CHRIST COLLEGE, JAGDALPUR

INCOME TAX NOTES 2006-07 2006

Capital gains
Profits or gains arising from transfer of any asset

CHARGEABILITY Any profits or Gains arising from the transfer of a Capital Asset during the previous year is Chargeable to Tax under this head of income. That is to Say:There Should be a Capital Asset Capital Assets should be transferred during the previous year. Profit/Gains ains should have arisen. Such Profit/Gains should be liable for tax.

1 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR

INCOME TAX NOTES 2006-07 2006

2 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR

INCOME TAX NOTES 2006-07 2006

3 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR

INCOME TAX NOTES 2006-07 2006

4 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR

INCOME TAX NOTES 2006-07 2006

TAX LIABILITY SHORT TERM CAPITAL GAINS To determine the Value of Consideration To deduct expenditure incurred for the transfer To deduct the cost of acquisition. To deduct cost of improvement. To avail exemption u/s 54 B, 54 D, 54 G, and 54 GA. The balance amount is Short Term Capital Gains. Short Term Capital Gains are chargeable to Tax based on SLAB RATES. LONG TERM CAPITAL GAINS To determine e the Value of Consideration To deduct expenditure incurred for the transfer. To deduct indexed cost of acquisition To deduct indexed cost of improvement. To avail exemption u/s 54, 54 B,54 D, 54 EC, 54F, 54 G, 54 GA, The balance amount is Long Term Capital Gains. Long Term Capital Gains are chargeable to Tax on Flat Rate i.e 20% 5 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR

INCOME TAX NOTES 2006-07 2006 ` Judicial points on what is taxable and what is not taxable. Personal effects should be movable property, it should be held for personal use and it should not be Jewellary, archaeological chaeological collections, drawings, paintings, sculptures, or any work of art. Gold and Silver coins and bars used for pooja of deities as a matter of pride or ornamentation are not personal effects. Therefore taxable. Furniture's are of personal use. Therefore Ther not taxable. Foreign Stamp collections not a personal effect. Therefore taxable. Car, Scooter etc., are under personal effects. Therefore exempted. Securities, Loose diamonds, Goats are not personal effects. Therefore taxabl Long term capital Gain => > 20% taxed While calculating Tax liability using slab rates, we dont take into consideration Long term capital gains. Slab rates 50000 - nil 50000 to 60000 - 10% 60000 to 150000 - 20% above 150000 - 30%

Long term capital gain in is charged at the flat rate of 20% . But a person who is non-resident, non a flat rate of 10% is charged for long term capital gain

Capital Gain

Long term capital gain (which remains for more than 36 months) months)

Short term capital gain (which remains less than 36

Furniture not asset of personal nature Business furniture is taken as asset Urban land Municipal contominent Board and having population more than 10000 Situated in local limit of municipality or Contominent Board Intangible asset Goodwill, patents, copyrights, Jewelry even personal.

Computation of long term capital gains Full value of consideration Less:Expenditures incurred wholly and Exclusively in connection with Such a transfer (like ike Brokerage and other selling exp) xx Net sale consideration xx Less :- i) Indexed cost of acquisition ii) Indexed cost of improvement xx Long term capital gain

xx xxx

xx xxx

6 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR

` Less :- Exception u/s 54/ 54B/ 54D/ 54EC/ 54ED/ 54F/ 54G Taxable LTCG

INCOME TAX NOTES 2006-07 2006 xx xxx

From as year 1988 89 , equity share and preference shares will be treated as short term capital assets, if they are held by an assessee for not more then 1 year (12 months) immediately preceding to the Date of sale or transfer. From as year 95-96 96 various securities listed in a recognized stock exchange in India like units of UTI and other specified mutual funds are considered as short term capital assets if they are held for less than 12 months. Capital assets means property of any kind whether fixed or circulating, movable or immovable, tangible or intangible, like land building plot, gold, silver, precious precious metals, Jewelry, shares, securities, furniture, machinery etc. Exceptions :- (It does not include in assets) 1. Stock in trade 2. Personal effects excluding jewelry 3. Agricultural land in rural area 4. Gold Bonds 61/2 % of gold bonds 1977 7% % gold bonds 1980 National Defense Gold bonds 1980 issued by central govt. 5. Special Bearer bond 1991 Issued by Central govt 6. Gold deposit bond 1999 Issued by Central govt Computation of short term capital gain Full value consideration Less:- Expenditure incurred wholly and exclusively in connection with such a transfer xxx (like brokerage and other setting exp) xx Net sale Considerable xxx Less:- Cost of acquisition Cost of improvement Short term capital gain Less:- Exception u/s 54B/ 54D/ 54G Taxable short term capital Gain xx xx

xx

xx xxx xx xxx

Indexed cost of acquisition

1. If the asset is purchased by the assessee before 01-04-81 01 Indexed cost = Original cost or Fmv on 01-04-81(whichever 81(whichever is more) X previous year Index)/100 2. If the asset is purchased by the assessee after 01-04-81 01 Indexed cost = Original cost or Fmv on 01-04-81(whichever 01 81(whichever is more) X (previous year Index)/(Index of purchased year) 7 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR

INCOME TAX NOTES 2006-07 2006 ` 3. If the asset is acquired from the previous owner before 01-04-81 01 81 and previous owner required this asset before 01-04-81 Indexed cost = Original cost or Fmv on 01-04-81(whichever 01 81(whichever is more) X previous year Index)/100 4. If the asset is acquired from the previous p owner after 01-04-81 81 and previous owner required this asset before 01-04-81 Indexed cost = Original cost or Fmv on 01-04-81(whichever 01 81(whichever is more) X (previous year Index)/(Index of purchased year) 5. If the asset is acquired from the previous owner after 01-04-81 81 and previous owner required this asset after 01-04-81 Indexed cost = Original cost or Fmv on 01-04-81(whichever 01 81(whichever is more) X (previous year Index)/(Index of purchased year) Note:- Case 3, 4 & 5 are applicable where the transferred asset is acquired by the assessee out of gift or inheritance.

Indexed cost of improvement

Case 1 :- If expense are incurred before 01-04-81 01 No need of Indexation Cost of improvement = NIL e incurred after 01-04-81 01 Case 2 :- If expense are Indexed cost of = Cost of improvement X (previous year Index)/(Index of the year in which exp are incurred) Note:- For calculating Indexed cost of acquisition 1. For other than debentures and bonds for all other long term capital assets, Indexed cost of acquisition and Indexed cost of improvement are to be calculated. (Cost of acquisition & cost of improvement are to be deducted, but not indexed) 2. If the assets are used by the assessee in the business which are subject subject to depreciation. Even if the holding is more than 3 years the gain on transfer of such assets is always treated as short term capital gain ie for these assets indexed cost of acquisition is not to be calculated. Ex:- If machinery and building is used used the assessee for business then it is not indexed. Exemption under section 54 Page 272

Capter 5 Income from other sources

Securities

Securities exempted from tax

Tax-free securities

Less tax securities 8

SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR Exempt U/s 10(15)

INCOME TAX NOTES 2006-07 2006

Government

Commercial

Listed in stock exchange

Unlisted in stock exchange

Government Commercial

Listed in stock exchange nge

Unlisted in stock exchan ge

Securities exempted from tax 10 (15) Tax due on the shares is fully exempted from tax. As such the interest received by the assessee will not be included in the total income. The government issues these securities. Page 263 Tax-free Securities This securities are issued by the government in the case of tax free Govt securities and companies in the case of tax free commercial securities. Gross Interest will be included in the total income. a) Tax free Government Securities Gross Interest = Face value X Rate / 100 b) Tax free Commercial Securities Note:- Interest received by the assessee is net Interest, so the same is to be converted into Gross Interest Net Interest = face value X Rate / 100 Net Interest to Gross Interest Case 1: - If the securities are listed in a stock exchange and if the total taxable income is less than Rupees 1000000 Gross Interest = Net Interest X 100 / 89.8 Case 2: - If the securities are listed in a stock exchange and if the total taxable income inc is more than 1000000 9 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR Gross Interest = Net Interest X 100 / 88.78

INCOME TAX NOTES 2006-07 2006

Case 3: - If the securities are not listed in a stock exchange and if the total taxable income is less than 1000000 Gross Interest = Net Interest X 100 / 79.6 Case 4: - If the securities are not listed in a stock exchange and if the total taxable income is more than 1000000 Gross Interest = Net Interest X 100 / 77.56 Special Note: - In the problem if total taxable income is not given assume less than Rs 1000000 Less Tax securities These securities can also be issued both by the Govt and commercial authorities. There can be two types of problems. 1. When rate of interest is given (both for Govt and commercial Securities) Gross Interest = Face value of security X Rate / 100 1. When interest amt received is given (both for Govt & commercial) Interest received is Net Interest and the same is to be converted into Gross Interest. Case (i) For Govt and listed commercial Securities and if the total income is less than Rs 1000000 Gross Interest = Net Interest X 100 / 89.8 Case (ii) For Govt and listed commercial securities and if the total income is more than Rs 1000000 Gross Interest = Net Interest X 100 / 88.78 d commercial securities income less than Rs 1000000 Case (iii) For unlisted Gross Interest = Net Interest X 100 / 79.6 Case (iv) For unlisted commercial Securities income more than Rs 1000000 Gross Interest = Net Interest X 100 / 77.56 Note: - If the nature of security is not not mentioned in the problem then the general assumption is that the security is of Less-tax tax unlisted and total taxable income is less than Rs 1000000 Note: - If the interest received amt is Rs 2500 or less than Rs 2500 then interest received is equal to Gross interest. More than 2500 Rs, interest received is Net Interest, so it is to be grossed up Deduction u/s 57 1. Collection charges actual amt spend allowed. 2. Interest on loan taken to purchase the securities. 2. Any expenditure, which is incurred incurred on assessee to earn such income. 10 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR

INCOME TAX NOTES 2006-07 2006 ` Note: - Commission paid to purchase or to sell the securities will not be allowed as deduction. Important points 1. Dividend on shares: a. Dividend from Domestic Company Exempt b. Dividend from units of UTI - Exempt a. Dividend from Non-Domestic Non Domestic Company or cooperative Society Taxable 1. Interest on bank deposit a. Up to Rs 5,000 b. More than Rs. 5,000 -

Taxable as it is More than 5000 & given net then, Gross = Int X 100/79.6 taxable as it is

3. Cooperative Interest and Dividend

4. Interest on company Deposits or Firms deposit a) Interest on company deposits or firm deposit: a. Up to Rs 5,000 Taxable as it is b. More than Rs. 5,000 More than 5000 & given net then, Gross = Int X 100/79.6 5. Lottery a) If the price amt is given - fully taxable b) If Net amt is given Gross amt = Net amt X 100 / 69.4 (Less than 1000000) Gross Amt= Net amt x 100/ 66.34 (more than 1000000) 6. Horse race Income 7. Casual Income Fully taxable

Fully taxable Taxable = Received Income

8. Royalty, Directors fee, Articles & Income, Exam, Remuneration Expenses 9. Family Pension

Taxable = Received amt 1/3 whichever is less Or Rs 15000

10. Income from sub tenant Net Income taxable 11. Income me from machinery, plant and furniture on hire: Taxable = Rent recurred Expenses and depreciation 12. Agriculture Income outside India - taxable 13. Income from Non-Agricultural Agricultural Taxable land in India . 14. Salary of N.P or MLA Taxable Taxable

15. Income from undisclosed sources (unexplained money) 16. Income of Cricketers. a. Test matches in India

25% of remuneration received by the player from the cricket control board for playing test matches in India is taxable. b. Other matches in India Entire amt not taxable. 11 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR

INCOME TAX NOTES 2006-07 2006 ` a. Matches outside India 50% taxable.

17. Income of minor: a. Income of minor shall be included in the income of his parents whose income is higher. b. Exemption of Rs 1500 is available for every minor. c. If minor earns income from self-efforts self efforts then such income will not be added to the income of his parents.

Computation of income from Interest on securities under the income from other sources for the A.Y. 2006-2007 2006 2007 Particulars Interest on tax free Govt securities Interest on tax free commercial securities listed Interest on tax free commercial securities Unlisted Interest on Less tax Govt securities Interest on Less tax Commercial securities securit Listed Interest on Less tax Commercial securities Unlisted Gross income from Interest on securities Less: - Deduction under section. 57 Collection Charges ** Interest t paid on loan taken to purchase the securities ** Income from Interest on securities

Amount *** *** *** *** *** *** ***

** ***

Chapter 6 Clubbing of Income and Deemed Incomes (Sec 60-69) 60 69) Clubbing Income Sec (60-65) 65) Deemed Income - Sec (66-69) 69) Income of other person is added in our income is known as clubbing of Income. The following are the incomes of other persons which are included in the total income of the asessee :1. Transfer of Income without transfer of assets (Sec 60)

12 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR `

INCOME TAX NOTES 2006-07 2006

INCOME FROM HOUSE PROPERTY The income from a house or a building is taxed under the head Income from House Property The income under this head is taxed on the basis of notional income (rental value of the house house )but not on the basis of actual rent received. Important points to be considered The legal owner is liable to pay the tax under this head. Deemed owner is liable to pay tax like a. Person transferring property to spouse (with out adequate consideration and when living togther) b. Person transferring property to minor child except married minor daughter c. Karta in the Hindu undivided Family d. Member of a housing co-oprative co society Where the ownership is in dispute, the I.T.O. will dicide on some reasonable basis and the rent receiver will be assessed (subject to the Courts judgment). If the house is mortgaged, the mortgager is liable for tax payment. In the case of leased lands, if any buildings are constructed, the lessee will be tratd as the owner for tax purposes. In the case of a partnership, if the building is constructed in the name of the firm then the firm is liable but not the partners. If the building is let out to the employees whose stay is incidental to the business, rent received will be treated as Business Incme and expenditure incurred on such house will be considered as Business Expenditure. Where the tenant has sublet the house, the rent received by him will not be considered as Income from house property It is taxable under the head income from other sources. Rent of the land and rent from huts or from tents will not come under this head. They will be considered as Income from other sources. Composite Rent (Rent of the house Rent of the Funbitur Service charges etc.): The rent received is split into two parts. a. Rent of the house (income from house property) b. Other rents (income from other sources) The incomes of the following will will be taken under the head Income from house property (only rent is to be considered). a. Building, let out for office or for residential or for any other purposes b. Storage or Warehousing c. Factory d. Stalls e. Bazar f. Shop g. Lecture hall h. Cinema hall i. Dance hall j. Platforms k. Public Auditorium l. Dock m. Bridge The following incomes will not be considered as rent from house property. a. If the house is used for agriculture purpose

13 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR `

INCOME TAX NOTES 2006 2006-07

b. If the income of a former ruler from any one palace was exempted before the commencement of the Constitution titution (26th Amendment ) Act of 1971. c. Property income of a local authority. d. Properry income of a registered trade union. e. Income from house propery held for chartible or religious purpose (Temples) f. Income from house properry occupied for the purpose of own business or profession whose income is taxable. Annual Value: Income from house property is computed based upon the annual value According to sec 23 (1) the annual value of any property shall be the sum for which the prope property rty might reasonably be expected to be let out from year to year In determining the Annual Value the following factors are to be considered Municipal Rental Value:- Municipal Rental Value means the rental value of the house according to a authority Actual Rental Value :- Actual Rental Value means rent received and receivable from the tenent for one year period Fair Rental Value :- Fair Rental Value means rent of similar accommodation in the same stret or similar street Stardard Rent :- Standard arent eans eans rent fixed according to the provisions of Rent Control Act. HOUSE PROPERTY

1. 2. 3. 4.

LET OUT HOUSE Comes under Rent Control Act Not comes under Rent Control Act

SELF OCCUPIED H OUSE Comes under Rent Control Act Not comes under Rent Control Act

Annual Value for Self occupied House

If the owner occupies the house for hi his s residential purpose then annual value of such house shall be taken as Nil , i.e., the income from such house is fully exempted. This exemption will be given if the following conditions are satisfied. i) The house is not let out during the previous year and ii) No other benefit is derived from thereon. Special Note: When the owner of a house of a house property uses the house for his residential Purpose then it is popularly known as self occupied property. prope On the other hand, if the owner uses the house for running his own business or to carry his Profession technically it is a self occupied house but for income tax purpose it is not treated As self occupied house i.e. when the owner of the house house is using the house for residential Purpose then only it is treated as self occupied house. Deduction for self occupied house No deductions are allowed u/s 24 except interest paid on money borrowed for the purpose Of purchase or construction or for repairs or reconstruction of the house.

14 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR `

INCOME TAX NOTES 2006 2006-07

Model 1: If the house is purchased / constructed ans loan is taken before 1 1-4-99. 99. The deduction is last of the following two amounts a) Actual interest paid or payable b) Rs.30,000 Model 2: If the house is purchased or constructed and the loan is taken after 1-4-99 If the assessee satisfies the following three conditions then the deduction shall be given Upto Rs.1,50,000. The loan is taken on or after 1 1-4-99 99 either for construction or for purchasing the house. i) ii) The construction struction or purchase process should be completed within 3 years from the end Of the financial year in which the loan is taken. iii) The lending person/institution has to give a certificate giving the following details. iv) Loan sanctioned amount to purchase/constr purchase/construct the house. v) Amount of interest payble for the relevant previous year to the current assessment year. vi) Amount of principal amount repaid during the previous year relevant to the current assessment year. Outstanding principal amount. vii) Note: If the assessee is unable to satisfy the abouve three conditions then the maximum deduction Amount will be limited to Rs. 30,000. Special note: If the assessee takes a new loan to repay the first borrowed amount then also interest payable on the new loan qualifies for deduction. Deduction: The deduction is least of the following two amounts. a) Actual interest paid or payable. b) Rs. 1,50,000. Mode. 3: If the loan is taken prior to the completion of construction. Interest on loan taken to purchase or acquire the property o or r to construct the house, interest paid for period prior to purchase/completion of construction will be allowd as deduction in five equal annual instalments commencing from previous year in which the house constru construCtion is completed. Interest relating to the year of completion of construction can be fully claimed as deduction in that year irrespective of the date of completion. Special Note: i) Interest on interest i.e. penal interest is not allowed as deduction. ii) If a new loan is taken to repay the original loan, interest paid on the new loan will be allowed as deduction (Assessee has to satisfy in this regard to assessing officer with the facts.) iii) Brokerage or commission paid or expenses incurred to raise the loan are not allowed as deduction. If Net Municipal al Rental Value is given: In some cities the municipal corporation will calculate the rental value of the property after allowing a percentage of amount for repairs and service taxes like sewerage and water taxes etc., in such a case Gross Municipal Rental l value is to be calculated as under. Gross Municipal Value(-) ) Allowance for repairs(-)service repairs( tax =Net Municipal Value OR Net Municipal Value*service taxes*allowance for repairs =Gross Municipal Value

15 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR `

INCOME TAX NOTES 2006 2006-07

Unrealised Rent: -The The amount of rent tha that t the owner (assessee) is unable to recover is known as unrealized rent. The treatment for unrealized rent is explained as under: (1) Unrealised rent of the relevant previous year to the current assessment year. the unrealized rent is to be deducted from the Actual Rental Value on satisfying the following conditions (i) Tenancy is bonafide and the tenant is not in occupation of any other property of the assesse. (ii) The defaulting tenant has vacated or steps have b been een taken to vacate the tenant. (iii)It is proved that the legal proceedings are useless or legal proceedings are taken to recover the rent. Hint: - A.R.V= Rent per month x12 (-) ( Unrealised rent. 2) Unrealised rent related to or prior to the Assessment year yea 2001-2002 2002 A) If unrealized rent was deducted from actual rental value in earlier previous year and the same is received during the current previous year then the actual amount of arrears received is treated as income from house property and no deduction are allowed under sec 23 and 24 B) If arrears of rent pertaining to earlier previous year was not assessed ( not shown sa income in the earlier period ) as income from house property then the actual amount received shall be treated as income from house property and standard deduction is allowed at 30% on the arrears received amount under section 24 C) Arrears of rent on account of new agreement entered during the previous year relevant to current year for enhancing the rent from back date i.e. from the period earlier earlie to 1-4-2001 If the assessee entered into an agreement with the tenant for enhancement of the rent during previous year i.e. 2003-2004 2004 or at a later date then in the year of receipt of arrears it will be treated as income from house property A deduction i is s allowed @ 30% on the arrears amount received

Deductions u/s 24: 1. Standard deduction or Statutory deduction u/s 24 (a) This is a compulsory deduction to every assesse who is having income from house letout. Actual expenditure incurred will not be considered. The deduction is given at a flat rate of 30% on net annual value. Note:- When the net annual value is nil or in negative standard deduction is not allowed as deduction. 2. Interest on loan u/s 24 (b) (i) Interest on loan taken to purchase or construction, repairs or renovation reconstruction of the house is allowed as deduction. (ii) If the interest is paid in India actual interest amount is allowed as deduction. And if the interest is paid outside India, tax is to be deducted at source, then only it can be allowed as deduction. (iii) Interest on loan is allowed as deduction on due basis also i.e., even if interest is not paid during the previous year interest for the previous year period can be claimed as deduction. (iv) If interest paid for earlier period is not claimed as deduction, then the same cannot be claimed as deduction in the current year. (v) Interest on loan taken to purchase or to acquire the property or to construct the house, interest paid for period prior ior to purchase/completion of construction will be allowed as deduction in five equal annual instalments commencing from previous year in which the house construction is completed.

16 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR `

INCOME TAX NOTES 2006 2006-07

Prior to construction periodmeans the period commencing on the date of borrowing and ending on earlier of the following two dates (a) March 31 immediately prior to the date of completion of construction/date of acquisition (b) Date of repayment of loan, (vi) Interest relating to the year of completion of construction can be fully c claimed as deduction in that year irrespective of the date of completion. (vii) Interest on interest i.e. penal interest is not allowed as deduction. (viii)If a new loan is taken to repay the original loan, interest interest paid on the new loan will be allowed as deduction (Assessee has to satisfy in this regard to assessing officer with the facts.) (ix) Brokerage or commission paid or expenses incurred to raise the loan are not allowed as deduction. Special Note:- From the assessment year 2002-03 2002 03 onwards expenses paid for repaires, collection charges, ground rent, Land revenue, insurance premium etc., will not be allowed as deduction. Municipal taxes: Actual amount paid by the assesse is to be deducted from gross annual Value. (i) If Municipal taxes are due but not paid is not to be deducted from gross annual value. (ii) Arrears of Municipal taxes paid in the relevant previous year to the current assessment year is to be deducted from gross annual value. Municipal taxes paid by the tenant is not to be deducted from gross annual value. kkl RATES OF TDS DURING 2005-06 Individual, HUF, AOP,BOI Company and Firms (PFAF) When there is no Where there is When there is sursur charge [rate of sursurcharge. surcharge @ Education cess charge [Rate of 10% 2% of tax + surcharge 2.5% of less than 8,50,000 Education cess tax + Education 2% of tax cess 2% of tax more than8,50,000

Income

A/Y 2006 2006-2007

A/Y 2006-2007

A/Y 2006-2007 2006

17 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR ` a) Dividend on shares referred to u/s 115-O b) Interest on unite of U.T.I. AND Mutual Funds c) Bank Interest (if amount of interest exceeds Rs.5000) d) Interest on securities issued by: Central or State Govt. Local authority or statutory corporation Listed securities Unlisted securities e) Winnings from Lotteries, Races, Puzzles, Card games, TV game shows. NIL NIL

INCOME TAX NOTES 2006 2006-07

NIL

NIL

NIL

NIL

10.2%

11.22%

10.455%

NIL 10.2% 10.2% 20.4%

NIL 11.22% 11.22% 22.44%

NIL 10.455% 10.455% 20.91%

30.6%

33.66%

31.365%

INCOME FROM OTHER SOURCESSOURCES IN NUTSHELL Incomes u/s 56(1) Incomes u/s 56 (2) Expenses u/s 57 Exempted incomes No TDS

18 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR ` 1. Agricultural income from outside India. 2. Receipt from person other than employer. 3. Income from subletting or rent of vacant land. 4. Directors fee/sitting fee. 5. Remuneration for delivering lectures or writing articles. 6. Withdrawal from NSS u/s 80CCAprincipal amount * interest. 7. Repurchase of units u/s 80CCBprincipal amount. 8. Casual incomes other than those taxable u/s 65(2) 9. All types of interests except taxable u/s 56(2). 1. Divident from foreign companies or a cooperative society. 2. Interest on securities. 3. Winnings from lotteries, races, crossword puxxles, card games, gambling T.V. Game shares and betting. 4. Any amount received as gift on or after 1-9 2004 which is not exempted u/s 56(v). 5. Income from letting of plant and machinery where it is not regular business. 6. Income from letting of building, along with furniture and plant and machinery and rent is inseparable. 7. Any amount deducted by A. No deduction of any expenditure out of casual incomes, races, puzzles etc. u/s 56(2). B. Bank Commission, Collection charges. 2. Interest on loan taken to acquire an asset whose income is taxable under this head. 3. Std. deduction @ 1/3 of family pension or Rs. 15,000 whichever is less. 4. Depreciation and expenses, fire insurance premium, local taxes etc. relating to let out period. 5. Amount paid by employer to provident fund or ESI authorities by

INCOME TAX NOTES 2006 2006-07

1. Rates of TES for Individual, HUF, 2. AOP [No surcharge] Interest on securities issued 3. by local authority or statutory 4. bodies 10.2% Listed debentures of a company10.2% Unlisted debentures5. 20..4% Bank Interest 10.2% 6. Casual Incomes 30.6% [With surcharge- 7. total income exceeds Rs.8,50,000] Interest on securities issued by local authority or statutory8. Bodies11.22% Listed debentures of a company 11.22% Unlisted debentures22.44% Bank interest 11.22% Casual Income33.66%

Interest on Govt. securities. Deemed dividend u/s 2(22)(c) Interest on any security notified u/s 193. Interest paid to an individual in A/c payee cheque for an amount not exceeding Rs. 2,500 by certain companies. Bank interest credited or paid upto Rs.2,500 Race winning if it is upto Rs.2,500. Winning from lotteries, card games and puzzle amount if not more than Rs. 5,000. In case of gambling and betting etc.

19 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

20.value of any share or debentures given free of cost or CHRIST COLLEGE, JAGDALPUR at concessional rate to employees under stock option scheme approved by the central Govt. 21.Free ticket given by railways & air transport employer to their employees. employer out of employees salary as their contribution towards provident fund or ESI fund. appropriate date. 6. Any other expen-diture which is not a personal or a capital expenditure and is incurred to earn an income taxable under this head.

INCOME TAX NOTES 2006 2006-07 `

20 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR `

INCOME TAX NOTES 2006 2006-07

21 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept

CHRIST COLLEGE, JAGDALPUR `

INCOME TAX NOTES 2006 2006-07

1.Rent free house. 1.Free medical facilities as given u/s 2.Concessional rent house 17(2) 3.Obligation of employment by 2.Free refreshment during working employer hours (a).Amounts paid by employer. 3.Free recreational facilities Club bill . 4.Provition of telephone whether basic Gas and electricity bill. or cellular 5.Free meals provided in remote area or Education bill of children. Income tax of employee. at offshore installation are fully Professional tax of employee. exempted. Salary of servants employed by But if given at any other place during employee. working hours it shall be exempted if Car or other conveyance owned cost does not exceed Rs 50 per meal. 6.Free education, training or refresher By employee, used for private purposes course for employees and expenses are met by employer. 7.Goods sold at concessional rates. Any other bill for personal expenses 8.Free ration received by members of issued in the name of employee paid by armed forces. employer. 9.Value of gifts up to Rs 5,000 in 4.Any other fringe benefits given by aggregate in a previous year. employer to employee. 10. allowed by Govt. to its employees (a) Free meals if provided during posted abroad. working hours & value exceeds Rs. 50 11.Rent free house given to an officer per meals of parliament, a union minister, & (b) Gifts exceeding Rs.5000 in p/y leader of opposition in parliament (c) Club facility actual expenditure is 12.Conveyance facilities to judges of taxable supreme court and high court (d)Credit card & add on card actual fee 13.Free conveyance provided by is taxable. employer to employees for going to or (e)Interest free loans or loan at coming from place of employment. concessional rate of interest if more 14.Any amount contributed by than Rs.20,000 7 if not for medical employer towards pension or deferred treatment difference between annuity scheme. prescribed rate & rate charged is 15.Employers contribution to staff taxable. group insurance scheme (f) Use of moveable assets except computers laptops. 16.Computers, laptops given to an employee for official use (g) Transfer of movable assets . 17.Transfer of a moveable asset more (h) Expense on tours & travels than 10 years old without consideration 5.Any amount of life insurance 18.Accident insurance premium paid by premium paid by employer during the employer for his own benefits previous years. 19Interest free loan or loan at concesional rate of interest taken by employee from employer if amount of loan does not exceed Rs 20,000 or loan is taken for medical treatment 20.value of any share or debentures given free of cost or at concessional rate to employees under stock option scheme approved by the central Govt. 21.Free ticket given by railways & air SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept transport employer to their employees.

1.Car owned by employer but used by employee both for personal and official purposes. 2.Gas & electricity facility. 3.Education facility for children. 4.Free transport allowed by employer engaged in transport business 5.Service of domestic servant provided by employer 6.Any other bill for personal expenses of employee paid by employer.

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CHRIST COLLEGE, JAGDALPUR `

INCOME TAX NOTES 2006 2006-07

23 SUBRAMANIAM.C, M.Com , L.L.B. Head Of Commerce Dept