DT & int taX

(50 pages)
Summary

CA FINAL May’ 23
SR NO CHAPTER NAME
1 BASIC CONCEPTS & TAX RATES FOR AY 2023 -2024
2 CAPITAL GAINS
3 INCOME FROM OTHER SOURCES
4 PGBP
5 TAXATION OF DIVIDEND, DEEMED DIVIDEND, LIQUIDATION AND BB
6 TAXATION OF POLITICAL PARTIES & ELECTORAL TRUST
7 SEZ UNITS TAXATION
8 PARTNERSHIP FIRM & LLP TAXATION
9 AOP & BOI
10 MINIMUM ALTERNATE TAX
11 ALTERNATE MINIMUM TAX
12 TAXATION OF TRUST
13 CLUBBING OF INCOME
14 TAXATION OF BUSINESS TRUST
15 ADVANCE TAX & INTEREST
16 DEDUCTION UNDER CH VI -A
17 TDS and TCS
18 TAXATION OF INVESTMENT FUND
19 SET OFF AND CARRY FORWARD
20 AGRICULTURE INCOME
21 INCOME FROM HOUSE PROPERTY
22 INCOME COMPUTATION & DISCLOSURE STANDARDS
23 TONNAGE TAXATION
24 CASH LOANS, DEPOSITS & ADVANCES
25 TAXATION IN CASE OF ESOPS
26 RETURN FILING & ASSESSMENT PROCEDURE
27 TRANSFER PRICING
28 NON RESIDENT TAXATION
29 DOUBLE TAXATION RELIEF
30 EQUALISATION LEVY
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1. BASIC CONCEPTS & TAX RATES FOR AY 2023 -2024

Tax rate for AY 2023-24 (PY 2022-23)
HUF, AOP, BOI, AJP, Individual | Resident  Individual | Resident 
Individual | Resident  X Age > 60 Age > 80
Net Income (Lacs) Rate (%) Net Income (Lacs) Rate (%) Net Income (Lacs) Rate (%)
0 - 2,50,000 - 0 - 3,00,000 -
0 - 5,00,000 -
2,50,000 - 5,00,000 5 3,00,000 - 5,00,000 5
5,00,000 - 10,00,000 20 5,00,000 - 10,00,000 20 5,00,000 - 10,00,000 20
10,00,000 + 30 10,00,000 + 30 10,00,000 + 30

Co - op Society Domestic company Firm, LLP, Local authority

Total Income Rate (%) T/o or gross receipts in Flat rate 30%
Rate (%)
0 - 10,000 10 PY 20-21 A
< 400 crore 25
Foreign company
10,000 - 20,000 20
20,000 + 30 > 400 crore 30 Flat rate 40%

Surcharge for AY 2023-24 (PY 2022-23) MARGINAL RELIEF

Example: Compute tax liability on 5,07,30,000
Person NTI Rate (%)
Tax liability on 5,07,30,000 1,50,31,500
50 lacs - 1 crore 10
Add: Surcharge @ 37% 55,61,655
1 crore - 2 crore 15
HUF, AOP, BOI, AJP, Individual A) 2,05,93,155
2 crore - 5 crore 25
Tax liability on 5,00,00,000 1,48,12,500
5 crore + 37
Add: Surcharge @ 25% 37,03,125
Firm, LLP, Local authority 1 crore + 12
Add: (NTI - 5,00,00,000) 7,30,000
A 1 crore - 10 crore 7 B) 1,92,45,625
Domestic company, Co-op Society
10 crore + 12 Lower of A) and B) 1,92,45,625
1 crore - 10 crore 2 + HEC @ 4% 7,69,825
Foreign Company
10 crore + 5 Tax payable 2,00,15,450

Rebate U/s 87A (Resident Individual only) NOTE

1. If DOB is 1st April, birthday will be
Applicable when NTI is upto 5 Lacs Rebate against all deemed to be on 31st March
100% of tax payable income including
(Before HEC) lottery, winning etc
2. H&EC @ 4% on tax + Surcharge
REBATE LOWER
3. NTI and tax to be rounded off to nearest 10.
12,500 but NOT 112A

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Surcharge where total income include

LTCG 112, LTCG 112A, STCG 111A, Dividend
A
Step 1: SC on income [ 112 + 112A + 111A + Dividend + other income ]
Step 2: If such SC > 15%, restrict to 15% for 112A ,111A, 112 & dividend income
Step 3: Calculate surcharge only on 'other income' as per slab
Step 4: If SC% in Step 2 > SC% in Step 3, Step 3 SC = Step 2 SC

Example: X resident. 112A income = 90,000. Other income=50,00,000

Particulars Amount Rate Tax
LTCG 112A
90,000 10% 0
(Exempt upto 1 Lac)
Other income 50,00,000 Slab rate 13,12,500
+ Surcharge - 112A 0 10% 0
+ Surcharge - Other income 13,12,500 10% 1,31,250
A TAX LIABILITY 14,43,750
Restricted to tax liability on
Other income 49,10,000 Slab rate 12,85,500
LTCG 112A [50,00,000 - 49,10,000]
90,000 10% 0
(Exempt upto 1 Lac)
+ [NTI - 50,00,000] 90,000 100% 90,000
B TAX LIABILITY 13,75,500
Lower of A & B 13,75,500
+ HEC 4% 55,020
NET TAX PAYABLE 14,30,520

115 BAC Alternate taxation regime (Individual & HUF)

Total income DEDUCTIONS X ALLOWED DEDUCTIONS ALLOWED
Tax rate
(In lacs) Interest u/s 24b - SOP 10 AA SEZ Travel allowance to Divyang employee
0.00 - 2.50 Nil Set off of HP loss 32(1)(iia) Tour allowance
2.50 - 5.00 5% Standard deduction - 50K 32 AD, 33 AB, 33 ABA Daily allowance
5.00 - 7.50 10%
35(1)(ii), (iia),(iii),
7.50 - 10.00 15% Entertainment allowance Conveyance allowance
35(2AA)
10.00 - 12.50 20%
Professional tax 35AD, 35CCC Deduction u/s VI A - 80 JJAA, 80CCD(2)
12.50 - 15.00 25%
Family pension • 111A, 112, 112A – Taxable at special rate
15+ 30% Leave travel concession Surcharge & cess – Normal
deduction
• 87A rebate 
House rent allowance Deduction u/s VI A
• Can choose / not choose any year
Allowance for Minor Allowance for MP / • HP loss set off with other head X
income MLA • HP loss c/f 

CA DHEER MODI
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115 BA 115 BAA 115 BAB
Assessee Domestic manuf co Domestic co New domestic co
Date registered 01-Mar-16 - 01-Oct-19
Surcharge Normal (7% & 12%) 10%
HEC 4% 4% 4%
Rate (PGBP) 25% 22% + 10% + 4% 15% + 10% + 4%

Rate (IFHP / IFOS) 25% + SC (If app) + 4% 22% + 10% + 4%

Special rate Income Special rate + SC (If app) + 4% Special rate + 10% + 4%
10AA, 32(1)(iia), 32AD, 33AB, 33ABA, 35(1)(ii), (iia), (iii), 35(2AA), 35(2AB)
Section Benefit X [Basically contribution to O/s] , 35AD, 35CCC, 35CCD
80IA to 80RRB Chapter VI A Chapter VI A
Section benefit  80JJAA 80JJAA, 80LA, 80M 80JJAA, 80M
MAT applicable? Yes No No

Section Name Rate Other

Benefits X same as 115 BAB
115 BAD Co-operative society 22% + 10% + 4% = 25.168%
80 JJAA 80 LA
115 BBE Deemed income u/s 68 - 69D 60% + 25% + 4% = 78%
115 BBF Royalty from patent in India 10% (75% exp incurred in India)
115 BBG Transfer of carbon credit 10%
Loss carry forward next year X
Transfer of virtual digital asset
115 BBH 30% Loss setoff against other income X
(Crypto) (NFT) A
Expense deduction X

Summary 115 BAB

Manufacturing income STCG - Depre assets 15%
Non - Manufacturing income STCG - Non Depre assets 22%
Excess profit computed by AO 30%
Special rate income Special rate

TAXATION OF UNIT LINKED INSURANCE POLICY

Any sum received under a LIP, including any bonus CAPITAL GAIN ON ULIP
EXEMPT
If received on death
If ULIP issued after 01/02/21 & prem > 2.5 lac
Received under keyman insurance policy
Taxable in year of receipt u/s 112A
Received where premium is paid more than limit CG = Amount received – Total prem paid
TAXABLE (20%, 10%, 15%) in 80C (If any amount is received subsequently, ONLY
premium which had NOT been considered earlier
Received against a ULIP issued after 1st Feb, 2021 & to be subtracted.)
premium > 2,50,000 NO indexation on premium paid

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2. CAPITAL GAINS
CAPITAL ASSET 2(14) COMPUTATION OF CG
INCLUDES EXCLUDES FVOC xx
Property (Mov / Imm) Gold ware Silverware Rural Agri land Less: transfer expenses (xx)
Securities Bullion Sculpture Gold monetization scheme 2015 = Net sales consideration xx
Jewellery Art Painting Personal movable property *Less: Indexed COA / COI (xx)
Drawing Silver bar Silver coins Raw material Stock in trade =LTCG * / STCG xx
A Virtual digital asset ULIP Gold deposit bonds, 1999 *Indexation only if LTCG

TYPES OF CAPITAL ASSET COST OF ACQUISITION

STCG if held for less than or equal to Self generated NIL
Goodwill
Purchased Price paid
1 Year 2 Year 3 Year
FMV XX
Any security (Other than units) in RSE in India Immovable Land or
SDV XX XX
Property building
UTI Units Any other COA XX
MF units (Equity oriented) Shares of any asset Other COA
Zero Coupon Bond company assets FMV on 01.04.2001

CASES WHEN CG NOT TAXABLE IN YEAR OF TRANSFER

CAPITAL ASSET (CA) CONVERTED TO SIT SIT CONVERTED TO CAPITAL ASSET
PY 01-02 PY 12-13 PY 22-23 PY 01-02 PY 12-13 PY 22-23
(Transfer year) (Tax year) (Tax year) (Tax year)
CA Converted to SIT SIT sold SIT Converted to CA CA sold
Cost = 10,000 FMV = 32,000 SP = 50,000 Cost = 10,000 FMV = 32,000 SP = 50,000
CG PGBP PGBP CG
PGBP taxable in PY 12-13 (When SIT converted to CA)
CG & PGBP both taxable in PY 22-23 (When SIT sold) CG taxable in PY 22-23 (When CA sold)

COMPULSORY ACQUISITION OF ASSETS JOINT DEVELOPMENT AGREEMENT

₹ TAX YEAR Year of transfer = When property transferred to JDA
Year of tax = When Certificate of completion (CC) recd
One time payment Year - compensation received FVOC = SDV on day of issue of CC +
Instalments (IC) Year - 1st instalment received Consideration received in cash
Instalments (EC) As and when received NOTE: If transferred before receiving CC, tax year = when
IC = Initial compensation | EC = Enhanced compensation property transferred to JDA

1. Litigation expenses be (-) from EC for CG calculation INSURANCE CLAIM – DAMANGED CAPITAL ASSET
2. EC received due to interim order - taxed when final order
is passed. Asset destroyed Claim received Cash
3. Interest received on late compensation – IFOS in year of (Year of (Year of tax) Asset (FMV)
receipt with 50% deduction transfer) Claim X received No CG / CL

10(37A) CG exempt for transfer of asset for development of Amaravati

EXEMPT TAXABLE
Land and building transferred to land pooling scheme
Land pooling ownership certificate transferred by OG owner Land pooling ownership certificate transferred by 2nd owner
Reconstituted land / plot received transferred within 2yrs from end Reconstituted land / plot received transferred post 2yrs from
of FY in which possession handed over end of FY in which possession handed over

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47 TRANSACTION NOT A TRANSFER 50B SLUMP SALE

● Distribution of assets on partition of HUF CG = Lump sum consideration – Net worth
FVOC COA
Capital asset
● Holding company 100% subsidiary company LTCG 112 ONLY if undertaking held for > 36m.
OR Depreciable asset WDV as per IT Act
If within 8 years, Converted to SIT % Falls down Non Depreciable asset + Book value
Then, taxable to transferor in PY in which asset transferred (-)Liability - (Book value)
.

● Capital asset transferred under gift / will / trust. NET WORTH

● Amalgamating Co Asset transfer Amalgamated Co NO indexation for assets
● Demerged Co Asset transfer Resulting Co Dep asset value = 0 if 35AD deduction taken.
Shares transfer IGNORE any revaluation of asset.
SH
FVOC = ● FMV of consideration [11UAE]
● Transfer of bonds or GDR (115AC) by a NR to NR [Monetary + Non monetary]
● Conversion of bond / Debenture into shares / Debenture. ● FMV of asset transferred
CG - converted security sold. Indexation from starting (Share)
● Firm converted to company provided
a) All A&L transferred
51 ADVANCE MONEY FORFEITED
b) Same SH proportion as capital A/c Before 01.04.2014 from COA Before indexation
c) Partners (Now SH) aggregate 50% voting power After 01.04.2014 IFOS 56(2)(ix)
● Transfer of mutual fund units due to scheme merger. By prev owner should NOT be deducted

112A LTCG 10% on excess of 1 Lac 111A STCG 15%

Unit of equity oriented Unit of biz trust ES of a Co. Unit of equity Unit of biz
ES of a Co. 12m
fund 12m 36m 12m oriented fund 12m trust 36m
STT on B & S STT on S . STT on S
No indexation | 87A rebate NOT allowed Sale of unlisted share = always CG. Never PGBP
Derivative options are always PGBP
COA of security if acquired before 01 Feb 2018 All other STCG taxable at normal rate
FMV as on 31st Jan 2018* XX
112 LTCG 20%
FVOC XX XX
COA XX For listed securities (other than units) & ZCB
Assessee can pay tax at either of the 2 options
*Listed (Time of sale & 31 Jan 2018) = Max trading price 31 Jan ‘18 10% ( X indexation)
FMV for non listed (On 31 Jan 2018) units = NAV on 31 Jan ‘18
20% ( √ indexation)

CAPITAL GAIN ON TRANSFER OF 112 A 111A 112

SHARES / DEBENTURES BY NR Basic exemption utilise Residents
Applicable when purchase done in foreign currency Chapter VI A deductions
Convert from INR to foreign currency
Rebate u/s 87A
COA Avg of TTBR & TTSR Date of acquisition
FVOC – Exp Avg of TTBR & TTSR Date of transfer NOTE
NO indexation benefit on bond and debenture
Capital gain TTBR Date of transfer
EXCEPT capital indexed / sovereign gold bond.
Indexation NOT available STT NOT + to cost, NEITHER (-) from FVOC

COA asset declared - IDS 2016

COA = FMV as on 1 Jun’16 if paid tax @ 45%
Indexation = Always from 2016 -17
POH = 01.06.2016 onwards.
(OG date if evidence of registered deed)

CA DHEER MODI
 54 54B 54D 54EC *54F 54G 54GA 54GB

Who Ind/HUF Ind/HUF Any Any Ind/HUF Any Any Ind/HUF

Asset trf LT ST/LT ST/LT LT LT ST/LT ST/LT LT

L,B, P&M. Shift

Urban Industrial L,B, P&M. Shift
industrial

Exchange of assets
Sale of agricultrue land. undertaking L or Any immovable Any LT CA industrial Residential HP/ Plot of
Residential HP undertaking
assets Rural already B compulsory property (except residential HP) undertaking - land
from Urban to
exempt acquired - govt. urban - rural
SEZ
2nd hand or Share of start up &

Transfer of unquoted shares

*Only 1 L or B for Brand new L,B,

A
Asset to be Rural/urban Bonds of NHAI, Only 1 residential HP in brand new L,B, Startup to buy new
residential HP in industrial P&M to shift to
purchased agriculture land REC, PFCL, IRFC India P&M to shift to P/M OR Deposit in
India purpose rural area
PARTICULARS

SEZ specified bank

If consideration is not determinable

-1 PURCHASE +2Y -1 PURCHASE +2Y
Time Limit +2Y +3Y* +0.5Y - 1Y or +3Y - 1Y or +3Y Upto date of ROI
CONSTRUCT +3Y CONSTRUCT +3Y
Exempt ● CG ● CG ● CG *● CG CG x Investment ● CG ● CG CG x Investment
amount ● Investment ● Investment ● Investment ● Investment Net Sale Consideration ● Investment ● Investment Net Sale Consideration
Lock in
3Y 3Y 3Y 5Y 3Y 3Y 3Y 5Y
period
CA transferred by firm (Dissolution) to Partner 9B

A/c payee cheque / DD / Electronic mode

CGAS
deposit
scheme    r     for company
Immovable property SDV* > 110% of consideration SDV

*buy 2 if LTCG < 2 Cr. * From when *Upto 50 lacs *Taxpayer own < 1 HP
Allowed once in a money received on transfer date
lifetime
FMV (Asset)

FMV of share
Immovable property SDV* < 110% of consideration Consideration
FVOC
FVOC

FMV of asset trfd

FMV of asset recd
Asset transferred by person (Future partner) to firm Amt recorded in BOA

Money/CA given to partner by firm (Reconstitution) FMV (Asset) - Capital bal

]
SDV < FMV
CASE

FMV < Consideration

Consideration < FMV < SDV
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SDV
FMV
Assesse may claim that SDV > FMV.

FVOC
Valuation officer shall determine FMV

SDV* = SDV on date of registration. SDV on date of agreement (DOA) can be taken if part of consideration received upto DOA –
Consideration

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3. INCOME FROM OTHER SOURCES

Some items taxable under IFOS – Interest on securities, Dividend, rent on letting out P&M, royalty, pension, salary of
MP / MLA, Interest on income tax refund, Director sitting fees.

TAXATION OF GIFTS
1) Gift received by person due to employee – employer relationship even if received on marriage = TAXABLE
2) Benefit / Gift / Perquisite received due to Business / Profession = PGBP

3) Gift received 56 (2) (x)

MOVABLE PROPERTY IMMOVABLE PROPERTY
MONEY
(SSJDPSAOBV)# (Land / building)
Case Taxable Case Taxable Case Taxable
Without
FMV > 50K Whole FMV SDV* > 50K Whole SDV
consideration
> 50k Whole taxable SDV - © > 50K
Inadequate
FMV - © > 50K Difference FMV & Difference SDV
consideration
SDV > 110%
# Share & security, Jewelry, Drawing, Painting, Sculpture, Archaeological collection, Other work of art, Bullion, Virtual digital A
* Calculate SDV per property and not on an aggregate basis A
NOT APPLICABLE when 1. Any Car, Watch, Mobile etc.. received not taxable since
- ES of Yes Bank received by investor under scheme NOT a CA for recipient
- ES of public sector company received from CG / SG 2. 56(2)(x) applicable only if asset received by recipient is
- Money received (Self) for treatment of COVID A CAPITAL ASSET for him.
- Money received by family of deceased (COVID) A Example:
A) Employer B) Any other person upto 10 Lacs Jeweler buys gold for 10Cr [FMV is 11Cr]. 1Cr will be PGBP.
Car received as gift not taxable since NOT a Capital Asset

Following gifts are NON TAXABLE (MR. DHULATI)

Received on occasion of Marriage, From Relative, in contemplation of Death, from Hospital, from University,, from
Local Authority, from Trust, Under will or Inheritance.

RELATIVE Closely held company issues shares to resident SH @ premium,

‘+’ = Also include brother, sister & their spouse Taxable to company = Issue price – Fair market value
Not applicable if consideration for share issue recd from venture A
Received from
Compensation on employer Salary
Lineal ascendant & Spouse
termination of employment
Any other case IFOS

Dad & Mom + Dad & Mom IFOS DEDUCTIONS ALLOWED

Assessee +
Lineal descendant + Spouse
Family pension
Interest on compensation
(compulsory acquisition of CA )
Spouse +
Interest on securities
Income from UTI / MF
1/3rd or 15,000
50%
Reasonable commission /
remuneration paid for realizing int.
Int exp upto 20% of such income

CA DHEER MODI
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4. PGBP
32(1)(ii) DEPRECIATION
Residential building
Building Non - Residential building
Temporary erection
Furniture Furniture and fittings
Acquired and put to use:
Motor
23 Aug '19 - 31 ..Mar '20
vehicle
Otherwise
+ 15% if used in hiring biz
Plant &
Machinery Other P&M (Include mobiles & EPABX)
Ships, vessels
Computer software, printer, scanner,
books, aero planes, windmills, Pollution 40%
control equipment
Intangible Knowhow, Patent, Copyrights,
asset trademark, Franchises, Goodwill
1. Depreciation claimed from when asset PUT TO USE.
2. Depreciation is claimed by beneficial owner
5% 3. Depreciation is on WDV basis. However, Business =
10% Power generation, Power distributor – OPTION to
choose SLM (Individual asset method) or WDV
40% 4. Lessor claims depreciation in case of leased asset
10% 5. Asset to be added to block even if not put to use.
6. WDV of block CAN NOT be negative.
30% 7. Half rate if put to use on or after 4th October.
(If acquired in same year)
15% 8. New P & M (Other than transport vehicle) acquired
and installed (Not in office) by Goods Manufacturer
/ Electricity generator / distributor = +20% Depre.
15% 9. If amalgamation / demerger, apportion depreciation
20% based of.no of days used by both entities.
10.STCG / STCL = When no of assets in block = 0 OR
When FVOC > WDV of block.
11.If goodwill already in block, subtract
(COA – Notional depreciation) from block
25%

33AB Growing tea / 33ABA Producing petrol 35 ABB LEASE TO OPERATE TELECOM
Assessee
coffee/ rubber / natural gas SERVICES OR SPECTRUM
EARLIER OF To be amortized from PY in which license fee
DEPOSIT Within 6m from end of PY End of PY paid till PY in which it expires.
Due date of ROI I.e. – License fee may be for 10 years, but
maybe spread over 11 years
DEDUCTION Actual deposit Actual deposit
EXAMPLE
AMOUNT 40% of PGBP 20% of PGBP
Original Cost: 100
SITE RESTORATION WDV after 2 years: 80 ST or LT
ACCOUNT NABARD
FUND Selling price: 150 depends
X in office Total profit: 70 upon POH
UTLISATION Use same year when withdrawn
X Sell within 8 years from end of PY PGBP 20 CG 50

CASE COST OF ASSET Cost of asset

+ Installation charges
Asset used for scientific research now in
NIL + Transportation expense
regular business
+ Test run expense
Asset acquired by way of gift / Inheritance Cost for prev owner - Dep allowed + Taxes (if ITC not available)
WDV at time of sale + Interest (put to use date)
Re - acquisition of asset sold - Sale of trial run product
Reacquisition cost
- Subsidy / Gov grant recd
Asset purchased and leased back to same (Do not include in cost if
WDV of OG owner
person payment / person / day >
Building used for personal purpose - now 10,000 other than a/c
OG cost - Notional depreciation
business payee cheque / DD |
Electronic clearing.)
Holding co Capital asset 100% Subsidiary co WDV of transferor

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ITEMS NOT ALLOWED / TO BE ADDED
▪ Under valuation of closing stock
▪ Over valuation of opening stock
▪ Ad in brochure of political party 80 GGB
▪ Payment to electoral trust by cheque 80 GGC
▪ Penalty for delayed filing of return (Breach of law)
▪ Compounding fees (Breach of law)
▪ Direct tax – Tax | Interest | Penalty | Cess A
▪ Expenditure on issue of right share (Capital in nature)
▪ IPO / FPO of shares expense (Capital in nature)
▪ Expense for inc authorised capital (Capital in nature)
▪ Expense on abandoned project (Capital in nature)
▪ Franchisee fees paid
▪ Tax paid by employer on non monetary benefits
▪ Loss due destruction of P&M (To be (–) from P&M Block)
▪ Amount paid to employee welfare trust
▪ Industrial power tariff concession received from Govt
▪ Provision of any kind (Unless given in green box)
▪ Int payment to co-operative bank post ROI due date
▪ Interest u/s 234B for short payment of advance tax
▪ Interest on loan taken for payment of income tax
▪ Discount given to creditors / waived off
▪ Excess amount of purchase over market value
▪ Payment in cash exceeding 10k / Person / Day
▪ Payment in cash exceeding 35k / Transporter / Day
▪ Sales tax not refunded to customer out of refund
▪ Contri to employee pension scheme > 10% (Basic+DA)
▪ CSR expense
▪ Development charges paid for capital asset (+ to block)
▪ Expense on transfer of carbon credit
▪ Expenses not related to business
▪ 30% of fees paid to NED / ID without TDS deduction
▪ 4/5th of VRS compensation paid to employees
▪ Amount spend out of NABARD a/c if not permissible
▪ Marked to market loss (Not as per ICDS)
▪ Commission paid to doctors
▪ Illegal expenditure (In or O/s India) A
▪ Additional depreciation if opted for 115 BAA,BAB,BAC
▪ Retrenchment compensation on closure of business
▪ STT / CTT paid (If security is capital asset)
▪ Excess payment made to relatives ( Excess to be +)
▪ TDS 40a(ia)
CASE DISALLOWED
Deducted but not paid till ROI due date 30% 100%
Not Deducted nor Recipient GOOD BOY 0%
paid till ROI due date Recipient BAD BOY 30% 100%
30% if resident | 100% if NR
GOOD BOY = has furnished return u/s 139(1)
has included above income in ROI
has paid tax due on such income
Taxes Interest Penalty
Direct tax
Indirect Tax 43B 43B
ITEMS ALLOWED / TO BE SUBTRACTED
 Overvaluation of closing stock
 Undervaluation of opening stock
 Ad in brochure of political party by company
 Franchise fees paid [Depreciation portion @25%]
 Scrap income on sale of P&M which was destroyed
 1/5th of VRS | 1/5th of amalgamation / demerger exp
 Premium on health insurance of employees in cash
 Payment in cash exceeding 10k to fisherman, farmer
 Marked to market loss (As per ICDS)
 Income tax refund & interest (IFOS)
 Expense on issue of bonus share / Buyback
 Interest on loan taken for capital asset after put to use
 Loss by theft if incidental to business
 Emper contribution to EPF paid before ROI due date
 Empee contribution to EPF paid before PF act due date
 [Redemption price-Issue price] ÷ Tenure of ZCB
 Legal fees incurred for defending title of factory
 Below expenses allowed only if actually paid 43B
= Bonus / Commission paid to employees
= Emper contribution to SPF, RPF, AGF, ASF etc
= Interest on loan taken from PFI, SFC, NBFC
= Leave encashment
= Indirect taxes, duties, cess
(43B not applicable if paid upto ROI due date)
 Payment of loan which has been converted from
arrears of interest
 Actual gratuity paid
 Provision for payment to workers estimation on wage
& reasonable certainty
 Provision for bad debts
INDIAN BANK FOREIGN BANK
8.5% of GTI + 5% of GTI
10% of avg advances by rural banks
 Commission paid to recovery agent for debt realisation
 Expense disallowed in any PY due to non deduction of
TDS, now deducted.
 Payment towards feasibility study conducted for tech
advancement related to business
 STT / CTT paid (If security is stock in trade)
 Discount on issue of debenture (Allowed over tenure)
 GST interest on delayed filing of return
 Profit on sale of land (Capital in nature)
 Grant received from gov for asset acquisition (- COA)
 Sponsorship fees (If incurred for business promotion)
 Expenses for bringing water to where factory located
 Payment upto 50k in cash to employee on retirement
 Salary (cash) person not at normal place of biz 15 days
 Contribution to national fund for rural development
 Retrenchment compensation on closure of some units
 Bad debts (If written off & was income of some PY)
 Transfer - special reserve- bank or finance corporation
Ꚛ Actual transfer
Ꚛ 20% of PGBP
Ꚛ 200% of ( SC + Reserve ) – Op bal of special reserve
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35. EXPENDITURE ON SCIENTIFIC RESEARCH PRELIMINARY EXPENSE

In house research
Before commencement After commencement
of business [3 years] of business
Rev exp Salary & Material ONLY
Capital exp 100%
Depreciation not allowed
Capital expense DOES NOT include LAND
In case of contribution to research association, Institute, College,
University, Laboratory, Company, 100% deduction
[ Feasibility study report, market survey, legal fees ]
Actual expense
5% of Cost of project
Higher of Cost of project or Capital employed for Indian companies
100%
35 CCC Agriculture extension project
100%
35 CCD Skill dev project
100% of Revenue & Capital expense deduction allowed
Capital expense DOES NOT include LAND & BUILDING

35 AD SPECIFIED BUSINESS

Warehouse Cold chain Bee keeping and Pipeline for natural Slurry pipeline
Fertilizer
Agri produce or Sugar facility production of honey gas & petrol for iron ore

Housing project under Hospital with 2 star hotel Infrastructure Semi conductor ICD or CFS
▪ Slum dev scheme min 100 beds or above facility wafer man. unit
▪ Affordable housing
100% capital deduction ALLOWED (X Land) | P&M should be new (20% old is OK) | SB Loss set-off SB income (∞Y) |
All benefit claimed to be reversed if asset is not used in SB (8Y)

44 AA MAINTENANCE OF BOOKS OF ACCOUNT

SPECIFIED PROFESSIONS OTHER BUSINESS
Interior decorator Accontancy Legal PGBP > 1.2L or
In any of 3 PY
Engineering Film artist CS Gross receipts > 10L
Tech consultant Architect Medical INDIVIDUAL & HUF
Gross receipts > 1.5L in all 3 PY Limit is 2.5L & 25L

44 AB AUDIT OF BOOKS OF ACCOUNT

Business - T/o in PY > *1Cr Prof - Gross receipts in PY > 50L 44AD / 44ADA - Assessee claims income < 6% 8% 50%
* 1Cr to be read as 10Cr if cash receipts / payments are upto 5% of total Receipts / Payment

PRESUMPTIVE TAXATION Only individual and firms (Not LLP)

44 AD Business 44 ADA Profession 44AE Transporter 44B Shipping 44BBA Aircraft
Gross receipts < 2Cr 50L No of vehicles < 10 7.5% of 5% of
PGBP income = 8% or 6% x GR 50% x GR PGBP HGV = 1k/Ton/M Rs received in India +
X required to maintain BOA / Audited income Other = 7.5k/M Destination start in India
44AD, 44ADA, 44AE are optional & for residents only. 44B & 44BBA are compulsory & for non residents

44 C BRANCHES OF FOREIGN COMPANY HEAD OFFICE EXP Sec 9B SIT transferred by firm
● 5% of adjusted total income i.e.. Before bf depreciation, Loss, VI A deductions (Dissolution) to partner.
● Expenses attributable to HO FMV of asset = PGBP for firm

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17. TDS and TCS

Deducted by buyer Collected by seller

꙰ Tax deducted only if amount taxable in hands of receiver

꙰ TDS / TCS to be deducted on value excluding GST component
꙰ In case of payment to NR/FC, cess to be added to TDS / TCS rate.

Payment (Monthly) Return (Quarterly)

Apr - Feb March Jun, Sept, Dec March
TDS 7th of next month 30th Apr FY 31st of next month 31st May
TCS 7th of next month 15th of next month 15th May

Assessee in default if tax not deducted OR deducted, but not paid.

If TDS deducted late, 1% pm or part from when deductible to when deducted
Paid late 1.5% pm or part from when deductible to when deducted

206 AA If payee does not furnish his PAN, TDS = 206 CC If buyer does not furnish his PAN, TCS =
● Rate as per respective section ● 2 x Rate as per respective section
● 20% [5% for Sec 194 O, 194Q] ● 5% [1% for Sec 206C(1H)]

206 AB* / 206 CCA* If payee / buyer has not filed return for last year for which due date expired &
TDS deducted / TCS collected > 50,000 in both those years A
● 2 x Rate as per respective section * Not applicable to sec 192, 192A, 194B,
● 5% 194BB, 194IA, 194IB, 194LBC, 194N

TCS
Section Nature of receipt Rate Note
Sale of goods aggregate more than 50 Lacs Seller T/o G/R > 10 Cr in last PY
206C(1H) 0.1%
(Per supplier) No TCS if TDS u/s 194Q deducted
Alcoholic liquor for human consumption 1%
206C(1) Scrap 1%
Mineral - Coal, Lignite, Iron 1%
Only if consideration > 10 Lacs
206C(1F) Motor vehicle 1%
Only on retail sales
206C(1C) Lease - Parking lot, toll plaza, mine and quarry 2%
Timber and any other foreign products 2.5%
206C(1)
Tendu leaves 5%
Remittance O/s India [ Not Edu purpose ] 5% Greater than 7 Lacs
206C(1G) Remittance O/s India [ Edu purpose ] 0.5% TCS only on excess
Sale of overseas tour package 5%

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Section Nature Payer Payee Rate Note

No TDS upto 50 Lacs. TDS only on excess.
Resident No TDS if TDS u/s 194O
194 Q Purchase of goods Buyer 0.10%
Seller No TDS if TCS u/s 206C(1) / (1F) / (1G)
No TDS if traded through RSE
A
Purchase of 1% No TDS if consideration & SDV upto 50 Lacs.
194 IA Any RP (↑ of C or
immovable property SDV) A
Includes everything like parking etc

No TDS if all satisfied

1%
Payment by ECO 1. Payee is Individual
194 O ECO (Gross
Ecommerce participant 2. Gross sale through ECO upto 5 Lacs
amount)
3. Payee has furnished PAN to ECO
A 194 S Any No TDS upto 10K.
Transfer of VDA RP 1%
1 Jul ‘22 Any No TDS upto 50K
Ind / HUF 1% No TDS if
a. Single contract upto 30K
194 C TDS on contract Any b. Aggregate contract upto 1 Lac
Other 2% c. Contract for personal purpose
4. Transporter owns 10 or less vehicles
Rent (P&M) Any RP 2%
194 I No TDS if rent upto 2.4 Lac
Rent (L&B, furniture) Any Any 10%
If return not filed in last 3 AY, then
Cash withdrawal
194 N Bank Any 2% 20 L < Withdrawal < 1 Cr, 2% on excess
above 1 crore
1 Cr < Withdrawal , 5% on excess
Insurance
194 D Insurance commission Agent 5% No TDS if commission upto 15K p.a.
company
Maturity proceeding No TDS if amount less than 1 Lac
194 DA Any Any 5%
of life insurance TDS only on (Maturity proceeds - premium)
Commission on sale
194 G Any Any 5% No TDS if commission upto 15K p.a.
of lottery ticket
Commission and
194 H Any Any 5% No TDS if commission upto 15K p.a.
brokerage
Those not
194 IB Rent (Land & building) covered in RP 5% No TDS if rent upto 50K per month
194 I
Contract/ brokerage/ Other than
194 M fees for professional 194 C / H / RP 5% No TDS if aggregate sum paid is upto 50 Lac
services J
Interest on
Infra debt TDS shall be deducted on gross amount.
194 LB infrastructure debt NR or FC 5%
fund No expenses to earn interest be subtracted
fund
Accumulated balance
192 A Any Employee 10% No TDS if amount less than 50K
of PF
A 194 R Perq arising from
Any RP 10% No TDS if perq amount is upto 20K in PY
1 Jul ‘22 business / Prof
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Section Nature Payer Payee Rate Note

No TDS on int paid to LIC, Gov security, Sec
193 Interest on securities Any RP 10%
54 EC securities
No TDS if
- Paid by bank / Post office upto 40K
Interest on other than
194 A Any RP 10% - Other cases upto 5K
securities
- Paid by firm to partner
- Int on income tax and bank saving
Interest (Bond) or
196 C dividend (GDR) u/s Any NR 10%
115 AC
194 Dividend income DC RP 10% No TDS if dividend amount upto 5K
194 IC Payment under JDA Any RP 10%
No TDS if Professional fees/ technical
services/ royalty is upto 30K [Separately]
194 J Professional services Any RP 10% No TDS if fees paid to director u/s 192
If payment made to call centre or for
cinematographic films, TDS@2%
Compensation for
194 LA compulsory acquisition Any RP 10% No TDS if compensation upto 2.5 Lac
of immovable property
Income in respect of
194 K UTI / MF RP 10% No TDS if payment upto 5K p.a.
units
Income in respect of
196 A UTI / MF NR or FC 20%
units
Interest / dividend u/s If income paid to specified fund then TDS
196 D Any FII 20%
115 AD @ 10%
NR
Sportspers
Payment to NR sports Payment for Participation in game, Ad,
194 E Any on/ 20%
person / entertainer News paper article
NR
Entertainer
Winning from lottery,
194 B Any Any 30% No TDS if winning upto 10,000
crossword etc.
Winning from horse
194 BB Any Any 30% No TDS if winning upto 10,000
race
Employer shouldn't consider losses other
192 Salary Any Employee Slab rate
than HP
Resident
TDS deducted after giving effect to VI A
Pension income & age > 75
Scheduled deduction & rebate 87A
194 P interest on such (Not Slab rate
bank Senior citizen should have only such
pension income required to
income
file ROI)
Last year turnover > 1 Cr in case of business or > 50 lacs in case of profession
Last year turnover > 10 Cr in case of business

Transaction with person in NJA attracts 30% tax rate. (Covered in transfer pricing in detail)

CA DHEER MODI