Contents About the Author I-5 Forward I-7 Preface I-9 Chapter-Heads I-11 u Amendments made by Finance (No.2) Act, 2014, at a Glance I-23 u GENERAL REFERENCER A. Taxation Rates 1 A.1. Individuals/HUF/AOP/BOI 1 A.2. Firm 2 A.3. Domestic Company 2 A.4. Limited Liability Partnership (w.e.f. AY 2010-11) 2 A.5. Short Term Capital Gains 2 A.6. Long Term Capital Gains 3 A.7. Other Tax Rates without Basic Exemption 3 A.8. Foreign Company 4 A.9. Cooperative Society 4 A.10. Tax on Distribution of Dividend/Distributed Income for Buy 5 Back Shares and Distribution by Securitization Trust u/ss 115-O, 115QA and 115TA A.11. Tax on Income Distributed by UTI/Mutual Funds u/s 115R 5 B. Gold and Silver Rates for last 15 Years 5 C. Tax Saving Scheme At A Glance 6 D. Accrued Interest on NSC 9 D.1. Interest Accrued on National Saving Certificates (VIIIth Issue) 9 D.2. Interest Accrued on National Saving Certificates (IXth Issue) 9 E. Accrued Interest on KVP 10 I-13
contents I-14 F. Rates of Depreciation under Income Tax Act & Companies Act 10 G. Statutory Time Limits Prescribed Under Income Tax Act 26 H. Important Forms & Challans Under Income Tax Act 30 H.1. Income Tax Return Forms 30 H.2. Tax Payment Challans 32 H.3. Charitable & Religious Trusts Forms 33 H.4. Other Forms 33 I. Monthly Tax Compliance Calendar 33 CHAPTER 1 Basic concepts 1.01 Assessee - Sec. 2(7) 37 1.02 Persons liable to pay Income Tax 37 1.03 Assessment Year - Sec. 2(9) / Previous Year - Sec. 3 38 1.04 Income -Sec. 2(24) 38 1.05 Income liable to Tax - Sec. 5 38 1.06 Income not liable to Tax - Sec. 5 39 1.07 Residential Status for Tax purpose - Sec. 6 39 CHAPTER 2 Salaries 2.01 Chargeability u/s 17(1) 44 2.02 Taxability of Different Components of Salary 45 2.03 Taxability of Important Allowances 50 2.04 Perquisites & Valuation thereof 54 2.05 Deductions from Salaries (Sec. 16) 67 2.06 Relief u/s. 89 for Arrear/Advance of Salary 67 2.07 Computation of Income under the head Salaries & Tax Payable 68 Thereon CHAPTER 3 Income from House Property 3.01 Chargeability u/s 22 69 3.02 Annual value [Sec. 23(1)(a)] 70
I-15 contents 3.03 Deductions 71 3.04 Computation of House Property 72 3.05 Income from Self Occupied House Property 76 3.06 Specific Tax Provisions Under Income from House Property 78 CHAPTER 4 Profits and Gains from Business or Profession 4.01 Chargeability u/s 28 80 4.02 Business or Profession 82 4.03 Deductions u/ss 30 to 37 82 4.04 Expenses/Payments not allowable u/ss 40, 40A and 43B 102 4.05 Partner s Remuneration u/s 40(b) 109 4.06 Presumptive Taxation u/ss 44AD & 44AE 110 4.07 Minimum Alternate Tax 110 4.08 Alternate Minimum Tax 112 4.09 Transfer Pricing 112 4.10 Method of Accounting (Sec. 145) 116 4.11 Accounting Standards as per Income Tax Act [Sec.145(2)] 116 4.12 Maintenance of Books of Account 118 4.13 Compulsory Audit of Accounts (Sec. 44AB) 119 4.14 Restrictions on Cash Payments (Sec. 40A) 120 4.15 Computation of Income under the head Profits and Gains of 120 Business or Profession CHAPTER 5 Capital Gains 5.01 Chargeability of Capital Gains/Capital Assets 121 5.02 Transfer 123 5.03 Full Value of Consideration 129 5.04 Cost of Acquisition, Cost to Previous Owner & Cost of Improvement 130 5.05 Types of Capital Assets & Capital Gains 134 5.06 Rates of Capital Gain Tax 136 5.07 Deduction/Exemption under Capital Gain 140
contents I-16 5.08 Indexed Cost of Acquisition/Improvement and Cost Inflation Index 143 5.09 Computation of Capital Gain 147 5.10 Reference to Valuation Officer (Sec. 55A) 148 CHAPTER 6 Income from Other Sources 6.01 Chargeability (Sec. 56) 150 6.02 Expenses Deductible (Sec. 57) 152 6.03 Expenses Not Deductible (Sec. 58) 153 6.04 Method of Accounting (Sec. 145) 153 6.05 Relief on Arrears of Family Pension [Sec. 89(1)] 153 6.06 Gifts/ Deemed Gifts [Sec. 56(2)(vii)] 153 6.07 List of Relatives [Sec. 56(2)(vii)] 157 6.08 Tax Provisions of Certain Specific Receipts under the head Income From Other Sources 158 CHAPTER 7 Carry Forward & Set off of Losses 7.01 General 159 7.02 Set Off of Losses within the same head of Income 159 7.03 Set Off of Losses against other heads of Income 160 7.04 Carry Forward of Losses 161 7.05 Capital Loss - Set off and Carry Forward 161 7.06 Losses from House Property - Set off and Carry Forward 161 7.07 Business Losses - Set off and Carry Forward 161 7.08 Loss from Other Sources - Set off and Carry Forward 162 7.09 Loss from Partnership Firm- Set off and Carry Forward 162 7.10 Order of Preferences for Set off & Carry Forward of Losses 163 7.11 Set off and Carry Forward Rules a Gist 163 CHAPTER 8 Clubbing Provisions 8.01 Transfer of Income without transfer of Assets 164
I-17 contents 8.02 Revocable transfer of Assets 164 8.03 Income arising to Spouse 165 8.04 Income arising to Minor Child 165 8.05 Income arising to Son s Wife 166 8.06 Income arising from Assets transfer to HUF Property 166 CHAPTER 9 Exempt Income u/s 10 9.01 Salaries 167 9.02 House Property 171 9.03 Business or Profession 171 9.04 Capital Gain 173 9.05 Other Sources 174 9.06 General 177 CHAPTER 10 Deductions under CHAPTER VIA u Deductions under Chapter VIA 185 CHAPTER 11 Rebate from Income Tax Liability u Rebate from Income Tax Liability 197 CHAPTER 12 Restrictions on Acceptance/Repayment of Loans & Deposits/Cash Credits/Unexplained Investment & Expenditure etc. u Restrictions on Acceptance/Repayment of Loans & Deposits/Cash Credits/Unexplained Investment & Expenditure etc. 198 CHAPTER 13 Taxation of Agricultural Income u Taxation of Agricultural Income 201 u Partial Integration of Taxes 203
contents I-18 CHAPTER 14 Taxation of NRI s u Taxation of NRI s 205 CHAPTER 15 Taxation of Foreign National s u Taxation of Foreign National s 211 CHAPTER 16 Taxation of HUF s u Taxation of HUF s 213 CHAPTER 17 COMPUTATION OF TAXABLE INCOME & TAX LIABILITY of individual 17.01 Steps for Computation of Taxable Income 217 17.02 Rounding off of Taxable Income 218 17.03 Steps for Computation of Tax liability 218 17.04 Rounding off of Tax 219 CHAPTER 18 Taxation of Firm s u Taxation of Firm s 220 CHAPTER 19 Taxation of LLP s u Limited Liability Partnership 229 CHAPTER 20 Taxation of AOP s/boi s u Taxation of AOP s/boi s 231
I-19 contents CHAPTER 21 Taxation of Companies u Taxation of Companies 234 CHAPTER 22 Taxation of Trust s/charitable Societies u Taxation of Trust s/charitable Societies 242 CHAPTER 23 Taxation of Co-Operative Societies u Taxation of Co-Operative Societies 246 CHAPTER 24 Taxation of Senior Citizens & Very Senior Citizens u Taxation of Senior Citizens & Very Senior Citizens 248 CHAPTER 25 Presumptive Taxation u/ss 44AD & 44AE u Presumptive Taxation u/ss 44AD & 44AE 249 CHAPTER 26 Permanent Account Number (PAN) 26.01 Permanent Account Number 251 26.02 Persons Liable to obtain PAN 252 26.03 PAN Application Forms and its Procedure 253 26.04 Documents to be Attached with PAN Application form alongwith formats of certificates 254 26.05 Surrender of Extra PAN 260 26.06 Penalties in respect of PAN 260 26.07 Declarations (if not holding PAN) 261
contents I-20 CHAPTER 27 Advance Tax u Advance Tax 262 CHAPTER 28 FILING OF RETURNS 28.01 Persons liable to file I Tax Return 263 28.02 Forms for Filing ITR 265 28.03 Different Modes of Filing ITR 266 28.04 Due Date of Filing of Return 267 28.05 Documents for ITR 267 28.06 Return of Loss 268 28.07 Belated Returns 268 28.08 Revised Return 268 28.09 Defective Returns Sec. 139(9) 268 28.10 Penalty/Prosecution for Non-Filing/Late Filing of Return 268 CHAPTER 29 INTEREST & PENALTIEs 29.01 Interest on Income Tax (Payable by the Assessee) 270 29.02 Interest on Income Tax (Receivable by the Assessee) u/s 244A 270 29.03 Penalties 271 CHAPTER 30 Assessment 30.01 Self Assessment u/s 140A 276 30.02 Assessment u/s 143(1) 276 30.03 Scrutiny/Regular Assessment u/s 143(2)/143(3) 277 30.04 Additions Normally made in Scrutiny Assessments 279 30.05 Best Judgment Assessment u/s 144 281 30.06 Re-assessment u/ss 147 to 151 282 30.07 Time limit for Completion of Assessment/Re-assessment u/s 153 282 30.08 De-novo Assessment on Demand u/s 153(2A) 283
I-21 contents 30.09 Rectification of Mistakes u/s 154 284 30.10 Rectification for allowing credit for TDS/TCS u/s 155(14) 284 CHAPTER 31 TAX DEDUCTION AT SOURCE (TDS) 31.01 TDS Provisions at a Glance 285 31.02 TCS Provisions at a Glance 287 31.03 Persons Liable to Deduct TDS 288 31.04 Payments on which TDS is to be Deducted 289 31.05 Circumstances where TDS is not Deductible 291 31.06 Tax Deduction & Collection Account Number (Sec. 203A) 292 31.07 TDS Provisions on Various Payments 292 31.08 TDS on Payments made in Foreign Currency to Non- Residents 298 31.09 Certificate of NIL/Lower Rate of Tax from Assessing Officer (Sec. 197) 300 31.10 General Provisions of Deduction of Tax at Source 301 31.11 General Provisions of Collection of Tax at Source 302 31.12 TDS/TCS Returns 303 31.13 Penal Provisions 305 CHAPTER 32 TAX AUDIT 32.01 Limits for Compulsory Tax Audit u/s 44AB 307 32.02 Tax Audit Chart (Clause by Clause) 307 32.03 Ceiling on Tax Audit Assignments 328 CHAPTER 33 Other Laws 33.01 Security Transaction Tax 329 33.02 Tonnage Tax 331 CHAPTER 34 Wealth tax 34.01 Applicability 333 34.02 Persons Liable to Wealth Tax 333
contents I-22 34.03 Persons Exempt from Wealth Tax 333 34.04 Assets Defined [Sec. 2(ea)] 333 34.05 Deemed Assets (Sec. 4) 335 34.06 Exclusions & Exemptions 336 34.07 Net Wealth 338 34.08 Rates of Wealth Tax (Sec. 3) 338 34.09 Valuation of Assets 338 34.10 Computation of Net Wealth 341 34.11 Wealth Tax Return 341 34.12 Interest or Penalties 342 CHAPTER 35 ELECTRONIC FILING 35.01 E-Payment of Direct Taxes (Income Tax/Advance Tax) 343 35.02 Registration of Digital Signatures at Income Tax 344 35.03 E-Filing of Income Tax Returns 344 35.04 E-Filing of Rectification u/s 154 345 35.05 Registration of Digital Signatures at Traces 345 35.06 E-Filing of Original TDS Returns 346 35.07 Downloading of TDS Certificate/Conso File via TRACES 349 35.08 E-Filing of Correction Statements of TDS 351 35.09 Online TDS Correction 351 35.10 Registration of Chartered Accountants for Uploading Tax Audit Reports/MAT Certification 353 35.11 E-Filing of TAX Audit Report/Other Reports 353 35.12 Types of Reports/Notices to be Filed Electronically 355 35.13 Passwords under various E-Filing Applications 356