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INCOME TAX LAW AND ACCOUNTS - I

INCOME TAX LAW AND ACCOUNTS - I. SUNIL CHANDRAN.S Assistant Professor Department of Commerce NSS College Pandalam. INCOME TAX. Points to be covered under Income tax Income tax Brief history of income tax in India Features of tax Objectives of taxation Direct and Indirect tax

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INCOME TAX LAW AND ACCOUNTS - I

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  1. INCOME TAX LAW AND ACCOUNTS - I SUNIL CHANDRAN.S Assistant Professor Department of Commerce NSS College Pandalam

  2. INCOME TAX • Points to be covered under Income tax • Income tax • Brief history of income tax in India • Features of tax • Objectives of taxation • Direct and Indirect tax • Gross Total Income • Total Income

  3. Points to be covered contd… • Person • Association of Persons • Body of Individuals • Assessee • Deemed assessee • Assessee in default • Assessment year • Previous year • Average rate of tax • Surchage and Education cess • Rates of tax

  4. Residential status Residential status are divided into 3 types • Resident and Ordinarily resident • Not ordinarily resident • Non resident For determining the residential status there are two conditions • Basic conditions • Additional conditions Basic conditions: • The assessee is in India during the previous year for a period of 182 days or more • The assessee is in India during the previous year for a period of 60 days or more and has been in India for a period of 365 days or more during the 4 years preceding the previous year.

  5. Additional conditions: • The assessee has been resident in India in atleast 2 out of 10 years preceding the P/yr and • The assessee has been in India for a period of 730 days or more during the 7 years preceding the previous year. Residential status Resident and Ordinarily resident : Assessee satisfying any one of the Basic condition and both the additional conditions. Not ordinarily resident: Assessee satisfying any one of the basic conditions but not satisfying both the additional conditions. Non Resident: Assessee satisfying none of the basic conditions.

  6. Transferred balance: When URPF gets recognised, balance standing in the credit of the employee’s URPF will be transferred to his RPF called Transferred balance. Annual accretion: Employer’s contribution to employee’s PF in excess of 12% of employees salary and interest allowed by employer on the balance of employee’s PF above 9.5%

  7. Incomes exempt from tax • Agricultural income • Receipt by a member from HUF • Gratuity: • Govt. employees- exempted • Employees covered under Payment of Gratuity Act 1972. • Employees not covered under Payment of Gratuity Act 1972. • Pension • Commutation of pension

  8. Encashment of earned leave • Retrenchment Compensation • House rent allowance: Least is exempted to the following Amount of HRA received Rent paid over 10% of salary 50% or 40% of salary

  9. Income from salary • Definition of salary • Perquisites -Tax free perquisites -Perquisites taxable in case of all employees -Perquisites taxable in the case of specified category of employees. Valuation of Perquisites: Residential accommodation • Govt. employees • Other employees a. Accommodation owned by the employer b. Accommodation taken on lease or rent by the employer

  10. Sweeper, Gardener, Watchman and Personal assistant. • Gas, electricity and water • Education facility in the institution of the employer. • Interest free or Concessional loan • Use of Movable asset • Transfer of movable asset

  11. Motor car: • Car owned by employer and running expenses met by employer. • Car owned by employer and running expenses met by employee. • Car owned by employee. • Recognized Provident Fund • Taxable allowances • Partially taxable allowances Fully exempted allowances • Deductions from Salary income • Entertainment allowance • Professional tax

  12. Income from House Property • Definition of House property • Income from house property- exempt from tax • Computation of Annual value of let out property • Computation of Gross annual value • Terms : • Standard rent • Actual rent • Municipal value • Fair rental value • Vacancy allowance • Municipal tax

  13. Profits and Gains from Business or Profession Meanings of : • Business • Profession Computation of Income from Business or Profession: Net profit as per P/L account Add - Disallowed expenses debited to P/L Less - Incomes credited to P/L but not chargeable under this head Depreciaiton Block of assets Rate of depreciation for each assets Special deductions from business income Practical problems

  14. THANK YOU

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