Transcript www.indiantaxupdates.com

10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Taxmann’s
TAX PAYERS’ PRESENTATION
RETURN OF INCOME
[ITR - 2]
By
Dr. Vinod K.
Singhania
Form ITR - 2
INDIAN INCOME TAX
RETURN[For Individuals and
HUFs not having Income from
Business or Profession]
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Guidelines for filing out parts
and schedules
General
All items must be filled in the manner indicated therein;
otherwise the return maybe liable to be held defective or even
invalid.
If any schedule is not applicable score across as “---NA---”.
If any item is inapplicable, write “NA” against that item.
Write “Nil” to denote nil figures.
Except as provided in the form, for a negative figure/ figure of
loss, write “-” before such figure.
All figures should be rounded off to the nearest one rupee.
However, the figures for total income/ loss and tax payable be
10 February
2009
©Taxmann/Dr.
Vinod multiple
K. Singhania of ten rupees.
finally
rounded
off to the
nearest
•
•
•
•
•
•
Guidelines for filing out parts
and schedules
Sequence for filling out parts and schedules
You are advised to follow the following sequence while
filling out the form:
Part A: General on page 1
• Schedules
Part B-TI and Part B-TTI
• Verification
• Details relating to TRP and counter signature of TRP if
return is prepared by him.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Personal information
Write first
name
Write middle
name (If no
middle name
leave blank
10 February 2009
Write
surname
Write 10 digit PAN, please
ensure that first five letters
of PAN are alpha and next
four letters are numeric and
the last one is alpha. For,
e.g., – AMUPK0123N
©Taxmann/Dr. Vinod K. Singhania
Personal information
Write Flat/Door/
Block No.
Write Road/
Street/ Post
Office
10 February 2009
Write Premises/
Building/ Village
Write Town/
City/ District
Write State
name
©Taxmann/Dr. Vinod K. Singhania
Write Area/
Locality
Write 6 digit
PIN Code
Personal information
Write Gender
Optional
10 February 2009
Write Date of
Birth
Optional
Tick on applicable status if
individual tick on Individual
otherwise on HUF
Write Employer
Category
©Taxmann/Dr. Vinod K. Singhania
Filing Status
Write Ward/
Circle
Description
Code
Voluntarily before the due date
Voluntarily after the due date
In response to notice under section 142(1)
11
12
13
In response to notice under section 148
In response to notice under section 153A
14
15
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Filing Status
If it is not revised
return tick on
original.
Tick the residential status. A person
is resident if he is in India in the
previous year for 182 days or more.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
••
Total Income
•
It can be taken from Form No. 16 given by the employer.
Alternatively
Salary
it can be calculated as –
XXX
Allowances
XXX
Perquisites
XXX
Gross salary
XXX
Less : Deduction under section 16
Standard deduction [Sec. 16(i)]
Nil
Entertainment allowance deduction [Sec. 16(ii)]
XXX
Professional tax [Sec. 16(iii)]
XXX
Income under the head “Salaries”
XXX
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Total Income
Take from Schedule HP.
Enter nil if it is negative
Short-term capital gain if
securities transaction tax
is paid
Any other short-term
capital gain
Long-term capital gain
take from Schedule CG
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©Taxmann/Dr. Vinod K. Singhania
Total Income
Income from owning
and maintaining race
horses
Income from other sources
not being from owning and
maintaining race horses
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©Taxmann/Dr. Vinod K. Singhania
Total Income
Take from Schedule CYLA
(Details of income after set
off of current year loss)
Take from
Schedule VIA
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©Taxmann/Dr. Vinod K. Singhania
Take from
Schedule BFLA
(Details of income
after set off of
brought forward
losses of earlier
years)
Total Income
Take from Schedule
EI (Details of
Exempt Income)
Take from Schedule CFL
(Details of Losses to be
carried forward to future
years)
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©Taxmann/Dr. Vinod K. Singhania
Computation of tax liability
Calculate tax on total income other than income chargeable at
special rates
Resident woman
(> 65 years of age)
0 – 1,80,000
1,80,001 – 3,00,000
3,00,000-5,00,000
Above 5,00,000
10 February 2009
Resident senior citizen
Any other
0 – 1,95,000
2,25,001 – 3,00,000
3,00,000-5,00,000
Above 5,00,000
0 – 1,10,000
Slab rate
Nil
1,50,001 – 3,00,000
10%
3,00,000-5,00,000
20%
Above 5,00,000
©Taxmann/Dr. Vinod K. Singhania
30%
Computation of tax liability
Surcharge is applicable only if
total income exceeds Rs. 10
Lakh. Rate of surcharge is 10
per cent of income-tax.
Education cess is 2 per cent and
SHEC is 1% of Income-tax and
surcharge.
Double Taxation
Relief – Where no
agreement exists.
10 February 2009
Relief in respect
of income which
Available if arrears
is taxable in
of salary/gratuity,
India as well as
etc. are received.
©Taxmann/Dr.
outside
India.Vinod K. Singhania
Computation of tax liability
Simple interest is levied when return is furnished after due date or no return
has been furnished @ 1% per month or part of the month (even part of month
will be taken as full month).
Interest will be calculated as –
1% per month or part of month of amount of tax [as determined on the regular
assessment and assessment u/s 143(1)] – Advance tax – Tax deducted/Tax
collected
at source
– Relief ©Taxmann/Dr.
u/s 90, 90AVinod
andK.91.
10 February
2009
Singhania
Computation of tax liability
When interest is
payable
Amount on
Rate of
Period for which interest is
which interest
interest
payable
is payable
When assessee
On assessed
Simple
From April 1 of the AY to the date
who is liable to pay tax*
interest @ 1% of determination of total income
advance tax, has
for every
u/s 143(1) or where regular
failed to pay such
month or part assessment is made to the date of
tax
of month
such regular assessment
When advance tax Assessed tax* - do - do paid but it is less
– Advance tax
than 90% of
assessed tax
*Assessed tax means tax on total income on the basis of regular assessment or assessment
u/s 143(1)
– Tax deducted/collected
at source
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Computation of tax liability
Simple interest is levied when advance tax is not paid or under estimated instalments of advance tax @
1% per month.
When interest is payable
If advance tax paid on or before September 15
is less than 30% of (a) – (b)
If advance tax paid on or before December15 is
less than 60% of (a) – (b)
If advance tax paid on or before March 15 is
less than 100% of (a) – (b)
Rate of interest
Simple interest @
1% per month
Simple interest @
1% per month
Simple interest @
1% per month
Period of
interest
3 months
Amount on which
interest is payable
30% (a – b) – c
3 months
60% (a – b) – d
–
100% (a – b) – e
a. Tax on total income declared in the return.
b. Tax deducted/collected at source (double tax relief u/s 90, 90A and 91.
c. Amount of advance tax paid on or before September 15 of the financial year immediately preceding the relevant AY.
d. Amount of advance tax paid on or before December 15 of the financial year immediately preceding the relevant AY.
e. Amount of advance tax paid on or before March 15 of the financial year immediately preceding the relevant AY.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Tax paid
Take from
Schedule-IT
Take from
Schedule IT
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©Taxmann/Dr. Vinod K. Singhania
Take from Schedules
TDS 1 and TDS 2
Refund
Enter bank account
number (essential in
case of refund)
10 February 2009
Magnetic Ink
Character Recognition
(MICR) may be taken
from cheque leaf of
©Taxmann/Dr. Vinod K. Singhania
the assessee
Write your name
Write your father’s
name
Verification
I, …………………………….son/daughter of……………………….. Solemnly declare that
to the best of my knowledge and belief, the information given in the return thereto is correct
and complete and that the amount of total income and other particulars shown therein are
truly stated and are in accordance with the provisions of the Income-tax Act, 1961, in respect
of income chargeable to income-tax for the previous year relevant to the assessment year
2008-09.
Place Date Sign here
Write place
10 February 2009
Write date
©Taxmann/Dr. Vinod K. Singhania
Put signature here
If you are filing your return
yourself then these columns
are not to be filled up
Write identification
number of TRP, if
return is prepared by
TRP
10 February 2009
TRP means, Tax Return Preparer who has
been issued as per Tax Return Preparer
Scheme, 2006, a Tax Return Preparer
Certificate and a unique Identification
Number to prepare return of income of Tax
Payers
Write name of TRP, if
return is prepared by TRP
©Taxmann/Dr. Vinod K. Singhania
Salaries
Write name
of employer
Write address
of employer
10 February 2009
Write Town/
City
Write 10 digit PAN of employer,
please ensure that first five digits
of PAN are alpha and next four
digits are numeric and the last
digit is alpha. For, e.g., –
AMUPK0123N
Write State
name
©Taxmann/Dr. Vinod K. Singhania
Write 6 digit
PIN Code
Salaries
House rent allowance,
education allowance,
conveyance allowance,
travelling allowance, etc.
if certain conditions are
satisfied.
10 February 2009
Fixed medical allowance,
conveyance allowance/travelling
allowance used for personal
purposes, telephone allowance,
lunch allowance, etc.
©Taxmann/Dr. Vinod K. Singhania
Salaries
Perquisites which are taxable
– rent-free/concessional
accommodation, education
facility, free-gas, electricity
or water supply, domestic
servants, interest-free loan,
transfer of movable assets,
use
of movable
assets.
Gratuity,
leave encashment,
10 February 2009
retrenchment compensation,
leave travel concession,
compensation for voluntary
retirement, etc. to the extent
©Taxmann/Dr. Vinod K. Singhania
chargeable to tax.
House property
Write address
Write Town/
City
Write 6 digit
PIN Code
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Write State
name
House property
Write name of
tenant
Tick if property
is let out
10 February 2009
Let out property
Self-occupied
property
©Taxmann/Dr. Vinod K. Singhania
Write 10 digit PAN of
tenant, please ensure that
first five letters of PAN are
alpha and next four letters
are numeric and the last
one is alpha6. For, e.g., –
AMUPK0123N
Gross annual value
Nil
House property
Deductible only in the case of
bona fide tenancy if the defaulting
tenant has not occupied any other
property, steps have been taken to
compel the tenant to vacate the
property and it is not possible to
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
House property
Available only
if property is
let out.
10 February 2009
Deduction is available only in
respect of municipal taxes
(not being penalty or interest)
actually paid during the
previous year. Not deductible
if the house is self-occupied.
©Taxmann/Dr. Vinod K. Singhania
House property
If capital is borrowed for
construction, reconstruction,
purchase, renewal or repair of
house property, interest is
deductible on accrual basis. No
maximum ceiling in the case of let
out property. In the case of selfoccupied property, amount
deductible cannot exceed Rs.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
In case, there is no
second house
property, write NIL
in items 2a to 2i
House property
Write address
Write
Town/
City
Write
State
name
Write name of
tenant
Tick if property
is let out
10 February 2009
Write 6 digit
PIN Code
Write 10 digit
PAN of tenant
©Taxmann/Dr. Vinod K. Singhania
Capital gains
Any profit or gain arising from the sale or
transfer of a capital asset is chargeable to
tax under the head “Capital gains”.
Applicable in the case of
non-resident if securities are
purchased in foreign
currency.
If period of holding is not more than 36
months (12 months in the case of shares,
units, quoted debentures, etc.)
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©Taxmann/Dr. Vinod K. Singhania
Capital gains
Section 94(7) - It is
applicable if
shares/securities/units
are purchased within 3
months before the
“record date” and
transferred within 3
months (9 months in
the case of units) from
the record date.
Section 94(8) - It is
applicable in the case
of bonus stripping.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Capital gains
Exemption is available only under sections 54B
(agricultural land), 54D (compulsory acquisition
of industrial land or building), 54G/54GA
(transfer of an industrial undertaking from urban
area to rural area/SEZ). Exemption under sections
54, 54EC, 54F is not available in the case of
short-term capital gain.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Capital gains
A capital asset was
purchased to get exemption
under sections 54B, 54D,
54G, 54GA in an earlier
year. This asset is
transferred in the current
year before completion of 3
years.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Capital gains
Equity shares or units of
mutual fund/UTI are
transferred within 12
months and securities
transaction tax is applicable
(i.e., transfer in a
recognised stock exchange
or transfer to the mutual
fund).
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Capital gains
If period of holding is
more than 36 months
(12 months in the
case of shares, units,
quoted debentures,
etc.
10 February 2009
Applicable in the case
of non-resident if
securities are
purchased in foreign
currency.
©Taxmann/Dr. Vinod K. Singhania
Capital gains
Cost of acquisition × 551 (Cost Inflation
Index for financial year 2007-08)
10 February 2009
Cost inflation index of the year in which
the capital asset was first held by the
©Taxmann/Dr. Vinod K. Singhania
assessee.
Capital gains
Cost of improvement incurred on or after April 1, 1981 × 551*
(Cost Inflation Index for financial year 2007-08)
Cost inflation index of the year in which the improvement took
*Financial year place.
Cost Inflation Index
2007-08
10 February 2009
551
©Taxmann/Dr. Vinod K. Singhania
Capital gains
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Capital gains
A capital asset was purchased to get
exemption under these sections in an
earlier year. This asset is transferred
in the current year before
completion of 3 years.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Other sources
1.Dividend means –
o distribution entailing
release of company’s
assets;
o distribution of debentures,
debenture-stock, deposit
certificates, bonus to
preference shareholder, etc.
2.Dividend from a domestic
company is not chargeable to
tax.
Fixed deposit interest, saving bank account
interest, post office interest, NSC interest,
Indira Vikas Patra (IVP)/Kisan Vikas Patra
interest, company deposit interest, etc.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Other sources
If not chargeable to tax
under the head “Profits
and gains of business or
profession”.
In this category if
income does not fall in
above four items.
Gross winning is
taxable. No deduction
for expenses or losses
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Current year loss adjustment
House property loss
cannot be set off
against salary
income.
10 February 2009
Long-term capital
loss can be set off
only against longterm
capitalVinod
gains.
©Taxmann/Dr.
K. Singhania
Short-term capital
loss can be set off
only against shortterm or long-term
capital gains.
Brought forward loss adjustment
House property loss
can be set off only
against house
property income.
Short-term capital
loss can be set off
only against shortterm or long-term
capital
gains.
10 February
2009
Long-term capital
loss can be set off
only against longterm capital gains.
©Taxmann/Dr. Vinod K. Singhania
Carry forward of loss
Type of loss to
be carried
forward to next
year(s)
1. House
property loss
pertaining to the
assessment year
2000-2001 or
any subsequent
10 February 2009
year
Profit against
For how
Should
Is it
which carried many years
the
necessary
forward loss loss can be business
to submit
can be set off
carried
be
return of
in next year(s) forward
continued loss in time
Income under 8 years
NA
No
the head
“Income from
house
property”
©Taxmann/Dr. Vinod K. Singhania
Carry forward of loss
Type of loss to
be carried
forward to next
year(s)
2. Speculation
loss
Profit against
For how
Should
Is it
which carried many years
the
necessary
forward loss loss can be business
to submit
can be set off
carried
be
return of
in next year(s) forward
continued loss in time
Speculation
profits
4 years*
Not
necessary
Yes#
*8 years up to the assessment year 2005-06.
#If return of income is submitted after the due date, the delay may be condoned
if certain conditions are satisfied—Circular No. 8/2001, dated May 16, 2001.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Carry forward of loss
Type of loss to be Profit against
carried forward to which carried
next year(s)
forward loss
can be set off
in next year(s)
3. Non-speculation
business loss
3.1 On account of Any income
unabsorbed
(not being
depreciation,
salary income
capital expenditure from the
on scientific
assessment
research and
year 2005-06)
10 February 2009
For how
Should
Is it
many years
the
necessary
loss can be business
to submit
carried
be
return of
forward
continued loss in time
No timelimit
©Taxmann/Dr. Vinod K. Singhania
Not
necessary
No
Carry forward of loss
Type of loss to be
carried forward to
next year(s)
3.2 Other remaining
business loss
4. Capital loss
4.1 Short-term
capital loss
**From
Profit against which
carried forward loss
can be set off in next
year(s)
Any business profit
(whether from
speculation or
otherwise)
Any income under the
head “Capital gains”
For how
many years
loss can be
carried
forward
8 years
8 years
Should the
business be
continued
Not
necessary**
Not
necessary
Is it
necessary to
submit
return of
loss in time
Yes#
Yes#
the assessment year 2000-01 the loss can be carried forward even if the
business/profession is discontinued.
10 February
2009
#If return
of income
Vinod
K. the
Singhania
is submitted©Taxmann/Dr.
after the due
date,
delay may be condoned if certain
Carry forward of loss
Type of loss to be
carried forward to
next year(s)
Profit against which
carried forward loss can
be set off in next year(s)
For how
many years
loss can be
carried
forward
8 years
4.2 Long-term
capital loss
Long-term capital gains
(up to the assessment
year 2002-03 any
income under the head
“Capital gains”)
Income from the activity 4 years
of owning and
maintaining race horses
Should the
business
be
continued
Not
necessary
Is it
necessary to
submit
return of
loss in time
Yes#
5. Loss from the
Yes
Yes#
activity of owning
and maintaining
race horses
#If return of income is submitted after the due date, the delay may be condoned if certain
conditions
are2009
satisfied—Circular
No. 8/2001,
dated
May 16, 2001.
10 February
©Taxmann/Dr.
Vinod
K. Singhania
Total deductions
80C - Deduction in respect of LIC
premium, contribution to PF,
amount paid under Home Loan
Account Scheme of NHB, etc.
80CCC - Deduction in respect
of contribution to Pension
Fund.
80CCD - Deduction in
respect of contribution to
Pension Scheme.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Total deductions
The aggregate amount of deduction under
sections 80C, 80CCC and 80CCD shall
not, in any case exceed one lakh rupees.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Total deductions
Deduction in respect of Medical
Insurance Premium maximum
amount of Rs. 15,000 ; Rs. 20,000
in case of senior citizen
10 February 2009
Deduction in respect of maintenance of
a handicap dependant who is with
disability, maximum amount Rs. 50,000
(Rs. 75,000 where disability is over
80%).
©Taxmann/Dr.
Vinod K. Singhania
Total deductions
Deduction in respect of Medical Treatment,
maximum amount Rs. 40,000 or Rs. 60,000
Deduction in respect of loan taken for higher
education. Entire payment of interest is
deductible for maximum of 8 years
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Total deductions
Deduction in respect of
donations to certain funds,
charitable institutions, etc.
100% or 50%
10 February 2009
Deduction in respect of
rent paid if a few
conditions are satisfied.
©Taxmann/Dr. Vinod K. Singhania
Total deductions
Deduction in respect of
contributions given by any
person to political parties
Deduction in respect of
certain donations for
scientific research or rural
development
Royalty on patents is
deductible up to Rs. 3 lakh if a
few conditions are satisfied.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Deduction in case of a
person with disability
Income of Specified Persons for
inclusion
Income of minor child (after
exemption of Rs. 1,500).
Income of a spouse/son’s wife
from an asset transferred
directly or indirectly without
10 February
2009
©Taxmann/Dr. Vinod K. Singhania
consideration.
Special rates
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Special rate
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Special rates
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Exempt income
Interest income from UTI,
Mutual Fund, etc.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Exempt income
Dividend from
domestic companies
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Exempt income
Long-term capital gain on transfer of
equity shares/units of equity oriented
mutual funds where securities
transaction tax is applicable.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Exempt income
Net agricultural
income in India.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Exempt income
Other incomes which are exempt under section 10,
i.e., exempted portion of house rent allowance,
gratuity, pension, transport allowance, education
allowance, etc.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Exempt income
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Tax payments
These will be
taken from the
counter foil of the
Challan 280
Please ensure
that BSR Code is
of 7 digit
Amount Rs.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
TDS on salary
These details can be
taken from Form 16
Write here 10 digits TAN of the deductor,
please ensure that first four digits are alpha,
next five digits are numeric and last digit is
alpha. For e.g., - AATK01298K
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
TDS on other income
These details can be
taken from Form 16A
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Points to be noted while filing
ITR-2 in paper format
•No document (including TDS certificate)
should be attached to this form.
•Please fill acknowledgement slip and
then submit the return.
•The return form is not required to be filed
in duplicate.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Income from house property(let out)
Gross annual value
Less : Municipal taxes
Net annual value
Less : Deduction under section 24
- Standard deduction
- Interest on borrowed capital
Income from house property
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©Taxmann/Dr. Vinod K. Singhania
Rs.
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
Income from house property(one selfoccupied property)
Gross annual value
Less : Municipal taxes
Net annual value
Less : Deduction under section 24
- Standard deduction
- Interest on borrowed capital
Income from house property
Rs.
Nil
Nil
Nil
Deductible*
xxxxxxxxx
*Subject to maximum of Rs. 30,000/Rs. 1,50,000
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Capital asset
•Any asset other than the following –
•Stock in trade.
•Personal effects.
•Rural agricultural land in India.
•Gold bonds.
•Special bearer bonds.
•Gold deposit bonds.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Short-term/long-term capital
assets
•Time gap: 36 months (generally)
•Time gap: 12 months (in the
following cases) –
10 February 2009
•Shares
•Quoted securities
•Units of UTI/mutual fund
•Zero coupon bonds.
©Taxmann/Dr. Vinod K. Singhania
Transfer – What it includes
•Sale
•Exchange
•Relinquishment of the asset
•Extinguishments of any rights
•Compulsory acquisition
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Transfer – What it does not
include
•46(1) - Distribution of asset in
kind by a company to its
shareholders at the time of
liquidation
•47(i) - Distribution of capital
asset on total or partial partition
10 February 2009
of Hindu Undivided Family
©Taxmann/Dr. Vinod K. Singhania
Transfer – What it does not include
•47(iii) -Transfer of capital asset under a gift
or will or an irrevocable trust
•47(iv) - Transfer of a capital asset by a
company to its 100 per cent subsidiary
company
•47(v) - Transfer of a capital asset by a 100
per cent subsidiary company to its holding
company
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©Taxmann/Dr. Vinod K. Singhania
Transfer – What it does not
include
•47(vi) - Transfer of capital asset in a
•
•
scheme of amalgamation
47(via) - Transfer of shares in an Indian
company held by a foreign company to
another foreign company under a scheme
of amalgamation of the two foreign
companies
47(viaa) - Transfer of capital asset in a
scheme of amalgamation of a banking
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Transfer – What it does not include
•47(vib) - Transfer in a demerger of a
capital asset by the demerged company
to resulting company
•47(vic) - Transfer of shares held in an
Indian company by a demerged foreign
company to the resulting foreign
company
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Transfer – What it does not include
•47(vid) -Transfer or issue of shares by the
resulting company, in a scheme of
demerger to the shareholders of the
demerged company
•47(vii) - Allotment of shares in
amalgamated company in lieu of shares
held in amalgamating company
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Transfer – What it does not include
•47(viia) -Transfer of capital asset
(being foreign currency convertible
bonds or GDR) by a non-resident to
another non-resident
•47(viii) - Transfer of agricultural land
in India before March 1, 1970
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©Taxmann/Dr. Vinod K. Singhania
Transfer – What it does not include
•47(ix) - Transfer of a capital asset
(being work of art, manuscript,
painting, etc.) to
Government/University/National
museum, etc.
•47(x) - Transfer by way of conversion
of bonds or debentures into shares
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Transfer – What it does not include
•47(xi) -Transfer by way of exchange
of a capital asset being membership of
a recognized stock exchange for
shares of a company
•47(xii) - Transfer of land by a sick
industrial company which is managed
by its workers’ co-operative
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©Taxmann/Dr. Vinod K. Singhania
Transfer – What it does not include
•47(xiii) - Transfer of a capital asset by a
firm to a company in the case of
conversion of firm into company
•47(xiiia) - Transfer of a capital asset,
being a membership right held by a
member of a recognised stock exchange
in India
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Transfer – What it does not include
•47(xiv) - Transfer of a capital
asset to a company in the case of
conversion of proprietary concern
into a company
•47(xv) - Transfer involved in a
scheme of lending of securities
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Transfer of long-term capital asset
•Indexed cost of acquisition.
•Benefit
Indexed cost of improvement.
of indexation is not available in the following cases
–
•Debentures/bonds
•Shares and debentures in the case of non-residents
•Depreciating assets
•Slump sale
•Cases covered by sections 115AB, 115AC, 115ACA,
10 February 2009
115AD
©Taxmann/Dr. Vinod K. Singhania
Notional cost of acquisition
•Cost to the previous owner
•Fair market value on April 1, 1981
•Depreciable asset
•Forfeiture of advance money
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©Taxmann/Dr. Vinod K. Singhania
Computation of capital gains in
special cases
•Conversion of stock-in-trade into capital asset [Sec.
45(2)].
•Transfer of capital asset by a partner to firm [Sec.
45(3)]
•Distribution of capital asset on dissolution of
partnership firm [Sec. 45(4)]
•Compulsory acquisition [Sec. 45(5)]
•Capital gain in the case of non-resident [First proviso
to sec. 48]
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©Taxmann/Dr. Vinod K. Singhania
Computation of capital gains in
special cases
•Bonus shares
•Distribution in the case of liquidation
•Conversion on debentures into shares
•Securities in de-mat form
•Insurance claim
•Slump sale
•Land and building [50C]
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Exemptions
•Section 54
•Section 54B
•Section 54D
•Section 54EC
•Section 54ED
•Section 54F
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•Section 54G
•Section 54GA
•Section 10(33)
•Section 10(37)
•Section 10(38)
©Taxmann/Dr. Vinod K. Singhania
Computation of tax in the case
of long-term capital gain [Sec.
112]
Tax rate: 20% (in some cases
•
10%)
•No deduction under section 80C
to 80U
•Exemption limit in some cases
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Computation of tax In the case of
short-term capital gain when securities
transaction tax is applicable [Sec. 111A]
•Tax rate: 10%
•No deduction under section 80C
to 80U
•Exemption limit in some cases
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Income-tax rates
(Add surcharge and education cess as well as Secondary and Higher
Education Cess)
If transaction
If it is not covered by
Capital asset
is covered by
securities
transaction tax
at the time of
transfer
LongShort-
term
securities transaction tax
Long-term
term
Shortterm
US-64
0%
0%
Without With
indexati indexat
on
ion
0%
0%
0%
Units (equity oriented)
0%
10%
10%
20%
NA
Units (others)
NA
NA
10%
20%
NA
Contd.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Income-tax rates
(Add surcharge and education cess as well as Secondary and Higher
Education Cess)
Capital asset
If transaction is
covered by
securities
transaction tax
at the time of
transfer
LongShortterm
term
If it is not covered by
securities transaction
tax
Long-term
Sho
rtWithout With
Indexati Indexa term
on
tion
Equity shares (listed) covered
by section10(36)
Equity shares (listed) any other
Equity shares (not listed)
0%
10%
0%
0% NA
0%
NA
10%
NA
10%
NA
20% NA
20% NA
Preference shares (listed)
NA
NA
10%
20%Contd..
NA
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Income-tax rates
(Add surcharge and education cess as well as Secondary and Higher
Education Cess)
Capital asset
Preference shares (not
listed)
Debentures (listed)
Debentures (not listed)
Government securities
10 February 2009
If transaction is
covered by
securities
transaction tax at
the time of transfer
If it is not covered by
securities transaction tax
Longterm
Shortterm
NA
NA
NA
20%
NA
NA
NA
NA
NA
NA
NA
10%
20%
10%
NA
NA
20%
NA
NA
NA
©Taxmann/Dr. Vinod K. Singhania
Long-term
Short
Without With -term
Indexati Indexa
on
tion
Transfer of income without
transfer of asset [Sec. 60]
•The ownership of asset is not
transferred.
•The income from the asset is
transferred to any person under a
settlement, trust, covenant, agreement
or arrangement.
•Transfer may be revocable/ irrevocable
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Revocable transfer of asset
[Sec.
61]
•Transfer to a trust which is revocable
during the lifetime of beneficiary.
•Transfer to a person which is revocable
during the lifetime of transferee.
•Transfer before April 1, 1961 which is
revocable within 6 years.
•Power to get re-transfer to the transferor.
•Right of the transferor to reassume power
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Remuneration of spouse
[Sec. 64(1)(ii)]
•The taxpayer is an individual.
•He/she has a substantial interest in a
concern.
Spouse of the taxpayer (i.e., husband/wife
of the taxpayer) is employed in the abovementioned concern.
Spouse is employed in the concern
without any technical or professional
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
knowledge or experience.
•
•
Income of assets transfer to
spouse
[Sec.
64(1)(iv)]
•The taxpayer is an individual.
•He/she has transferred an asset (other than a house
property).
•The asset is transferred to his/her spouse.
•The transfer may be direct or indirect.
•The asset is transferred otherwise than (a) for
adequate consideration, or (b) in connection with
an agreement to live apart.
•The asset may be held by the transferee-spouse in
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Income of assets transfer to
son’s wife [Sec. 64(1)(vi)]
•The taxpayer is an individual.
•He/she has transferred an asset after May 31,
1973.
•The asset is transferred to his/her son’s wife.
•The transfer may be direct or indirect.
•The asset is transferred otherwise than for
adequate consideration.
•The asset may be held by the son’s wife in
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Income of minor child
[Sec. 64(1A)]
•All income which arises or accrues to
•
•
the minor child shall be clubbed in
the income of his parents.
Clubbing in the hands of father or
mother whose income is higher.
Income of minor child (from all
sources) suffering from any disability
of the nature specified under section
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©Taxmann/Dr. Vinod K. Singhania
Income of minor child not
subject
to
clubbing
•Income of minor child suffering from
any disability of the nature specified
under section 80U.
•Income of minor child on account of any
manual work.
•Income of minor child on account of any
activity involving application of his
skill, talent
or specialised knowledge
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Income of minor child
Exemption under section 10(32)
Exemption of Rs. 1,500 in
respect of each minor child if
the income of such minor as
includible under section
64(1A) exceeds that amount.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Conversion of self-acquired property
into joint family property [Sec. 64(2)]
Where an individual (being member of
a Hindu undivided family) converts
(after December 31, 1969) his selfacquired property into joint family
property.
•
•When such an individual transfers his
self-acquired property, directly or
indirectly, to the family otherwise than
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
How to proceed Step 1- Inter-source adjustment under the
same head of income.
Step 2- Inter-head adjustment in the same
assessment year.
Step 2 is applied only if a loss cannot be
set off under Step 1.
Step 3 - Carry forward of a loss. Step 3 is
applied only if a loss cannot be set off
10 February 2009
©Taxmann/Dr.
Vinod2.
K. Singhania
under Steps
1 and
Step 1 - Inter-source adjustment
General rule - If the net result for
any assessment year, in respect of any
source under any head of income, is a
loss, the assessee is entitled to have
the amount of such loss set off
against his income from any other
source under the same head of
income for the same assessment year.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Exceptions
•Loss from speculation business
•Long-term capital loss
•Loss from the activity of owning and
maintaining race horses
•Loss cannot be set off against
winnings from lotteries, crossword
puzzles, etc.
•Loss from an activity whose income is
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Step 2 - Inter-head
adjustment
General rule
Where the net result of computation
made for any assessment year in
respect of any head of income is a
loss, the same can be set off against
the income from other heads.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Exceptions
•Loss in a speculation business
•Loss under the head “Capital gains”
•Loss from the activity of owning and
maintaining race horses
•Business loss cannot be set off against
salary income
•Loss cannot be set off against
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Step 3 - Carry forward of
loss
If a loss cannot be set off either
under the same head or under the
different heads, because of absence
or inadequacy of the income of the
same year, it may be carried forward
and set off against the income of the
subsequent year.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Losses to be carried forward
•Loss under the head “Income from
house property”
•Loss under the head “Profits and gains
of business or profession” (i.e., loss
from speculative or non-speculative
business)
•Loss under the head “Capital gains”
•Loss from the activity of owning and
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Business losses
•Loss can be set off only against business income
•Losses can be carried forward by the person who
incurred the loss
Exceptions –
•Accumulated business loss of an amalgamating company
•
•
under section 72A or 72AA
Accumulated business loss of a demerged company
Accumulated business loss of a proprietary concern or a
firm when its business is taken over by a company by
satisfying
of section
10 February 2009 conditions
©Taxmann/Dr.
Vinod K. 47(xiii)/(xiv)
Singhania
Business losses
•Loss can be carried forward for 8 years
•Return of loss should be submitted in time
oLoss of a speculative or non-speculative business (not
being unabsorbed depreciation)
oShort or long-term capital loss
oLoss (not being unabsorbed depreciation) from the activity
of owning and maintaining race horses.
•Continuity of business not necessary
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Business losses
•Carry forward of unabsorbed
depreciation, capital expenditure
on scientific research and family
planning expenditure
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©Taxmann/Dr. Vinod K. Singhania
Speculative business in the case of a
company
Where any part of the business of a company (other than a
company whose gross total income consists mainly of
income which is chargeable under the heads “Interest on
securities”, “Income from house property”, “Capital
gains” and “Income from other sources”, or a company
the principal business of which is the business of banking
or the granting of loans and advances), consists in the
purchase and sale of shares of other companies, such
company shall be deemed to be carrying on a speculation
10 February 2009
Vinod K. Singhania
business
to the extent©Taxmann/Dr.
to which
the business consists of
Loss on sale of shares,
securities or units [Sec.
94(7)]
Condition 1 - Any person buys or
acquires any securities/ shares/units
within a period of 3 months before
the record date.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Condition 2 - Such a person sells or
transfers such securities/shares/units
within a period of 3 months (9 months
in the case of units from the
assessment year 2005-06) after the
record date.
Condition 3 - The dividend or income
on such securities/shares/units
received (or receivable) by such
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
•Consequences if these conditions are
10 February 2009
satisfied - Loss arising to the
taxpayer on account of purchase and
sale of securities/shares/units, to the
extent such loss does not exceed the
amount of dividend/income received
(or receivable) on such
securities/shares/units, shall be
ignored for the purpose of computing
©Taxmann/Dr.
Vinod K. Singhania
the income
chargeable
to tax
Loss arising in the case of
bonus stripping [Sec.
94(8)]
1. The taxpayer buys or acquires
any unit (“original unit”) within a
period of 3 months prior to the
record date.
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
2. Such person is allotted additional
units without any payment on the
basis of holding of such units
(hereinafter referred to as “bonus
units”) on such record date.
3. Such person sells or transfers all
(or any) of the original units within a
period of 9 months after such record
date.
4. But he continues to hold all (or
10 February 2009
©Taxmann/Dr. Vinod K. Singhania
Consequences
1. The loss (if any) arising to the
taxpayer on account of purchase and
sale of all (or any) of the aforesaid
original units shall be ignored for the
purposes of computing his income
chargeable to tax.
2. The amount of loss so ignored shall
be deemed to be the cost of purchase or
acquisition
of bonus units as are held by
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©Taxmann/Dr. Vinod K. Singhania
10 February 2009
©Taxmann/Dr. Vinod K. Singhania