1. Basic of Income tax and Computation of Tax Liabiliy

  1. Basic
    1. Income Definition
      1. Conversion of Stock in trade into Capital asset – Income u/H PGBP
      1. Compensation on termination of employment or  modification of terms of employment – Income u/H Other sources
  • Section 139A ( Application of PAN)
    •  Every person (not being an individual) which enters into a financial transaction of an amount aggregating to Rs. 2,50,000 or more in a financial year shall be required to apply to the Assessing Officer for allotment of PAN.
    •  The managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer or any person competent to act on behalf of such entities shall also apply to the Assessing Officer for allotment of PAN.
  • Tax Deducted at source
    • Sec 193 – Intt on securities
      • 7.75% GOT Saving Taxable Bonds, 2018
        • Limit –Intt amount Exceed to Rs. 10000/-
    • Section 194A – Intt other than intt on securities
      • Limit of Exceeding Rs. 10000 increased to Rs. 50000 in case of senior citizen only
  • Computation of Income
    • Health and Education Cess @4% instead of education Cess @ 3%
    • LTCG on Equity Taxable @ 10% if It Exceed Rs. 1 Lacs
    • DDT rate U/s 2(22)(e): – 30% without grossing up +12% surcharge+ 4% health and education cess – (34.944%) same is exempt in the hand of shareholder
    • Mutual fund income distribution rate @ 10% basic rate + 12% surcharge+ 4% health and education cess – (12.9422%)

2. Income under Various Head

  1. Salary
    1. Standard Deduction of Rs. 40000/-
    1. Withdrawal of Transport allowance @ 1600 p.m. and medical allowance Rs. 15000/-
    1. Transport allowance still for differently abled person @ 3200 p.m
  • Profit and gain from Business and profession
    • Sec 28 Charging Section
      • Compensation received for modification/termination of business contract
      • Conversion of inventory into capital asset
      • Section 43 Actual Cost = FMV on the date of conversion
    • Share Market Transaction
      • Sec 36 (1):- deduction in respect of any marked to market loss (or other expected loss) shall be allowed. However, deduction is available only if such loss is computed in accordance with ICDS.
      • Sec 40A :-  no deduction or allowance shall be allowed in respect of any marked to market loss or other expected loss except as allowable under section 36(1)(xviii).
  • Capital Gain
    • Stock in trade converted into Capital Asset
      • Section 49 Cost of Acq = Section 43 Actual Cost = FMV on the date of conversion
      • Section 2(42A ) Period of holding =starts from Date of conversion
  • Section 43CA : Stamp duty is more than the consideration becomes Income of the seller
    • Amendment : If difference is of 5% than such provision will not apply
  • Section 44AE : Earlier of Rs. 7500 p.m.(or part) per truck (irrespective of tonnage capacity)
    • Amendment :
      • Heavy vehicle (gross vehicle weight which exceed 12000kg)  – Rs. 1000 per ton of gross vehicle weight for every month or part or amount actually claimed whichever is higher
      • Other than heavy vehicle – Rs. 7500 per month (part of the month) per truck   or amount actually claimed whichever is higher
    • Section 54 EC
      • Available :- LTCG from Property including land
      • Time Span : – Lock in Period raised to 5 years earlier 3 years
  • Income from Other Sources
    • Sec 56(2)(X)
      • Income from other sources – Property purchase at less than stamp duty value
        • Difference up to 5% is not considered as income instead of Rs. 50000 earlier
        • Same Transaction between holding and 100% subsidiary not covered under this section
  • Deduction
    • 80TTA : Exclusion of Senior citizen
    • 80TTB :
      •  Deduction : Rs. 50000/-
      • To whom : Senior citizen
      • From which type of Intt income :  Income of Intt from Banks /cooperative bank/Post office bank ( S/b Intt + FD + RD)
    • 80DDB : Medical Expense for specific illness increase to Rs. 100000 for both category instead of Rs. 60000/- (senior) or Rs. 80000(very Senior)
    • 80JJAA : New Employment generation
      • Period of 240 days is reduced to 150 days for business of apparel footwear or leather products
      • When in one period employment is for less than 240 days than the same employee is eligible for deduction in next period
    • 80D : Medical insurance for Parents 
    • Limit raised to Rs. 50000 instead of Rs. 30000/-

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