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TAXATION

TAXATION. Syllabus. Structure & Scope of Income Tax Act Definitions Agricultural Income Assessees Assessment Year, Previous Year Income Capital & Revenue Expenditure Person Residence Person Company Dividend Total Income. Heads of Income. Salaries Income from House Property

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TAXATION

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  1. TAXATION

  2. Syllabus • Structure & Scope of Income Tax Act • Definitions • Agricultural Income • Assessees • Assessment Year, Previous Year • Income • Capital & Revenue Expenditure • Person • Residence • Person • Company • Dividend • Total Income

  3. Heads of Income • Salaries • Income from House Property • Profit & Gains of Business • Capital Gains • Income from Other Sources

  4. Syllabus ( cont.) • Rebates and Reliefs • Treatment of losses • Computation of Total Income and determination of Tax Liability

  5. Definitions Assessment Year (A.Y.)means a period of 12 months starting from April 1 of every year and ending on March 31 of the next year. An Assessment year is the financial year immediately succeeding the relevant previous year E.g.Current Assessment year is 2009-2010 which started on April 1,2009 and will end on March 31 2010 Concept Check : Accounting year v/s AY

  6. Previous Year (P.Y.) • Section 3 defines Previous Year as the financial year • immediately preceeding the assessment year ie. the year income is earned • Current Financial year is from April 1st 2009 till March 31, 2010. • In case of newly setup business ,Financial year starts on the day the business is setup and ends on March 31 of the next year. • In case a business is closed, Fin. Year is ……………?

  7. Previous Year eg. (Cont.) • Income earned in 2007-08 ie. April 1,2007 till March 2008 , • is taxable in the following A.Y. 2008-09 at the rates applicable for the • A.Y. 2008-09. • Income earned in 2008-09 ie. April 1,2008 till March 2009 , • is taxable in the following A.Y. 2009-10 at the rates applicable for the • A.Y. 2009-10.

  8. Exceptions to taxability of PY income in AY • Income of non resident from shipping • Permanently leaving india • Short duration bodies • Alienate assets • Discontinued business

  9. Person • According to Section 2(31) , the term person includes • An individual • A Hindu Undivided Family • A company • A firm • An association of persons whether incorporated or not • Local authority --means a municipal committee, district board, • body of port commissioners, or other authority legally entitled to • or entrusted by the government with the control and management • of a municipal or local fund. • f) Every artificial juridicial person not falling within any of the • preceding categories.

  10. Assessee • AssesseeIncome Tax Act 1961 (Act no. 43) defines 'assessee' as a person by whom any tax or any other sum of money is payable under this Act • proceedings under the act • even for refund • deemed assessee • assessee in default

  11. Gross Total Income • According to section 14 ,income of a person is computed • under the following five heads: • Salaries • Income from House Property • Profit & Gains of Business • Capital Gains • Income from Other Sources • The aggregate of income • under each head is known as 'Gross Total Income'

  12. Total Income Total Income of an assessee is the gross total Income received under the five heads of income as reduced by the amount deductible Under Sections 80CCC to 80U. Example: Salary 5,00,000 Income from House Property 40,000 Income from Business 0 Capital Gains 80,000 Income from Other Sources 20,000 Gross Total Income 6,40,000 Less Deduction under section 88 1,00,000 Total Income5,40,000

  13. Status Indian Income Foreign Income Resident and ordinarily resident Taxable Taxable Resident but not ordinarily resident Taxable Not Taxable Non-Resident Taxable Not Taxable

  14. CompanySection 2(17) of the act defines company. The term company includes: any Indian company any corporate incorporated by or under the laws of country outside India any institution, association or body which is or was assessable or was assessed as a company for any assessment year under the 1922 Act or under the 1961 act any institution, association or body, whether incorporated or not and whether Indian or non Indian, which is declared by general or special order of the board to be a company only for such assessment year or assessment years

  15. Timing issues wrt law applicable • For computing income • For other purposes

  16. Income—now whats that? • Cash—Kind? • Illegal • Disputed • Reimbursement • Diversion by overriding title v/s application • Surplus of mutual activity • Temp/perm • Real,not fictional • Dharmada,pathshala,gaushala collection • Lump sum • Double taxation-strict nono • Pin money

  17. Other issues • Agricultural income • Exemption v/s deduction • Capital v/s revenue receipts • Subsidies • Method of accounting • Business income • Others

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