the end of
to be maintained for how many years? relevant AY
Upto Rs. 1 Crore of
Upto What amount of International Transaction is a person aggregate value of
not required to maintain the information & documents? International
Transactions
Due date of filing return of income u/s 139(1) – International
Transaction or Specified Domestic Transaction u/s 92C along
30th November of AY
with Audit Report
Rs. 40,000 or the

What is the amount of Standard Deduction allowed from Gross
amount of Gross Salary,
Salary?
whichever is less
Exceeds 12000 Kgs (or
What is the Gross Vehicle Weight of Vehicle to classify as a we can say 12 tons)
Heavy Goods Vehicle?
1 ton = 1000 kgs
Extra space for Self Notes:

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FULL FORMS
GAAR General Anti Avoidance Rules
SAAR Specific Anti Avoidance Rules
DTAA Double Taxation Avoidance Agreement
AAR Authority for Advance Rulings
ALP Arm‘s Length Price
CUP Comparable Uncontrolled Price
SLP Special Leave Petition
ITAT Income Tax Appellate Tribunal
CFC Controlled Foreign Corporation
TIEA Tax Information Exchange Agreement
OECD Organisation for Economic Co-operation & Development
BEPS Base Erosion & Profit Shifting
MAT Minimum Alternate Tax
AMT Alternate Minimum Tax
RPM Resale Price Method
CPM Cost Plus Method
PSM Profit Split Method
TNMM Transactional Net Margin Method
TPO Transfer Pricing Officer
APA Advance Pricing Agreement
IMPORTANT SECTION NUMBERS

90 Agreements with foreign countries or specified territories
90A CG power to enter into agreement with any specified association in specified
territory outside India
91 Relief when no bilateral agreement between the countries
144 Best Judgment Assessment
143(1) Intimation of Assessment
143(3) Regular Assessment
147 Re-Assessment or Income escaping Assessment
148 Notice of Re-Assessment
154 Rectification of Mistakes apparent from record
263 & 264 Revision by Commission of Income Tax
249 Appeal to CIT (A)
260A Appeal to High Court
261 Appeal to Supreme Court
IMPORTANT FORM NUMBERS

15G Application by an Resident Individual/HUF who is of age less than 60 years to
receive the income without deduction of TDS
15H Application by an Resident Individual who is of age 60 years or more to receive
the income without deduction of TDS
34B Application for Settlement of Cases (5 Copies) Rs. 500/-
34C Application for Advance Ruling by a Non Resident (4 Copies i.e. Quadruplicate)
34D Application for Advance Ruling by a Non Resident (for transaction with a
Resident)
34E Application for Advance Ruling by Notified Residents
34EA Resident/non-resident who seeks advance ruling in respect of impermissible
avoidance arrangement
35 Appeal to CIT (A)

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36 Appeal to ITAT
49A Application for allotment of PAN
49B Application for allotment of TAN
3CA Audit Report where accounts are audited under any other law
3CB Audit Report where accounts are not audited under any other law
3CD Statement of Particulars to be annexed with Audit Report u/s 44AB
24Q TDS Return for Salary
27Q TDS Return for Income other than Salary for Non Residents
26Q TDS Return for Income other than Salary
16 TDS Certificate of Salary
16A TDS Certificate other than Salary
16B TDS Certificate for TDS Deducted u/s 194IA for purchase of Immovable Property
INCOME WHICH DO NOT FORM PART OF TOTAL INCOME (EXEMPT

INCOMES)
10(1) Agricultural Income
10(2) Sum received by an Individual as an member of HUF
10(2A) Share of profits received by Partner of a Firm
10(7) any allowances or perquisites paid or allowed as such outside India by the
Government to a citizen of India for rendering service outside India ;
10(10B) Any compensation received by Employee under Industrial Disputes Act, 1947
10(10BB) Any payment made under Bhopal Gas Leak Disaster
10(10BC) Any amount received from CG or SG or LA by an Individual or his Legal Heir
by way of Compensation on account of any Disaster.
10(11) Receipt of Provident Fund as per Provident Funds Act
10(13A) House Rent Allowance received as per Limits
10(16) Scholarships granted to meet the cost of education
10(17) any income by way of—
(i) daily allowance received by any person by reason of his membership of
Parliament or of any State Legislature or of any Committee thereof;
[(ii) any allowance received by any person by reason of his membership of
Parliament under the Members of Parliament (Constituency Allowance)
Rules, 1986;
[(iii) any constituency allowance received by any person by reason of his
membership of any State Legislature under any Act or rules made by that
State Legislature;]]]
10(18) any income by way of—
(i) pension received by an individual who has been in the service of the
Central Government or State Government and has been awarded ―Param
Vir Chakra‖ or ―Maha Vir Chakra‖ or ―Vir Chakra‖ or such other gallantry
award as the Central Government may, by notification29 in the Official
Gazette, specify in this behalf;
(ii) family pension received by any member of the family of an individual
referred to in sub-clause (i).
10(19) family pension received by the widow or children or nominated heirs, as the
case may be, of a member of the armed forces (including para-military forces)
of the Union, where the death of such member has occurred in the course of
operational duties,
10(20) Income of Local Authority chargeable under the head:
(i) House Property
(ii) Capital Gains
(iii) Income from other sources
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(iv)
Trade or Business of supply of a commodity or service (not being water
or electricity)
10(22B) Income of such news agency set up in India solely for collection and
distribution of news as CG may notify.
10(23D) Income of Registered Mutual Fund registered with SEBI;
Such other Mutual fund set up by a Public Sector bank or Public Financial
Institution or Authorized by RBI
10(23DA) Any income of Securitization trust from the activity of Securitization
10(23FC) any income of a business trust by way of interest received or receivable from a
special purpose vehicle.
10(24) Registered Trade Union:
Income from House Property
Income from Other sources
10(26AAB) any income of an agricultural produce market committee or board constituted
under any law for the time being in force for the purpose of regulating the
marketing of agricultural produce
10(34) Dividends received on which DDT has been charged (Domestic Company)
10(35) Any Income received in respects of units of Registered Mutual Funds
10(37) In the case of an assessee, being an individual or a Hindu undivided family,
any income chargeable under the head ―Capital gains‖ arising from the
transfer of agricultural land, where—
(i) such land is situate in any area referred to in item (a) or item (b) of sub-
clause (iii) of clause (14) of section 2;
(ii) such land, during the period of two years immediately preceding the date
of transfer, was being used for agricultural purposes by such Hindu
undivided family or individual or a parent of his;
(iii) such transfer is by way of compulsory acquisition under any law, or a
transfer the consideration for which is determined or approved by the
Central Government or the Reserve Bank of India;
(iv) such income has arisen from the compensation or consideration for
such transfer received by such assessee on or after the 1st day of April,
2004.
10(38) Any income arising from the transfer of a long-term capital asset, being an
equity share in a company or a unit of an equity oriented fund [or a unit of a
business trust] on which STT is paid.
10(43) any amount received by an individual as a loan, either in lump sum or in
installment, in a transaction of reverse mortgage
10(46) In exercise of the powers conferred by clause (46) of section 10 of the Income-
tax Act, 1961, the Central Government hereby notifies for the purposes of the
said clause, „Prayagraj Mela Pradhikaran, Prayagraj‟, an authority
constituted by the State Government of Uttar Pradesh, in respect of the
following specified income arising to that authority, namely:
(a) Grant-in-aid received from any Central Government, State Government or
other authority;
(b) Tolls on the parking of vehicle or entering any vehicle or any person
bringing goods for sale or for demonstration/ advertisement into the Mela
area;
(c) Fee on the registration of activity of business, trade or profession;
(d) Fee on the services provided to individual as service charge;
(e) Any other charge and fee in Mela Area levied by authority as per the
provisions of the Uttar Pradesh Prayagraj Mela Authority, Allahabad Act,
2017. (W.E.F 14.03.2019)

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10(47) Any income of an infrastructure debt fund
10AA Newly Established Units in SEZ:
(i) Deduction of 100% of profits & gains from exports of such articles or
things or from services for a period of 5 Consecutive AY beginning with
AY relevant to the PY in which Unit begins to manufacture or produce
articles or things or provide services & 50% for further 5 Consecutive
AY and thereafter;
(ii) For next 5 Consecutive AY, so much of amount not exceeding 50% of
profits as is debited to Profit & Loss Account of the PY in respect of
which deduction is to be allowed and credited to a reserve account
(Called as SEZ Re-investment Reserve Account).
13A Tax Exemptions to Political Parties (Assessed as AOP)
Following Incomes of Political Parties are Exempt:
a) Income by way of Voluntary Contributions;
b) Income from House Property;
c) Income from Other Sources
d) Income from Capital Gain
Subject to following conditions:

a) Party keeps & maintains such books of account as would enable the AO to
property deduce the income;
b) In respect of voluntary contributions in excess of Rs. 20,000, the party
keeps and maintains a record of contribution and names and addresses of
the persons who have made the contribution;
c) Accounts of party are audited by CA or other qualified accountant;
d) No Donation of Rs. 2000 or more can be received by a political party
otherwise by way of Account Payee Cheque/Draft/ ECS through a bank
account or through Electoral Bonds.
e) Return of Income u/s 139(4B) should be filed by Political Party on or
before the due date of filing ROI u/s 139(1), otherwise exemption u/s 13A
will not be given.
f) CEO of political party is required to file a ROI if total income exceeds the
maximum amount which is not chargeable to income tax.
13B Voluntary Contributions received by Electoral Trust:

Any Voluntary contributions received by an Electoral Trust shall not be
included in total income of PY of such electoral trust, if:
(a) Such electoral trust distributes to any political party, registered u/s 29A
of representation of people act, 1951 during the said PY, 95% of aggregate
donations received by it during PY along with surplus, if any brought
forward from any earlier PY; and
(b) Such Electoral trust functions in accordance with rules of CG.
RATES OF TAXES:

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INDIVIDUALS,
SLAB RATES HUF, AOP, BOI,
NORMAL LA
RATES
FLAT FIRM,
RATES OF TAX RATES COMPANY
LTCG : 20%
SPECIAL RATES FLAT RATES STCG U/S 111A: 15%
CASUAL INCOME: 30%

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RATES OF TAX
Maximum Amount which is not chargeable to tax i.e. Maximum Exemption Limit:
In case of certain assessee, there is no income tax on income earned during the previous
year upto a certain limit.
In case of Individual (Male or Female), being Resident of India, who is of ` 5,00,000

age of 80 years or more at any time during the Previous Year
In case of Individual (Male or Female), being Resident of India, who is of ` 3,00,000
age of 60 years and above but less than 80 Years at any time during the
Previous Year
Any other Individual, being Resident of India who is less than 60 Years of ` 2,50,000
age or Individual who is a Non Resident irrespective of whether his age is
less than or more than 60 Years.
HUF ` 2,50,000
AOP/BOI other than Co-operative Society ` 2,50,000
Artificial Juridical Person other than Company ` 2,50,000
Firm, Company, LA and Co-operative Society NIL
RATE OF INCOME TAX FOR AY 2019-20:

INDIVIDUALS:
For an Individual (Male or Female), Resident in India who is of age of 80 years or more:
Upto 5,00,000 NIL
5,00,001 to 10,00,000 20%
Above 10,00,000 30%
For an Individual (Male or Female) resident in India who is of age of 60 years or more but
less than 80 years
Upto 3,00,000 NIL
3,00,001 to 5,00,000 5%
5,00,001 to 10,00,000 20%
Above 10,00,000 30%
For an Individual (Male or Female)

Resident in India age less than 60 years or
Non-resident (any age)
Upto 2,50,000 NIL
2,50,001 to 5,00,000 5%
5,00,001 to 10,00,000 20%
Above 10,00,000 30%
Education Cess at the rate 2% on income tax shall be levied. And Secondary and higher
education cess (SHEC) at the rate of 1% on income tax shall also be levied. Health Cess at
the rate of 1% on income tax is now introduced. So, total Health & Education Cess is 4%.
FIRM/LLP/Local Authority: (No Basic Exemption)

Rate of Tax is 30% Flat. Health & Education Cess @4% on total tax shall also be applied.
CO-OPERATIVE SOCIETY:
Where the total income does not exceed ` 10% of total income
10,000
Where the total income exceeds ` 10,000 ` 1,000 plus 20% of the amount that
but does not exceed ` 20,000 exceeds ` 10,000
Where the total income exceeds ` 20,000 ` 3,000 plus 30% of the income that
exceeds ` 20,000.

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DOMESTIC COMPANY:
Rate of Tax
(i) Where the total turnover or Gross 25% of total Income
receipts in the P.Y. 2016-2017 does not for A.Y 2019-20
exceeds Rs. 250 Crores
(ii) in case of other Domestic Companies 30% of Total Income
FOREIGN COMPANY:
Rate of tax is 40% Flat of total income.
SURCHARGE ON DIFFERENT PERSONS (TAX ON TAX) (JYADA KAMAANE KI SAZZA):

Assessee Rate Applicable Surcharge Rate of
of Tax TI> 50 TI>`1 Crore, TI >`10 HEC
Lakhs but TI ≤ `10 Crore
<1Crore Crore
1. Domestic Companies 25%/ - 7% 12% 4%
30%
2. Foreign Companies 40% - 2% 5% 4%
3. Firms and LLP 30% - 12% 12% 4%
4. Local Authorities 30% - 12% 12% 4%
5. Co- operative Societies Slabs - 12% 12% 4%
6. Individuals/HUF/AOP/ Slabs 10% 15% 15% 4%
BOI/ AJP
SPECIAL RATES OF TAX

Short Term Capital Gain on Listed Equity Shares on which STT has been 15%
Charged u/s 111A
Long term capital gain u/s 112 20%
Casual incomes like lottery u/s 115BB 30%
Income referred to in sections 68, 69, 69A, 69B, 69C and 69D u/s 115BBE 60%
Dividend Distribution Tax (+SC+EC+SHEC extra) 15%*
Voluntary Contributions to Charitable trust (Anonymous Donation) 30%
Alternative Minimum Tax (AMT) or Minimum Alternative Tax (MAT) (+SC+HEC) 18.5%
Long term capital gains arising to a non-resident person from transfer of 10%
unlisted securities or shares of a company in which the public are not
substantially interested without giving effect to benefit of indexation u/s
112(1)(e)(iii)
Long-term capital gains arising from transfer of listed securities (other than a 10%
unit), zero coupon bonds without giving effect to benefit of indexation Proviso
to Section 112
Anonymous donation u/s 115BBC 30%
Any income by way of transfer of carbon credits u/s 115BBG 10%
Income of an Indian company by way of dividends declared, distributed or paid 15%
by a foreign company. The benefits shall be allowed only if Indian company
holds 26% or more in nominal value of equity share capital of a foreign
company u/s 115BBD
Dividend received from domestic companies in excess of Rs. 10 Lakh 10%
[excluding deemed dividend under section 2(22)(e)] u/s 115BBDA

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TEA/ COFFEE/ RUBBER
Rule Nature of Business Agl Inc. Non-Agl. Inc.
7A Sale of Centrifuged Latex or Cenex manufactured 65% 35%
from Rubber
7B (a) Sale of grown and cured Coffee by the Seller in 75% 25%
India
(b) Sale of grown, cured, roasted and grounded 60% 40%
Coffee by the Seller in India
8 Growing and Manufacturing Tea 60% 40%
HEADS OF INCOME VIS-À-VIS METHOD OF ACCOUNTING:

Heads of Income Relevance of Method of Accounting
Taxable on the DUE BASIS OR RECEIPT BASIS; whichever is earlier
Salaries
(Method of Accounting is irrelevant)
Income from House Property is taxable only on ACCRUAL BASIS.
House Property (Method of Accounting is irrelevant)
Assessee may employ either Cash or Mercantile System of Accounting

regularly. (Hybrid System not allowed)
Business Income
(Exception Section 43B)
Taxable during the Previous Year in which capital asset is

Capital Gain transferred. (i.e year of Accrual) (Method of Accounting is irrelevant)
Assessee may employ either Cash or Mercantile System of Accounting

regularly. (Hybrid System not allowed)
Income From
(Exception Interest Receipt on Initial Compensation or Enhanced
Other Sources
Compensation on compulsory acquisition under any Law)
RESIDENTIAL STATUS
An individual is said to be resident in India if he satisfies any one of
INDIVIDUAL the following conditions:
(i) He is in India for a period aggregating to 182 days or more in the
relevant previous year; OR
(ii) He is in India for 60 days or more during the relevant previous

year and has been in India for 365 days or more during 4 previous
years immediately preceding relevant previous year.
EXCEPTIONS:
(a)In case of an Individual, who is a Citizen of India and who leaves
India in any previous year for the purposes of employment outside
India, the condition number (ii) above shall not be applicable for the
relevant previous year in which he leaves India.
In other words, for that particular previous year in which he leaves
India for the purpose of employment outside India he shall be called
resident only when he satisfies the condition No. 1 mentioned above.
Similarly, in case of an Individual who is a citizen of India and who

leaves India in any PY as a member of the crew of an Indian Ship, the
condition No. 2 above shall not be applicable.
(b) In case of an Individual, who is a Citizen of India, or a person of

Indian Origin, who being outside India, comes on a visit to India in
any previous year, the condition No. 2 mentioned above in his case
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also shall not be applicable.
A person is said to be of Indian Origin if he or either of his

parents or any of his grandparents was born in undivided India
i.e. before India was partitioned.
When an Individual is said to be resident and ordinarily

resident in India: (ROR)
An individual, who is resident in India, shall be resident and
ordinarily resident in India if he satisfies both the following
conditions:
(i) He has been resident in India for at least 2 out of 10 previous
years immediately preceding the relevant previous year. AND
(ii) He has been in India for 730 days or more, during 7 previous
years immediately preceding the relevant previous year.
HINDU A HUF is said to be resident in India in any PY in every case except

UNDIVIDED where during that year the control and management of its affairs is
FAMILY situated wholly outside India.
“Control and management refers to the decisions taken regarding

affairs of the HUF. The control and management lies at the place
where decisions regarding the affairs of the HUF are taken.”
When is HUF said to be resident and ordinarily resident?

The HUF is said to be resident and ordinarily resident in India if the
Karta of HUF satisfies both the following conditions:
(i) Karta must be resident in at least 2 out of 10 previous years

immediately preceding the relevant PY; AND
(ii) Karta must be in India for at least 730 days during 7 previous
year immediately preceding the relevant previous year.
If the karta does not satisfy any one or both of the conditions, then the
HUF is said to be Resident but not ordinarily resident.
FIRM/ AOP/ BOI & A firm, AOP and BOI is said to be resident in India in any previous
AJP year in all cases except where during that year the control and
management of its affairs is situated wholly outside India.
In case of a firm, the control and management is in the hands of the

partners and therefore, if the partners generally meet in India
regarding the affairs of the firm, then the firm is said to be resident
in India.
COMPANY A company is said to be a resident in India in any previous year if:

(a) It is an Indian Company; OR
(b) During the relevant previous year, its Place of Effective
Management (POEM) in that year is in India.
A Place where Key Management & Commercial Decisions that are necessary
for the conduct of the business of an Entity as a whole are in substance made.
Extra Space for Self Notes:

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SCOPE OF INCOME
1. In case of Resident in India (ROR in case of Individual and HUF) [Section 5(1)]
The following incomes from whatever source derived form part of total income in case of
resident in India (ROR for Individual and HUF)
(i) Any income which is received or is deemed to be received in India in the relevant PY by
or on behalf of such person;
(ii) Any income which accrues or arises or is deemed to accrue or arise in India in the
relevant PY;
(iii) Any income which accrues or arises outside India during the relevant PY.
2. In case of Resident but not ordinarily resident in India (individual and HUF
only)
The following incomes from whatever source derived form part of total income in case of
RNOR:
relevant PY;
(iii) Any income which accrues or arises to him outside India during the relevant PY if it is
derived from a business controlled in or a profession set up in India.
3. In case of Non-Resident in India [Section 5(2)]

relevant PY;
TAX INCIDENCE VS. RESIDENTIAL STATUS

Where tax incidence arises in case of ROR RNOR NR
Income Received in India (whether accrued in or YES YES YES
outside India)
Income deemed to be received in India (whether YES YES YES
accrued in or outside India)
Income accrued or arising in India (whether YES YES YES
received in India or Outside)
Income deemed to accrued or arising in India YES YES YES
(whether received in India or Outside)
Income received and accrued outside India from a YES YES NO
business controlled or a profession set in India
Income received and accrued outside India from a YES NO NO
business controlled or a profession set outside
India
Income earned and received outside India but NO NO NO
later on remitted to India
Past untaxed profits NO NO NO

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TAXABLE UNDER WHICH HEAD ??
Rental Income from Vacant Land/Plot Income from Other Sources
But if regular activity then PGBP
Sub-letting Income Income from Other Sources

But if regular activity then PGBP
Composite Rent If Separable:

Then Rent of Building taxable under Income
from House Property
&
Rent of other Assets & Services shall be
taxable under PGBP or Other Sources as the
case may be
If not Separable:
Entire Rent shall be taxable under PGBP or
Other Sources as the case may be
Rent received from Employees for Under the Head Profits or Gains from
Building or Staff Quarters let out to Business or Profession
Employees
Family Pension received by family Income from Other Sources
members of deceased employee
Dividend Income Income from Other Sources, if taxable
Winning from Lottery, Horse Race, Etc Income from Other Sources
Salary, Bonus, Commission or PGBP
remuneration by whatever named called
received by a Partner from Firm
Salary received by Member of Parliament Income from other sources
Examinership fees received by a Income from other sources
professor from University
Sitting fee received by Directors for Income from other sources
attending meetings

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COMPUTATION OF TOTAL INCOME

`
PARTIAL INTEGRATION OF AGRICULTURAL INCOME

`
INCOME UNDER THE HEAD SALARY
ALLOWANCES PARTLY EXEMPT [SEC. 10(14) & RULE 2BB]

`
SPECIAL ALLOWANCES WHICH ARE EXEMPT TO THE EXTENT OF ACTUAL AMOUNT

RECEIVED OR THE AMOUNT SPENT FOR THE PERFORMANCE OF DUTIES OF AN
OFFICE, WHICHEVER IS LESS:
Travelling Any allowance granted to meet the cost of travel on tour or on transfer of
Allowance duty. Allowance for transfer includes any sum paid in connection with
transfer, packing and transportation of personal effects on such transfer.
Daily Any Allowance, whether granted on tour or for the period of journey In
Allowance connection with transfer, to meet the ordinary daily charges incurred by an
employee on account of absence from his normal place of duty;
Conveyance Any allowance granted to meet the expenditure incurred on conveyance in

Allowance performance of duties of an office. Expenditure incurred on journey from
residence to office and back to residence shall not be treated as
expenditure incurred on conveyance in performance of official duties;
(covered under transport allowance)
Helper Any allowance, by whatever name called, granted to meet the expenditure
allowance incurred on a helper where such helper is engaged for the performance of
official duties only.
Academic Any allowance granted for encouraging academic, research and training
allowance pursuits in educational and research institutes.
Uniform Any allowance, by whatever name called, granted to meet the expenditure
allowance incurred on the purchase or maintenance of uniform for wear during the
performance of duties of office.
SPECIAL ALLOWANCES WHICH ARE EXEMPT TO THE EXTENT OF ACTUAL AMOUNT

RECEIVED OR THE AMOUNT SPENT FOR THE PERFORMANCE OF DUTIES OF AN
OFFICE, WHICHEVER IS LESS:
1. Travelling Allowance
2. Daily Allowance
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3. Conveyance Allowance
4. Helper Allowance
5. Academic Allowance
6. Uniform Allowance
HOUSE RENT ALLOWANCE [SECTION 10(13A) AND RULE 2A]
HRA is exempt under section 10(13A) to the extent of the minimum of the following three
amounts:
(a) Actual HRA received by the employee.
(b) Rent Paid Less 10% of Salary for the ‗relevant period‘.
(c) 50% of the salary where the residential house is situated at Mumbai, Kolkata, Delhi or
Chennai and 40% of the salary where the house is situated at any other place, for the
relevant period.
Relevant period‘ means the period during which the said accommodation was
occupied by the assessee during the previous year.
Salary for the purpose of HRA

BASIC SALARY + DA (forming part of retirement benefits) + Commission (fixed %)
GRATUITY [SEC 10(10)]:

Gratuity
Government Non- Government Employees

Employees
Employee covered by Other Employees

Fully Exempt Gratuity Act,
Least of following is exempt
Least of following is exempt  Actual Gratuity received,
 Actual Gratuity received,  1/2 × Average salary for 10 months
 15/26 × last drawn salary × no. of preceding the month of retirement ×
years of Completed Service or part no. of fully Completed years of Service
thereof in excess of six months  Rs 20,00,000.
 Rs 20,00,000.
Salary means:
Last drawn Salary means Last completed month of Basic + DA + Commission forming part of
Salary salary as fixed percentage of Turnover
Salary means: Basic + D.A Completed years of service: : In
For purpose of calculating completed year of calculating the number of years of service
service, more than 6 months shall be taken as a only completed years are to be taken into
completed year. A period of 6 months or less than 6 account and part of the year whether more
months shall be ignored.
or less than 6 months, will be ignored.

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TREATMENT OF PENSION [SECTION 17(1)(II)]:
Pension is a payment made by the employer after the retirement/death of the employees
as a reward for past service.
Pension
Uncommuted Commutation of Pension

Pension
Government Other Employee

Fully Employee
Taxable
If in receipt of Gratuity If in not receipt of Gratuity
Fully Exempt
1/3 × Full Value of 1/2 × Full Value of Pension
Pension is Exempt is Exempt

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PROVIDENT FUNDS
Particulars Recognized PF Unrecognized PF Statutory Public PF
PF
Employer‟s Amount in excess Not taxable at the time Fully N.A.
Contribution of 12% of salary is of contribution exempt
yearly taxable
Employee‟s Eligible for No Income Tax Benefit Eligible for Eligible for
Contribution deduction u/s 80C deduction deduction
u/s 80C u/s 80C
Interest Amount in excess Interest on Employee‟s Fully Fully

Credited of 9.5% p.a. is Contribution is exempt exempt
taxable taxable under ―Other
Sources‖.
Interest on Employer‟s
Contribution is not
taxable at the time of
credit.
Amount Exempt from tax if Employer‟s Fully Fully

received on employee served a contribution and exempt exempt
retirement, Continuous period interest thereon is u/s 10(11) u/s 10(11)
etc. of 5 years or more taxable as salary.
or retires before
rendering 5 years Employee‟s
of service because contribution is not
of reason beyond taxable.
the control of the
employee. Interest on employee
In other case, it contribution is taxable
will be taxable. under income from
other source.
Salary for the purpose of PF = Basic + D.A. (considered for retirement Benefits) + Commission as
a fixed percentage of Turnover.

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RENT FREE ACCOMODATION
S.no. Category of Unfurnished Accommodation Furnished
Employee (a) Accommodation
(b)
1. Government License fee determined by the Government Value of
employee Less: Rent recovered from Employee Unfurnished
Accommodation
as determined
in (a)
Add: Value of
Furniture
- If owned by
Employer, 10%
P.A. of Original
Cost of such
Furniture
- If hired from
Third Party,
then Actual
Hire Charges
Less: Any
charges paid or
payable by the
Employee
2. Non- Where accommodation is owned by Same as Above
Government employer
Employee Location Perquisite value
In cities having a 15% of salary
population >25 lacs as Less: Rent actually
per 2001 census. paid by Employee
In cities having a 10% of salary
population > 10 lacs ≤ Less: Rent actually
25 lacs as per 2001 paid by Employee
census.
Accommodation in a
In other areas 7.5% of salary
Hotel will not be
taxable perquisite if- Less: Rent actually
paid by Employee
 The period of such
accommodation Where the accommodation is taken on lease
does not exceed 15 Same as Above
Days,
or rent by employer
 Such Rent Paid by Employer
accommodation has Or whichever is
been provided on 15% of Salary Lower
the transfer of the Less: Rent recovered from Employee
Employee from one Where the Accommodation is in Hotel Same as Above
place to another. 24% of Salary paid or payable
Or W/L
Actual Charges paid/ payable
Less: Amount paid or payable by the Employee

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VALUATION OF MOTOR CAR/OTHER VEHICLES [RULE 3(2)]
S.no Car Expenses Wholly Wholly personal Partly personal use
owned/ met by official use
hired by use
1. Employer Employer Not a Running and cc of Perquisite
perquisite maintenance engine value
expenses, wear upto Rs 1,800 p.m.
and tear or hire 1.6litres
charges, driver above 1.6 Rs 2,400 p.m.
salary less litres
amount charged If chauffeur is also provided,
from the employee Rs 900 p.m. should be added
for such use. to the above value.
2. Employee Employer Not a Actual amount of Actual amount of
perquisite expenditure expenditure incurred by the
incurred. employer as reduced by the
perquisite value arrived at in
(2) above.
3. Employer Employee Not a Wear and tear or cc of engine Perquisite
perquisite hire charges, value
driver salary. upto 1.6 litres Rs 600
p.m.
above 1.6 Rs 900
litres p.m.
If chauffeur is also provided,
Rs 900 p.m. should be added
to the above value.
PARTICULARS MAXIMUM EXEMPTION LIMIT
Leave Salary Rs. 3,00,000
Voluntary Retirement Rs. 5,00,000
Retrenchment Compensation Rs. 5,00,000
Gratuity Rs. 20,00,000
Entertainment Allowance Rs. 5,000

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Transfer of Movable Computers & Motor Car Other Assets
Asset to Employees Electronic Items
Actual Cost Actual Cost Actual Cost
Less: Less: Depreciation Less: Depreciation @
Completed year Depreciation @ @ 20% for every 10% for every
means actual 50% for every completed year completed year under
completed year from completed year under WDV SLM method.
the date of acquisition under WDV method.
of asset to the date of method.
transfer of such asset Value of the Value of the Asset Value of the Asset
to employees. Asset Less: Amount Less: Amount
Less: Amount recovered from the recovered from the
recovered from employee employee
the employee
Value of Value of Value of perquisite
perquisite perquisite
 Electronic gadgets include Computer, Digital Diaries and printers,

but exclude washing machines, microwave ovens, Mixers etc.
 Transfer of Assets, which are 10 years old, shall not attract
taxability.
Use of Movable Assets 10% of Actual Cost if owned by the Employer, or
other than Actual Rental Charge paid/ payable by Employer
Computer or Less: Amount recovred from Employee
Laptops or other
Assets already
mentioned
DEDUCTIONS UNDER THE HEAD SALARY

STANDARD DEDUCTION (Inserted by Finance Act 2018)
Gross Salary or Rs. 40,000; whichever is less
TREATMENT OF ENTERTAINMENT ALLOWANCE [SEC 16(II)]

 This deduction is allowed only to a Government employee.
Non-Government employees shall not be eligible for any deduction on account of any
entertainment allowance received by them.
 Least of the following is allowed as deduction:-

(i) Actual entertainment allowance received during the previous year.
(ii) 20% of Basic Salary of the Individual
(iii) `5,000.
Entire Entertainment allowance received is added first in the Gross Salary & then Deduction is
allowed from Gross Salary as per the criteria given above.
PROFESSIONAL TAX / TAX ON EMPLOYMENT:

Paid by Employee: Allowed as Deduction
Paid by Employer Directly: First add to the gross salary & then allow deduction from gross
salary

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`

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INCOME UNDER THE HEAD HOUSE PROPERTY
BASIS OF CHARGE: (Section 22)
The basis of calculating income from house property is the Annual Value. This is the
inherent capacity of the property to earn income. Income from house property is perhaps the
only income that is charged to tax on a notional basis. The charge is not because of the receipt
of any income but is on the inherent potential of house property to generate income. The
annual value is the amount for which the property might reasonably be expected to let
from year to year.
ESSENTIAL CONDITIONS:
1. The Property must consist of buildings or land appurtenant thereto
2. The assessee must be the owner of such house property. Any income derived from a
property which is not owned by the assessee cannot be taxed under this head.
WHEN INCOME FROM HOUSE PROPERTY IS NOT CHARGED TO TAX:

In the following cases income from property is not charged to tax:
(a) Farm House Income from any building owned or occupied by an agriculturist
or receiver of rent of such land provided that the building is in
immediate vicinity of agricultural land and is used as a dwelling
house or as a store house.
(b) Property held for As per section 11, where the property is held for charitable or
charitable purposes religious purposes the income from such property is exempt from
tax.
(c) House property It falls under the head ―Income from business and profession‖ and
used for own although no income will be derived but deductions/allowances of
business/ profession such property shall be allowed under that head.
(d) Self occupied Annual value of one self-occupied house shall be taken as NIL.
House
(e) House property of The income from property held by a registered trade union/local
registered trade authority is not taxable.
union/local authority
(f) Palace of ex-Ruler The annual value of any one palace in the occupation of an ex-
ruler shall be exempted from tax.

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COMPUTATION OF INCOME FROM HOUSE PROPERTY (SITUATIONS)
Particular SOP or SOP Let-out Let-out Let-out More SOP for
s kept Vacant for full property property than part of the
u/s 23(2) year kept kept one year and
vacant vacant for property let out for
for whole part of self- part of the
year the year occupie year
d
(1) (2) (3) (4) (5) (6)
Annual For whole
u/s u/s u/s
Value year u/s
NIL 23(1)(a)(b) 23(1)(c) 23(1)(c)
23(1)(a)/(b)
[refer above] [refer above] [refer above]
[refer above]
Less: Municipal
Municipal Municipal Municipal
Municipal NIL Tax paid for
Tax paid Tax paid Tax paid
Taxes whole year
Balance NIL NAV (NAV) NAV NAV
Less:
Deductio
n u/s 24
Standard One
30% of 30% of property
Deductio NIL NIL 30% of NAV
NAV NAV like
n @ 30% Column
Interest Loan taken 1
on after 1.4.99 for
acqu./ const. Other
borrowed
of house & the Propertie
capital same was s like
completed Column
within 5 yrs 2
from the end
of F.Y in which
Actual Actual Actual
loan is taken-
No ceiling No Limit No ceiling No ceiling
max ded. Rs
Limit Limit Limit
2,00,000
(including
apportioned
pre- const.
period int.)
In any other
case max.
deduction Rs
30,000

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UNREALIZED RENT: [EXPLANATION TO SECTION 23(1)]
Unrealized Rent means the rent not paid by the Tenant and realised by the owner.
As per the explanation, the actual rent received or receivable mentioned in Section
23(1)(b) and (c) shall not include the amount of rent which the owner cannot realize,
subject to the rules made in this behalf. In other words, unrealized rent, if any, should be
deducted from clause (b) and (c) of Section 23(1).
Rules for unrealized rent:

Deduction of Unrealized Rent is allowed provided following conditions are satisfied:-
(a) The tenancy is bonafide;
(b) The defaulting tenant has vacated or steps have been taken to compel him to vacate
the property;
(c) The defaulting tenant is not in occupation of any other property of the assessee.
(d) The assessee has taken all reasonable steps to institute legal proceedings for the
recovery of the unpaid rent or satisfies assessing officer that legal proceedings would be
useless.
ARREARS OF RENT RECEIVED:

Means incremental rent relating to earlier F.Y.‘s, received during the current F.Y. which is
not charged to income tax for any previous year.
TAXABILITY OF ARREARS OF RENT OR UNREALISED RENT RECEIVED SUBSEQUENTLY

(SECTION 25A)
1. Taxability Taxable in the year of receipt/realization.
2. Deduction Deduction @ 30% is allowed on arrears of rent or unrealized rent received
subsequently.
3. Ownership Taxable even if assessee is not the owner of the property in the FY of
receipt/ realization.
Interest on borrowed capital
Pre-construction Interest Post Construction/ acquisition

Interest
It is allowed as deduction over a

period of 5 years in equal annual Deduction of interest is allowed in
installments commencing from the year in which interest is due,
the year of acquisition or even though it is not paid during
completion of construction.
the F.Y.

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Deduction of Interest on borrowed capital in respect of one self-occupied property
where annual value is nil:
Interest on borrowed capital
Pre-construction Interest Post Construction/ acquisition

Interest
It is allowed as deduction over a

period of 5 years in equal annual
installments commencing from the Deduction of interest is allowed in
year of acquisition or completion of the year in which interest is due,
construction. even though it is not paid during
the F.Y.
In case of SOP there is limit on deduction amount:
PROPERTY OWNED BY CO-OWNERS [SECTION 26]

Sometimes the property consisting of buildings or the buildings and land appurtenant
thereto is owned by two or more persons, who are known as co-owners. In such cases, if
their respective shares are definite and ascertainable, such persons shall not be assessed
as an AOP in respect of such property, but the share of each person in the income from
the property, as computed in accordance with sections 22-25, shall be included in his
total income as under:
(a) Where the house property is self-occupied by each co-owner: where the house
property owned by the co-owner is self-occupied by each of the co-owner, the annual
value of the property for each of such co-owner shall be nil and each of the co-owner shall
be entitled to the maximum deduction of ` 30,000/2,00,000 under section 24(b) on
account of interest on the borrowed capital.
(b) Where the entire or part of the property is let: As regards, the property or part of
the property which is owned by co-owner is let out, the income from such property or part
thereof shall be first computed as if this property/part is owned by one owner and
thereafter the income so computed shall be apportioned amongst each co-owner as per
their definite share.

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PROFITS & GAINS FROM BUSINESS & PROFESSION
Necessary Ingredients:
Clause (i) of section 28 is the main clause dealing with the charge of profits and gains of a
business in general. On an analysis of clause (i) five ingredients are found to emerge:
 There should be a business or profession;
 The business or profession should be carried on by the assessee;
 The business or profession should be carried on for some time during the previous
year;
 The charge is in respect of the profits and gains of the previous year of the business or
profession; and
 The charge extends to any business or profession carried on.
CHARGING SECTION 28
Sec. 28 Income under the head “Profits and Gains of Business or Profession”
(i) Profits and Gains of Business or Profession carried on by the Assessee at any time
during the previous year.
Compensation taxable as Business Income : Compensation or other payment for
–
(a) Termination or modification of Managing Agent‘s agreement in relation to an
Indian Company.
(b) Termination or modification of Managing Agent‘s agreement in relation to any
(ii) other Company in India.
(c) Termination or modification of contract relating to an agency in India.
(d) Vesting of management of property or business with Government/Corporation.
(e) any person, by whatever name called, at or in connection with the termination
or the modification of the terms and conditions, of any contract relating to his
business;
(iii) Income received by a Trade or Professional Association, from services rendered to
its Members.
Export Incentives taxable as Business Income :
(iiia) Profit on Sale of Import License.
(iib) Cash Assistance against exports.
(iiic) Customs duty or excise re-paid or repayable as Duty Drawback.
(iv) Value of Benefit or Perquisite arising from Business/Profession, whether convertible

into money or not.
(v) Interest, Salary, Bonus, Commission or Remuneration receivable or received by a
Partner of a Firm, from the Firm in which he is a Partner.
(va) Any sum, received or receivable, in cash or kind under an agreement for –
(a) not carrying out any activity in relation to any business or profession; or
(b) not sharing any know-how, patent, copyright, trademark, licence, franchise or
any other business of commercial right of similar nature or information or
technique likely to assist in the manufacture or processing of goods or provision
of services.
(vi) Sum received under Keyman Insurance Policy, including sum allocated by way of
Bonus on such policy.
(via) the fair market value of inventory as on the date on which it is converted into, or
treated as, a capital asset determined in the prescribed manner;
(vii) Sum received or receivable (in cash or kind) on account of any Capital Asset (other
than Land or Goodwill or Financial Instrument) allowed as deduction u/s 35AD,
being demolished, destroyed, discarded or transferred.

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DEPRECIATION (Section 32)
What is “Block of Assets”:
Block of Assets [Section 2(11)]: Block of assets means a group of assets falling within
same class of assets comprising-
(a) Tangible Assets being building, machinery, plant or furniture;
(b) Intangible Assets being Know-how, Patents, Copyrights, Trademarks, Licenses,
Franchises or any other business;
In respect of which the same percentage of depreciation is prescribed.
Class of Assets:
Assets eligible for depreciation have been classified into four classes:
(a) Building
(b) Plant and Machinery
(c) Furniture
(d) Intangible Assets
Each class of assets other than Intangible assets may have different blocks or groups on
which separate rate of depreciation are prescribed and for each such rate, separate block
will be formed.
In case of Intangible assets there will be only one block as only one rate i.e. 25% has
been prescribed for all such Intangible assets.
CONDITIONS FOR ALLOWABILITY OF DEPRECIATION [SEC. 32]:

The following conditions must be satisfied in order to claim depreciation:
(i) Ownership: The asset must be owned by the assessee; wholly or partially.
(ii) Use: The asset must be used for the purpose of business or profession during the
P.Y.
(iii) Block of Assets: It shall fall within the classification of Block of Assets.
If any of the above conditions is not satisfied, the depreciation shall not be allowed.
Sold includes a transfer by way of exchange or compulsory acquisition under

any law for the time being in force but does not include a transfer, in the
scheme of amalgamation, of any asset by the amalgamating company to the
amalgamated company where the amalgamated company is an Indian Company.
2. Computation of WDV: In case of any Asset, WDV is computed as under-

Particulars `
Opening Value of the Block in the particular Class of Asset a so on the XXXX
first day of the P.Y.
Add: Actual Cost of Assets acquired during the P.Y. in the same block. XXX
Less: Moneys payable in respect of any Asset, which is sold, demolished or
destroyed in that block including any Scrap Value. (XXX)
Written down Value for the purpose of computation of Depreciation XXXX
Less: Depreciation at the rate prescribed for the block (XXX)
Closing Written Down Value of the Block XXXX
Money payable in respect of any building, machinery, plant and furniture includes:
(a) Any insurance, salvage or compensation, money payable in respect thereof;
(b) Where the building, machinery, plant or furniture is sold, the price for which it is sold.
The word money has to be interpreted only as actual money or cash and not as any other thing
or benefit which could be evaluated in terms of money.

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RATES OF DEPRECIATION
(a) Buildings
Block 1 Buildings which are used mainly for residential purpose except hotel and 5%
boarding houses
Block 2 Buildings other than those used mainly for residential purposes and not 10%
covered by sub item (1) above.
Block 3 Purely temporary erections such as wooden structures. 40%
(b) Furniture and Fittings

Block 1 Furniture and Fittings including Electrical Fittings 10%
© Machinery and Plant

Block 1 Motor cars, other than those used in the business of running them on 15%
hire
Block 2 Machinery & Plant 15%
Block 3 Motor buses, motor lorries and motor taxi used in the business of 30%
running them on hire
Block 4 Computers including computer software‘s 40%
Block 5 Books (other than annual publications and books owned by assessee 40%
carrying on business in running libraries)
Block 6 Books owned by assessee carrying on profession being annual 40%
publications
Block 7 Books owned by assessee carrying on business in running lending 40%
libraries
Block 8 Aeroplanes - Aeroengines 40%
Block 9 New commercial vehicle which is acquired & put to use on or before 40%
30.09.2009
Block 10 Moulds used in Rubber and Plastic Goods Factories 30%
Block 11 Lifesaving Medical Equipment 40%
Block 12 Containers made of Glass or Plastic used as re-fills. 40%
Block 13 Ships and Other Water Vessels 20%
Block 14 *Renewable energy devices if they are installed on or after 1st April 40%
2014-
(a) Wind Mills and any specially designed devices which run on wind
mills;
(b) Any special devices including electric generators and pumps running
on wind energy
(d) Intangible Assets

Block 1 Know How, Patents, Copyrights, trademarks, Licenses, Franchises, etc. 25%
(includes Goodwill)
Bold Rates 40% is the amendment made by Notification No. 103/2016 dated 7 th
November 2016
DEPRECIATION ON NEWLY ACQUIRED ASSETS

1. Depreciation on Where any asset, falling within a block of asset, is:
newly acquired  acquired by the assessee during the previous year
asset in the and
previous year & is  is put to use for the purpose of business or profession for a
put to use for less period less than 180 days in that previous year,
than 180 days depreciation in respect of such asset shall be restricted to 50% of
during that previous the amount calculated at the percentage prescribed for the block

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year of asset comprising such asset.
2. newly acquired If the Asset is acquired during the current P.Y. & put to use only in the
Asset, used only in subsequent P.Y., but less than 180 days, the above condition does not
subsequent P.Y. apply. (Assessee entitled for full depreciation for the subsequent P.Y.)
ADDITIONAL DEPRECIATION ON NEW MACHINERY OR PLANT [SECTION 32(1)(IIA)]
1. Applicable to Assessee‘s engaged in the business of manufacture /

Applicability Production of any article/thing or in the business of Generation,
Transmission or Distribution of Power.
2. Eligible Any new Machinery or Plant acquired and installed after 31.03.2005.
Asset
3. Ineligible a. Ships and Aircrafts;
Asset b. Any machinery or plant which before its installation by the assessee was
used either within or outside India by any other person;
c. Any machinery or plant installed in any office premises or any
residential accommodation, including accommodation in nature of guest
house;
d. Any office appliances or road transport vehicles; or
e. Any machinery or plant, the whole of the actual cost of whi8ch is
allowed as a deduction (whether by way of depreciation or otherwise) in
computing the income chargeable under the head ―Profits and Gains of
business or profession‖ of any one previous year.
4. Rate of Besides normal depreciation, additional depreciation shall be allowed @
additional 20% of the actual cost of the eligible asset in the previous year in which
depreciation: such asset is acquired and installed.
5. usage In case of Assets newly acquired and put to use in the same P.Y. for less
Period < 180 than 180 days, the Additional Depreciation shall be provided at 50% of
days normal rate applicable, i.e. @ 10%
Balance 50% shall be allowed u/s 32 in the immediately succeeding
P.Y. in respect of such asset.
6. Special (a) Date of Commencement: Assessee should set up an Undertaking or
Rate of Enterprise for manufacture or production of ant article or thing, on or after
Additional 01.04.2015.
Depreciation
for (b) Location: In any Backward Area notified by C.G., in the state of
Machinery or Andhra Pradesh or Bihar or Telangana or West Bengal.
Plant for (c) Machinery Dates: Assessee should acquire and Install new Machinery
undertaking or Plant (other than Ships and Aircrafts) for the purposes of the said
in Backward undertaking or Enterprise during the period 01.04.2015 to 31.03.2020.
Areas of
Specified (d) Rate: Additional Depreciation shall be 35% instead of 20%.
States (e) Usage<180 days: only 50% Depreciation of the depreciation is allowed
if Asset used for < 180 days in the P.Y. balance 50% is allowed in the
immediately succeeding P.Y.

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DEPRECIATION IN CASE OF POWER SECTOR UNITS – SLM
1. Eligible Power Sector Units engaged in the business of generation or generation and
Assessee’s: distribution of power can change depreciation on their assets under Straight
– Line Method, at the rates prescribed in Appendix I of the Income Tax Rules.
2. Eligible Power Sector Units can claim depreciation on SLM method only on Tangible
Assets: Assets. For Intangible Assets, only WDV Method shall be applicable.
3. Usage less In case of newly acquired assets put into use for less than 180 days,
than 180 depreciation is allowable at 50% of the normal rate.
days:
4. Option for (a) WDV: Power Sector Units can also opt for claiming depreciation under
WDV: Written Down Value Method.
(b) Time of exercise of option: They have to exercise such option before the due
date of furnishing the Return u/s 139(1) relevant to the previous year in which
they begin to generate power.
(c) Nature of Decision: The option once exercised shall be final.
5. Sale in year Where the asset is sold or discarded in the previous year in which it is first
of First Use: put to use, any loss arising therefrom shall be treated as Capital Loss, i.
e. Loss under the head ―Capital Gains.‖
6. Transfer of Capital Gains on transfer of Depreciable Assets held by Power Sector Units
Depreciable shall be computed as follows –
Assets by Situation Condition Treatment
Power Sector I Net Consideration is less Terminal Depreciation u/s 32 =
Units: than WDV WDV Less Net Consideration.
II Net Consideration is Balancing Charge u/s 41(2) = Net
greater than WDV Consideration Less WDV
III Net Consideration is Capital Gain = Net Consideration
greater than Original Less Original Cost [Note : Sec. 48
Cost of Asset and 49 applies for Capital Gains]
Balancing Charge [Sec. 41(2)] =
Original Cost Less WDV
Note:
 Net Consideration = Consideration for Transfer Less Expenses of
Transfer.
 The amount of Balancing Charge should not exceed the difference
between Actual Cost and the WDV.
INVESTMENT IN NEW PLANT OR MACHINERY (SEC 32AC/32AD)

Section 32AC(1) 32AC(1A) 32AD
Effective Date 1.4.2014 1.4.2015 1.4.2016
Eligible Company Company All Assessees
Assessee
Period of During the During any P.Y. During the period from
Acquisition & period from 01.4.2015 to 31.3.2020
Installation 01.04.2013
to
31.03.2015
Condition Aggregate (a) Aggregate Amount of (a) Commencement:
amount of Actual Cost of New Assessee should set
Actual Cost of Asset exceeds Rs. 25 up an Undertaking or
such new Crores. Enterprise on or after

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Asset exceeds (b) If deduction is 01.04.2015.
Rs 100 allowable u/s 32AC(1), (b) Location: in any
Crores. i.e. for investment upto notified Backward
31.03.2015, then no Area in the state of
deduction is allowed Andhra Pradesh or
u/s 32AC(1A), for A.Y. Bihar or Telangana or
2015-2016. West Bengal.
(c) No Limit on Amount
of Investment.
Deduction for (See note) 15% of the Actual Cost of 15% of the Actual Cost of
that A.Y. such New Assets. such New Assets.
Last Year of A.Y. 2015- A.Y. 2017-2018 A.Y. 2020-2021
Deduction 2016
“New Asset” means any new Plant or Machinery (other than Ship or Aircraft), but does
not include-
(a) Any Plant or Machinery which before its installation by the assessee was used whether
within or outside India by any other person,
(b) Any Plant or Machinery installed in any Office Premises or any Residential
Accommodation including accommodation in the nature of a Guest House,
(c) Any Office Appliances including Computers or Computer Software,
(d) Any Vehicle,
Any Plant or Machinery the whole of the Actual Cost of which is allowed as deduction
(whether by way of depreciation or otherwise) in computing the income chargeable u/h
―P.G.B.P‖ of any P.Y.
PRESUMPTIVE INCOME SUMMARY

Sec. Nature of Business Profit on Turnover
44AD All Resident Assessee except business of plying, hiring 6% of Turnover
or leasing goods carriage (received through
Account payee Cheque
or Draft or ECS)
In other Case: 8% of
Turnover
44ADA Specified Professions 50% of Gross Receipts
44AE Business of Plying, hiring or leasing goods carriage For Heavy Goods
Vehicle:
Rs. 1000 per ton for
every month or part
For other than Heavy

Goods Vehicle:
Rs. 7500 per month or
part thereof
Heavy Goods Vehicle

means gross vehicle
weight exceeds 1200
Kg
44B Shipping Business 7.5% of Gross Turnover

44BB business of providing services or facilities in 10% of Gross Turnover
connection with, or supplying plant and machinery on
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hire, for extraction or production of, mineral oils
44BBA Operation of Aircraft 10% of Gross Turnover
44D Royalty or Technical fees derived by a Foreign Rate of Tax 20%
Company from Government of Indian Concern
(Sec.115)
LOSSES ALLOWABLE AS DEDUCTION:
(i) Loss on account of embezzlement in the PY in which embezzlement is discovered.

(ii) Loss of stock in trade by fire and other natural calamities or due to negligence of the
employees or due to enemy action or in transit.
(iii) Loss on account of robbery or theft provided it is in the course of business and
incidental to the trade whichever trade it is.
(iv) Loss caused by non-recovery of advances made in the course of business, provided it
is a trading loss.
(v) Loss caused by forfeiture of security deposits given at the time of submission of
tenders for supply of goods.
(vi) Loss suffered due to breach of contract for delivery of goods by either party.
(vii) Loss caused on account of fluctuation in exchange rate, at the time of remitting the
money for the purchase of raw material.
(vii) Loss by the failure of the bank in which money is deposited.
LOSSES NOT ALLOWABLE:
(i) Losses incurred in closing down of the business.

(ii) Loss caused by forfeiture of advance given for purchase of capital assets.
(iii) Loss sustained before the business is commenced e.g. pre-incorporation loss taken over
by the company.
CONTRIBUTIONS MADE TO OUTSIDE RESEARCH ASSOCIATIONS/COMPANY

Sec.35 Payment made Conditions Eligible
to Deduction
(1)(ii) (a) Any research (a) Object of Research Association should be the
Association, or undertaking of SR.
(b) Any (b) The Association/ University/ College/ Other 150% of

University, Institution should be approved in accordance with sum paid.
College or Other the Guidelines, and should be notified by CG.
Institution, to
be used for SR.
(1)(iia) Company (a) Company should be registered in India.
(b) Its main object for SR & Development.

100% of
(c) The Company should be approved by Prescribed sum paid
Authority and should fulfill other prescribed
Conditions.
1(iii) (a) Any (a) Object of Research Association should be the

100% of
Research undertaking of Research in Social Science or
sum paid
Association, or Statistical Research.
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(b) Any
University, (b) If paid to University/ College/ Other Institution,
College or Other it should be used for research in Social Science or
Institution Statistical Research.
(2AA) National Payment should be made with a Specific direction

Laboratory or that the said sum shall be used for SR undertaken
150% of
University or IIT under a Programme approved by Prescribed
sum paid
or Specified Authority.
Person
(2AB) Company any expenditure incurred by a company on
engaged in Bio- scientific research (including capital expenditure
Technology or other than on land and building) on in-house
in any business scientific research and development facilities as
150% of
of approved by the prescribed authorities shall be
sum paid
manufacturing allowed as deduction
or production of
eligible articles
or things
DISALLOWANCES IN CASE OF PARTNERSHIP FIRM [Section 40(b)]

Interest on Interest on capital of the partners is allowed as deduction only when the
Partner’s payment of interest is mentioned in the partnership deed.
Capital: Further the amount of interest allowed as deduction shall be either the
amount mentioned in the partnership deed or 12% p.a. whichever is
less.
Deduction= Rate of Interest mentioned in deed
or Whichever is Less
12% Simple Interest;
Note: Interest given on Current Account of a Partner will not be

allowable as deduction.
Remuneration: Any salary, bonus, commission or any other remuneration is an

allowable deduction only when-
 it is prescribed in the partnership deed and
 only when it is paid to a working partner.
Salary paid to non-working partner shall not be eligible for any
deduction.
Further, the quantum of deduction payable to all working partner shall

be minimum of the following two limits:
(a) Amount paid or payable to working partners as authorised in
Partnership Deed.
(b) Maximum amount specified u/s 40(b).
Maximum amount specified u/s 40(b):

On first Rs 3,00,000 of book profit 90% of the book profit or Rs
or in case of a loss 1,50,000 whichever is more
On the balance book profit 60% of the book profit
Computation of Book Profits for the purpose of Sec 40(b):

Step 1 Find out the Net Profit of the firm as per Profit & Loss
Account
Step 2 Make adjustment for admissible and inadmissible deduction
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of expenditures and compute taxable income before
deduction towards Interest and Remuneration to Partners
Step 3 If Interest & Remuneration already debited then ADD BACK
Step 4 Deduct Interest allowable u/s 40(b)
Step 5 Book Profit = Step 1 – Step 2 + Step 3 – Step 4
Taxability in the hands of Partners:
i) Interest: Interest received from the firm is taxable to the extent, it was
allowed as expenditure in the hands of Firm u/s 40(b). (Interest paid
above 12% is already taxed in the hands of Firm)
ii) Remuneration: Remuneration received from firm is taxable to the

extent it is allowed as expenditure in the hands of firm u/s 40(b).
(Remuneration paid above the limit prescribed u/s 40(b) is already taxed
in the hands of firm)
iii) Share Income from Firm: Share of profit received from the firm is
exempt in the hands of partners as the same has been taxed in the
hands of firm.
EXPENSES OR PAYMENTS NOT DEDUCTIBLE WHERE SUCH PAYMENTS ARE MADE TO

RELATIVES [SECTION 40A(2)]
1. Nature of (a) The Payment is in respect of goods, services or facilities supplied/

Payment: provided by a specified person (i.e. relatives or close associates of the
assessee).
(b) The amount paid to such Relative is considered to be excessive or
unreasonable as compared with the market value of such goods, services
or facilities.
2. Amount The excessive or unreasonable sum shall be disallowed by the A.O, in this
Disallowed matter, the AO shall have due regard to-
(a) The FMV of the goods, services or facilities; or
(b) The legitimate needs of the Assessee‘s business or profession; or
(c) The benefit derived by or accruing to the assessee from the payment.
Disallowance of 100% of expenditure is payment is made by any mode other than

account payee cheque or draft or ECS through Bank Account: [Section 40A(3)(a)]
1. Nature of  Expenditure in respect of which aggregate payments made to a person in a
Expenditure day,
 In excess of Rs 10,000 (Rs. 35,000 for payment made for plying, hiring or
leasing goods carriages) is made,
 Otherwise than by way of Account Payee Cheque/ Demand Draft/ ECS
2. Extend of The whole of such expenditure shall not be allowed as a deduction.

Disallowance
3. Payment When an expenditure is allowed on due basis for a P.Y., and the liability is
of settled in the subsequent period-
Outstanding (a) otherwise than by Account Payee Cheque/Draft/ ECS and
Liabilities (b) Aggregate of Payment made in a day exceeds Rs 10,000/ 35,000
Such payment will be deemed to be Business Income of the P.Y. in the year
of actual Payment.

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4. (a) This Rule does not apply in respect of an expenditure not claimed as
Applicability deduction u/s 30 to 37.
(b) This rule is applicable even in respect of advance for an expenditure
covered u/s 30 to 37.
5. (i) Where the payment is made to:
EXCEPTION (a) RBI or any banking company;
S: Rule 6DD (b) SBI or any subsidiary of SBI;
(c) any co-operative bank or land mortgage bank;
(d) LIC
(ii) Where the payment is made to GOI and under rules framed by it, such
payment is required to be made in legal tender;
(iii) Where the payment is made by:

(a) any letter of credit arrangement through a bank;
(b) a mail or telegraphic transfer through a bank;
(c) a book adjustment from any account in a bank to any other account in
that or any other bank;
(d) a credit card
(e) a debit card
(f) the use of ECS through a bank account
(iv) Where the payment is made for the purchase of:

(a) Agricultural or forest produce; or
(b) The produce of animal husbandry or dairy or poultry farming;
(c) Fish or fish products;
(d) The products of horticulture or apiculture.
(v) Where the payment was required to be made on a day on which banks
were closed either on account of holiday or strike;
(vi) where the payment is made in a village or town, which on the date of
such payment is not served by any bank, to any person who ordinarily
resides, or is carrying on any business, profession or vocation, in any such
village or town;
CERTAIN DEDUCTIONS TO BE ALLOWED ONLY ON ACTUAL PAYMENT [SECTION 43B]

The following sums are allowed as deduction only on the basis of actual payment within
the time limits specified in section 43B.
Nature of expense Stipulated time period

1) Any sum payable by way of tax, duty, cess or fee, by Due amount should be
whatever name called, under any law for the time being in force paid on or before the due
date of furnishing return
2) Any sum payable by the assessee as an employer by way of of income u/s 139(1) in
contribution to any provident fund or superannuation fund or respect of PY in which the
gratuity fund or any other fund for welfare of employees
liability to pay such sum
3) Any sum payable to an employee as bonus or commission for was incurred.
services rendered However in cases 1 to 6, if
payment of outstanding
4) Any sum payable by the assessee as interest on any loan or
liability is made after the
borrowing from any public financial institution or state
due date, deduction can
financial corporation or state industrial investment corporation
be claimed in the year of
like IDBI, IFCI, UPSIDC, Delhi Finance Corporation, etc. in
payment
accordance with terms and conditions of the agreement
governing the loan or borrowing

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5) any sum payable by the assessee as interest on any loan or
advance from a scheduled bank in accordance with the terms
and condition of agreement governing such loan
6) Any sum payable by the assessee as an employer in lieu of

any leave at the credit of his employee
7) Any sum payable by the assessee to the Indian Railways
for use of Railway assets
TAXATION OF FOREIGN CURRENCY FLUCTUATIONS (SECTION 43AA) W.E.F. 01.04.17

(1) Subject to the provisions of section 43A, any gain or loss arising on account of any
change in foreign exchange rates shall be treated as income or loss, as the case may be,
and such gain or loss shall be computed in accordance with the income computation and
disclosure standards notified under sub-section (2) of section 145.
(2) For the purposes of sub-section (1), gain or loss arising on account of the effects of
change in foreign exchange rates shall be in respect of all foreign currency transactions,
including those relating to—
(i) monetary items and non-monetary items;
(ii) translation of financial statements of foreign operations;
(iii) forward exchange contracts;
(iv) foreign currency translation reserves.
STAMP DUTY VALUE OF LAND AND BUILDING TO BE TAKEN AS THE FULL VALUE OF
CONSIDERATION IN RESPECT OF TRANSFER, EVEN IF THE SAME ARE HELD BY THE
TRANSFEROR AS STOCK-IN-TRADE [SECTION 43CA]
Situation Any Consideration received or accruing as a result of the transfer by an

Assessee of an Asset (other than Capital Asset), being Land Building or
both.
Value of Value adopted/ assessed/ assessable by Stamp valuation Authority of State

Consideration Government in respect of such transfer, shall be deemed to be full Value of
Consideration received or accruing as a result of such transfer for the
purposes of computing P&G from transfer of such asset.
Relevant date Value of consideration shall be as follows:

for stamp Situation Relevant Date
duty value Time: If Whole/ Part of the Consideration has
been received on or before the date of Agreement
Date of Agreement
&
Mode: By any Mode other than Cash
In any other case Date of Registration
.

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MAINTENANCE OF ACCOUNTS BY CERTAIN PERSONS CARRYING ON BUSINESS OR
PROFESSION [SECTION 44AA AND RULE 6F]
Class of Persons Threshold limit of gross Requirement
receipts/total income
Every person carrying on a If his total gross receipts from Maintenance of such
specified profession, namely, profession does not exceed Rs books of account and
legal, medical, engineering, 1,50,000 in any one of the three other documents as
architectural profession or years immediately preceding the may enable the
the profession of accountancy previous year, or Assessing Officer to
or technical consultancy or compute his total
interior decoration or any Where the profession has been income in accordance
other notified profession [i.e., newly set up in the previous year, with the provisions of
authorised representative, his total gross receipts in the the Act
film artist, company secretary profession for that year does not
and information technology]. exceed Rs 1,50,000.
Every person carrying on a If his total gross receipts from Maintenance of such
specified profession, namely, profession exceeds Rs1,50,000 in books of account and
legal, medical, engineering, any one of the three years other documents
architectural profession or immediately preceding the referred to in sub-rule
the profession of accountancy previous year, or (2), namely, cash
or technical consultancy or book, journal, if
interior decoration or Where the profession has been accounts are
authorised representative or newly set up in the previous year, maintained according
film artist. his total gross receipts in the to the mercantile
profession for that year exceeds system of accounting,
Rs 1,50,000. a ledger, carbon copies
of bills for sums
exceeding Rs 25,
original bills and
receipts (payment
vouchers in case the
expenditure does not
exceed Rs 50).
Every person carrying on a (i) If his total sales, turnover or Maintenance of such
non-specified profession or gross receipts from business or books of account and
business. profession exceeds Rs 10,00,000 other documents as
in any one of the three years may enable the
immediately preceding the Assessing Officer to
previous year, or his income from compute his total
business or profession exceeds income in accordance
Rs 1,20,000 in any one of the with the provisions of
three years immediately the Act.
preceding the previous year.
(ii) Where the business or
profession has been newly set up
in the previous year, his total
sales, turnover or gross receipts
for that year is likely to exceed
Rs 10,00,000 or his income from
business or profession for that
year is likely to exceed Rs
1,20,000 in that year.
Provided that in the case of a person being an individual or

a Hindu undivided family, the provisions of clause (i) and
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clause (ii) shall have effect, as if for the words "one lakh
twenty thousand rupees", the words "two lakh fifty
thousand rupees" had been substituted :
Provided further that in the case of a person being an

individual or a Hindu undivided family, the provisions of
clause (i) and clause (ii) shall have effect, as if for the words
"ten lakh rupees", the words "twenty-five lakh rupees" had
been substituted.
(iii) Where the profits and gains from
business are deemed to be the profits
and gains of the assessee under
section 44AE, 44BB, 44BBB and the
assessee has claimed his income to
be lower than the deemed profits.
(iv) Where the profits and gains from

business are deemed to be the profits
and gains of the assessee under
section 44AD, and he has claimed
such income to be lower than the
deemed profits.
COMPULSORY AUDIT OF ACCOUNTS [SECTION 44AB AND RULE 6G]

Category of person Threshold limit for applicability of section
44AB
Every person carrying on business Total sales, turnover or gross receipts in
business > Rs 1 crore in any previous year
Every person carrying on profession Gross receipts in profession > Rs 50 lakh in

any previous year
Every person carrying on a business, Income is claimed to be lower than the

where deemed profits are taxed on deemed profits under the respective sections
presumptive basis under section 44AE,
44BB and 44BBB.
Every person carrying on a profession, Income is claimed to be lower than the

where 50% of the gross receipts are deemed profits and such income exceeds
deemed to be the profits under section the basic exemption limit.
44ADA.
Every person who declared profit on Income cannot be computed on the basis
presumptive basis under section 44AD of presumptive tax provisions under
for any previous year and thereafter, section 44AD for five assessment years
declares profits for any five consecutive subsequent to the assessment year
assessment years relevant to the relevant to the previous year in which
previous year succeeding such previous profits have not been declared under
year not in accordance with section 44AD(1) and whose income
presumptive tax provisions of section exceeds the basic exemption limit in that
44AD(1). year.
Forms of Report:
Nature of person Audit Report Statement of
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Particulars
In case of a person who carries on business or Form 3CA Form 3CD
profession and whose books are required to be
audited by or under any law.
In case of person who carries on business or Form 3CB Form 3CD
profession but not being a person referred to
above.
PRESUMPTIVE TAXATION
SPECIAL PROVISIONS FOR COMPUTING PROFITS AND GAINS OF ANY BUSINESS
(EXCLUDING THE BUSINESS COVERED UNDER SECTION 44AE)[SECTION 44AD]
1. Eligible The scheme shall be applicable to an Individual, a HUF or
Assessee Partnership Firm who is a resident but not to a LLP.
Thus, the scheme is not applicable to LLP, a company assessee or
AOP/BOI, etc.
2. Eligible (a) Any business except the business of plying, hiring or leasing
Business goods carriages specified u/s 44AE, and
(b) Whose total Turnover or Gross Receipts in the P.Y. does not
exceed Rs 2 Crore.
3. Ineligible The Provision of Sec. 44AD are not applicable to-

Business (a) A person carrying on specified profession referred to in section
44AA;
(b) A person earning income in the nature of commission or
brokerage;
(c) A person carrying on any agency business;
(d) A person who is availing deduction u/s 10AA or deduction under
the provisions of Chapter VIA under the heading ―C-deduction in
respect of certain Income‖ (Section 80IA to 80RRB) in the relevant AY;
4. Amount of 8% of the total turnover or gross receipts of the assessee in the PY; or
Presumptive Such higher sum as declared by the Assessee will be deemed to be
Income the Profits and Gains of Business or Profession.
5. Deduction u/s 30 Deemed to be allowed.
to 38
6. Allowability of WDV of Assets shall be computed, as if Depreciation had been
Depreciation for allowed in earlier years.
subsequent P.Y.
7. Maintenance of Assessee opting for Presumptive Scheme u/s 44AD or u/s 44AE, will
Books/ Audit not be required to maintain Books of Accounts u/s 44AA and get the
accounts audited u/s 44AB, in respect of such Income/ Business.
8. Benefit of Deduction u/s 80C to 80U shall be available to the Assessee.

Chapter VIA
9. Advance Tax The eligible assessee is now required to pay advance tax on or
before 15th March of the financial year.
10. when Assessee An assessee with turnover not exceeding 2 crore, who show an
declares lower income below 8% of total turnover or gross receipts as the case may
Income be and his total income exceeds the maximum amount which is not
chargeable to tax, be required to maintain the books of accounts as
per section 44AA and also get them audited and furnish a report of
such audit as required u/s 44AB.

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11. Computation of Compute presumptive Income as above
Presumptive Less: Interest, Salary and Allowable Remuneration to Partners.
Income if Balance is chargeable to tax as Firm‘s income.
Assessee is a Firm (Now Salary, interest, remuneration paid to Deleted by FA 16
partner as per section 40(b) not deductible.)
12. Non-offering of Where an eligible assessee declares profit for any previous year in
income as per accordance with the provisions of this section and he declares profit
section 44AD for for any of the five consecutive assessment years relevant to the
five continuous previous year succeeding such previous year not in accordance with
years, the provisions of this section, he shall not be eligible to claim the
benefit of the provisions of this section for five assessment years
subsequent to the assessment year relevant to the previous year in
which the profit has not been declared in accordance with the
provisions of this section.
PRESUMPTIVE TAXATION SCHEME FOR ASSESSEE ENGAGED IN ELIGIBLE PROFESSION

[SECTION 44ADA]
1. Eligible
Assessee
2. Eligible • Assessee who is engaged in any profession referred to in section

Business 44AA(1) such as legal, medical, engineering or architectural
profession or the profession of accountancy or technical consultancy
or interior decoration or any other profession as is notified by the
Board in the Official Gazette; and
• whose total gross receipts does not exceed fifty lakh rupees in a
previous year,
3. Amount of 50% of the total gross receipts of the Assessee in the PY; or
Presumptive Sum higher than the aforesaid sum claimed to have been earned by
Income the Assessee.
to 38
subsequent P.Y.
6. Maintenance of Assessee opting for Presumptive Scheme u/s 44AD, 44ADA or u/s
Books/ Audit 44AE, will not be required to maintain Books of Accounts u/s 44AA
and get the accounts audited u/s 44AB, in respect of such Income/
Business.
7. when Assessee An assessee with gross receipts not exceeding 50 LAKH, who show
declares lower an income below 50% of gross receipts as the case may be and his
Income total income exceeds the maximum amount which is not chargeable
to tax, be required to maintain the books of accounts as per section
44AA and also get them audited and furnish a report of such audit as
required u/s 44AB.

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PRESUMPTIVE INCOME OF PLYING GOODS CARRIAGES [SECTION 44AE]
1.Eligible Assessee The assessee who own not more than 10 goods carriages at any
& Business time during the previous year and who is engaged in the business
of plying, hiring or leasing of goods carriages;
2. Amount of For the purposes of sub-section (1), the profits and gains from
Presumptive Income each goods carriage,—
(i) being a heavy goods vehicle, shall be an amount equal to Rs.

1000 per ton of gross vehicle weight or unladen weight, as the
case may be, for every month or part of a month during which the
heavy goods vehicle is owned by the assessee in the previous year
or an amount claimed to have been actually earned from such
vehicle, whichever is higher;
(ii) other than heavy goods vehicle, shall be an amount equal to

Rs. 7500 for every month or part of a month during which the
goods carriage is owned by the assessee in the previous year or an
amount claimed to have been actually earned from such goods
carriage, whichever is higher.
―heavy goods vehicle‖ means any goods carriage, the gross vehicle
weight of which exceeds 12000 kilograms;

to 38
Subsequent P.Y’s.
5. Maintenance of Assessee opting for Presumptive Scheme u/s 44AD or u/s 44AE,
Books/ Audit will not be required to maintain Books of Accounts u/s 44AA and
get the accounts audited u/s 44AB, in respect of such Income/
Business.
6. Consideration of Shall not be considered if the Assessee opts for Sec. 44AD/AE.
Turnover of Tax
Audit u/s 44B
8. Benefit of Chapter Deduction u/s 80C to 80U shall be available to the Assessee.
VIA
9. Computation of Compute presumptive Income as above
Presumptive Income Less: Interest, Salary and Allowable Remuneration to Partners.
if Assessee is a Firm Balance is chargeable to tax as Firm‘s income.
10. Consequences if The Assessee may choose not to opt for the scheme and may
presumptive income declare an income lower than the specified amount. In this case,
scheme not opted the assessee shall have to maintain books of accounts and get his
accounts audited by CA.

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Computation u/h PGBP:
Net profit as per P & L Account
Add: Expenses debited to P & L a/c but not allowable
1. Personal expenses[Section 37]
2. Capital expenses [Section 37]
3. Illegal payments or payments in relation to violation of law[Sec 37] Depreciation as
per companies act
4. Expenses in relation to income chargeable under other heads of income
5. Amounts transferred to reserves
6. Amounts not deductible u/s 40 & 40(a)
i. Interest, royalty, fees for technical services payable outside India or in India
to a NRI without deduction of tax at source.
ii. STT paid on or after 1.10.2004
iii. FBT
iv. Income tax/Wealth tax
v. Salary paid outside India or in India to NRI without Deduction of tax at
source
vi. Any interest, commission or brokerage, rent, royalty, fees for professional
services or fees for technical services or payment to a contractor or sub
contractor on which tax has not be deducted or after deduction has not
been paid during the PY or in the subsequent year before expiry of period
specified u/s 200(1)
7. Provision of gratuity [Section 40A(7)]
8. Certain deduction to be allowed only on actual payments [Section 43B]
i. Indirect taxes like VAT, service tax, excise duty, customs, etc
ii. Bonus paid
iii. Interest on loan or borrowing from any PFI or SFC or State industrial
investment corporation like IDBI, IFCI, DFC, etc
iv. Interest on loan from any scheduled bank
9. Political contributions [Section 37(2B)]
10. Amounts not deductible in respect of payment to relatives [Section 40(2)]
11. Amounts not deductible in respect of expenditure exceeding ` 20,000/- otherwise
than by a/c payee cheque or a/c payee bank draft
12. Contribution to non-statutory funds [Section 40A(9)]
Less: Amount credited to P & L but not included under this head PGBP
1. Dividend income [exempt u/s 10(34)]
2. Rental income[taxable under head House property]
3. Capital gains[taxable under head capital gains]
4. Gifts(not taxable if taxable then under head IFOS)
5. Income tax refunded(not taxable as income tax paid not allowed as deduction)
6. Excise duty/custom duty refund earlier not allowed as deduction
Add: Amounts treated as income but not credited to P & L

Less: Expenses allowed by not debited to P & L
1. Depreciation as per income tax act

`

`

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CAPITAL GAIN
(A) Capital Asset [Sec. 2(14):-
There Includes Excludes
must be Property of any (a) SIT, Consumable Stores, Raw Material held for
a kind, held by business or profession,
Capital the Assessee (b) Personal Effects (Note 1)
Asset whether or not (c) Rural Agricultural Lands in India, (Note 2)
connected with (d) 6.5% Gold Bonds 1977, 7% Gold Bonds 1980 &
business or National Defence Bonds
profession. (e) Special Bearer Bonds, 1991
(f) Gold Deposit Bonds, 1999
Note:
1. Personal Effects: It means Movable Property including wearing apparel and
furniture, held for the personal use by the assessee or any member of his
family dependent on him, but excludes:
(a) Jewellery;
(b) Archaeological Collections; These are Capital Asset even though
(c) Drawings; they are movable and used for personal
(d) Paintings; purpose.
(e) Sculptures;
(f) Any work of art.
Jewellery includes
(a) Ornaments: Ornaments made of Gold, Silver or Platinum or any other
precious metal.
The above ornaments will be considered as jewellery even if they-
 Contain any precious or Semi-Precious Stone, and
 Are worked/ sewn into any wearing apparel.
(b) Stones: Precious or Semi-Precious Stones-
 Whether or not set in any furniture or utensils or other article, or
 Whether or not worked or sewn into wearing apparel.
Significant Issues:
 Silver Utensils used for entertaining guests should also be treated as
articles held for Personal use.
 Gold and Silver coins and bars used for pooja are ―Capital Assets‖.
2. Capital Asset would include Agriculture Lands Situated-

(a) In any area within Municipality/ Municipal Corporation/ Notified area
Committee/ Town committee/ Cantonment Board, etc. which has a
population of not less than 10,000 or
(b) In any area within the distance, measured aerially-
Example:

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3. Property of any Kind: The property of any kind used in the section 2(14)
are of widest amplitude and include not only tangible assets but also
intangible assets.
So, it can cover tangible assets like land, building, shares, cars, scooters, etc.
and also the intangible assets like copyrights, route permits, trademarks, etc.
4. The property transferred must be capital asset on the date of transfer:

To attract the capital gain, the property transferred must be a capital asset on
the date of transfer and it is not necessary that it should have been a capital
asset also on the date of acquisition by the assessee. If the concerned asset
does not fall within the definition of capital asset on the date of transfer, no
capital gain can be levied.
COST INFLATION INDEX (WILL BE GIVEN IN QUESTION PAPER, NOT TO BE

REMEMBERED)

`
COMPUTATION OF CAPITAL GAIN IN CERTAIN CASES:
1. Taxation of (i) Meaning: Zero Coupon Bond means a bond-
Zero Coupon (a) Issued by any infrastructure capital company or infrastructure capital
Bonds fund or public sector company or scheduled bank;
(b) In respect of which no payment and benefit is received or receivable
before maturity or redemption from infrastructure capital company or
infrastructure capital fund or public sector company; and
(c) Which the central government may, by notification in the official
gazette, specify in this behalf.
(ii) Transfer: The maturity or redemption of zero coupon bond shall be

regarded as transfer.
(iii) Tax Treatment: The profits arising on the transfer of such zero
coupon bonds shall be chargeable under the head capital gain. Further, if
such zero coupon bond are held for not more than 12 months, such
capital gain shall be treated as short term capital gain and hence shall
be subject to short term capital gain. On the other hand, where these
bonds are held for more than 12 months, such capital gain shall be
treated as long term capital gain.
(iv) Tax Rate: The long term capital gain on zero coupon bond shall be
chargeable to tax at 10% of long term capital gain without indexation of
cost of such bonds.
2. Insurance (i)Causes for Compensation: Where any person receives at any time
Compensation during any previous year any money or other assets under a insurance
[Section 45(1A)] from an insurer on account of damage to, or destruction of, any capital
asset, as a result of:
(a) Flood, typhoon, hurricane, cyclone, earthquake or other convulsion of
nature; or
(b) Riot or civil disturbance; or
(c) Accidental fire or explosion;
(d) Action by an enemy or action taken in combating an enemy
Then any profits or gains arising from receipt of such money or other
assets shall be chargeable to income tax under the head ―Capital Gain‖.
(ii) Year of Taxability: The capital gain shall be deemed to be the income
of the PY in which such money or other asset was received.
(iii) Computation of Capital Gains:

(a) Consideration Received = Money or FMV of the Asset on the date
of receipt.
(b) Capital Gains = Money Received or FMV of Asset received
Less: Cost of Acquisition or Indexed Cost of Acquisition
(iv) Benefit of Indexation: Indexation will be given upto the Year of

Destruction or Damage.
(v) Depreciable Assets:

(a) Compensation received shall be reduced from the WDV of the
Block, and any surplus shall be chargeable as STCG, and loss shall be
treated as STCL.
(b) If some asset still exists in the Block and no surplus is available,
then depreciation may be claimed on the balance.
Significant Issues:

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Damaged Machines: If Damaged Machinery is repaired and re-used, the expense

is deductible u/s 31. Any Insurance Compensation received for the damage is
treated as income u/s 41(1), to the extent of deduction allowed u/s 31. Excess
Loss
amount is Capital Receipt and not chargeable to tax.
3) Capital gain (i) Transfer: Conversion of capital asset into stock in trade is treated as a
on conversion ―transfer‖ u/s 2 (47).
of capital asset
into stock in (ii) Year of Taxability: Capital gain will not arise in the PY in which it is
trade [Section converted, but it will arise in the PY in which such converted assets is
45(2)] sold or otherwise transferred.
(iii) Full value of the consideration: FMV of the asset, as on the date of
such conversion, shall be deemed to be the full value of the consideration
of the asset.
(iv) Computation: In the year of Sale or Transfer of Stock, the income

shall be computed as under-
(a) Capital Gain = FMV of Stock on the date of Conversion
Less: Cost/ Indexed Cost of Acquisition.
(b) Business Income = Consideration Received on sale
Less: FMV of Capital Asset on date of conversion.
(v) Indexation: Indexation of cost of acquisition and improvement, if

required, will be done till the PY in which such conversion took place.
4) Capital gain (i) Transfer: The profits or gains arising from the transfer of capital asset
on transfer of held by a person, to a firm or AOP/BOI (not being a company or a co-
capital asset by operative society) in which:
a (i) he is or
partner/member (ii) Becomes a partner or a member.
to a By way of capital contribution or otherwise, shall be chargeable to tax.
firm/AOP/BOI as
a capital (ii) Year of Taxability: Capital Gain is charged to tax in the PY, in which
contribution such a transfer takes place.
[Section 45(3)]
(iii) Capital Gain = Amount credited in the Partner‘s Capital Account
Less: Cost or Indexed Cost of Acquisition.
Transfers
Partner/Member Firm/AOP/BOI
Capital asset
Amount recorded in books

is sales consideration

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5) Capital gain (i) Transfer: Distribution of Capital Asset by a Firm/ AOP/BOI on its
on transfer of a dissolution or otherwise is a transfer.
capital asset by
way of (ii) Year of Taxability: Capital Gain is chargeable to tax in the hands of
distribution on Firm/ AOP/ BOI in the PY, in which such transfer takes place.
the dissolution
of a firm, AOP, (iii) Capital Gain = FMV of the Asset on the date of transfer
BOI. [Section Less: Cost or Indexed Cost of Acquisition.
45(4)]
Significant Issue:
Valuation of Stock on Dissolution: When the business of the Firm is
not continued, stock shall be valued at Market Price at the time of
dissolution and the surplus shall be taxed in the hands of firm as
Business Income.
Distributes capital Asset on dissolution Partner/Member

of firm or on retirement of partner
Fair Market value of Capital Asset on date of

Firm/AOP/BOI distribution is sales consideration
6) Capital gain 1. Chargeability: Where a capital asset, other than Urban Agricultural
on transfer by land, has been compulsorily acquired under any law, it will be treated as
way of a transfer of previous year in which the asset is compulsorily acquired.
compulsory
acquisition of 2. Taxability of Receipts:
an asset by A. Normal or Original Compensation [Sec. 45(5)(a)]:
Government (i) Original Compensation is taxable in the P.Y. in which it is first
[Section 45(5)] received.
(ii) Whole of the compensation is taxable, even if a portion of the amount
is received.
(iii) Capital Gain = Enhanced Compensation received
Less: Cost or Indexed Cost of Acquisition.
Note: Indexation shall be applied for the Year in which the asset is
compulsorily acquired.
B. Enhanced Compensation [Sec.45(5)(b)]

(i) Enhanced Compensation is taxable in the P.Y. in which it is actually
received.
(ii) COA & COI shall be taken as „NIL‟.
(iii) Capital Gain = Enhanced Compensation received
Less: Expenses on Receipt of Enhanced Compensation.
3. Compensation received by Legal Heirs: Compensation received

subsequent to the death of Assessee is taxable in the hands of his legal
heirs, under the head ―Capital Gains‖.
5. Reduction of Compensation: Where normal compensation/ enhanced

compensation is reduced by Court/ Tribunal/ Other Authority, then the
Capital Gain is assessed in the year of receipt shall be re-computed
accordingly, and rectification of assessment shall be made u/s 155.
Interest on Enhanced Compensation on account of Compulsory acquisition, is

chargeable under the head ― Income from Other Sources‖ .

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7) Capital  In the hands of Company: Where the assets of a company are
gains on distributed to its shareholder on its liquidation, such distribution shall
not be regarded as a transfer by the company. Therefore, there will be
distribution of
no capital gain to the company.
assets by
companies in  In the hands of Shareholder: Where a shareholder on the liquidation
liquidation of a Company, receives any money or other asset from the company in
[Section 46] lieu of the shares held by him, such a shareholder shall be chargeable
to income tax under the head ―Capital gain” in respect of the money
and the asset so received.
Capital Gain = Money received and/or the Market Value of the
Other assets on the date of distribution
Less: Deemed dividend within the meaning of Section
2(22)(c).
Less: COA/ICOA of shares
Capital Gain on Subsequent Sale of assets received by

Shareholder on Liquidation: Net Consideration
Less: Market value of the asset on the date of distribution
and COI
Transfer [Section 2(47)]: Transfer, in relation to capital asset, includes:

(i) The sale, exchange or relinquishment of the asset; or
(ii) The extinguishment of any rights therein; or
(iii) The compulsory acquisition thereof under any law; or
(iv) Conversion of Capital Asset into SIT.
(v) The maturity or redemption of zero coupon bonds; or
(vi) any transaction involving the allowing of the possession of any immovable property to be
taken or retained in part performance of the contract of the nature referred to in Section 53A
of Transfer of Property Act, 1882; or
(vii) Any transaction (whether by way of becoming a member of, or acquiring shares in a co-
operative society, company or other association of person or by way of any agreement or any
arrangement or in any other manner whatsoever)which has the effect of transferring or
enabling the enjoyment of any immovable property.
SPECIAL PROVISIONS FOR COMPUTATION OF CAPITAL GAINS IN CASE OF SLUMP

SALE [SECTION 50B]
1. Meaning Slump Sale means transfer of one or more undertaking as a result of sale,
for a lumpsum consideration, without assigning any value individual assets
and liabilities transferred. [Sec.2(42C)]
2. Short Capital Gain arising from Slump Sale of Capital Asset, being one or more
Term or undertakings owned or held by the Assessee for more than 36 months is
Long Term LTCG. Otherwise, it will be treated as STCG.
3. No Benefit Benefit of Indexed Cost of Acquisition/ Improvement is not available in

of Indexation computing LTCG.
4. Step Total value of the = Depreciable Assets at WDV
Computation 1 Assets + Sec. 35AD Assets at NIL Value (see note)
of Capital + Other Assets at Book Value
Gain
Step Net Worth = Total Value of the Assets (Step 1)
2 Less: Liability taken over

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Step Capital Gain = Net Consideration
3 Less: Net Worth (Step 2)
Note: - If the whole of the expenditure has been allowed as deduction or is

allowable as deduction under Sec. 35AD, Value of such Asset = NIL.
- Any change on account of revaluation of assets shall not be

considered.
COMPUTATION OF CAPITAL GAINS IN REAL ESTATE TRANSACTIONS [SECTION 50C]

TRANSFER OF LAND / BUILDING FOR LOWER CONSIDERATION
Section 50C makes a special provision for determining the full value of consideration in
case of transfer of immovable property being Land or Building or Both
1. Asset The Assessee transfers Land, or Building or both.
2. Value Sale Consideration received as a result of the transfer of land and

building or both, is less than the value adopted or assessed or
assessable by any authority of a state government (i.e. Stamp valuation
authority‖) for the purpose of payment of stamp duty in respect of such
transfer.
3. Consideration
adopted for Value adopted by the Stamp Valuation Authority.
Capital Gains
4. Proviso to Section 50C of the Act has been amended in line with section 43CA to
Sec 50C (1) provide that where the date of the agreement fixing the amount of
consideration and the date of registration for the transfer of the capital
asset are not the same, the value adopted or assessed or assessable by
the stamp valuation authority on the date of agreement may be taken
for the purposes of computing full value of consideration for such
transfer.
Condition for adoption of stamp duty value on the date of agreement:

However, the stamp duty value on the date of agreement can be adopted
only in a case where the amount of consideration, or a part thereof, has
been paid by way of an account payee cheque or account payee bank
draft or use of electronic clearing system through a bank account, on
or before the date of the agreement for the transfer of such immovable
property.

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4. Reference to Conditions If the following conditions are satisfied, the AO may on

Valuation the basis of claim made by the assessee refer the
Officer valuation of the relevant asset to a valuation officer in
accordance with section 55A of the Income tax act:
(i) Where the assessee claims before the AO that the value
adopted or assessed by the stamp valuation authority
exceeds the fair market value of the property as on the
date of transfer; and
(ii) The value adopted by stamp valuation authority is not

disputed, in any appeal or revision or reference before
any authority or court.
Effects If the FMV determined by the Valuation Officer is less

than the value adopted for stamp duty purposes, the AO
may take such FMV determined by Valuation Officer to be
the full value of consideration.
However, if the FMV determined by the Valuation Officer
is more than the value adopted or assessed or assessable
for stamp duty purposes, the AO shall not adopt such
FMV and will take the full value of consideration to be
the value adopted or assessed or assessable for stamp
duty purposes.
CG ON TRANSFER OF UNLISTED SHARES IN A COMPANY [SECTION 50CA]

If Unlisted Shares transferred for a consideration less than fair market value, then Fair
market value shall be deemed to be the full value of consideration for the purpose of
computation of capital gain.
DEEMED FULL VALUE OF CONSIDERATION:

Sr. Mode of transfer Deemed full value of consideration Section
No
1 Money or asset received from an Value of money and/or FMV of asset 45(1A)
insurer on account of damage or on the date of receipt
destruction of any capital asset
2 Conversion into or treatment of FMV of the asset as on the date of it 45(2)
capital asset into stock in trade conversion or treatment
3 Introduction of capital in kind Amount recorded in the books of 45(3)
into firm or AOP/BOI by account of the firm or AOP/BOI as the
partner/member value of the capital asset
4 Distribution of asset in kind on FMV as on the date of distribution 45(4)
dissolution of firm or AOP or BOI
5 Shareholders receiving money Money and market value of the assets 46(2)
and assets from the liquidator on on the date of distribution minus the
the liquidation of the company amount assessed as deemed dividend
u/s 2(22)(c)
6 Transfer of land or building or Not less than value adopted by or 50C
both assessed or assessable by Stamp
Valuation authority if consideration
declared by assessee is less
7 Transfer of capital asset where Fair market value on the date of 50D

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consideration is not ascertainable transfer
or cannot be determined
COMPUTATION OF CAPITAL GAINS (SECTION 48)

Computation of Short term capital gains:
Full value of consideration
Less: (a) Cost of Acquisition
(b) Cost of Improvement
(c) Expenditure incurred wholly and exclusively in connection with
………….such a transfer
Gross Short term capital gains
Less: Exemption, if available, u/s 54B/54D/54G
Taxable Short term Capital Gain
Computation of Long term capital gains:

Full value of consideration
Less: (a) Indexed Cost of Acquisition
(b) Indexed Cost of Improvement
(c) Expenditure incurred wholly and exclusively in connection with such a
transfer
Gross Long term capital gains
Less: Exemption, if available, u/s 54/54B/54D/54EC/54F/54G/54GA/54GB
Taxable Long term Capital Gain
COST OF ACQUISITION [SECTION 55(2)]

General Situation Cost of Acquisition
Principles (a) Capital Asset became property COA to the Assessee
of an Assessee before 01.04.2001 Or Whichever
FMV as on 2001 is higher
(b) Capital Asset became property
of an Assessee on or after Cost incurred by the Assessee
01.04.2001
(c) Capital Asset became property cost to the Previous
of Previous Owner before Owner Whichever
01.04.2001 and transferred to the Or is higher
Assessee by any mode u/s 49(1) FMV as on 2001
Note:
1. When COA of the Previous Owner cannot be ascertained, FMV on the

date on which Capital Asset became the Property of the Previous Owner
shall be Considered.
2. The option in the above case is not available for depreciable assets.
3. The option is not available in case of goodwill of a business, brand or

trademark associated with the business, whether self-generated or
purchased.

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Cost of Specified Intangible Asset Mode of Cost of
Specified Acquisition Acquisitio
Intangible n
Assets  Goodwill of a Business (not of (a) Acquisition of
profession) Asset by
 Trademark or Brand Name Assessee by
associated with a business (not of purchase from Purchase
profession) previous owner. Price
 Right to manufacture, produce or
process any article or thing (b) Any other
 Right to carry on any business case (not being a
 Tenancy Rights, Stage Carriage case u/s 49(1), NIL
Permits or Loom hours i.e. HUF
Partition, Gift,
Will, etc.)
Bonus Shares Bonus Shares allotted prior to 01.04.2001 = Fair Market Value as on
01.04.2001
Bonus Shares allotted on or after 01.04.2001 = NIL
Right Issue Existing Shareholder subscribes: Amount paid to acquired shares
Person who acquires right from Existing Shareholder renounces: Price

paid for acquiring shares + Price paid for acquiring Right from Existing
Shareholder
COST OF IMPROVEMENT [SECTION 55(1)(B)]

Situation Cost of Improvement
capital asset being goodwill of a
business or a right to
manufacture, produce or process NIL.
any article or thing or right to
carry on any business
(ii) In relation to any other asset: All capital expenditure incurred in making any
additions or alterations to the capital asset on or after
(a) Where the capital asset 01.04.2001 by the previous owner or the assessee.
becomes the property of the (a) All capital expenditure incurred in making any
previous owner or the additions or alterations to the capital asset by the
assessee before 01.04.2001. Assessee after it become his property.
(b) Any other Case (b) Where the capital asset became the property of the
Assessee by any mode specified in section 49(1), capital
expenditure incurred by the previous owner also be
treated as cost of improvement.

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INDEXED COST OF ACQUISITION/ IMPROVEMENT [SECTION 55]
1. Meaning Indexation is a benefit given to the Assessee in computation of LTCG using
Cost Inflation Index (CII).
2. Indexed Cost of Acquisition (ICA) and Indexed Cost of Improvement (ICI) is

Computation computed in the following manner-
(a) Indexed Cost of Acquisition (ICA):
(i) Acquired prior to 01.04.2001 Cost of Acquisition × CII for Year of Transfer
100
(ii) Acquired on or after 01.04.2001= Cost of Acquisition × CII for Year of Transfer
CII for Year of Acquisition
(b) Indexed Cost of Improvement (ICI):

Cost of Improvement × CII for Year of Transfer
CII for Year of Acquisition
Note: ICI can be computed only if it is incurred on or after 01.04.2001.
Legal Decision:
If an Assessee acquired a Capital Asset by way of Gift and transferred such Asset,
then Indexed Cost of Acquisition would be with reference to the year in which
Previous Owner held the asset and not the year in which Assessee became the
Owner. Therefore, the CII should be based on the year in which the Previous
Owner acquired the asset and not the year in which the Assessee became the
Owner.
BASE YEAR Base year for the purpose for calculation of Indexed cost of acquisition or
SHIFTED improvement has been shifted from 1981-1982 to 2001-2002. Accordingly,
FROM 1981- if any Assessee/Previous Owner has acquired capital asset prior to
1982 TO 01.04.2001 then he will have the option to choose actual cost of acquisition
2001-2002 or FMV as on 01.04.2001 as his cost of acquisition. Cost of improvement
incurred by Assessee or previous owner prior to 01.04.2001 shall be taken
as NIL. (Amendment by Finance Act 2017)
3. Situations For the following transfers, the benefit of indexation is not available:-
when
Indexation is Nature of LTCA Transferred Assessee not eligible
not available (a) Bonds/ Debentures except Capital Indexed All Assessees
Bonds issued by Govt.
(b) Shares/ Debentures of Indian Company Non- Residents
acquired by using Convertible Forex
(c) Depreciable Assets All Assessees
(d) Slump Sale All Assessees
Cost of Allotted after 01.04.2001: COA shall be taken as NIL. And the entire sale
acquisition of consideration received on the transfer shall be treated as Capital Gain.
Bonus shares
or any other Allotted before 01.04.2001: cost of such bonus shares is NIL but the
financial assessee may opt for FMV as on 01.04.2001 as the cost of acquisition of
asset allotted such bonus shares.
without
payment
`
Cost of Where an assessee, by virtue of holding certain shares, become entitled to
acquisition of subscribe to any additional shares then:
Right Shares
[Section (i) The cost of acquisition of the original shares shall remain unchanged i.e.
55(2)(aa)] it shall be the amount actually paid for acquiring the original shares;
(ii) The cost of acquisition of the right shares, when the assessee subscribes
to the shares on the basis of the said entitlement, shall be the amount
actually paid for acquiring the right shares.
(iii) The cost of acquisition of the right to acquire such shares, when such a
right is renounced in favour of any other person, shall be taken as NIL.
(iv) As regards, the person in whose favour the right to subscribe to the
shares has been renounced, the cost of acquisition of such right share shall
be the amount paid by him to the company for acquiring the shares PLUS
the amount paid to the person renouncing the right.
Cost of It shall be the amount which bears to the cost of acquisition of shares held
acquisition of by the assessee in the demerged company the same proportion as the net
the shares in book value of the assets transferred in a demerged bears to the net worth of
the resulting the demerged company immediately before such demerger.
company In other words:
Net Worth for this section shall mean the aggregate of the paid up share
capital and general reserves as appearing in the books of account of the
demerged company immediately before demerger.
If the shares of the resulting company are later on transferred, then for
computation of nature of capital gain, the period for which the shares were
held in demerged company shall also be considered.
Cost of Where the shareholder of an amalgamating company gets the shares of the
Shares of amalgamated company in lieu of the shares held by him in an
Amalgamated amalgamating company, the cost of acquisition of such shares of the
Company amalgamated company shall be deemed to be the cost of acquisition to him
[Section of the shares of amalgamating company.
49(2)] i.e. Cost of Shares of Amalgamating company becomes cost of shares
of amalgamated company;
Cost of Where the capital gain arises from the transfer of specified security or sweat
specified equity share, which has already been taxed under the head salary as
security or perquisite, the cost of acquisition of such security shall be the Fair Market
sweat equity Value which has been taken into account for the purpose of valuation of
shares perquisite.
already
treated as
perquisite

`
EXEMPTIONS UNDER CAPITAL GAIN
S.no Particulars Section 54 Section Section Section Section Section 54F
. 54B 54EC 54D 54G
1 Eligible Individual Individual Any Any Any Individual /
Assessee / / assessee assessee assessee HUF‟s
HUF‟s HUF‟s
2 Asset Residential Urban Land or L&B Land, Any asset
transferred House Agricultur Building forming Building other than
al or Both part Machinery Residential
Land of an or House.
industrial Plant or any
undertaking right in
land or
building
used
for business
of
Industrial
Undertakin
g
3 Period of Long-term At least 2 Long-term At least 2 Long- Long-term

holding of capital years capital asset years term/ capital
the asset asset immediatel immediatel Short-term asset
transferred y y capital
preceding preceding asset
the date the date of
of transfer.
transfer
4 Other Income Land - The transfer Shifting Assessee
Conditions from should should be the should not
such house be used by Industrial own more
should be for way of Undertakin than
chargeable agricultur compulsory g one
under the al Acquisition from residential
head purposes of Urban house on
―Income by the Area to the
from house assessee industrial Rural date of
property‖ or undertaking Area transfer
his
parents
or a HUF
for
two years
5 Qualifying One Agricultur Long Term Land or Land, One
asset i.e., Residential al Specified Building Building Residential
asset in House Land Asset – New P&M House
which situated in (Urban/ Bonds and situated
capital India Rural) of NHAI or expenses on in India
gains RECL, shifting the
has to be PFCL & Industrial
invested IRFCL. Undertakin
(Redeemab g
le
after 5
years)
6 Time limit Purchase Purchase Purchase Purchase/ Purchase/ Purchase
for within 1 within 2 within 6 construct construct within 1
purchase/ year years from months within 3 within 1 year
constructio before or 2 the date of from years after year before before or 2
n years after transfer the date of transfer, or 3 years years after
the date of transfer for shifting after the the
`
S.no Particulars Section 54 Section Section Section Section Section 54F
. 54B 54EC 54D 54G
transfer or re- transfer. date of
or establishin transfer
construct g the or
within 3 existing Construct
years after undertakin within 3
the date of g or setting years
transfer up a new after the
industrial date
undertakin of transfer
g.
7 Amount of Cost of new Cost of Capital Cost of Cost ofCost of new
Exemption Residential new Gain or new new assets Residential
House or Agricultur amount asset or plus House ≥ Net
Capital al invested in Capital expenses sale
Gain, Land or specified Gain, incurred consideratio
whichever Capital bonds, whichever or n of original
is Gain, whichever is lower. Capital asset, entire
lower, is whichever is lower. Gains, Capital gain
exempt is Maximum whichever is exempt.
lower, is permissible is lower, isCost of new
exempt investment exempt. Residential
in such House < Net
bonds out sale
of capital consideratio
gains n of original
arising in asset,
any proportiona
financial te capital
year is Rs gain is
50 lakhs. exempt.
8. Sale of New If sold Same as If sold Same as Same as If sold
Asset within 3 Section 54 within 3 Section 54 Section 54 within 3
yrs. from yrs., yrs.,
date of exempted (a) Capital
purchase/ CG will be gain/loss
constructio deemed to on transfer
n, for be LTCG of of new
computing the house
STCG on assessee in which will
new asset, the year of always be
cost of new sale of new short-term
asset shall asset. capital
be reduced gain/ loss;
by amount (b) Capital
of CG gain exempt
exempt. earlier
under this
Section i.e.
54F shall be
treated as
LTCG of the
P.Y. in
which the
new asset is
transferred.

`
Exemption of Long Term Capital Gains on Investment in Notified Units of
Specified fund (Section 54EE)(Effective AY2017-18)
OBJECTIVE For incentivizing the startup ecosystem in India, the ―Startup India
Action Plan‖ envisages establishment of a Fund of Funds which intends
to raise Rs. 2,500 Crores Annually for Four years to finance the
startups.
EXEMPTION In order to achieve this objective, New Section 54EE has been inserted
to provide exemption from CG if LTCG proceeds are invested by an
Assessee in units issued before 1 st April 2019 of such fund, as may be
notified by CG.
QUANTUM OF The lower of the Capital Gains or the amount so invested would be
EXEMPTION exempted under this Section.
TIME LIMIT FOR 6 Months after the date of transfer
INVESTMENT
CEILING LIMIT The Maximum investment in units of the specified fund in any FY is Rs.
FOR 50 Lakhs. Further, the investment made by an Assessee in the units of
INVESTMENT specified fund out of CG arising from the transfer of one or more
Capital Assets, cannot exceed Rs. 50 Lakhs, whether the investment is
made in the same FY or Subsequent FY or partly in the same FY and
partly in the subsequent FY.
CONSEQUENCE Where the units are transferred at any time within a period of 3 years
OF TRANSFER from its acquisition, the capital gains, to the extent exempt earlier,
BEFORE 3 would be chargeable as CG in the year of acquisition.
YEARS
DEEMED Further, if the assessee takes any loan or advance on the security of
TRANSFER such units, he shall be deemed to have transferred such units on the
date on which such loan or advance is taken.
CAPITAL GAINS - EXEMPTIONS UNDER SECTION 10

Section Particulars
10(33) Any income arising from the transfer of a capital asset being a unit of UTI
10(37) Where any individual or HUF owns urban agricultural land which has been
used for agricultural purposes for a period of two years immediately preceding
the date of transfer by such individual or a parent of his or by such HUF and
the same is compulsorily acquired under any law or the consideration for such
transfer is determined or approved by the Central Government or the RBI,
resultant capital gain will be exempt provided the compensation or
consideration for such transfer is received on or after 1.4.2004.
10(38) Any income arising from the transfer of a long term capital asset being an
equity share in a company or a unit of an equity oriented fund shall be exempt,
if such transaction is chargeable to securities transaction tax.
Provided further that the exemption shall be allowed in case of transfer of

equity shares which were acquired on or after 1st October 2014, if STT is
chargeable not only at the time of transfer but also at the time of acquisition of
shares.
However the above restriction is not applicable in the following cases:

(i) Transfer of equity shares which were acquired prior to 1st October 2014;
(ii) Transfer of Mutual Fund units whether acquired before or after 1 st
October 2014.
Provided also that nothing contained in this clause shall apply to any income
`
arising from the transfer of long-term capital asset, being an equity share in a
company or a unit of an equity oriented fund or a unit of a business trust,
made on or after the 1st day of April, 2018.
Additional Tax on Dividend in Special Cases: (Section 115BBDA)

Assessee: ―specified assessee‖ means a person other than,—
(i) a domestic company; or
(ii) a fund or institution or trust or any university or other educational institution or any
hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-
clause (vi) or sub-clause (via) of clause (23C) of section 10; or
(iii) a trust or institution registered under section 12A or section 12AA.‘.
Income: Dividend Income exceeding Rs. 10 Lakhs
Tax: 10% on the amount of dividend exceeding Rs. 10 Lakhs
Meaning of Dividend: Dividend as per Section 2(22) but does not included 2(22)(e)

`

`
INCOME FROM OTHER SOURCES
GIFTS RECEIVED BY INDIVIDUALS AND HUF [SEC. 56(2)(VII)]
1. Individual & HUF.
Applicability
2. Taxability The following amounts received by an Individual or HUF from any person
Land or (subject to exceptions) is taxable as Income from Other Sources-
Building or
both Item Nature Amount Taxable under
Received “Income from Other
Sources”
(a) Any sum Without Consideration, the
Other than Whole of aggregate
of Money aggregate value of which exceeds
Immovable value of such sum.
Rs 50,000.
Property
(b) (i) Without Consideration & Stamp
includes: Stamp duty value of
Immovable Duty Value of Property > Rs
(a) Shares & property
Securities
Property 50,000.
(b) Jewellery
(ii) Inadequate Consideration, i.e.
(c)Archeologic difference between Consideration
Stamp Duty Value –
al Collections
& Stamp Duty Value exceeds Rs
Consideration
(d) Drawings 50,000.
(f) Paintings
(g) Sculptures (c) Other (i) Without consideration &
(h) Any art of than aggregate FMV > Rs 50,000. FMV of such property
work Immovable
(i) Bullion. Property. (ii) Inadequate Consideration, i.e.
difference between consideration FMV – Consideration.
& FMV exceeds Rs 50,000.
3. Gifts received from following persons/ situations are not taxable:-
Exceptions
(i) From any Relative; or
(ii) On the occasion of the marriage
of the individual; or
(iii) Under a will or by way of
inheritance; or
(iv) From any local authority; or
(v) From any fund or foundation or
university or other educational
institution or hospital or other
medical institution or any trust or
institution referred to u/s 10(23D);
or
(vi) From any trust or institution registered u/s 12AA.
The expression ―Relative‖ means:

(i) In case of an Individual:
(a) Spouse of the individual;
(b) Brother or sister of the individual;
(c) Brother or sister of spouse of the individual;
(d) Brother or sister of either of parents of the individual;
(e) Any lineal ascendant or descendant of the individual;
(f) Any lineal ascendant or descendant of the spouse of the individual;
(g) Spouse of the person referred to in items (b) to (f) mentioned above.
(ii) In case of Hindu Undivided Family: Any member of HUF;

`
Persons not covered under the definition of relative: (hence,

Unrelated)
1. Son/Daughter of Brother or sister of individual
2. Son/Daughter of Brother/Sister of Spouse of Individual
3. Son/Daughter of Brother or sister of Parent‘s of individual
VALUE OF SHARES RECEIVED BY A FIRM OR A COMPANY FOR INADEQUATE

CONSIDERATION OR WITHOUT CONSIDERATION TO BE TAXED IN THE HANDS OF THE
RECIPIENT [SECTION 56(2)(VIIA)]
Where a firm or a company not being a in which the public are substantially interested,
receives, in any previous year, from any person or persons, any property, being shares of
a company not being a company in which the public are substantially interested,-
Situation Amount taxable under Income from Other
Sources
Without any consideration and the
Whole of the Aggregate Value
aggregate FMV exceeds Rs 50,000.
Received for consideration less than FMV
FMV by Rs 50,000 Less: Consideration
However, the transactions undertaken for business reorganization, amalgamation and

demerger which are not regarded as transfer under clauses, (via), (vic), (vicb), (vid) and (vii)
of section 47 of the Act shall be excluded from the application of clause (viia).
Share premium in excess of the fair market value to be treated as income [Section
56(2)(viib)]
1. Situation A company, not being a company in which the public are substantially
interested, receives, in any previous year, receives consideration for issue
of shares and if the consideration received for issue of shares exceeds the
face value of such shares, (i.e. issued at Premium)
2. Subscriber Any person being a resident
3. Taxable The aggregate Consideration received as exceeds the FMV of Shares.

Amount
4. Exception The above provision shall not apply where the consideration for issue of
shares is received
(i) by a venture capital undertaking from a venture capital company or a
venture capital fund; or
(ii) by a company from a class or classes of persons as may be notified by
the Central Government in this behalf.
5. FMV FMV of the shares shall be higher of the following:-
(i) Value determined in accordance with prescribed method; or
(ii) Value substantiated by the company to the satisfaction of the

Assessing Officer, based on the value, on the date of issue of shares, of its
assets, including intangible assets, being goodwill, know-how, patents,
copyrights, trademarks, licences, franchises or any other business or
commercial rights of similar nature (i.e. the value shall be determined as
per the net asset method including the value of intangible assets which
are specified).
`
FAMILY PENSION
1. Meaning Family Pension received by the Family Members of the deceased employee.
2. Taxability It is chargeable to tax u/h ―IFOS‖
3. Deduction  33.33% of Gross Pension,

u/s 57 Or whichever is Less
 Rs 15,000
4. Family Pension received by Widow or Childeren or Nominated Heirs of a

Exemptions Deceased Member of the Armed Forces.
available for
Family Condition: The Member‘s death has occurred in the course of his
Pension i.e. operational Duties.
not Taxable
INTEREST ON COMPENSATION OR ENHANCED COMPENSATION [SECTION 56(2)(VIII)]

1. Taxability income by way of interest received on compensation or on enhanced
compensation referred to in section 145A(b) above shall be taxable under
the head income from other sources in the previous year in which such
interest is received.
2. Deduction Above interest which is taxable under the head income from other sources,
from such a deduction of a sum equal to 50% of such income shall be allowed to the
interest assessee and no deduction shall be allowed under any other clause of
[Section section 57.
57(iv)]:

`

`
CLUBBING OF INCOME
Salary, Commission, Fees or Remuneration paid to Spouse, from a concern in which
Individual has a Substantial Interest [Sec.64(1)(ii)]:
a) Clubbed in Individual
the hands of
b) Exception Clubbing is not attracted, in case the Spouse possesses technical or
professional qualifications and the remuneration is received in exercise
of that knowledge/qualification/experience.
c) Where both Remuneration of both shall be clubbed in the hands of that spouse
husband & whose total income, before including such remuneration is greater.
wife have
substantial Note: Where such income is once included in the hands of either
interest and spouse, any such income arising in any succeeding year shall not be
both are included in the total income of other spouse unless the Assessing
getting Officer is satisfied, after giving that spouse an opportunity of being
remuneration heard, that it is necessary so to do.
from the
concern Person having substantial interest in the company [Section 2(32)] –
is a person who is the beneficial owner of shares (not being shares
entitled to a fixed rate of dividend), whether with or without a right to
participate in profits, carrying at least 20% of the total voting power.
Income from Assets (Other than HP) transferred directly or indirectly to Spouse
[Sec.64(1)(iv)]:
a) Clubbed in Individual
the hands of
b) Exceptions  If the assets are transferred before marriage.
 If the assets are transferred for adequate consideration. [Note:
Natural Love and Affection does not constitute adequate
consideration.]
 If the assets are transferred in connection with an agreement to
live apart.
 If on the date of accrual of income, Transferee is not the spouse
of the Transferor.
 Any income from the accretion of the transferred asset is to be
clubbed with the income of the Transferor.
 If any income earned by investing such income (arising from
transferred asset) cannot be clubbed.
 If Property is acquired by the spouse out of pin money (i. e. an
allowance given to the wife by her husband for her dress and
usual household expenses)
Income from Assets transferred to Son’s wife [Sec.64(1)(vi)]:

a) Clubbed in Transferor (i.e. in Laws)
the hands of
b) Condition The transfer should be for inadequate consideration.
Transfer of Assets by an Individual to a person or AOP to the extent such income is used by
Transferee for the immediate or deferred benefit of Spouse/ Son’s wife [Sec.64(1)(vii)(viii)]:
a) Clubbed in Individual Transferor- when transferred to spouse, and
the hands of In Laws- when transferred to Son‘s Wife.
b) Condition The transfer should be for inadequate consideration.

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Minor’s Income [Sec.64(1A)]

a) Basic Nature of Clubbed in the Conditions/Exceptions
Principles Transaction hands of
Income of a  If the Parents‘ Following Incomes of Minor
Minor Child, marriage subsists, Child shall not be clubbed –
including in the hands of the 1. Income of a Minor Child
Minor Parent whose total suffering any disability
Married income is greater, specified u/s 80U.
Daughter. or 2. Income on account of
 If the marriage manual work done by Minor
Note: Child does not subsist, Child.
includes in the hands of the 3. Income on account of any
Step-child person who activity involving application of
and Adopted maintains the skills, talent or specialized
Child. Minor Child. knowledge and experience.
 Exemptions: The 4. If an individual transfers
Parent in whose House Property to a Minor
hands the Minor‘s Married Daughter, income from
Income is clubbed, that property shall not be
is entitled to an clubbed in the Parents‘ hands.
exemption u/s [Sec.27]
10(32), ` 1,500 per
child.
b) Taxability of Source of Income Clubbed in the hands of
Income of 1. Income from House
Minor Married Property, where the
Daughter Transferor is –
(a) Parent Clubbing provisions not attracted. Taxable
in Minor‘s hands.
(b) Parents – in – law Parents – in – law
(c) Spouse Spouse.
(d) Any other Person Parents. Exemption u/s 10(32) is
applicable.
2. Income under
other Heads of
Income
(a) Minor suffering from Clubbing provisions not attracted. Taxable
disability u/s 80U in Minor‘s hands.
(b) Income earned Clubbing provisions not attracted. Taxable
through– Manual work in Minor‘s hands.
Skill, Talent and Clubbing provisions not attracted. Taxable
Specialized knowledge in Minor‘s hands.
Any other source Parents, Exemption u/s 10(32) is
applicable.
c) Change in Once clubbing of Minors Income is done with that of one parent, it will
Clubbing continue to be clubbed with that parent only, in subsequent years.
However, the A. O. may club income of Minor with that of other parent if
it is necessary to do so, after giving reasonable opportunity of being
heard to other parent.

`
SET OFF SET ON
Head of Income under Set Off in the year Carry Forward Time limit Return
which Loss is incurred of loss & Set off in for c/fwd. u/s 139(1)
subsequent and set off Apply
previous years of losses (Sec. 80)
Under Under Under Under
same other same other
head head head head
(Sec.70) (Sec.71)
Income from House Yes Yes Yes No 8 A. Y. No
Property
(Max Amount = 2,00,000)
Profits and gains from
business or profession :
 Non-Speculation Yes Yes Yes No 8 A. Y. Yes
Business (Note)
 Speculation Yes No Yes No 4 A. Y. Yes
Business (Note)
 Specified Business Yes No Yes No No Limit Yes
(Note)
(Note)
 Unabsorbed Yes Yes Yes No Limit No
Depreciation Yes
Capital Gains :
 Short Term Yes No Yes No 8 A. Y. Yes
 Long Term (Note) Yes No Yes No 8 A. Y. Yes
Income from Other

Sources
 Lotteries, Profit No No No N. A. Yes
Crossword, Puzzles, from
Card Games, similar
Gambling etc. activities
 Loss from activity of
owning and Yes No Yes No 4. A. Y. Yes
maintaining Race
Horses
 Other Income Yes Yes No No 8 A. Y. Yes.

`
INCOMES
Capital
Business Other sources
Loses Salar House Gains
y property Norma Speculativ Lon Rac cas
Short Normal
l e g e ual
Salary NA NA NA NA NA NA NA NA NA
House
Y Y Y Y Y Y Y Y N
prop.
Normal
N Y Y Y Y Y Y Y N
bus.
Specul.
N N N Y N N N N N
Bus.
STCL N N N N Y Y N N N
LTCG N N N N N Y N N N
Normal
Loss
Y Y Y Y Y Y Y Y N
Other
source
Horse race N N N N N N N Y N
DEDUCTIONS UNDER CHAPTER VIA

Sec. Applica Nature of Amount of Special Points
bility Payment/ Receipt Deduction
80C Individu Eligible Maximum Amount 1. Investment or
al/ HUF Investments along with deduction Contribution should
u/s 80CCC & be made in approved
80CCD(1) or investment schemes.
independently u/s
80C, is restricted to 2. Deduction should
Rs 1,50,000. be allowed on
[Sec.80CCE] Payment basis not on
accrual basis.
80CCC All Amount paid or Amount Deposited 1. Amount Deposited

Individu deposited by the Or excludes Interest or
als, Individual, in an Rs 1,50,000 Bonus accrued or
irrespect Annuity Plan of credited to Assessees
ive of LIC or any other Whichever is account.
Resident Insurer, for lower
ial receiving Pension.
Status
and
Citizens
hip
80CCD Individu Employees 1. Contribution made 1. Amount received by

al Contribution to by Assessee the Individual from
employe Approved Pension [Sec.80CCD(1)]: such Scheme on:
d by Scheme of the C.G.  Employee:  Account Closure;
C.G. or or Amount paid or  Opting out for
any Employers 20% of Salary, such Pension
other Contribution to whichever is less. Scheme;
Employe Pension Scheme.  Any Other  as pension from
`
r Assessee: Amount the Annuity Plan
or Paid or 20% of purchased or
Any GTI, whichever is taken on such
other less. closure or opting
Individu Note: the deduction out.
al on account of Will be chargeable to
employee/assessee tax in the P.Y. in
contribution shall not which it was received.
exceed Rs 1,50,000.
2. Contribution
made by
CG/Employer
[Sec.80CCD(2)]:
Amount paid or 20%
of Salary, whichever is
less.
3.New Sub Section

(1B) is inserted to
provide an additional
deduction of Rs.
50,000 in respect of
amount contributed
to NPS by an
Individual or
Employee.
Note: This is an
additional deduction
& shall not be
included in the overall
ceiling limit of Rs
1,50,000 u/s 80CCE.
80D Individu a) Medical 1. Individual 1. Where the premium

al, HUF Insurance;  Individual or his paid for a Senior
whether family (Spouse or Citizen, then
Resident b) Health Scheme Dependent Child)- deduction is
or Non- Contribution Aggregate of aggregate premium
Resident approved by C.G. amounts paid as paid or Rs 50,000,
. (only Individual Insurance whichever is lower.
whether R or NR); premium or Here, Senior Citizen
contribution to means an Individual
c) Expenditure on CGHS or Resident in India, who
Preventive Health preventive health is of the age of 60
Checkup. (only check-up or Rs years or more at any
Individual whether 25,000 whichever time during the
R or NR) is less. relevant P.Y.
d) Medical  Parents (Whether 2. Expenditure for

Expenditure for Dependent or Preventive Health
Senior Citizen not)- Aggregate of Checkup of the
amounts paid as Assessee or his family
Insurance is included in the total
Premium or deduction of Rs.

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preventive health 25,000/50,000,
check-up or Rs subject to maximum
25,000 whichever of Rs 5,000.
is less.
3. Payment of
 Medical Premium should be of
Expenditure on any mode other than
health of Cash. Except amount
assessee or paid for preventive
family member: health checkup can
amount expended be any mode
or Rs. 50,000 including Cash.
whichever is less
 Medical
expenditure on
health of
parents: Amount
expended or Rs.
50,000 whichever
is less
2. HUF –
 Policy in the name
of any Member-
Aggregate
premium Paid or
Rs 25,000
whichever is less.
 Medical
Expenditure on
health of any
member of
family: Actual
Expenditure or Rs.
50,000 whichever
is less;
80DD Individu a) Expenditure 1. General: A fixed 1. The Assessee shall

al or incurred for deduction of Rs furnish a copy of the
HUF medical 75,000 is allowed, Certificate issued by
Resident treatment, irrespective of the Medical Authority
in India. nursing, expenditure along with ROI u/s
training and incurred/amount 139.
rehabilitation of paid.
dependent 2. Dependent means-
being a person 2. Special: if the  Individual –
with disability, Dependent person Spouse, Children,
with ―severe Parents, Brothers
b) Amount disability‟, the & Sisters of the
deposited in deduction is Rs. Individual, or any
Approved 1,25,000. of them
Scheme of Note: Severe  HUF – Any Member
LIC/UTI or Disability means a of HUF.
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other Approved Person with 80% or
Insurer, which more of one
provides for
payment of
recurring or
lump sum
amount for the
benefit of the
dependent after
the demise of
the Assessee.
80DD Individu Expenditure 1.General:Rs 40,000 1. Dependent means-
B al or incurred for or amount actually  Individual –
HUF medical treatment paid, whichever is Spouse, Children,
Resident of specified lower. Parents, Brothers
in India. diseases & Sisters of the
If the Assessee is- 2.Expenditure Individual, or any
 Individual- incurred for Senior of them
medical Citizen: Rs 1,00,000  HUF – Any
treatment of or amount actually Member of HUF.
himself or paid, whichever is
Dependent. lower. 2. Deduction shall be
 HUF- Medical reduced by the amount
Treatment of Note: Senior Citizen received from the
any Member of means an Individual Insurer or
HUF. Resident in India, who reimbursement by the
Note: Specified is of the age of 60 Employer, against any
Diseases includes: years or more at any insurance for the
a) Neurological time during the Medical Treatment.
Diseases, relevant P.Y.
b) Cancer
c) AIDS etc.
80E Individu Payment of  Any amount of Meaning of Higher

al Interest on interest paid is Education: means
Educational Loan eligible for any course (including
taken from deduction. Vocational Studies)
Financial Principal Repayment pursued after passing
Institution or is not eligible for the SSE, conducted
Charitable deduction. by any recognized
Institution for the Board or university
purpose of  Period of
pursuing Higher Deduction:
Education for Deduction is
himself or for his available for a
Relative, i.e. maximum period
Spouse and of 8 A.Y. including
Children of the first year of
Individual. repayment or until
the Interest is fully
repaid, whichever
is earlier.
80G All Contribution or Categories of 1. Donation should be
Assessee Donation to Deduction: The made in sum of
s Approved Funds deduction u/s 80G is money and not in
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and Charitable available in the Kind.
Institutions. following Categories:
A. 100% Deduction, 2. The Assessee
with no Ceiling Limit/ should produce Proof
Restriction on amount of Payment along
of Donation. [See note with ROI.
2]
B. 50% Deduction, 3. No deduction shall
with no Ceiling Limit/be allowed in respect
Restriction on amount of donation of any
of Donation. [See notesum exceeding Rs
2] 2,000, unless such
sum is paid by any
C. 100% Donation, mode other than
with Qualifying cash.
Amount = 10% of
Adjusted GTI. [See
note 2]
D. 50% Donation,
with Qualifying
Amount = 10% of
Adjusted GTI. [See
note 2]
80GG Individu Payment of Rent Amount of Conditions for
al for his Residential Deduction: claiming Deduction:
Accommodation,  Rent paid less 10%  No HRA: Assessee
whether furnished Of Adjusted should not be in
or not. TI, or receipt of HRA.
 Rs 5,000 p.m., or
 25% of Adjusted TI.  No Residential
Whichever is less House at the place
of Business
Note: Adjusted Total
Income:  The accommodation
GTI should be occupied
Less: LTCG[Sec. by the Assessee for
112(2)] the purpose of his
STCG [Sec. own Residence.
111A]
All other
deductions under
Chapter VI-A except
80GG
Adjusted Total
Income
80GGB Indian Amount 100% of No Deduction shall

Compan contributed during Contribution. be allowed in respect
y the P.Y. to- of any sum
a) A Political contributed by way of
Party; Cash
b) An Electoral
Trust.

`
80GGC Any Amount 100% of No Deduction shall
Person contributed during Contribution. be allowed in respect
N.A. to: the P.Y. to- of any sum
 L.A a) A Political contributed by way of
 AJP Party; or Cash
wholl b) An Electoral
y or Trust.
partly
funde
d by
Gover
nmen
t.
80PA Producer ―eligible business‖ 100% of the Profits Benefit shall be
Compan means – derived from eligible available for the
y having (a) the marketing business previous year relevant
total of agricultural to an assessment
turnover produce grown by year commencing on
of less the members or after the 1st day of
than one April, 2019, but before
hundred (b) the purchase of the 1st day of April,
crores agricultural 2025.
implements, seeds,
livestock or other In a case where the
articles intended assessee is entitled
for agriculture for also to deduction
the purpose of under any other
supplying them to provision of this
the members Chapter, the
deduction under this
(c) the processing section shall be
of the agricultural allowed with reference
produce of the to the income, if any,
members as referred to in this
section included in
the gross total income
as reduced by the
deductions under
such other provision
of this Chapter.
80QQB Resident Source of Whole of such 1. If income earned

Individu Income: Any income; outside India: It
al being lumpsum whichever is should be remitted
an consideration for Or within 6 months
Author the assignment or less from the end of the
grant of any Rs3,00,000 relevant P.Y, or
interests in the within such time
copyright of any extended by RBI.
Book, being a
work of literary, 2.No Deduction shall
artistic or scientific be allowed under any
nature, or for other provisions of
Royalty or this act in respect of
copyright Fees (in such Income.

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lumpsum or
otherwise) 3. Royalty not
received in
Note: Books does Lumpsum: amount
not include in excess of 15% of
Brochures, Diaries, the value of such
Guides, Journals, books sold during the
Magazines, P.Y shall be ignored.
Newspapers,
Pamphlets,
Textbooks for
Schools, and other
publications of
similar nature.
80RRB Resident Source of Income: Whole of such 1. If income earned
Individu a) GTI of the income; outside India: It
al being Patentee includes whichever is should be remitted
a “Royalty” in Or within 6 months
Patente respect of the less from the end of the
e Patent, i.e. Rs3,00,000 relevant P.Y, or
Consideration for- within such time
 Transfer of all extended by RBI.
or any rights in
respect of a 2.No Deduction shall
patent; or be allowed under any
 Imparting of other provisions of
any information this act in respect of
concerning the such Income.
working of, or
the use of, a
patent , or
 Use of any
Patent; or
 Rendering of
any services in
connection with
the activities
referred to in
above sub
clauses.
b) The above
Royalty shall not
include any
consideration-
(i) being income
chargeable u/h
CG, or
ii) for sale of
product
manufactured
with the use of
patented process
or patented article
for commercial

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use.
80TTA Individu Nature of Income: Interest Income; Deposit held by Firm,

(other al/ Interest on Or AOP or BOI: Where
than HUF Deposits in a Rs. 10,000 Saving Account is
80TTB) Saving Account ( whichever is Less held in the name of a
not being Time Firm, AOP, BOI, no
Deposits) with- deduction shall be
 A Banking allowed u/s 80TTA in
Company. respect of such
 A Co-Operative income in computing
Society engaged the T.I of any Partner
in the business of the Firm or Member
of banking. of AOP/BOI.
 Post Office.
80TTB Senior income by way of Interest Income or Deposit held by Firm,

Citizen interest on Rs. 50,000 AOP or BOI: Where
deposits with: whichever is Less Saving Account is
a) Banking held in the name of a
Company Firm, AOP, BOI, no
b) Co-operative deduction shall be
society engaged allowed u/s 80TTA in
in banking respect of such
business income in computing
c) Post Office the T.I of any Partner
of the Firm or Member
of AOP/BOI.
80U Resident Resident 1. General: A fixed 1. The Assessee shall

Individu Individual deduction of Rs furnish a copy of the
al, being Suffering from 75,000 is allowed. Certificate issued by
a person disability, (i.e. the Medical Authority
with Permanent 2. Special: if the along with ROI u/s
disabilit Physical Disability person have ―severe 139.
y. or Mental disability‟, the
Retardation deduction is Rs.
including 1,25,000.
Blindness, loss of Note: Severe
Voice, Autism, etc. Disability means a
Person with 80% or
more of one or more
disabilities.

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ELIGIBLE INVESTMENTS U/S 80C
Nature of Investment/Payment Payments made by
Individual HUF
1. Life Insurance Premium [Special point 1] Self, Spouse, Any Member of
Deduction u/s 80C Child HUF
If policies issued between 20% of ―Actual Capital Minimum Capital Sum Assured
1.4.2003 and 31.03.2012 Sum Assured‖ means the minimum amount
If policies issued on or 10% of ―Minimum assured under the policy on the
after 1.4.2012 but before Capital Sum Assured‖ happening of the insured event at
1.4.2013 time during the term of policy, not
If policies issued after  10% of ―Minimum taking into account-
1.4.2013 Capital Sum Assured‖  The value of any premium agreed
 Insurance on the to be returned; or
life of person with
 Any benefit by way of bonus or
disability 15% of
otherwise over & above sum
―Minimum Capital
actually assured which is to be
Sum Assured‖
received under the policy by any
person.
2. Contribution to Statutory or Recognized Provident Self NA

Fund.
3. Contribution to Public Provident Fund Self, Spouse, Any Member of
Child HUF
4.Contribution to Approved Superannuation Fund. Self NA
5. Subscription to National Savings Scheme, 1992. Self NA
6. Subscription to National Savings Certificate Self NA
(including Interest Accrued.)
7. Contribution to Unit Linked Insurance Plan of Self, Spouse, Any Member of
UTI/LIC and continuous for minimum period of 5 years. Child HUF
[Special point 2]
8. contribution to Annuity Plans of Insurance Companies Self, Spouse, Any Member of
Child HUF
9. Subscription to Units of Mutual Funds/UTI. Self NA
10. Contribution to Pension Fund of Mutual Self NA
Fund/UTI/National Housing Bank.
11. Deposits with National Housing Bank, HUDCO Self NA
12. Deposits with a PSU providing long term finance for Self NA
purchase/construction of Residential Houses in India.
13. Deposits with notified Housing Boards set up under Self NA
law, for planning, developing and improvement of
cities/towns/villages.
14. Tuition Fees paid to University, College, School or Maximum NA
Educational Institution located in India for full-time Two Children
education of Children, other than Donation or
Development Fees.
15. Housing Loan/Cost [Special point 4, 5] Self NA
16. Subscription to approved Equity Shares Self NA
orDebentures of a Public Company or a Public Financial
Institution, and the entire proceeds of the issue is
utilized wholly and exclusively for Power Generation or
Infrastructure Facility Company [Holding Period
minimum 3 years.]

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17. Term Deposit for atleast5 Years with a Scheduled Self NA
Bank in accordance with a Scheme framed and notified
by Central Government. [Special point 3]
18. Subscription to notified NABARD Bonds Self NA
19. Deposit under Senior Citizens Savings Scheme Self NA
Rules, 2004 [Special point 3]
20. 5 – Year Time Deposit in an account under Post Self NA
Office Time Deposit Rules, 198]
21. Sukanya Samriddhi Account Scheme for welfare Self, Girl Child Self, Girl Child
of a Girl Child
 Investment – Deduction is allowed u/s 80C
 Interest – Exempt
 Withdrawal – Exempt

`

`
RETURN OF INCOME
DUE DATE OF FILING RETURN OF INCOME U/S 139(1):
Assessee Due Date
(a) Company (Other than a Company required to furnish a Report u/s
92E)
(b) Person (Other than a Company) whose accounts are required to be
audited under the Act or under any other law 30th September
(c) Working Partner of Partnership Firm whose accounts are to be audited
(d) Assessee who is required to furnish a Report u/s 92E, i. e. Assessee 30th November
having International Transactions.
(e) Any other Assessee 31st July
LOSS RETURN U/S 139(3)

A Loss sustained by the Assessee in any previous year under the head ―Profits and Gains
of Business or Profession‖ or ―Speculation Business‖ or ―Owning and Maintaining Race
Horses‖ or ―Capital Gains‖ or ―Loss from Specified Business‖ can be carried forward,
only if the Return is furnished within the time allowed u/s 139(1).
EXCEPTION: Unabsorbed Depreciation u/s 32(2) or Loss under the head “Income from
House Property” u/s 71B can be carried forward, even if the Return of Income is filed
within the belated period.
BELATED RETURN U/S 139(4)

This is applicable to any person who has not furnished his Return of Income within the
time allowed u/s 139(1), or in response to a notice issued u/s 142(1).
The Belated Return can be filed either before –

(a) End of the relevant Assessment Year,
or whichever is earlier
(b) Completion of assessment.
REVISED RETURN U/S 139(5)

(a) There should be an omission or wrong statement in the original return filed.
(b) The Original Return should have been filed within the due date u/s 139(1) or 139(4)
(Now, Belated Return can also be revised)
Note: Return filed in pursuance to Notice u/s 142(1) cannot be revised.

The Revised Return shall be filed before –
(a) Expiry of one year from the end
of the relevant Assessment Year,
or whichever is earlier
(b) Completion of assessment.
NOTE:
(a) The Revised Return will be considered as having been filed when the original return
was filed.
(b) A Revised Return replaces the Original Return.
(c) The Assessee is entitled to furnish a second Revised Return, if the Assessee discovers
any omission or wrong statement in the Revised Return, provided such second Revised
Return is filed within the time prescribed above.
MANDATORY QUOTING OF PAN:

Nature of Transaction Value of Transaction
Sale or Purchase of a motor vehicle which requires All Such Transactions

`
registration by a registration authority other than 2
wheelers.
Opening of an Account (other than Fixed Deposit and a All Such Transactions
Basic Saving Bank Deposit Account) with a Banking
Company or a Co-operative Bank
Making an Application to any banking company or a Co- All such transactions
operative Bank or to any other company or institution, for
issue of a credit or debit card
Opening of a Demat Account with a Depository, participant, All Such Transactions
Custodian of securities or any other person registered u/s
12(1A) of SEBI Act, 1992
Payment to a Hotel or restaurant against a bill or bills at Payment in cash exceeding `
any one time 50,000
Payment in connection with travel to any foreign country or Payment in cash exceeding `
payment for purchase of any foreign currency at any one 50,000
time
Payment to a Mutual Fund for purchase of its units Amount Exceeding ` 50,000
Payment to a company or an institution for acquiring Amount exceeding ` 50,000
debenture or bonds issued by it
Payment to RBI for acquiring bonds issued by it Amount exceeding ` 50,000
Deposit with a banking company or a Co-operative Bank Deposits in cash exceeding `
50,000 during one day
Purchase of bank drafts or pay order or bankers cheque Payment in cash exceeding `
from banking company or co-operative bank 50,000 during one day
A Time Deposit with: Amount exceeding ` 50,000
a) Banking Company or a Co-operative Bank or aggregating to more than
b) Post office ` 5 Lakhs during a financial
c) Nidhi Company year.
d) NBFC(Deposit NBFC)
Payment of Life Insurance Payment Amount aggregating to more
than ` 50,000 in a financial
year
A contract for sale or purchase of Securities other than Amount exceeding ` 1
Shares Lakhs per transaction
Sale or purchase by any person of Shares of a company not Amount Exceeding ` 1 Lakh
listed in RSE per transaction
Sale or purchase of any immovable property Amount exceeding ` 10
Lakhs or valued by Stamp
Valuation authority at an
amount exceeding ` 10
Lakhs
Sale or Purchase by any person, of Goods or services other Amount exceeding ` 2 Lakh
than above (including Jewellary) per transaction
RETURN BY WHOM TO BE SIGNED [SECTION 140]

Individual (i) By the individual himself; or
(ii) Where he is absent from India, by the individual himself or by some
person duly authorised by him on his behalf; or (iii) Where he is mentally
incapacitated from attending to his affairs, by his guardian or any other
person competent to act on his behalf and (iv) Where, for any other reason
it is not possible for the individual to sign the return, by any person duly
authorised by him in this behalf.
In case of (ii) and (iv) above, the person signing the return should hold a
valid power of attorney from the individual to do so, which shall be attached
to the return.

`
Hindu Only by the Karta. However, in the following two cases it can be signed by
Undivided any other adult member of the family:
Family (i) Where the Karta is absent from India; or
(ii) Where the Karta is mentally incapacitated form attending to his affairs.
Company (i) By the managing director thereof, or
(ii) Where for any unavoidable reason such managing director is not able to
sign and verify the return, or where there is no managing director, by any
director thereof or
(iii) In the case of a company being wound up, by the liquidator or
(iv) In case of a company whose management has been taken over by the
Central Government or the State Government, by the Principal Officer
thereof.
However, if the company is non-resident in India, the return may be signed

and verified by a person who holds a valid power of attorney from such
company to do so.
Firm (i) By the managing partner thereof, or
(ii) Where for any unavoidable reason, such managing partner is not able to
sign and verify the return, or where there is no managing partner as such,
by any partner thereof, not being a minor;
LLP By the designated partner thereof, or where for any unavoidable reason
such designated partner is not able to sign and verify the return, or where
there is no designated partner as such, by any partner thereof;
Political By the chief executive officer of such party (whether such Chief Executive
Party Officer is known as Secretary or by any other designation).
(h) In the case of any other association – By any member of the association
or the principal officer.
ADVANCE TAX & TDS

ADVANCE TAX INSTALLMENTS
Due date of installment in the Amount Payable by Corporate Assessee & Non –
relevant P.Y (Sec.211) Corporate Assessee (uniform Slabs)
1. On or before the 15 June
th 15% of Advance Tax payable
2. On or before the 15th September. 45% of advance tax payable less Advance tax paid
in earlier installments
3. On or before the 15th December 75% of advance tax payable less Advance tax paid
4. On or before the 15th March 100% of advance tax payable less Advance tax paid
INTEREST/ FEE PAYABLE UNDER INCOME TAX ACT

Section 234A: Rate: 1% per month
Late filing of Tenure: Starts from due date of filing ROI till actual date of filing ROI
ROI Amount: tax not paid
Section 234B: Rate: 1% per month

Default in Tenure: From 1st April till the actual date of payment

`
Payment of Amount: Advance Tax not paid
Advance Tax
Section 234C: Rate: 1% per month
Deferment of Tenure:
Advance Tax Installment Corporate
1st 15th June 3 Months
2 15 Sept
nd th 3 Months
3rd 15th Dec 3 Months
4 15 Mar
th th 1 Month
Amount: Deficit in each installment
In case of taxpayers (other than those who opted for presumptive taxation
scheme under section 44AD or section 44ADA), interest shall be levied:
(i) If advance tax paid on or before 15th June is less than 12% of
advance tax payable
(ii) If advance tax paid on or before 15 th September is less than 36% of
advance tax payable
(iii) If advance tax paid on or before 15 th December is less than 75% of
advance tax payable
(iv) If advance tax paid on or before 15 th March is less than 100% of
advance tax payable
Section 234F: a) ROI filed after Due Date u/s 139 (1) but before 31 st December of AY:
Penalty for late Rs. 5000
filing of Return b) Rs. 10,000 in any other case (that is filed on or after 1 st January of AY)
of Income u/s If total income of the person does not exceed Rs. 5 Lakhs then fee payable
139 shall not exceed Rs. 1000.
Time for payment of TDS: (monthly)

April to Feb = 7th of the succeeding month
March = 30th April
DUE DATE OF FILING QUARTERLY STATEMENT:

Sl. No. Date of ending of the Due date in the case
quarter of the financial year Of other Deductors
1. 30th June 31st July of the financial year
2. 30th September 31st October of the financial year
31 December
st 31st January of the financial year
3. 31st March 31st May of the financial year immediately
following the financial year in which deduction is
made
Due date for Filing Form 26QB for TDS Deducted u/s 194IA is 30 days from the end of the
month in which TDS is deducted.
TIME LIMIT FOR ISSUE OF CERTIFICATE

S. No. Form No. Periodicity Due date
1. 16 Annual By 31st day of May of the financial year immediately
following the financial year in which the income was paid
and tax deducted.

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2. 16A Quarterly Within 15 days from the due date for furnishing the
statement of tax deducted at source under rule 31A. In
other words, certificate in Form No. 16A should be issued
within the time limit specified as under:
Quarter In other cases
ending
30th June 14th August
30 th 15th November
September
31st December 15th Feb
31st March 15th June
3. 16B One Time Within 15days from the due date for furnishing Challan
cum Statement in Form 26QB
TDS RATES CHART

Sec No. Particulars Rate Exemption
192A Accumulated balance of Provident 10% Rs. 50,000
Fund
193 Interest on Securities 10% Rs. 5,000
194 Dividends 20% Rs. 2,500
194A Interest other than interest on 10% From Banking Company & Co-
securities operative Society:
Rs. 10,000 (for Senior Citizen
= Rs. 50,000)
From Others: Rs. 5,000
From Motor Car Accident

Tribunal: Rs. 50,000.
194B Winnings from Lotteries, Cross 30% Rs. 10,000

Word Puzzles, etc
194BB Winning from Horse Race 30% Rs. 10,000
194C Payment to Contractors/Sub 1%: Payee Single Payment: Rs. 30,000
Contractors is Annual: Rs. 1,00,000
Ind/HUF
2%: Other
Payee
194D Insurance Commission 5% Rs. 15,000
194DA Payment under Life Insurance 1% Rs. 1,00,000
Policy
194E Non – Resident Sportsman 20% + NIL
(including Athlete) or a Non Sur. +
Resident Entertainer HEC
Or Non Resident Sports Association
194EE National Savings Scheme 10% Rs. 2,500
194G Commission on Sale of Lottery 5% Rs. 15,000
Tickets
194H Commission or Brokerage 5% Rs. 15,000
194I Rent 2%: P or M Rs. 1,80,000
10%: L or
B, F or F
194IA Payment for acquisition of 1% Rs. 50,00,000
Immovable Property other than Agri
`
Land
194IB Rent Paid by Individual or HUF to a 5% If the amount of rent exceeds
Resident Person Rs. 50,000 per month or part
of a month During the PY.
(w.e.f. 01.06.2017)
194IC Any person responsible to pay to a 10% Notwithstanding anything
Resident person u/s 45(5A) contained in section 194-IA,
any person responsible for
paying to a resident any sum
by way of consideration, not
being consideration in kind,
under the agreement referred
to in sub-section (5A) of
section 45, shall at the time of
credit of such sum to the
account of the payee or at the
time of payment thereof in
cash or by issue of a cheque or
draft or by any other mode,
whichever is earlier, deduct an
amount equal to ten per cent.
of such sum as income-tax
thereon
194J Sum paid for: 10% Rs. 30,000 (Except Payment to
a) Professional Service Director)
b) technical Services
c) Royalty
d) payment to director (No
Exemption)
e) Non-Compete Fees
194J Payee engaged in the business of 2% -
Call Centre
194LA Compensation on Compulsory 10% Rs. 2,50,000
Acquisition of any Immovable
Property other than Agricultural
Land

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SECTION 195 PAYMENT OF OTHER SUM TO NON RESIDENT
TAX COLLECTED AT SOURCE (TCS)

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IMPORTANT PENALTIES
Default Section Penalty
No.
Failure to comply with the Notice u/s 142 271(1)(b) Rs. 10,000 for each
(1)/(2A)/143(2) failure
Concealment of Income 271(1)(c) Minimum: 100%
Maximum: 300%
Of amount of
concealment of tax
Failure to keep & maintain books of accounts u/s 271A Rs. 25,000
44AA
Failure to keep and maintain information and 271AA 2% of value of
documents relating to International Transaction or transaction
Specified Domestic Transaction
Failure to get the accounts audited or furnish a 271B ½ % of total sales or
report as required u/s 44AB Rs. 1,50,000
whichever is Less
Penalty for failure to furnish report from an 271BA Rs. 1 Lakh
Chartered Accountant as required under section 92E.
(International transaction)
Failure to deduct TDS or Failure to pay DDT u/s 271C An amount equal to
115O TDS not deducted or
DDT not paid
Taking loans or deposits in contravention of Section 271D An amount equal to
269SS loan or deposit
Contravention with Section 269ST 271DA Sum equal to Receipt
Repayment of loan or deposits in contravention of 271E An amount equal to
Section 269T loan or deposit repaid
Failure to file return of income before the end of 271F Rs. 5,000
Assessment year (Converted into Fee u/s 234F)
Penalty for failure to furnish information or document 271G 2% of value of
u/s 92D International
Transaction or
Specified Domestic
Transaction
Failure to file TDS return 271H Not less than 10,000
and upto 1,00,000
Penalty for furnishing incorrect information in reports 271J Rs. 10,000 for each
or certificates by Accountant or Merchant Banker or report or certificate
registered valuer
Failure to comply with the provisions of PAN 272B Rs. 10,000
Failure to comply with provisions of TAN 272BB Rs. 10,000
NEW SECTION 269ST INSERTED: MODE OF UNDERTAKING TRANSACTIONS:

No person shall receive an amount of two lakh rupees or more—
(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion from a person,
otherwise than by an account payee cheque or an account payee bank draft or use of
electronic clearing system through a bank account:
Provided that the provisions of this section shall not apply to—
(i) any receipt by—
(a) Government;
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(b) any banking company, post office savings bank or co-operative bank;
(ii) transactions of the nature referred to in section 269SS;
(iii) such other persons or class of persons or receipts, which the Central Government
may, by notification in the Official Gazette, specify.
PENALTY FOR CONTRAVENTION WITH SECTION 269ST (Section 271DA)

(1) If a person receives any sum in contravention of the provisions of section 269ST, he
shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt:
Provided that no penalty shall be imposable if such person proves that there were good
and sufficient reasons for the contravention.
(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint
Commissioner

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ASSESSMENTS & MISC TOPICS
Types of Assessment
Self -Assessment Best Judgement Precautionary

(Sec. 140A) Assessment (Sec.144) Assessment.
Regular Income Escaping Assessment in case of

Assessment (Sec. Assessment or Re- Search or Requisition
143) Assessment (Sec.147) (Sec. 153A)
(A) SELF ASSESSMENT (SECTION 140A)
Income tax (including surcharge, if any, and education cess) on the returned income A
Add: Interest under sections 234A, 234B, 234C B
Less: Relief of tax under sections 89/90/90A/91 C
Less: MAT credit under section 115JAA/AMT credit under section 115JD D
Less: TDS/TCS E
Less: Advance Tax F
A + B – C – D – E – F = Amount to be paid by way of self – assessment under section 140A.
(B) SCRUTINY (REGULAR) ASSESSMENT [SECTION 143(2) & (3)]

1. Notice The Assessing Officer may serve a notice u/s 143 (2) for Scrutiny
Assessment if-
 The Assessee has filled a return u/s 139 or in response to a notice
issued u/s 142(1) and
 The A.O. considers it necessary to do so, in order to ensure that
the Assessee has not understated the Income, or Computed
Excessive Loss, or underpaid tax in any manner.
Such notice may require the assessee to either attend the Office of AO or
produce any evidence on a date specified in the notice, on which assessee
may reply in support of the return.
Note: Where the assessee has not furnished his return of income, then
notice under section 143(2) cannot be issued to him and consequently
assessment under section 143(3) is not possible. This is because notice
under section 143(2) can be issued only if the assessee has filed return
under section 139 or in response to a notice issued under section 142(1).
Time limit for Such Notice is required to be served (not merely issued) before the
Service of expiry of 6 Months from the end of the F.Y. in which the return is
Notice furnished.

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Assessment On the day specified in the notice issued under Sub-section (2), or as
Order U/s soon afterwards as may be, after hearing such evidence as the assessee
143(3) may produce and such other evidence as the Assessing Officer may
require on specified points, and after taking into account all relevant
material which he has gathered, the Assessing Officer shall, by an order
in writing, make an assessment of the total income or loss of the
assessee, and determine the sum payable by him or refund of any
amount due to him on the basis of such assessment.
Penalty for If any person failed to Comply with a notice issued U/s 143(2), he shall
Failure to be liable to Penalty of Rs 10,000.
Comply with However no Penalty is levied if the defaulter proves that there is
Notice reasonable cause for such failure.
(C) BEST JUDGEMENT ASSESSMENT U/S 144

1. If any person:
(a) Fails to furnish a return of income under section 139(1) and has not furnished the
return under section 139(4) upto the date of issue of show cause notice under section
144, or
(b) Fails to comply with all terms of a notice issued under section 142(1)(i) or 142(1)(ii),
or
(c) Fails to comply with a direction for special audit issued under section 142(2A), or
(d) Fails to comply with all terms of a notice issued under section 143(2)
2. Assessment The Assessing Officer after taking into account all relevant material
which he has gathered, shall make an assessment to the best of his
judgement and determine the tax payable by the assessee.
Note: The Assessing Officer under section 144 cannot assess the
income below the returned income and cannot assess the loss higher
than the returned loss.
3. Opportunity The Assessing Officer shall not make the assessment unless he gives an
of being heard opportunity of being heard to the assessee. The opportunity of being
heard shall be given by serving a notice upon the assessee in which he
shall be asked to show cause as to why a best judgement assessment
should not be made on him. [Show cause notice under section 144]
NOTE:
1. This notice is not required to be issued where a notice under section
142(1)(i) has already been issued to the assessee.
4. Rejection of The assessing officer can also reject the accounts book under section
Books of 145 and can make best judgment assessment under section 144 if:
Accounts – The accounts books are incorrect, false or incomplete.
– If the accounting method employed is such that the profit cannot be
derived from it correctly.
– Where the method of accounting adopted by the assessee is not
followed by him regularly or income has not been computed in
accordance with notified standards.
– If the assessee has not followed the income computation and
disclosure standards notified by the government.
(D) INCOME ESCAPING ASSESSMENT OR RE-ASSESSMENT (SECTION 147)
If the Assessing Officer has reason to believe that any income chargeable to tax has
escaped assessment for any assessment year, he may, subject to the provisions of
sections 148 to 153,
– assess or reassess income which has escaped assessment or
`
– recompute the loss or the depreciation allowance or any other allowance, as the case
may be for the relevant assessment year.
Section 147, the Assessing Officer shall serve on the assessee a notice requiring him to
furnish, within such period, as may be specified in the notice, a return of his income or
the income of any other person in respect of which he is assessable under this Act during
the previous year corresponding to the relevant assessment year.
The following shall also be deemed to be cases where income chargeable to tax has
escaped assessment, namely:
(i) Where no return of income has been furnished by the assessee although his total
income or the total income of any other person in respect of which he is assessable under
this Act during the previous year exceeded the maximum amount which is not chargeable
to income-tax
(ii) Where a return of income has been furnished by the assessee but no assessment has
been made and it is noticed by the Assessing Officer that the assessee has understated
the income or has claimed excessive loss, deduction, allowance or relief in the return
(iii) Where the assessee has failed to furnish a report in respect of any international
transaction which he was so required under section 92E
(iv) Where an assessment has been made, but

(i) Income chargeable to tax has been under assessed; or
(ii) Such income has been assessed at too low a rate; or
(iii) Such income has been made the subject of excessive relief under this Act; or
(iv) Excessive loss or depreciation allowance or any other allowance under this Act has
been computed;
(v) Where a return of income has not been furnished by the assessee or a return of income
has been furnished by him and on the basis of information or document received from the
prescribed income-tax authority, under sub-section (2) of section 133C, it is noticed by
the Assessing Officer that the income of the assessee exceeds the maximum amount not
chargeable to tax, or as the case may be, the assessee has understated the income or has
claimed excessive loss, deduction, allowance or relief in the return.
(vi) Where a person is found to have any asset (including financial interest in any entity)
located outside India.
The assessing officer before making the assessment under this section will have to issue
notice u/s 148 to the assessee requiring him to file the return even if he has already filed
the return under section 139 or 142(1). The
AO is duty bound to provide the assessee the reasons recorded by him, if the assessee
request for it. If on request the reasons are not supplied then AO cannot proceed the
assessment.
TIME LIMIT FOR COMPLETION OF ASSESSMENTS AND REASSESMENTS (SECTION 153)
Section Proceeding Time Limit for Completion of Assessment or

Reassessment
153 (1) Regular assessment u/s 143/ a) Within 21 months from end of the
Best judgment assessment u/s assessment year in which income was first
144 assessable. [Applicable for assessment year
2017-18 or before]
b) Within 18 months from end of the

assessment year in which income was first
assessable. [Applicable for assessment year
`
2018-19]
c) Within 12 months from end of the

assessment year in which income was
first assessable. [Applicable for
assessment year 2019-20 and onwards]
Note: If reference is made to TPO, the

period available for assessment shall be
extended by 12 months
153 (2) Order of assessment or a) Within 9 months from end of the

Reassessment u/s 147. financial year in which notice under
section 148 was served. [if notice is served
before 01-04- 2019]
b) Within 12 months from end of the

financial year in which notice under
section 148 was served. [if notice is served
on or after 01- 04-2019]

period available for reassessment shall be
extended by 12 months.
153 (3) Fresh Assessment U/s a) Within 9 months from end of the
143/144/147 where the original financial year in which order under section
assessment has been set aside, 254 is received by - Principal Chief
cancelled and referred back to AO Commissioner or - Chief Commissioner or -
by an order u/s 254/263/264 Principal Commissioner or - Commissioner
or, - as the case may be an order under
section 263/264 is passed by Principal
Commissioner or Commissioner
b) Within 12 months from the end of the

financial year in which order under section
254 is received or order under section 263
or 264 is passed by the authority. [if order
is passed on or after financial year 2019-
20]

period available for assessment shall be
extended by 12 months.
- Assessment u/s 153A 21 Months from the end of FY in which last

of the authorization for search u/s 132 or
for requisition u/s 132A was executed.
- Assessment u/s 153C 21 Months from the end of FY in which last

of the authorization for search u/s 132 or
for requisition u/s 132A was executed.
- Reference made to TPO u/s 92CA 33 Months from the end of relevant AY
(E) PRECAUTIONARY ASSESSMENT

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Where it is not clear as to who has received the income and prima facie, it appears that
the income may have been received either by A or by B or by both together, the Assessing
Officer can commence proceedings against both A and B to determine the question as to
who is responsible to pay the tax [Lalji Haridas v. I.T.O. (1961) 43 ITR p. 387 (S.C.)].
CENTERALISED PROCESSING OF RETURN/INTIMATION TO THE ASSESSEE U/S 143(1)
Under Section 143(1), Assessing Officer completes the assessment without passing a
regular assessment order. The Assessing Officer issue an acknowledgement/intimation
under section 143(1) of tax payable or refundable as the case may be on the basis of
Return of Income filed by the assessee under section 139 or in response to a notice issued
under section 142(1). A Return filed is to be processed and Total Income or Loss is to be
computed after making the adjustments in the following manner:
(i) The total income or loss after making adjustments for any arithmetical error in the
return or.
(ii) an incorrect claim, if such incorrect claim is apparent from any information in the
return;
However before making such adjustments, an Intimation has to be given to the assessee
requiring him to respond to such adjustments. Such Intimation may be in writing or
electronic mode. The response received if any, has to be duly considered before effecting
any adjustment. However, if no response is received within 30 days of issue of such
Intimation, the processing shall be carried out incorporating such adjustments.
The AO shall prepare or generate intimation and send it to the assessee specifying the
sum determined to be payable by, or the amount of refund due to the assessee.
Since no assessment order is issued by the department for legal purposes the intimation/
acknowledgement shall not be considered as assessment.
Time limit for intimation under section 143(1):
No intimation for tax or interest due under section 143(1) shall be sent after the expiry
of 1 year from the end of financial year in which return of income is made.
PROCESSING UNDER SECTION 143(1) BE MANDATED BEFORE ASSESSMENT
Processing of return is not necessary before the expiry of one year from the end of FY in
which the return is made, where notice has been issued to the assessee U/s 143 (2).
INQUIRY BEFORE ASSESSMENT UNDER SECTION 142

1. NOTICE UNDER SECTION 142(1)
Section 142(1)(i): If the assessee has not furnished the return of income within the time
prescribed under section 139(1), then the Assessing Officer may issue a notice requiring
him to furnish the return of income within the time specified in the notice.
THE NOTICE UNDER SECTION 142(1)(i) CAN BE ISSUED EVEN AFTER THE END OF THE RELEVANT
ASSESSMENT YEAR.
Section 142(1(ii): For the purpose of making an assessment, by issuing this notice the
Assessing Officer can require the assessee to furnish accounts, documents, various other
information and also a statement of assets and liabilities, whether included in the
accounts or not.
Note:

`
(1) The Assessing Officer shall obtain the previous approval of the Joint Commissioner
before requiring the assessee to furnish a statement of assets and liabilities not included
in the accounts.
(2) The Assessing Officer shall not require the production of any accounts relating to a
period more than three years prior to the previous year.
(3) Notice under section 142(1)(ii) can be issued whether the assessee has filed return of
income or not.
2. Give direction to get books of accounts audited u/s 142(2A) to (2D):
1. Direction under section 142(2A) can be issued if Assessing Officer is of the opinion that
it is necessary to get the accounts audited having regard to:
(i) Complexities involved in accounts; or
(ii) Volume of the accounts; or
(iii) Doubts about the correctness of the accounts; or
(iv) Multiplicity of transaction in the accounts; or
(v) Specialized nature of business activity of the assessee; AND
(vi) It is in the interest of the revenue to get the special audit done.
2. The direction under section 142(2A) can be issued only when the case is pending before
the Assessing Officer in an assessment/reassessment.
3. This direction can be issued with the previous approval of Chief Commissioner or
Commissioner.
4. The accounts shall be audited by a Chartered Accountant nominated by the Chief

Commissioner or Commissioner and the audit fees and expenses relating to audit shall
also be fixed by the Chief Commissioner or Commissioner. And remuneration of the
auditor and other audit expenses shall be paid by the Central Government.
5. The direction under section 142(2A) can be given even if the accounts of the assessee
have been audited under the Income – tax Act or under any other law.
6. The assessee is to furnish the report of such audit in the prescribed form to the
Assessing Officer within the time period specified in the direction. Such period may be
extended by Assessing Officer, suomotu, or on an application made by the assessee and for
any good and sufficient reason. However, that the aggregate of the time period originally
fixed and the time period so extended shall not exceed 180 days from the date the
direction is received by the assessee.
7. The assessee shall be given an opportunity of being heard in case any material gathered
on the basis of audit under section 142(2A) is proposed to be utilized for the purposes of
assessment.
Notification dated 13.03.2019

In exercise of the powers conferred by section 118 of the Income-tax Act, 1961 (43 of
1961), the Central Board of Direct Taxes hereby directs that the Commissioner of Income-
tax (eVerification) shall be subordinate to the Principal Director General of Income-tax
(Systems).

`
ASSOCIATED ENTREPRISES:

`
TAX PLANNING
OBJECTIVE OF TAX PLANNING
Tax planning, is honest and rightful approach to the attainment of maximum benefits of
the taxation laws within their framework. The basic objectives of tax planning are:
(a) Reduction of tax liability
(b) Minimisation of litigation
(c) Productive investment
(d) Healthy growth of economy
(e) Economic stability
ESSENTIALS OF TAX PLANNING

Successful Tax Planning must conform to the following tests –
1. Conformity with Law: The Tax Planning should have a comprehensive knowledge of the
Law, Rules and Regulations. Such knowledge is not only that of Tax Laws, but also Civil
and Personal branches of Law, so that the Tax Planner‘s scheme does not get defeated by
the universal principles of jurisprudence.
2. Flexibility: This seeks to ensure that the success of the Tax Planning scheme is not
nullified by statutory negation. For this, his tax plan must be flexible. Flexibility
essentially means that the scheme provides for suitable changes in accepted forms. The
Tax Planner should therefore be watchful of significant developments related to his field.
3. Compliance: Efforts at Tax Planning should not ignore the legislative intent. They
should be directed in every case to see that not only the tax benefits are obtained, but also
the tax obligations are discharged without fail, so that the penal provisions are not
attracted.
TYPES OF TAX PLANNING

The tax planning exercise ranges from devising a model for specific transaction as well as
for systematic corporate planning. These are:
(a) Short-range and long-range tax planning.
(b) Permissive tax planning.
(c) Purposive tax planning.
(A) SHORT-RANGE PLANNING & LONG-RANGE PLANNING
Basis Short Range Tax Planning Long Range Tax Planning

Meaning If has limited short – term It may have no immediate Tax Benefit in the
objective. There is no current Assessment Year, but provides real
permanent or long – term Tax Savings over a period of time.
commitment.

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Example Sale of Capital Asset like 1. An Assessee transfer Shares to his Spouse.
House Property, and If the Company declares Bonus Shares,
investment thereof in bonds Income arising from that Bonus Shares shall
of NHAI or REC., to claim not be clubbed with Transfer‘s Income.
exemption u/s 54EC, with 2. Purchase of House Property through Bank
lock – in period only 3 years. Loan, to avail deductions u/s 24 & 80C, to
reduce tax incidence.
(B) PERMISSIVE TAX PLANNING
Permissive tax planning is tax planning under the expressed provisions of tax laws. Tax
laws of our country offer many exemptions and incentives.
(C) PURPOSIVE TAX PLANNING

Purposive tax planning is based on the measures which circumvent the law. The
permissive tax planning has the express sanction of the Statute while the purposive tax
planning does not carry such sanction.
For example, under Sections 60 to 65 of the Income-tax Act, 1961 the income of the other
persons is clubbed in the income of the assessee. If the assessee is in a position to plan in
such a way that these provisions do not get attracted, Such a plan would work in favour
of the tax payer because it would increase his disposable resources. Such a tax plan could
be termed as ‗Purposive Tax Planning‘.
TAX HAVEN
A Tax Haven is a place where there is no tax on income or it is taxed at low rate.
Individuals or corporate entities move from jurisdiction of high rates of taxes to the region
of low tax in order to lower their overall tax liability. This has created competition amongst
various governments of the world to lure more investments from abroad. Specially small
countries are taking this opportunity to attract more investments from abroad. It is like
making ‗tax haven shopping‘ available to large multinationals. This policy of the
transnational corporate adversely affects the tax base of the country from where such
entities transfer their business.
DETERMINING FACTORS OF TAX HAVEN

The factors to be considered in taking decision whether a country is tax haven or not are:
1. Nil or Nominal tax Rate: There is no or nominal tax on income (generally or in
specified circumstances.
2. No Exchange of Information: There is no system of exchange of information with
respect to the tax regime in the tax haven country.
3. Lack of Transparency: The regime lacks transparency
4. Limited Regulatory supervision: No proper regulatory supervision and lack of
financial disclosures to the government would also categories a country as Tax Haven.
5. The Government of the country facilitates the establishment of the foreign owned
enterprises without the need for strict compliance of local laws or prohibits such entities
from having any mechanical impact on the local economy.
SECTION 91: COUNTRIES WITH WHICH NO AGREEMENT EXISTS

- If there is a country with which India does not have a DTAA,
- And the assessee (resident in India) in respect of income arising outside India,
- Pays income tax in foreign country and also in India,
- Then he shall be entitled to deduct the lower of the following amount
- From Income tax payable by him in India in respect of such doubly taxed income;

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SPECIFIED DOMESTIC TRANSACTIONS (Section 92BA)

For the purposes of this section and sections 92, 92C, 92D and 92E, "specified domestic
transaction" in case of an assessee means any of the following transactions, not being an
international transaction, namely:—
(i) deleted…
(ii) any transaction referred to in section 80A;
(iii) any transfer of goods or services referred to in sub-section (8) of section 80-IA;
(iv) any business transacted between the assessee and other person as referred to in
sub-section (10) of section 80-IA;
(v) any transaction, referred to in any other section under Chapter VI-A or section
10AA, to which provisions of sub-section (8) or sub-section (10) of section 80-IA are
applicable; or
(vi) any other transaction as may be prescribed,
and where the aggregate of such transactions entered into by the assessee in the previous
year exceeds a sum of twenty crore rupees.

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CA. AMIT TALDA

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Maximum Amount of Deduction of Interest in case of Self

Maximum Amount of Deduction of Interest in case of Self

Maximum Amount of Deduction of Interest in case of Let out

Pre-Construction Interest on Self Occupied Property/Let out

Compulsory Audit of Account of a Profession u/s 44AB if

Individual & HUF

Compulsory Maintenance of books of Account of a Specified

If total turnover or gross

For other than Heavy

Heavy Goods Vehicle

Due date of filing return of income u/s 139(1) – International

Maximum Deduction of Entertainment Allowance to a

Advance tax is payable by the Assessee under income tax act if

50% of interest received

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Standard deduction from Net Annual Value u/h House

Rs. 40,000 or the

Extra space for Self Notes:

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IMPORTANT SECTION NUMBERS

IMPORTANT FORM NUMBERS

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INCOME WHICH DO NOT FORM PART OF TOTAL INCOME (EXEMPT

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Subject to following conditions:

13B Voluntary Contributions received by Electoral Trust:

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In case of Individual (Male or Female), being Resident of India, who is of ` 5,00,000

RATE OF INCOME TAX FOR AY 2019-20:

For an Individual (Male or Female)

FIRM/LLP/Local Authority: (No Basic Exemption)

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SURCHARGE ON DIFFERENT PERSONS (TAX ON TAX) (JYADA KAMAANE KI SAZZA):

SPECIAL RATES OF TAX

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HEADS OF INCOME VIS-À-VIS METHOD OF ACCOUNTING:

Assessee may employ either Cash or Mercantile System of Accounting

Taxable during the Previous Year in which capital asset is

Assessee may employ either Cash or Mercantile System of Accounting

(ii) He is in India for 60 days or more during the relevant previous

Similarly, in case of an Individual who is a citizen of India and who

(b) In case of an Individual, who is a Citizen of India, or a person of

A person is said to be of Indian Origin if he or either of his

When an Individual is said to be resident and ordinarily

HINDU A HUF is said to be resident in India in any PY in every case except

“Control and management refers to the decisions taken regarding

When is HUF said to be resident and ordinarily resident?

(i) Karta must be resident in at least 2 out of 10 previous years

In case of a firm, the control and management is in the hands of the

COMPANY A company is said to be a resident in India in any previous year if:

Extra Space for Self Notes:

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3. In case of Non-Resident in India [Section 5(2)]

TAX INCIDENCE VS. RESIDENTIAL STATUS