Income Tax Chart Book 2024 PDF

FOR 2024 EXAMS CHART BOOK FOR INCOME TAX Graphical and tabular presentation of tax concepts for strong revision RAJAT MOGHA TAX CLASSES HELPLINE +91 96906 91957 This chartbook is prepared with utmost simplicity, str...

FOR 2024 EXAMS CHART BOOK FOR INCOME TAX Graphical and tabular presentation of tax concepts for strong revision RAJAT MOGHA TAX CLASSES HELPLINE +91 96906 91957 This chartbook is prepared with utmost simplicity, straight forward and student friendly language. This book will serve as a strong study tool in your exam preparation.  RAJAT MOGHA TAX CLASSES Chart book index This chartbook is prepared with utmost simplicity, straight forward and student friendly language. This book will serve as a strong study tool in your exam preparation. 1 2 Introduction Heads of income Salary.................... 4 Basic concepts.......... 1 House property....... 8 New tax scheme...... 2 PGBP...................... 9 Residential status.....3 Capital gains......... 14 IFOS...................... 20 3 4 Clubbing & Setoff Deductions Clubbing of income.......... 22 Sec 80C to 80 U.......... 24 Setoff of losses................ 23 5 6 TDS, TCS & Advance tax Return of income TDS.............................. 27 ROI..................... 33 TCS.............................. 31 Advance tax................. 32 CA RAJAT MOGHA - EXCLUSIVE FACULTY FOR TAXATION www.rajatmogha.com  CA Rajat Mogha Income tax - Chartbook Basic concepts Individual/HUF/AOP/BOI/artificial juridical person · - Optional Tax regime Income Tax rate Rebate under section 87A 0 to Rs. 250,000 Nil Only for resident individual having income up to Rs.5 lacs Rs. 250,001 to 5 lacs 5% Amount of rebate - Rs.500,001 to 10 lacs 20% -Rs.12,500 - More than Rs.10lacs 30% -Tax on income Whichever is lower In case the individual is resident and of the age 60 years or more then exemption limit is Rs.3,00,00 and of age 80 years or more exemption limit is Rs.5,00,000 Rate of surcharge Rate of Surcharge on dividend/ Particulars surcharge 112/111A/112A ↑ Total income is more than Rs.50 lacs but upto Rs. 1 cr 10% 10% - If total income is more than Rs. 1 cr but upto Rs.2 cr 15% 15% , If total income (excluding dividend/112/111A/112A) is more than Rs.2 cr but up to Rs.5 cr) 25% 15% - If total income (excluding dividend/112/111A/112A) is more than Rs.5 cr 37% 15% For partnership firm including LLP and local authority \ \ @° °@}@ opting – companies,\ Section Tax rate Surcharge rate irrespective of income - 115BBA 22% 10% - 115BAB 15% 10% Foreign companies · Surcharge rates Flat tax rate – 40% I If total income is more than Rs. 1 crore but up to Rs.10 cr 2% If total income is more 5% than Rs.10 cr Cases where income of the previous year will be assessed in that previous year itself - Non-resident shipping business - Person leaving India / AOP/BOI/artificial juridical person formed for a particular event or purpose Person likely to transfer property to avoid taxes Discontinued business www.rajatmogha.com 9690691957 Income tax - Chartbook CA|CMA|CS Page 1  CA Rajat Mogha Income tax - Chartbook Default tax regime for Ind/HUF/AOP/BOI/AJP – Section 115BAC - < ~ @ ° ⑫ @ Now it is a default method to pay tax (only for normal income) Please note – special income is taxable at special rates only. LTCG – 20% /111A–15% /112A–10%/casual income – 30% Income Alternative rate of tax Change of Regime - Up to Rs. 3 lakhs Nil Non PGBP - Can Rs.3 lakhs for Rs.6 lakhs 5% change every year / - Rs.6 lakhs to Rs.9 lakhs 10% DEFAULT TAX - Rs.9 lakhs to Rs.12 lakhs 15% System PGBP - Cannot Rs.12 lakhs Rs.15 lakhs 20% change once default I I More than Rs.15 lakhs 30% adopted Under default tax regime, tax rate will be same and assessee age is not relevant. Under Rebate under section 87A under default regime d regim efault tax e, Only for resident individual having income up to Rs. 7 lacs availa rebate is a ble, if lso incom t Amount of rebate e exce he margi e -Rs.25,000 nally ds -Tax on income lacs. by ₹7 Whichever is lower Rate of surcharge under default regime Rate of Surcharge on dividend/ Particulars surcharge 111A/112A/112 Total income is more than Rs.50 lacs but upto Rs. 1 cr 10% 10% - - If total income is more than Rs. 1 cr but upto Rs.2 cr 15% 15% , If total income (excluding dividend/112/111A/112A) is more than Rs.2 cr 25% 15% Deduction is not allowed while computing tax as per the new scheme & Leave travel concession House rent allowance Other official and personal allowances Only the following allowances shall be allowed Transport allowance for physically handicapped (Rs.3200) Conveyance allowance and travelling allowance for official purpose Daily allowance provided to the employee to meet his routine expenses while he is away from his normal place of duty. Daily allowance or constituency allowance of MPs and MLAs Exemption in respect of income of minor child included in the income of parent (Rs.1500 per child) Section 10AA exemption of SEZ Section 16 deduction under salary (entertainment allowance & tax on employment). Please note standard deduction is available. Section 24(b) interest on loan in respect of self occupied property (Rs.2,00,000) Additional depreciation Section 35 Contribution for scientific research – outside Section 35AD specified business deduction Section 35CCC Expenditure incurred on notified agriculture extension projects Deduction under chapter VI-A (Section 80C to 80U) Only the following deductions are allowed Section 80CCD(2), 80CCH(2) and 80JJAA www.rajatmogha.com 9690691957 Income tax - Chartbook CA|CMA|CS Page 2  CA Rajat Mogha Income tax - Chartbook Residential status & scope of total income · Residential status of individual Special provisions PY stay 182 days or more in India Indian citizen or PIO, being outside India comes to Basic conditions visit India and total income exceeds ₹15 lacs 0R (excluding foreign sources income). PY stay 60 days or more in India + PY stay 182 days or more in India Basic conditions preceding 4 years stay atleast 365 days 0R 182 days or more in these 3 cases PY stay 120 days or more in India + I Indian citizen Indian citizen Indian citizen or PIO who stays preceding 4 years stay atleast 365 days leaving India for being crew abroad but comes to visit India & employment member of total income other than foreign Ordinary resident Non ordinary resident Stay during PY is 120 outside Indian ship sources is upto ₹15 lacs. Stay during PY is days or more but less To sum up 182 days or more than 182 days. Individual becomes resident if ANY of the basic condition is satisfied. But in above 3 cases only 182 days condition will apply. Indian citizen whose total income exceeds Additional conditions to check ₹15 lacs (excluding foreign sources income*) & not liable to tax in any country or territory- ordinary or non ordinary Always deemed as not ordinary resident. Stay in India in last 7 Must be resident in 2 out - years (preceding the PY) +of 10 years(preceding *Income from foreign sources is 730 days or more. the PY). Means income which accrues or arise outside If both the above are satisfied - ordinary resident else India but it does not include income from non ordinary resident business or profession which is controlled from India Residential status of HUF If control& management is 100% outside India Residential status of firm /AOP/ BOI then non resident otherwise resident. If control& management is 100% outside India then To determine ROR or RNOR - apply additional non resident otherwise resident. conditions on Karta. Residential status of company Scope of total income The following companies are resident during PY Indian companies ROR RNOR NR Income arise or deemed Yes Yes Yes Foreign companies where POEM is in India to arise in India Income received or Yes Yes Yes Interest, Royalty, FTS income of Non-resident deemed to be received in Taxable in the following cases if received India from: Income neither arise nor Yes Yes No If controlled from India GOI received in India No Resident, used in any source in India If not controlled from India NR, used in business in India · www.rajatmogha.com 9690691957 Income tax - Chartbook CA|CMA|CS Page 3  CA Rajat Mogha Income tax - Chartbook Income under the head salary Section 15 to 17 Section15 Charging section 1 : Salary Employee and employer relationship Allowances 2 Due or receive whichever is earlier Perquisites Advance received or arrears received will Retirement benefits be taxable in the year when received - but not be taxable again Profits in lieu of salary Allowances 4 Official Personal 3 House rent allowance Least of the following - HRA full allowances allowances Actual HRA taxable y under default re Rent paid - 10% of RBS salary gime - exempt - taxable 40% RBS (50% in case of DMKC) RBS= BS + DA(forming part) + Fixed % commission on turnover Eg. Travelling, Eg. Cash, conveyance, daily, lunch, medical, 1 Children education allowance research, uniform, overtime, etc. etc. Rs. 100 pm each - Max 2 children Under optional Some personal allowances are exempt only in optional - Hostel allowance regime only regime Rs. 300 pm each - Max 2 children House rent Children Hostel Transport I Transport allowance In both the regimes allowance education allowance allowance Only for blind, deaf, dumb allowance or orthopedically Rs. 3,200 p.m. handicapped Deduction under section 16 In both the regimes Forgoing of salary Standard deduction - Max Rs.50,000 5 Taxable in the hands of employee 6 M Entertainment allowance Actual Least of the following entertainment allowance Only for government employees Under 20% of basic salary Rs. 5,000 optional regime Surrender of salary Tax on employment - cash basis only Not taxable Profit in lieu of salary 7 Compensation received - Termination or modification of employment contract Amount received on key-man insurance policy Lump-sum payment- Before joining or after cessation of job www.rajatmogha.com Income tax - Chartbook Page 4  CA Rajat Mogha Income tax - Chartbook · Rent free or Common points - accommodation. concessional accommodation Any amount recovered from employee shall be Hotel Accommodation perquisite Actual hotel charges, or 24% of RFA salary, for all employees deducted from perq. value · including government employee Government Employee Non govt. employees Non govt. employees Value of furniture = 10% (upto 15 days on transfer is exempt) Central or state House owned by employer House hired by employer p.a. of actual cost or hire charges as the case may be Accommodation to high/supreme government employee Population Perq. value Value of perq. court judges - exempt Upto 15 lacs 5% of RFA salary Actual hire charges Licence fees More than 15 upto 40 lacs 7.5% of RFA salary 10% of RFA salary RFA salary = BS+ DA(forming part)+all taxable allowances+bonus+commission, as per govt. rules More than 40 lacs 10% of RFA salary Whichever is lower etc. It does not include perquisites. Salary from all employers to be considered. If same accommodation is continued for more than 1 year, then the value of perquisite is restricted to CII. Maximum RFA = CII of the PY x RFA perquisite value of first year CII of the first PY - Accommodation provided at two places - first 90 days, one taxable (Lower) Car provided by employer 100% personal use Partly personal & official 10% p.a. of actual Expenses by Expenses by Motor cost or hire charges Employer Employee Upto 1.6 lt. cc Car + all expenses met Rs. 1,800 p.m. Rs. 600 p.m. by employer like More than 1.6 lt. cc Rs. 2,400 p.m. Rs. 900 p.m. facility driver, fuel, Note: maintenance, etc. Rs.900 p.m. is increased for driver less: Any amt Part of the month- ignore recovered from I More than 1 car provided for partly use Consider only 1 as partly used and all other as employee 100% Personal Car owned by employee 100% Personal : ded All expenses met by employer - any amount recovered r o v i from employee Car p 00% Partly used for 1 al Expenses met by employer minus 1800pm/2400pm offici not o s e is (also deduct 900 pm for driver) p pur quisite Note Higher amount can be deducted if a per specified documents are maintained. www.rajatmogha.com Income tax - Chartbook Page 5  CA Rajat Mogha Income tax - Chartbook Domestic servant Sweat equity shares Amount paid by employer FMV of the shares when the option is less any amount recovered exercised(-) amt paid by employee Taxable in the year of allotment, but exemption is Eligible start ups Gas, electricity, water, etc. Interest free or concessional loan - Loan upto Rs. 20,000 is exempt Purchase cost or production cost of employer Loan for medical treatment of specified disease is exempt ! less any amount recovered In other cases, use SBI interest rate to compute. Interest on monthly balance as reduced by interest paid by Education facility employee. Expenditure incurred by employed (-) amount recovered Food or refreshment facility Under optional regime only Exempt for children, if perquisite Meals - exempt upto Rs. 50 per meal value is upto Rs.1000 pm by reason Refreshments fully exempt of employment. - Meals provided in remote areas also exempt If institute is owned by employer cost of similar institution Gifts from employer Use of movable assets Cash gifts - fully taxable Use of laptops & computer Nil perquisite Gifts in kind - exempt if value upto Rs.5,000 Other movable assets Employer owned - 10% Under optional regime only pa. of actual cost Leave travel concession 2 LTCs can be availed in a block of 4 years Employer hired - Mode of travel Economy class airfare Only 1 LTC can be carried forward to next actual hire charges By air block, to be availed in first year By other mode Less: amount paid by employee Rail available First class rail fare ~ Max. 2 children - born after 1-10-1998 No rail - other recognised transport Deluxe fare of such mode Transfer of movable assets No rail- no recognised transport Equivalent first class rail fare Original cost (-) depreciation for completed years (-) Medical facilities amount paid by employee Treatment in India Treatment outside India For other than family Computers, mobiles, storage devices WDV @50% Govt. hospital Treatment & stay expenses upto RBI members fully taxable. limit Family - self, spouse, Cars WDV @20% Employer hospital children, dependent Specified disease in Travelling expenses exempt if & parents and dependent siblings Other assets SLM @10% approved hospital GTI upto Rs. 2 lacs Fully exempt perquisites I Telephone and computer facility I Accommodation to HC or SC judges (optional scheme) Health insurance premium Foreign perquisites & allowances Recreational facilities for employees by GOI to Indian citizen Accommodation provided at remote area at Transport facility between home & office mining site or onshore oil exploration site Education facility to employee www.rajatmogha.com Income tax - Chartbook CA|CMA|CS Page 6 CA Rajat Mogha Income tax - Chartbook Gratuity Retirement benefits CG/SG/Local authority employees Fully exempt Non government employees Covered under gratuity act Not covered under gratuity act Least of the following will be exempt Least of the following will be exempt Actual gratuity Actual gratuity : Rs.20lacs Rs.20lacs 15/26 x last drawn salary x completed · 1/2 x Avg. salary of 10 months x only completed years of services (rounded off) years of services Salary= BS + DA(forming part) Salary= BS + DA + Fixed % commission on turnover Note: Gratuity received during tenure - Fully taxable for all employees including government employees. Gratuity received again from any other employer- Reduce the limit of Rs. 20 lac from earlier exemption. Provident fund Interest on Pension employer Employer contribution Commuted contribution Statutory provident fund Fully exempt Fully exempt Government Non government employee Recognised provident fund Exempt upto 12% of salary Exempt upto 9.5% employee No gratuity With gratuity Maximum exemption Rs. 7.5 lacs interest rate Fully exempt 1/2 x (commuted 1/3 x (commuted Unrecognised provident fund Taxable only in the year when Taxable only in the year when pension/ % of pension/ % of commutation) such amount is actually such amount is actually commutation) received received Note: Uncommuted pension is fully taxable for all employees If employee contribution to SPF/RPF is more than ₹2.5 lac, then interest on such excess contribution is taxable under IFOS Leave salary Other employee Least of the following Central and state govt employee Fully exempt Voluntary retirement Actual leave encashment Least of the following will be exempt Rs. 25 lacs Leave salary received during Actual amount received on VRS 10 x average salary Rs. 5 lacs Leaves at credit x Average salary service is fully 3 x salary x completed years of service Max leaves granted = 30 taxable Last drawn salary x remaining months of service left Salary= BS +DA(forming part) + Fixed % commission on turnover Average of last 10 months immediately before the date of retirement Salary= BS+ DA( forming part) + fixed % commission on turnover Retrenchment compensation Section 17(2) (vii) Least of the following will be exempt Employer contribution in excess of Rs. 7.5 lacs Actual compensation received Rs. 5 lacs Recognised provident fund 15/26 x Average salary x completed years of service or Approved superannuation fund part thereof in excess of 6 months New pension scheme Salary= BS + All allowances, commission & perquisites Bonus & retirement benefits not to be included Section 17 (2) (viia) TP = (PC/2) x R + (PC1 +TP1) x R www.rajatmogha.com Income tax - Chartbook Page 7 CA|CMA|CS CA Rajat Mogha Income tax - Chartbook Income under the head house property Sectionw ise summar 1 Section 22 Charging section of HP · y Section 22 to 27 Sec 23 Computation of annual value : Section 23 Computation of annual value Section 24 Deductions allowed from annual value 4 Gross annual value - GAV · Actual rent received or receivable - ARR Section25 Deductions not allowed Expected rent or annual letting value Higher Section 25A Recovery of unrealised rent or arrears of rent *Expected rent Section 26 Co-ownership Municipal value : Higher Section 27 Deemed owner Fair rental value Lower 2 Sec 22 charging section Standard rent There must be a building or land appurtenant thereto Note: Assessee must be the owner(or deemed owner) 1. In case actual rent is lower than expected rent due Owner should not use it for own business or profession Computation of House property income to vacancy, then GAV = ARR otherwise GAV will be expected rent. - Gross annual value xx 2. In case of unrealised rent, then reduce unrealised rent - Less: Municipal taxes paid by owner xx from actual rent and then compare with expected rent. - Net annual value xxx 3. NAV of maximum 2 self occupied or unoccupied house Less: deductions u/s 24 can be taken as NIL for individual or HUF assessee. 3 24(a) Statutory deductions xx Interest is allowed on due basis If loan is taken for purchase or 24(b) Interest on borrowing xx : Loan taken to repay the original construction on or after 1 Apr, Income from house property xxx - loan is also allowed. Pre-construction period interest 1999 and completed within 5 years then take ₹2 lacs. is also allowed in 5 instalment. There is no limit of interest in Sec 24 Deductions - I Pre-construction period starts from the date of loan case of let out or deemed let uptil the PY prior to the year of completion of out property. 24(a) Standard 30% of NAV 5 · 24(b) Interest on borrowing property. In case self occupied property(s) the maximum : interest allowed is ₹2lacs or ₹30,000. Under optional regime only Sec 25 Deductions not allowed 6 · Interest, if payable outside India TDS is deducted then such interest is not Or allowed, unless - Agent is appointed u/s 163 7 Sec 27 Deemed ownership 19 ·::. Sec 25A Recovery of unrealised rent or arrears of rent Property is transferred to ↑ Holder of an impartible estate 70% of such recovered amount is taxable under House property in spouse or minor child (except Co-op-society member. the year of recovery. married daughter) without Person in possession of propenty adequate consideration. Lease hold right of more than 3 years. Sec 26 Co-ownership 8 · Co-owned property is self occupied Co-owned property is letout - Imp. points 1 10 Composite rent if seperable, then income from building is house property otherwise Take NAV as Nil for each co- First compute HP income as a IFOS or PGBP. owners and compute separately. single owner and then divide the Income from building used for agriculture is exempt. Deduction of interest is also income in the respective ratio of Foreign building income is taxable if received in India or in case of ordinary separately available. ownership residents Note: If ownership ratio is not ascertainable then take assessee as AOP Building with different units if used for different purposes are computed separately www.rajatmogha.com Income tax - Chartbook Page 8 CA|CMA|CS CA Rajat Mogha Income tax - Chartbook Profits & gains from business or profession Sectionwise summary Sec 28 charging section 28 Charging section I Profits from any business/profession carried during PY 29 Computation - Gifts, perquisites during course of business 30 Buildings expenses I Non competing fees 31 P&M and furniture Depreciation I Sum-received from key man insurance policy 32 33AB Tea coffee rubber CMA & CS I Inventory converted into capital assets - FMV Remuneration received by partner from partnership : 33ABA Site restoration CMA & CS 35ABB Telecom licence CMA & CS firm 35 Scientific research Export assistance 35AD Specified business I Compensation on breach of business contract 35CCA Rural development I Sum received on transfer of 35AD assets 35AC Eligible projects CMA & CS 35D 35DD Preliminary expenses Amalgamation expenses CMA & CS Sec 29 computation of PGBP xxx 35DDA VRS expenses Net profit as per P/L account 36(1) Other deductions Add: expenses debited but not allowed xx 37(1) General deductions Less: Income credited but covered under other heads/exempt (xx) 38 Proportionate deductions Add: Income not credited to P/L but covered u/s 28 or 41 xx 40(a) Exp not allowed Less: Expenses not debited to P/L but allowed u/s 30 to 37 (xx) 40(b) Partners remuneration 40A(2) Excessive payment PGBP income XXX 40A(3) Cash payment in excess of ₹10,000 40A(7) Provision for unapproved gratuity Sec 30 Expenses of business buildings 41 Deemed business income - Rent, rates, taxes, repairs & insurance of building 44AA Books of accounts - It should not be personal building 44AB Tax audit - If building is used for business & non business purpose 44AD Presumptive business income Presumptive specified profession also, allow proportionately 44ADA 44AE Goods carrying vehicles I Rates & taxes are allowed only on payment basis- sec 43B 44B 44BBA Non resident shipping business Non resident aircraft business Sec 31 repairs & insurance of P&M and furniture CMA & CS - Repairs must be revenue in nature. < If P&M or furniture is used for business as well as non business purpose, allow proportionately Only use WDV method(exception- power generation).. Sec 32 Depreciation - WDV of the block at the begn. of the year xxx - Depreciation is charged on block of assets and not on individual Add: Additions during the year xx assets. I Less: Money received on sale/disposal (xx) 7 If asset is acquired in the PY but put to use for less than 180 days, WDV at the end for charging dep XXX then half depreciation Dep for the year xx < If asset is never put to use - No depreciation. (Except passive use). Additional depreciation Under optional Half depreciation No depreciation regime only WDV of Asset not Entire block is Acquired Used for block is Nil sold/ Only on new plant & machine put to use 20% of actual cost · I less than or negative transferred Installation in factory during PY Not on vehicles 180 days 10% if used for less than 180 days I Not available, where100% Power generating unit and remaining 10% in next year - deduction is allowed in 1 year SLM method to be followed Option to choose WDV method- in very 1st year Original cost PGBP loss Terminal depreciation Written Balancing PGBP inc. u/s 41 charge Capital gains u/s 32 down value www.rajatmogha.com 9690691957 Income tax - Chartbook Page 9 CA|CMA|CS CA Rajat Mogha Income tax - Chartbook For CMA & CS students For CMA & CS students For CMA & CS students Sec 33 ABA Site restoration fund Sec 33AB TCR account Sec 35ABB Telecom license Assessee engaged in extraction or Cost of license to be amortised ! Assessee engaged in manufacturing production of mineral oil and natural tea, coffee or rubber. over the life of license. gas Amount of deduction Deduction allowed only when Amount of deduction 40% of profits license fees is paid. 20% of profits Lower A Or Lower Sale of license Or Amount deposited in TCR account Amount deposited in specified account CMA & CS Deposit within 6 months from the end PGBP loss allowed u/s 35ABB Written PGBP inc. down value u/s 41 Capital gains Sec 35ABA Spectrum fess of PY or due date of ROI, earlier. Same as 35ABB Under optional regime only Sec 35 Scientific research Sec 35AD Specified business Under optional regime only 100% deduction on capital expenditure In house research Outside research (except land, goodwill & financial instruments Must be related to business May or may not relate Date Business 1.4.2007 Cross country pipeline network- gas/petroleum 100% deduction allowed for to business 1.4.2009 Cold chain facility revenue or capital 100% allowed 1.4.2009 1.4.2010 Warehouse for agricultural produce 2* or above hotel expenditure(except land) Approved association/ 1.4.2010 Hospital 100 beds or more institutions/ National lab / IIT 1.4.2010 Housing- slum redevelopment Before commencement expenses etc. 1.4.2011 Housing- affordable Last 3 1.4.2011 Fertiliser production Capital exp - 1.4.2012 Inland container depot or customs freight station all(except land) For social science/ 1.4.2012 Bee keeping years 1.4.2012 Warehouse- sugar storage allowed Revenue exp - only statistical research or 1.4.2014 Iron ore slurry pipeline salary and material used for SR scientific research 1.4.2014 1.4.2017 Semiconductors wafer fabrication Developing or maintenance of new infrastructure facility Sale of scientific research asset Important notes 35AD Prior to commencement capex allowed, if capitalised Original cost Payment in cash not more than ₹10,000 Section 10AA or chapter VI A profit linked deduction not allowed Zero Written PGBP inc. Capital gains Asset must not be transferred before 8 years If transferred in normal business then Deemed business income = Deduction u/s 35AD - deemed depreciation down value u/s 41 Transfer of SR asset in normal business- to be added n block at nil value For CMA & CS students Sec 35D Preliminary expenses Sec 35DD Amalgamation expenses Actual prem. expenses Or Lower - Allowed in 5 instalment Allowed for companies in 5 instalments 5% of cost of project Actual prem. expenses Company assessee Lower - Allowed in 5 Or 5% of cost of project instalment Sec 35DDA VRS expenses 5% of capital employed Higher Allowed in 5 instalments www.rajatmogha.com 9690691957 Income tax - Chartbook Page 10 CA|CMA|CS  CA Rajat Mogha Income tax - Chartbook Sec 36(1) ° % / ! #nec * @\ Other deductions Sec 37(1) General deductions Insurance of stock The following conditions must be satisfied ! Insurance of livestock Not covered Must be Not a personal Must not be - Health insurance of employees & family u/s 30 to expense, must illegal i.e. revenue in - Bonus & commission- 43B 36 nature be for business prohibited by law Interest on borrowing (capitalise till the asset is put to use) Note: CSR expenses not allowed Interest on Zero Coupon Bonds (spread over life) Employer contribution to statutory or RPF - 43B Employer contribution to pension scheme -43B and also max 10% of salary (BS +DA forming Sec 37 (2B) Political party part) Any expenses for adv. in political party Bad debts (provision for doubtful debts not souvenir, hoarding etc. not allowed allowed) Provision for doubtful debts allowed only for banks(7.5%) & FIs(5%) CMA & CS Sec 38 Proportionate deduction Family planning expenses- only company assessee - Revenue and capital exp. (capex in 5 Expenses if not exclusively incurred for instalment) business/profession are allowed proportionately. Securities transaction tax STT Commodities transaction tax CTT Sec 40(a) Expenses not allowed & Interest, royalty, FTS payable outside India w/o TDS - 100% Payment to resident w/o TDS on which TDS provisions apply - 30% I Salary payable outside India w/o TDS -100% TDS must be deducted in PY & must be deposited on or before due date of ROI Income tax or provision for income tax I Tax paid by employer on non monetary perquisites Then it is assumed that TDS has been If the deductor, fails to deduct TDS, deposited on the date of such filing of however the deductee files their ROI ROI and therefore deduction is allowed and pays Tax an such income when such ROI is filed. www.rajatmogha.com 9690691957 Income tax - Chartbook CA|CMA|CS Page 11 CA Rajat Mogha Income tax - Chartbook Sec 40(b) Remuneration Sec 40A(2) Excess payment to partners Any excess or unreasonable payment to related person is disallowed Individual Relative of individual i Interest on capital is allowed to all Firm Partner or relative of partner partners as per the partnership deed,but HUF/AOP Member or their relative maximum is 12% pa simple interest Company Director or their relatives Remuneration to non-working partners is not allowed. Note: Any individual having substantial interest i.e. 20% or more ownership is related and also any RELATIVE of such individual Remuneration to working partners Relative - Spouse, siblings and lineal ascended or descendants is allowed, as per partnership deed, but maximum as following % of book profits Sec 40A(3) Cash payment Any payment made in a single day to a single party of more Book profits Maximum remuneration than ₹10,000 in cash, bearer or crossed cheque is disallowed. Up-to first ₹3 lacs ₹150,000 or 90% of Payment for transportation of goods is allowed upto or in case of loss book profits, higher ₹35,000 On balance 60% Allowed mode account payee cheque, bank draft, ECS, Debit or credit cards, UPI, e-wallet, etc. How to calculate book profits? Some exceptions Determine PGBP income w/o any interest or remuneration to partners xx Payment to banks/Govt. Less: Interest allowable to partners (xx) Purchase of agriculture or forest produce, fish, meat, poultry, Less: B/f unabsor. depn, if any (xx) horticulture, apiculture from the producer/cultivator. BOOK PROFITS XXX Purchase of products made w/o power manufacturer. Payment made in a village where there is no bank Payment to employee on retirement upto ₹50,000 How to calculate final PGBP of firm? Payment by authorised dealer for purchase of Foreign currency Book profits as computed above XX Less: Remuneration allowed to partners (xx) PGBP of the firm XXX Sec 40A(7) Provision for gratuity Provision for gratuity to only approved gratuity fund is allowed, subject to 43B Sec 43B Expenses allowed on Sec 41 Deemed business income actual payment Bad debts recovered, which were allowed earlier. Any tax, cess payable to government. Bonus or commission to employees. Cessation of any trading liability. Interest to any bank/ FIs / notified NBFCs Amount received on sale of power generating/ Payment of leave salary. scientific research, telecom licences etc. Payment to Indian railways for use of rail assets. Original cost Written agreement - As per agreement or max 45 days Payment to MSME No agreement - max 15 days PGBP loss Written PGBP inc. Capital gains down value u/s 41 Sec 43CA Real estate business Sale consideration should not be less than stamp value Actual sale price admissible it stamp value does not exceed 110% of selling price In case of prior date agreement, then take stamp value of such prior date provided some consideration is received earlier by banking mode (not in cash) www.rajatmogha.com 9690691957 Income tax - Chartbook Page 12 CA|CMA|CS  CA Rajat Mogha Income tax - Chartbook Sec 44AA Books of accounts Sec 44AB Tax audit Notified Business.. Always required professionals Existing: If gross receipts of all 3 assessee with T/O exceeds Medical, engineer, lawyers, CAs, CMAs, preceding years exceeds ₹1.5 lacs New: T/O of the PY likely to exceed cash transactions ₹1 cr in PY Assessee opting 44AD is CS, architect, interior ₹1.5 lacs decorator, film artists then prescribed accounts exceeding 5% exempt with T/O upto ₹2 cr Cash book, journal, ledger, Bills issued of more than ₹25 and Business bills received of more than ₹50 Also daily case register and inventory details in case of doctors assessee with T/O exceeds Individual/HUF Others cash transactions ₹10cr Businessman Income exceeds ₹2.5 lacs or Income exceeds ₹1.2 lacs or upto 5% T/O exceeds ₹25 lacs of any T/O exceeds ₹10 lacs of any and other of the 3 preceding years professionals of the 3 preceding years Assessee carrying Gross receipts Income likely to exceed ₹2.5 Income likely to exceed ₹1.2 lacs or T/O likely to exceed profession exceeds ₹50 lacs lacs or T/O likely to exceed ₹25 lacs of PY ₹10 lacs of PY Persons eligible for presumptive income but Persons eligible for presumptive income but declaring lower declaring lower profits are also required to get audit. profits are also required to maintain books Sec 44ADA Presumptive - Professionals Professionals as referred in 44AA where gross receipts is upto ₹50 Sec 44AD Presumptive income lacs /₹ 75 lacs if cash receipts upto 5% Presumptive income - Minimum 5o% of gross receipts Resident Individual, HUF & firm(not LLP) with T/O upto ₹2 cr/₹3 cr if cash receipt upto 5% Presumptive income - Minimum 8% of T/O (6% in case of Sec 44AE Goods carrying vehicles banking transactions) Assessee owning not more than 10 Non applicability of this section goods vehicles at anytime during PY Specified professionals covered u/s 44AA Assessee earning commission or brokerage income Heavy goods vehicles ₹1,000 per ton of gross vehicle Person carrying agency business Weight more than 12 tons weight (for every month or part of month for each vehicle) Person referred u/s 44AE - goods carrying vehicles Person claiming deduction u/s 10AA and chapter VI-A Other vehicles ₹7,500 for every month or part of profit linked deduction month for each vehicle) Agricultural income For CMA & CS students Sec 44B Non resident Shipping business Business Agriculture Amount received in India 7.5% Amount received anywhere, of journey from Indian port to any port outside India Rubber 35% 65% For CMA & CS students Coffee Sec 44BBA Non resident Grown & cured 25% 75% aircraft business Grown, cured, 40% 60% Amount received in India roasted & grounded 5% Amount received anywhere, of journey from Indian airport to any airport outside India Tea 40% 60% www.rajatmogha.com 9690691957 Income tax - Chartbook CA|CMA|CS Page 13  CA Rajat Mogha Income tax - Chartbook Capital gains Sec 45(1) Charging section 45(1) Charging section of capital gains Taxable in the 45(1A) 45(2) Insurance claim Conversion of CA into SIT Any profits or gains +Transfer +Capital assets +hands of transferor 45(5) Compulsory acquisition 46 Liquidation of companies 46A Buy back of shares Section - 2(14) Capital assets 47 Transactions not transfer 48 Computation of capital gains All assets are capital assets 49 Cost of acquisition Please note securities held by FII are also capital assets 50 Depreciable assets Except the following 50A Sale of individual assset · Stock in trade Some personal movable assets are capital assets 50B Slump sale - Personal movable assets - Jewellery/precious and semiprecious stones 50C Real estate transactions - Rural agriculture land I Paintings/drawings/sketches 50CA Consideration for unlisted shares Sculptures Gold deposit bond 50D 51 54 Consideration not determinable Forfeiture of amount Exemption in case of residential property ! Archaeological collections/any work of art Securities and Virtual digital assets 54B Exemption agriculture land 54D Compulsory acquisition of L&B industrial units 54EC 54F NHAI or RECL LTCG other than residential property Period of holding - 55(1) Cost of improvement 55(2) Cost of acquisition - It starts from the date of acquisition to 1 day before the date of transfer Reference of valuation officer 55A - If it is more than three years then long-term capital gain otherwise short-term Other sections 2(14) Capital asset I In some cases the period will be taken as one year or two year 1 2 2(47) Transfer 10(37) 112 Compulsory acquisition of agricultural land Computation of long-term capital gain One year Two years 111A Short-term capital gains on shares -Listed securities Unlisted shares - equity or 112A Long-term capital gains on shares Equity oriented units of mutual fund : Units of UTI Zero coupon bonds preference Land or building or both Market linked debentures & Specified mutual fund units - Always short term Section 48 computation of capital gain · Full value of consideration XX Notes: Less: - CII of PY2023–2024 = 348 Cost of acquisition X Asset acquired before 1 April 2001 then take CII as 100 and cost of acquisition can also Cost of improvement X be taken as FMV as on 1 April 2001 if it is higher. Expenses on transfer X In case of land or building FMV as on 1 April 2001 should not exceed stamp value as on Short-term XX 1 April 2001 In case of long-term capital asset the Any improvement before 1 April 2001 is to be ignored COA and COI will be indexed No indexation in case of bonds or debentures (except capital index bonds & SGBs) COA/COI shall not include, deduction of interest claimed u/s 24(b) or chapter VI-A CII of the year of transfer Cost of Indexed cost of acquisition= CII of the year in which the X acquisition asset was first held by assessee Also refer Manjula J. Shah case Section 45(2) conversion of capital assets into Section 45(1A) Insurance claims stock in trade Capital gains will be taxable in the year when the Capital gains will arise in the year of actual sale of stock claim is received In the year of actual sale there will be two types of gains one PGBP and other capital gains I Full value of consideration will be the amount T Full value of consideration will be the FMV as on the date of conversion of claim (if asset is in kind then take FMV) - Indexation will be done only up to the date of conversion. www.rajatmogha.com 9690691957 Income tax - Chartbook CA|CMA|CS Page 14 CA Rajat Mogha Income tax - Chartbook Section 45(5) Compulsory acquisition T of capital asset Section 46A Buyback of Shares or Specified - Capital gains will be taxable in the year when the compensation Securities is first received Buyback of specified securities Buy back of shares (listed or unlisted) Full value of consideration will be the amount of compensation Capital gain will arise in the hands Capital gain will be taxable in the hands of company at the rate of 20% plus surcharge 12% Enhanced compensation of securities holder plus cess 4% under section 115QA. In case of enhanced compensation capital gains will again arise in the year - Therefore such capital gains will be exempt in the when such enhanced compensation is received hands of shareholder under section 10(34A) Full value of consideration will be the amount of enhanced compensation received Cost of acquisition will be nil Expenses on transfer can be taken as any legal expenses Section 47 Transaction is not regarded as transfer - Interest on delayed compensation is taxable under IFOS after - Distribution of capital assets on total or partial partition of HUF 50% flat deduction I Transfer of capital asset under a gift/will/irrevocable trust If the actual compensation is reduced then the original capital - Transfer of capital asset by holding company to its 100% Indian subsidiary company or by a - gain shall be re-computed subsidiary company to its 100% Indian holding company I Transfer by issue of shares by the resulting company in the scheme of demerger - Capital gains will be exempt in case of compulsory acquisition of agricultural land (urban) by the government & Transfer of assets in the scheme of amalgamation. Transfer of shares of amalgamated company to the existing shareholders of old amalgamating Section 46 distribution of assets by company. company on liquidation Conversion of debentures/bonds into shares. Transfer of rupee denominated bonds outside India by a non-resident to another non-resident. I Capital gains will arise in the hands of shareholder as his - Redemption of sovereign gold bonds by RBI - only for individual assessee. shares are getting transferred Transfer of paintings/drawings/ sculptures or archaeological collection to national museum/ - Full value of consideration will be the market value of assets universities/government. received plus any money receiv