TAXATION – Various Concepts

CA. Vikram Vaidya

Chartered Accountant

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1. Persons Liable to pay Tax

i. Individuals

ii. Societies & charitable/religious trusts

iii. All partnership firms irrespective of their income

iv. Co-operative Societies irrespective of their income

v. Companies irrespective of their income

vi. Local Authorities irrespective of their income

vii. AOP / BOI irrespective of their income

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2. Residential Status

i. Resident in India.

a. Individual [Sec.6(1)]

b. HUF or Firm or AOP [Sec.6(2)]

c. Company [Sec.6(3)]

d. Every other person [Sec.6(4)]

ii. Non-Residents

iii. Not Ordinarily Resident

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Conditions for determining Resi status for Individuals &
HUF

R & OR : If individual satisfies any one of the following conditions

a) Presence in India for 182 days or more in relevant PY
b) Presence in India for 60 days or more in relevant PY & 365
days or more in 4 PYs imme preceding relevant PY
• And he satisfies both the additional conditions
i. Resi in India in last 2 out of 10 PYs imme preceding the
relevant PY
ii. Presence in India for at least 730 days during 7 years imme
preceding the relevant PY
R but not OR : If an individual satisfies any one of basic conditions but
does not satisfy either or none of the additional conditions
NR : If an individual satisfies none of the basic conditions
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Explanation to sec 6(1)
By virtue of explanation to sec 6(1), if a person is

1) an Indian citizen leaving India for employment outside

India or as a member of crew of an Indian ship
2) an Indian citizen or person of Indian origin coming on a
visit to India

Then in basic condition (b) read 182 days instead of 60 days.

A person is deemed to be of Indian origin, if he or either of his

parents or any of his grant parents (maternal or paternal) was
born in undivided India.

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Status of Hindu Undivided Family

 NR : if control & management of its affairs is wholly situated

outside India
 R but not OR : If control & management of its affairs is wholly or
partly situated in India & karta or manager of family is not able
to satisfy either both or one of the additional conditions
 R and OR : same as above but karta or manager of family is able
to satisfy both of the additional conditions.

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Various concepts continued…

3. Incomes liable to Tax

4. Previous Year [Sec.3]

5. Assessment Year [Sec.2(9)]

6. What Incomes are to be included in Total Income

Of Resident Person

Of Not Ordinarily Resident Person

Of Non-Resident Person

7. Instances of incomes deemed to accrue in India

8. Capital Receipts are not Taxable

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Various concepts continued…

9. Gifts/Amounts without consideration from unrelated persons to be taxable

10. Heads of Incomes [Sec.14]

i. Income from Salary [Sec.15 to 17]

ii. Income from House Property [Sec.22 to 27]

iii. Profits or Gains of Business or Profession [Sec.28 to 44AD]

iv. Capital Gains [Sec.45 to 55A]

v. Income from Other Sources [Sec.56 to 59]

10. Permissible Deductions from GTI [Sec.80CCC to 80U]

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Various concepts continued…

11. Computation of Gross Total Income

12. Set off and Carry forward

13. Total/Taxable Income

14. Agricultural Income

15. Rebates & Reliefs [Sec.86, 88, 88B, 88C, 88D, 88E & 89]

16. Permanent Account Number (PAN)

17. PAN mandatory for certain transactions

18. Tax Deduction and Collection Account Number (TIN)

19. Incomes Exempt from Tax [Sec.10] (various 104 Incomes)

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Various concepts continued…

19. 10 Year Tax Holiday for FTZ/EHTP/STP/SEZ [Sec.10A]

20. 15 Year Tax Holiday for New SEZ Units

21. 10 Year Tax Holiday for new 100% EOU [Sec.10B]

22. Tax Holiday for Exporters of Wood based Handicrafts [Sec.10BA]

23. Income Tax Return

24. Various Forms of Return

25. Self Assessment

26. One-by-Six Scheme

27. Advance Tax

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Various concepts continued…

28. Deduction of Tax at Source

29. Tax Planning & Tax Saving Schemes

30. Non-Resident Individuals & Foreign Nationals

31. H.U.F.

32. A.O.P. / B.O.I.

33. Partnership Firms

34. Companies

35. Senior Citizen

36. Estimated Income Schemes [Sec.44AD, 44AE & 44AF]

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Various concepts continued…

37. Clubbing of income

38. Assessment

39. Income Tax Rates

i. For Individuals, HUF, AOP, BOI

ii. For Partnership Firms, Companies, Foreign Companies

iii. For Co-operative Societies

iv. For Local Authorities

40. Depreciation Rates

41. Calendar of Income Tax Obligations

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Deductions from Gross Total Income (Ch.VI A)

80C : Dedn in respect of payment of LIP, PPF, contri to PF, subn to Infrastructure

Bonds, Accrued Int on NSCs, payment of tuition fees of 2 children,

purchase or constrn of HP, repayment of principal amt of Housing Loan,

Units of any Mutual Fund, Term Deposit of at least 5 years, Investment in

NABARD Rural Bonds, Deposit in SCSS, etc.

100% of amt contributed or invested (if out of income chargeable to tax)

sub to max of Rs.1,00,000.

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Deductions from Gross Total Income (Ch.VI A) contd . . .

80CCC : Dedn in respect of payment towards an annuity plan of LIC or

any other insurer for receiving pension from the fund

Amount of Deduction : Maximum Rs.1,00,000

But aggregate of deduction u/s.80C, 80CCC & 80CCD cannot

exceed Rs.1,00,000.

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Deductions from Gross Total Income (Ch.VI A) contd . . .

80CCD : Dedn in respect of contri to pension fund of the Central Govt.

Amt deductible is subject to 10% of salaries for employee’s contri

and for employer’s contri, 1st it is included in salary income & then
dedn is provided subject to 10% of salary (Sal = Basic + DA)

But aggregate of deduction u/s.80C, 80CCC & 80CCD cannot

exceed Rs.1,00,000.

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Deductions from Gross Total Income (Ch.VI A) contd . . .

80D : Dedn in respect Medical Insurance Premium paid by any mode except
cash known as MEDICLAIM

Amt deductible is amt deposited or Rs.15,000 whichever is lower.

If prem is paid on account of insu on the health of senior citizen the amt
deductible is amt deposited or Rs.20,000 whichever is lower. (senior
citizen means an individual who has completed 65 years of age in the
previous year)

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Deductions from Gross Total Income (Ch.VI A) contd . . .

80DD : Dedn in respect exp incurred in respect of maintenance and / or

medical treatment of dependent.

Amt deductible is a fixed deduction of Rs.50,000.

If dependent is suffering from a disability over 80% then amt

deductible is a fixed deduction of Rs.75,000.

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Deductions from Gross Total Income (Ch.VI A) contd . . .

80DDB : Dedn in respect exp incurred in respect of medical treatment of specified

diseases of dependent.

Amt deductible is a Rs.40,000 or the exp actually incurred, whichever is

lower.

If exp incurred on account of medical treatment of senior citizen, the amt

deductible is a Rs.60,000 or the exp actually incurred, whichever is lower.

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Deductions from Gross Total Income (Ch.VI A) contd . . .

80E : Dedn in respect of repayment of Interest on Loan taken by an individual for his higher
education or relative’s higher education. (Repayment of loan or interest for higher education
of child was not deductible upto A.Y.2007-08)

Amt deductible is entire payment of interest on such loan. Deduction is available for max of 8
years or until the interest on such loan is paid in full. First year in which deduction is
available is the year in which tax payer starts paying interest on loan taken for higher
education.

It may be noted that dedn is not available for repayment of principal loan amt from AY 2006-
07

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