Income 1 May

INCOME TAX AMENDMENTS (Finance Act 2023)
CHAPTER – 7: INCOME FROM OTHER SOURCES
INCOME CHARGEABLE UNDER THE HEAD ‘INCOME FROM OTHER SOURCES’ [SECTION
56]
Shares issued by Private limited Company - Issue price exceeds FMV of shares [Section
56(2)(viib)]
Where a company, not being a company in which the public are substantially interested, receives,
in any previous year, from any person being a resident, any consideration for issue of shares
that exceeds the face value of such shares, the aggregate consideration received for such
shares as exceeds the fair market value of the shares.
The person from whom the consideration is received may be a resident or non-resident.
Explanation:
(a) The fair market value of the shares shall be the value -
(i) as may be determined in accordance with such method as may be prescribed; or
(ii) as may be substantiated by the company to the satisfaction of the Assessing Officer,
based on the value, on the date of issue of shares, of its assets, including intangible assets
being goodwill, knowhow, patents, copyrights, trademarks, licences, franchises or any other
business or commercial rights of similar nature,
Whichever higher,
(b) "Venture capital company", "venture capital fund" and "venture capital undertaking" shall
have the meanings respectively assigned to them in Section 10(23FB).
(c) "Specified fund" - means a fund established or incorporated in India in the form of a trust
or a company or a limited liability partnership or a body corporate which has been granted a
certificate of registration as a Category I or a Category II Alternative Investment Fund and is
regulated under the Securities and Exchange Board of India (Alternative Investment Fund)
Regulations, 2012 made under the SEBI Act, 1992 or regulated under the International
Financial Services Centre Authority (Fund Management) Regulations, 2022 made under the
International Financial Services Authority Act, 2019.
(d) "Trust" means a trust established under the Indian Trusts Act, 1882 or under any other
law for the time being in force.
Sum received, including the amount allocated by way of bonus, under a LIP other than
under a ULIP and keyman insurance policy, which is not exempt u/s 10(10D) [Section
56(2)(xii)]
Any sum received under a life insurance policy, including the sum allocated by way of bonus
on such policy would not be included in the total income of a person [Section 10(10D)].
The following table summarizes the exemption available under section 10(10D) vis-a-vis the date
of issue of such policies and the corresponding condition to be satisfied for exemption -
Particulars Exemption u/s 10(10D)
In respect of policies Any sum received under a LIP including the sum allocated by way of
issued before bonus is exempt.
1.4.2013
CA/CS/CMA, Contact no. for classes – 9039600091

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issued between bonus exempt.

1.4.2003 and However , exemption would not be available if the premium payable
31.3.2021 for any of the years during the term of the policy exceeds 20% of
"actual capital sum assured".
issue on or after bonus is exempt.
1.4.2012 but before However, exemption would not be available if the premium payable
1.4.2013 for any of the years during the term of the policy exceeds 10% of
actual capital sum assured.
In respect of policies (a) Where the insurance is on the life of a person with disability
issue on or after or severe disability as referred to in section 80U or a person
1.4.2013 suffering from disease or ailment as specified under section
80DDB.
Any sum received under a LIP including the sum allocated by
way of bonus is exempt. However, exemption would not be
available if the premium payable for any of the years during
the term of the policy exceeds 15% of "actual capital sum
assured"
(b) Where the insurance is on the life of any person, other than
mentioned in (a) above
Any sum received under a LIP including the sum allocated by
way of bonus is exempt. However, exemption would not be
available if the premium payable for any of the years during the
term of the policy exceeds 10% of "actual capital sum assured".
In respect of policies Any sum received under a LIP including the sum allocated by way
issued on or after of bonus is exempt.
1.4.2023 However, exemption would not be available if the premium
payable for any of the years during the term of the policy
exceeds 10% or 15%, as the case may be, of "actual capital sum
assured.
Further, exemption would also not be available if the amount of
premium payable exceeds ₹ 5,00,000 for any of the previous
years during the term of such policy. In a case where premium is
payable by a person for more than one LIP (other than ULIP) and
the aggregate of premium payable on such policies exceed ₹
5,00,000 for any of the previous years during the term of any
such policy(ies), exemption would be available in respect of any of
those LIPS (other than ULIP), at the option of the assessee,
whose aggregate premium payable does not exceed ₹ 5,00,000
for any of the previous years during their term.
Any sum is received on the death of a person is exempt irrespective of the annual premium
payable on the policy. The condition of payment of premium of 10% or 15% or 20% or ₹
5,00,000 would not be applicable.
Exemption is not available in respect of amount received from an insurance policy taken for
disabled person under section 80DD: Any sum received under section 80DD(3) shall not be
exempt under section 10(10D). Accordingly, if the dependent disabled, in respect of whom an

individual or the member of the HUF has paid or deposited any amount in any scheme of LIC or
any other insurer, predeceases the individual or the member of the HUF, the amount so paid or
deposited shall be deemed to be the income of the assessee of the previous year in which such
amount is received. Such amount would not be exempt u/s 10(10D).
Exemption is not available in respect of the sum received under a Keyman insurance policy:
Any sum received under a Keyman insurance policy shall also not be exempt.
Explanation 1 to section 10(10D) defines "Keyman insurance policy" as a life insurance policy
taken by one person on the life of another person who is or was the employee of the first-
mentioned person or is or was connected in any manner whatsoever with the business of the
first- mentioned person. The term includes within its scope a keyman insurance policy which has
been assigned to any person during its term, with or without consideration. Therefore, such
policies shall continue to be treated as a keyman insurance policy even after the same is
assigned to the keyman. Consequently, the sum received by the keyman on such policies, being
"keyman insurance policies", would not be exempt u/s 10(10D).
Taxability of sum received under a LIP which is not exempt u/s 10(10D): Where any sum
is received (including the amount allocated by way of bonus) at any time during a previous
year, under a life insurance policy, other than the sum -
(i) received under a ULIP
(ii) received under a Keyman insurance policy
which is not exempt under section 10(10D), the sum so received as exceeds the aggregate
of the premium paid during the term of such life insurance policy, and not claimed as
deduction under any other provision of the Act, computed in the prescribed manner, would
be chargeable to tax under the head "Income from other sources".
Guidelines u/s 10(10D) of the Income-tax Act, 1961 [Circular No. 15/2023 dated
16.08.2023]
Section 10(10D) provides for exemption of the sum received under a life insurance policy,
including the sum allocated by way of bonus on such policy subject to the condition that the
annual premium does not exceed 10% of actual capital sum assured.
W.e.f. A.Y. 2024-25, section 10(10D) amended by the Finance Act, 2023 to provide that –
(I) In case where an assessee has a single life insurance policy (other than ULIP) issued on
or after 1.4.2023 - Exemption u/s 10(10D) would not be available with respect to any life
insurance policy (other than ULIP) issued on or after 1.4.2023, if the amount of premium
payable exceeds ₹ 5,00,000 for any of the previous years during the term of such life insurance
policy.
(II) In case where an assessee has multiple life insurance policies (other than ULIPs)
issued on or after 1.4.2023 - In a case where premium is payable by a person for more than
one life insurance policies (other than ULIPs) issued on or after 1.4.2023 and the aggregate of
premium payable on such life insurance policies exceed ₹ 5,00,000 for any of the previous years
during the term of any such LIP(s), exemption u/s 10(10D) would be available in respect of any
of those LIPs, at the option of the assessee, whose aggregate premium payable does not exceed
₹ 5,00,000 for any of the previous years during their term. However, to get exemption u/s
10(10D), the condition of annual premium not exceeding 10% of the actual capital sum assured
also needs to be satisfied.

(III) Exemption in case of death of a person - In case any sum is received on the death of a
person, exemption u/s 10(10D) would be available irrespective of the annual premium payable of
the LIP.
Guidelines issued by the CBDT: In case any difficulty arises in giving effect to the provisions
of this clause, the CBDT may issue guidelines for the purpose of removing the difficulty with
the previous approval of the Central Government.
Accordingly, the CBDT has, with the approval of the Central Government, vide this circular,
issued the following guidelines in respect of LIPs (other than ULIPs)–
Situation 1: No sum of any nature including bonus (such sum here in after referred as
“consideration”) is received by the assessee on any LIPs which are issued on or after 1.4.2023
(such LIPs here in after referred as “eligible LIPs”) during any previous year preceding the
current previous year (being the P.Y. in which consideration is received and its taxability is being
examined) or consideration has been received on such eligible LIPs in an earlier previous year
but has not been claimed exempt. In such a situation, the exemption u/s 10(10D) would be
determined as under:
I. Where the assessee has received consideration, during the current P.Y., under one
eligible LIP only
Circumstance Eligibility for exemption u/s 10(10D)
If the amount of premium payable on such Such consideration would be eligible for
eligible LIP does not exceed ₹ 5,00,000 for exemption u/s 10(10D).
any of the PYs during the term of such eligible [Refer Example 1 and 2 given below]
LIP and annual premium does not exceed 10%
of actual capital sum assured
If the amount of premium payable on such Such consideration would not be eligible for
eligible LIP > ₹ 5,00,000 for any of the PYs exemption u/s 10(10D).
during the term of such eligible LIP [Refer Example 3 given below]
Example 1:
LIP A
Date of issue 1.4.2013
Annual premium 6,00,000
Sum assured 60,00,000
Consideration received as on 01.11.2023 on maturity 70,00,000
Note – The assessee did not receive any consideration under any other eligible LIPs in earlier
P.Y. preceding the P.Y.2023-24.
Eligibility for exemption u/s 10(10D) - The consideration received under LIP “A” would be
exempt u/s 10(10D) in A.Y. 2024-25 since annual premium does not exceed 10% of the actual
capital sum assured. Moreover, as the policy has been issued before 1.4.2023, limit of ₹
5,00,000 of amount of premium payable is not applicable, since it is not an eligible ULIP.
Example 2:
LIP A

Eligibility for exemption u/s 10(10D) - The consideration received would be exempt u/s
10(10D) in A.Y. 2034-35, since the annual premium payable on the policy does not exceed ₹
5,00,000 and also does not exceed 10% of actual capital sum assured.
Example 3:
LIP A
Eligibility for exemption u/s 10(10D) - The consideration received would not be exempt u/s
10(10D) in A.Y. 2034-35 since the annual premium payable on the eligible LIP exceeds ₹
5,00,000.
II. Where the assessee has received consideration, during the current P.Y., under more
than one eligible LIP
If the aggregate of the amount of premium Such consideration would be eligible for
payable on such eligible LIPs does not exceed exemption under u/s 10(10D).
₹ 5,00,000 for any of the PYs during the term [Refer Example 4 given below]
of such eligible LIPs and the annual premium ≤
10% of actual capital sum assured
If the aggregate of the amount of premium Consideration in respect of any of those
payable on such eligible LIPs > ₹ 5,00,000 for eligible LIPs whose aggregate amount of
any of the PYs during the term of such eligible premium payable does not exceed ₹ 5,00,000
LIP for any of the PYs during their term would be
eligible for exemption u/s 10(10D), provided
their annual premium ≤ 10% of actual capital
sum assured.
[Refer Examples 5, 6 and 7 given below]
Example 4:
LIP A B
Date of issue 1.4.2023 1.4.2023
Annual premium 3,00,000 2,00,000
Sum assured 30,00,000 20,00,000
Consideration received as on 01.11.2023 on maturity 32,00,000 21,00,000
Eligibility for exemption u/s 10(10D) – In this case, the aggregate of the annual premium
payable for LIP “A” and LIP “B” does not exceed ₹ 5,00,000 during the term of these policies.
Further, annual premium payable in respect of LIP “A” and LIP “B” does not exceed 10% of
actual capital sum assured. Therefore, the consideration received under LIP “A” and “B” would
be exempt u/s 10(10D) in A.Y. 2034-35
Example 5:
LIP A B
Date of issue 1.4.2023 1.4.2023
Annual premium 4,50,000 5,50,000

Sum assured 45,00,000 55,00,000

Consideration received as on 01.11.2033 on maturity 52,00,000 60,00,000
Eligibility for exemption u/s 10(10D) – In this case, the aggregate of the annual premium
payable for LIP “A” and LIP “B” exceeds ₹ 5,00,000 during the term of these policies.
However, the consideration received under LIP “A” would be exempt u/s 10(10D) in A.Y. 2034 -
35, since its annual premium payable does not exceed ` 5,00,000 for any previous year during
the term of the policy and also does not exceed 10% of actual capital sum assured.
Consequently, the consideration received under LIP “B” alone would not be exempt u/s 10(10D) in
A.Y. 2034-35.
Example 6:
LIP A B C
Date of issue 1.4.2023 1.4.2023 1.4.2023
Annual premium 1,00,000 3,50,000 6,00,000
Sum assured 10,00,000 35,00,000 60,00,000
Consideration received as on 01.11.2033 on maturity 12,00,000 40,00,000 70,00,000
Eligibility for exemption u/s 10(10D) - The aggregate of annual premium payable for LIP “A”,
LIP “B” and LIP “C” exceeds ` 5,00,000 during the term of these policies.
However, the consideration received under LIPs “A” and “B” would be exempt u/s 10(10D) in A.Y.
2034-35, since aggregate of annual premium payable for these two policies does not exceed ₹
5,00,000 for any previous year during the term of these two policies and annual premium
payable in respect of these policies does not exceed 10% of actual capital sum assured.
Consequently, the consideration received under LIP “C” alone would not be exempt u/s 10(10D) in
A.Y. 2034-35.
Example 7:
LIP X A B C
Date of issue 1.4.2022 1.4.2023 1.4.2023 1.4.2023
Annual premium 5,50,000 1,00,000 3,50,000 6,00,000
Sum assured 55,00,000 10,00,000 35,00,000 60,00,000
Consideration received as on 01.11.2032 on 62,00,000
maturity
Consideration received as on 01.11.2033 on 12,00,000 40,00,000 70,00,000
maturity
P.Y. preceding the P.Y.2033-34, except LIP X in P.Y. 2032-33.
Eligibility for exemption u/s 10(10D) - The consideration received under LIP “X” would be
exempt u/s 10(10D) in A.Y. 2032-33, since annual premium does not exceed 10% of the actual
capital sum assured. Moreover, as the policy has been issued before 1.4.2023, limit of ₹
5,00,000 on amount of premium payable is not applicable, since LIP “X” is not an eligible LIP.
The aggregate of annual premium payable for LIP “A”, LIP “B” and LIP “C” (being LIPs issued on
or after 1.4.2023) exceeds ₹ 5,00,000 during the term of these policies.
However, the consideration received under LIPs “A” and “B” would be exempt u/s 10(10D) in A.Y.
2034-35, since aggregate of annual premium payable for these two policies does not exceed ₹

5,00,000 for any previous year during the term of these two policies and annual premium
payable in respect of these policies does not exceed 10% of actual capital sum assured.
Consequently, the consideration received under LIP “C” alone would not be exempt u/s 10(10D) in
A.Y. 2034-35.
Situation 2: Consideration has been received by the assessee under any one or more eligible
LIPs (i.e., issued on or after 1.4.2023) during any P.Y. preceding the current P.Y. and it has been
claimed to be exempt u/s 10(10D). Such eligible LIPs are referred as “Earlier Exempt Eligible
LIPs (EEE LIPs)” in this paragraph and corresponding examples and reference to eligible LIPs
shall not include EEE LIPs. The exemption u/s 10(10D) would be determined as under:
I. Where the assessee has received consideration, during the current P.Y., under one
eligible LIP only
If aggregate amount of premium payable on Consideration under such eligible LIP would be
such eligible LIP and EEE LIPs does not eligible for exemption u/s 10(10D).
exceed ₹ 5,00,000 for any of the PYs during
the term of such eligible LIP and annual
premium in respect of eligible LIP does not
exceed 10% of actual capital sum assured.
If aggregate amount of premium payable on Consideration under such eligible LIP would not
such eligible LIP and EEE LIPs > ₹ 5,00,000 be eligible for exemption u/s 10(10D).
for any of the PYs during the term of such
eligible LIP
II. Where the assessee has received consideration, during the current P.Y., under more
than one eligible LIP
If aggregate of the amount of premium Consideration received would be eligible for
payable on such eligible LIPs and EEE LIPs exemption under u/s 10(10D).
does not exceed ₹ 5,00,000 for any of the PYs
during the term of such eligible LIPs and
annual premium in respect of eligible LIPs also
does not exceed 10% of actual capital sum
assured.
If aggregate of the amount of premium Consideration in respect of any of those
payable on such eligible LIPs and EEE LIPs > ₹ eligible LIPs (whose aggregate amount of
5,00,000 for any of the PYs during the term premium along with the aggregate amount of
of such eligible LIPs premium of EEE LIPs does not exceed ₹
5,00,000 for any of the PYs during their term)
would be eligible for exemption u/s 10(10D).
[Refer Examples 8, 9 and 10 given below]
Example 8:
LIP X A B C
Date of issue 1.4.2023 1.4.2024 1.4.2024 1.4.2024
Annual premium 4,50,000 1,00,000 1,50,000 6,00,000
Sum assured 45,00,000 10,00,000 15,00,000 60,00,000
maturity
maturity

Eligibility for exemption u/s 10(10D) - The consideration under LIP “X” would be exempt u/s
10(10D) in P.Y. 2033-34, since the annual premium does not exceed ₹ 5,00,000 and also does not
In this case, the aggregate of the annual premium payable for LIP “A”, LIP “B” and LIP “C” along
with the premium for LIP “X” exceeds ₹ 5,00,000 during the term of these policies.
The aggregate of the annual premium payable for LIP “A” and the premium for LIP “X” also
exceeds ₹ 5,00,000 during the term of these policies.
Consequently, the consideration received under LIP “A”, LIP “B” and LIP “C” would not be exempt
u/s 10(10D) in A.Y. 2035-36.
Example 9:
LIP X A B C
Date of issue 1.4.2023 1.4.2024 1.4.2024 1.4.2024
Annual premium 2,50,000 2.00,000 2,50,000 6,00,000
Sum assured 25,00,000 20,00,000 25,00,000 60,00,000
maturity
maturity
10(10D) in P.Y. 2033-34, since the annual premium does not exceed ₹ 5,00,000 and also does not
In this case, the aggregate of the annual premium payable for LIP “A”, LIP “B” and LIP “C” along
with the premium for LIP “X” exceeds ₹ 5,00,000 during the term of these policies.
However, the consideration received under LIPs “A” or “B” (any one) can be claimed as exempt
u/s 10(10D) in A.Y. 2035-36.
If the consideration received under LIP “A” is claimed to be exempt as aggregate of the annual
premium payable for LIP “X” and “A” did not exceed ₹ 5,00,000 for any of the PYs., the
consideration received under LIP “B” would not be exempt.
If the consideration received under LIP “B” is claimed to be exempt as aggregate of the annual
premium payable for LIP “X” and “B” did not exceed ₹ 5,00,000 for any of the PYs., the
consideration received under LIP “A” would not be exempt. Exemption for consideration
received under LIP “ B” is preferred as it is more beneficial to the assessee.
Alternative treatment: If the consideration under LIP “X” was not claimed to be exempt u/s
10(10D) in A.Y. 2034-35 by the assessee, then, the consideration received under LIP “A” and
LIP “B” would be exempt u/s 10(10D) in A.Y. 2035-36 since the aggregate of the annual premium
payable for the LIPs “A” and “B” together did not exceed ₹ 5,00,000 for any of the previous
years during the term of these two policies. However, the most beneficial treatment is to claim
LIP “X” and “B” as exempt. It may be noted that in every case, the consideration received for
LIP “C” would not be exempt u/s 10(10D).
Example 10:
LIP X Y A B D
Date of issue 1.4.2023 1.4.2024 1.4.2024 1.4.2024 1.4.2024
Annual premium 2,00,000 2.00,000 2,00,000 3,00,000 6,00,000
Sum assured 20,00,000 20,00,000 20,00,000 30,00,000 60,00,000

Consideration received as on 12,00,000

1.7.2033 on maturity
Consideration received as on 24,00,000
Consideration received as on 24,00,000 36,00,000 70,00,000
P.Y. preceding the P.Y.2035-36, except LIP “X” and “Y”.
10(10D) in A.Y.2034-35, since the annual premium does not exceed ₹ 5,00,000 and also does not
The consideration received under LIP “Y” would be exempt u/s 10(10D) in A.Y. 2035 -36, since
the aggregate of annual premium payable for LIP “X” and “Y” does not exceed ₹ 5,00,000 and
annual premium payable for LIP “Y” does not exceed 10% of actual capital sum assured.
The consideration received under LIPs “A”, ULIP “B” and ULIP “C” would not be exempt u/s
10(10D) in A.Y. 2036-37, since aggregate of annual premium payable for these three policies and
LIP “X” and “Y” exceeds ₹ 5,00,000.
Alternative treatment: If the consideration on surrender under LIP “X” was not claimed to be
exempt u/s 10(10D) in A.Y. 2034-35 by the assessee, then the consideration received under LIP
“Y” would be exempt and the consideration received under LIP “A” or LIP “B” (any one) can be
exempt u/s 10(10D) in A.Y. 2036-37. If the consideration received under LIP “A” is claimed to
be exempt, as aggregate of the annual premium payable for LIP “Y” and “A” did not exceed ₹
5,00,000 for any of the PYs., the consideration received under LIP “B” would not be exempt.
If the consideration received under LIP “B” is claimed to be exempt as aggregate of the annual
premium payable for LIP “Y” and “B” did not exceed ₹ 5,00,000 for any of the PYs., the
consideration received under LIP “A” would not be exempt. Exemption for consideration
received under LIP “B” is preferred as it is more beneficial to the assessee.
If the consideration on surrender of LIP “X” and on maturity of LIP “Y” were not claimed to be
exempt under section 10(10D) in A.Y.2034-35 and A.Y.2035-36, respectively, then consideration
received under both LIP “A” and LIP “B” would be exempt in A.Y.2036-37 (being LIPs issued on
or after 1.4.2023, whose aggregate consideration does not exceed ₹ 5,00,000).
It may be noted that, in every case, consideration received under LIP “C” would not be exempt
under section 10(10D).
Clarification on GST Component: It is also clarified by the CBDT that the premium payable/
aggregate premium payable for a life insurance policy/policies, other than a ULIP, issued on or
after 1.4.2023, for any previous year, would be exclusive of the amount of GST payable on such
premium.
Clarification on premium of Term life insurance policy: It is further clarified by the CBDT
that the limit of ₹ 5,00,000 of amount of premium payable would not be applicable in case of a
term life insurance policy i.e. where sum under a life insurance policy is only paid to the nominee
in case of the death of the person insured during the term of the policy and no amount is paid to
anyone if the insured person survives the policy tenure.
Hence, any sum received under a term insurance policy shall continue to be exempt under section
10(10D), irrespective of the amount of the premium payable in respect of such policy. Further
the premium paid f or such policies would not be counted for checking the limit of ₹ 5,00,000 of
amount of premium payable.
Manner of computation of taxable income from LIP under section 56(2)(xiii) [Notification
No. 61/2023 dated 16.08.2023]

Where any sum is received (including the amount allocated by way of bonus) at any time during a
previous year, under a life insurance policy, other than the sum
(i) received under a ULIP
(ii) received under a Keyman insurance policy
which is not exempt under section 10(10D), the sum so received as exceeds the aggregate of the
premium paid during the term of such life insurance policy, and not claimed as deduction under
any other provision of the Act, computed in the prescribed manner, would be chargeable to tax
under the head “Income from other sources” under section 56(2)(xiii).
Accordingly, the CBDT has, vide this notification, inserted Rule 11UACA to compute the income
chargeable to tax under section 56(2)(xiii). Where any person receives at any time during any
previous year any sum under such LIP, then, the income chargeable to tax under section
56(2)(xiii) during the previous year in which such sum is received has to be computed in the
following manner –
Situation Income chargeable to tax during the
previous year in which such sum is
received
i. where the sum is received for the first time A-B, where
under the LIP during the previous year A = the sum or aggregate of sum received
(first previous year) under the LIP during the first previous
year; and B = the aggregate of the premium
paid during the term of the LIP till the
date of receipt of the sum in the first
previous year that has not been claimed as
deduction under any other provision of the
Act.
ii. where the sum is received under the LIP C-D, where
during the previous year subsequent to the C = the sum or aggregate of sum received
first previous year (subsequent previous under the LIP during the subsequent
year previous year; and D = the aggregate of the
premium paid during the term of the LIP
till the date of receipt of the sum in the
subsequent previous year not being
premium which –
(a) has been claimed as deduction under any
other provision of the Act; or
(b) is included in “B” or “D” in any of the
previous year(s).
“Sum received under a LIP” means any amount, by whatever name called, received under such
policy which is not exempt under section 10(10D), other than the sum –
(a) received under a ULIP; or
(b) received under a Keyman insurance policy
TAXABILITY OF CASUAL INCOME [SECTION 115BB]
Winnings from lotteries, crossword puzzles, races including horse races, card games and other
games of any sort or gambling or betting of any form or nature whatsoever, shall be taxable @
30% (plus surcharge, as applicable and HEC) under Section 115BB. However, income by way of
winnings from any online game would not be taxed under this section.

Grossing up of income: Income in form of winnings from lotteries, crossword puzzles, card
games or other game of any sort or from gambling or betting of any form or nature or
other games of any sort is subject to TDS under section 194B if it if the amount or aggregate
of amounts of payment exceeds ₹ 10,000 during the financial year and income from horse
races is subject to TDS under section 194BB if it if the amount or aggregate of amounts of
payment exceeds 10,000 during the financial year. Thus, such income is to be grossed up
before being included in the total income of the assessee.
TAX IN RESPECT OF WINNINGS FROM ONLINE GAMES [SECTION 115BBJ)

(1)This section provides that net winnings from any online game would be taxed at a flat
rate of 30% plus surcharge, if applicable, plus health and education cess @ 4%.
(2) Meaning of online games: A game that is offered on the internet and is accessible by a
user through a computer resource including any telecommunication device
(3) No expenditure or allowance can be allowed from such income.
(4) Deduction under Chapter VI-A is not allowable from such income.
(5) Adjustment of unexhausted basic exemption limit is also not permitted against such
income.

AGGREGATION OF INCOME AND SET-

OFFOR CARRY FORWARD OF LOSS
INTER SOURCE ADJUSTMENT [SECTION 70]
Losses from specified business [Section 73A(1)]: In case of an assesse exercising the
option of shifting out of the default tax regime provided under section 115BAC(1A), loss in
any specified business referred in section 35AD can be set-off only against any other
specified business.
However, losses from other business can be set-off against profits from specified
business.
SET-OFF OF LOSS FROM ONE HEAD AGAINST INCOME FROM ANOTHER [SECTION
71]
Loss from House property: The loss under the head" Income from house property" would
not be allowable to be set-off against income under the other head if the assessee pays
tax at concessional rate under section 115BAC.
However, if the assessee exercises the option of shifting out of the default tax regime.
provided under section 115BAC(1A) and there is a loss under the head "Income from house
property" and the assessee has income assessable under any other head of income, the
maximum loss from house property which can be set-off against income from any other
head is ₹ 2 lakhs. In other words, in such case, the amount of such loss exceeding ₹ 2
lakhs would not be allowable to be set-off against income under the other head.
CARRY FORWARD AND SET OFF OF LOSS FROM HOUSE PROPERTY [SECTION 71B]
(a) If the assessee exercises the option of shifting out of the default tax regime provided
under section 115BAC(1A): In any assessment year, if there is a loss under the head
"Income from house property", such loss will first be set-off against income from any
other head to the extent of ₹ 2,00,000 during the same year. The unabsorbed loss will be
carried forward to the following assessment year to be set-off against income under the
head "Income from house property".
(b) If the assessee pays tax at concessional rate u/s 115BAC: The loss under the head
"Income from house property" would not be allowable to be set-off against income under
any other head. The unabsorbed loss will be carried forward to the following assessment
year to be set-off against income under the head "Income from house property".
CA/CS/CMA, Contact no. For Classes – 9039600091

DEDUCTION UNDER CHAPTER VI-A

EXEMPTION VS DEDUCTIONS
(1) Exemptions: The various items of income referred to in the different clauses of section
10 are excluded from the total income of an assessee. These incomes are known as
exempted incomes. "Exemption" means exclusion. A particular income exempt from tax
under section 10 shall not enter into the computation of taxable income. However, there
are certain items of income referred to in section 10 which are not exempted if the
assessee pays concessional rates of tax under the default tax regime u/s 115BAC,
namely,-
10(5) Leave travel concession
10(13A) House Rent Allowance
10(14) Special Allowances except -
(a) Travelling allowance
(b) Daily allowance
(c) Conveyance allowance
(d) Transport allowance to blind/deaf and dumb/ orthopedically handicapped
employee
10(17) Daily allowance/ Constituency allowance received by any Member of Parliament
or of State Legislatures
10(32) Exemption in respect of income of minor child included in assessee's total
income
(2) "Deduction" in relation to Chapter VI-A and section 10AA refers to the amount that is
reduced from gross total income to arrive at the total income. There are incomes which
are included in gross total income but are wholly or partly allowed as deduction under
Chapter VI-A in computation of total income, if the assessee has exercised the option of
shifting out of the default tax regime provided under section 115BAC(1A) and pays tax as
per the optional tax regime under the normal provisions of the Act.
Deduction is allowed on specific investments or expenses incurred by the taxpayer to
promote the culture of savings and investments. This could include medical expenditure,
donations made to charities, investments made in specific avenues such as Public Provident
Fund (PPF), National Pension Scheme (NPS) etc.
However, if the assessee pays concessional rates of tax under default tax regime u/s
115BAC, only deduction in respect of employer's contribution to NPS u/s 80CCD(2),
Central Government's contribution to Agnipath Scheme u/s 80CCH(2) and deduction in
respect of employment of new employees u/s 80JJAA would be allowed to the assessee.
He cannot claim deduction under any other provision in Chapter VI-A under the default tax
regime.
Section 10AA also provides for a deduction in respect of units established in SEZ from the
total income of the assessee. It is available only if the assessee has exercised the option
of shifting out of the default tax regime provided under section 115BAC(1A).
CA/CS/CMA, Contact no. for Classes – 9039600091,

This deduction is not available if the assessee pays concessional rates of tax under the
default tax regime u/s 115BAC.
The tax liability is calculated on the "total income" which is arrived after reducing
permissible deductions from gross total income.
Students should note this very important difference between exemption under section 10
and the deduction under Chapter VI-A/10AA.
Difference between Deduction under Chapter VI-A & section 10AA and Exemption under
section 10
Particulars Deduction Exemption
(in relation to Chapter VI-A and (contained in section 10)
section 10AA)
Meaning Investment /contributions in certain incomes which are Income-exempt
instruments (as prescribed under u/s 10 will not be included in
Income tax Act). Payments made for computing gross total income.
certain purposes.
Relevant Sections 80C to 80U in chapter VI-A Section 10 of the Income-tax Act.
Sections and section 10AA of the Income-tax
Act.
Manner of First included in the Gross Total Not included in the Gross Total
treatment Income and then deductions will be Income.
allowed form Gross Total Income.
The important point to be noted here is that if there is no gross total income, then no
deductions will be permissible. This Chapter contains deduction under Chapter VI-A which
includes deductions in respect of certain payments, deductions in respect of certain
incomes, deductions in respect of other income and other deductions. It also includes
deduction under section 10AA.
DEDUCTION IN RESPECT OF CONTRIBUTION TO AGNIPATH SCHEME [SECTION

80CCH]
(1) Meaning of Agnipath Scheme: Agnipath scheme is a Central Government scheme
launched in 2022 for enrolment of Indian youth in the Indian Armed Forces.
(2) Meaning of Agniveer Corpus Fund: The Agniveer Corpus Fund means a fund in which
consolidated contributions of all the Agniveers and matching contributions of the Central
Government along with interest on both these contributions are held.
(3) Features of the Agnipath Scheme: Each Agniveer is to contribute 30% of his monthly
customized Agniveer Package to the individual's Agniveer Corpus Fund. Further, the
Government will also contribute a matching amount to the Agniveer Corpus Fund". The
Government will also pay to the subscriber interest as approved from time to time on the
contributions standing in his account.
(4) Deduction: Section 80CCH provides deduction in respect of contribution made in the
Agniveer Corpus Fund by the individual enrolled in the Agnipath Scheme and the Central
Government.
(5) Quantum of deduction:

(i) Section 80CCH(1) provides a deduction for the amount paid or deposited by an
assessee, being an individual enrolled in the Agnipath Scheme and subscribing to the
Agniveer Corpus Fund on or after 1-11-2022, in his account in the Agniveer Corpus Fund.
Deduction u/s 80CCH(1) would be available to an individual only if he has exercised the
option of shifting out of the default tax regime provided u/s 115BAC(1A).
(ii) Under section 80CCH(2), the whole amount of contribution made by the Central
Government to the said account of an assessee in the Agniveer Corpus Fund, is allowed as
a deduction in computation of the total income of the assessee.
(iii) The entire Central Government's contribution to the Agniveer Corpus Fund would be
included in the salary of the assessee. However, deduction under section 80CCH(2) would
be available for the same.
Deduction under section 80CCH(2) would be available to an individual irrespective of the
regime under which he pays tax.
Exemption on payment from Agnipath Corpus Fund to a person enrolled under the Agnipath
Scheme or to his nominee [Section 10(12C)]
Any payment from the Agnipath Corpus Fund to a person enrolled under the Agnipath
Scheme or to his nominee would be exempt from tax.
DEDUCTION IN RESPECT OF DONATIONS TO CERTAIN FUNDS, CHARITABLE

INSTITUTIONS, ETC. [SECTION 80G]
Eligible assessee: All assessees.
In case of an individual, HUF, AOP (other than a co-operative society) or Bol or an

artificial juridical person, deduction would be available only if they have exercised the
option of shifting out of the default tax regime provided under section 115BAC(1A). It
would not be available if they pay concessional rates of tax under the default tax regime
u/s 115BAC.
In case of companies and co-operative societies, deduction would not be available if they
opt for the special provisions u/s 115BAA/115BAB and section 115BAD/115BAE,
respectively. In other words, deduction would be available only if they pay tax under the
normal provisions of the Act.
Funds eligible for 50% deduction without any qualifying limit -

(i) The Jawaharlal Nehru Memorial Fund;
(ii) The Indira Gandhi Memorial Trust;
(iii) The Prime Minister's Drought Relief Fund;
(iv) The Rajiv Gandhi Foundation;
SPECIAL PROVISIONS IN RESPECT OF NEWLY ESTABLISHED UNITS IN SPECIAL

ECONOMIC ZONES [SECTION 10AA]
(1) Introduction: A deduction of profits and gains which are derived by an assessee being an
entrepreneur from the export of articles or things or providing any service, shall be allowed
from the total income of the assessee.
In case of an individual, HUF, AoP (other than a co-operative society) or Bol or an
artificial juridical person, deduction would be available only if they have exercised the

option of shifting out of the default tax regime provided under section 115BAC(1A). The
deduction would be available only under the optional tax regime, where they pay tax under
the normal provisions of the Act.
In case of companies and co-operative societies, deduction would not be available if they
opt for the special provisions u/s 115BAA/ 115BAB and section 115BAD/115BAE,
respectively. The deduction would be available if they pay tax under the normal provisions
of the Act.
(2) Applicability: This section applies to a unit established by an entrepreneur in a Special
Economic Zone, which begins to manufacture or produce articles or things or provide any
services during the previous year relevant to A.Y. 2006-07 or any subsequent assessment year
but not later than A.Y. 2020-21.
Amount of deduction:
First 5 consecutive 100% of profits and gains from export business (starting from
assessment years assessment year relevant to year of start of production/
manufacture).
Next 5 consecutive 50% of profits and gains from export business.
assessment years
Further next 5 Lower of-
consecutive assessment ➢ 50% of Profits from export business; or
years ➢ Amount transferred from Profit and Loss A/c to the
"Special Economic Zone Reinvestment Reserve A/c".
Explanation: The amount of deduction under this section shall be allowed from the total income
of the assessee computed in accordance with the provisions of this Act, before giving effect to
the provisions of this section and the deduction under this section shall not exceed such total
income of the assessee.
The deduction for last 5 assessment years is allowed if –
(i) The amount transferred to "Special Economic Zone Reinvestment Reserve A/c" is used for
acquiring new plant or machinery, which is first put to use within 3 years from the year of
creation of reserve.
(ii) Until acquisition of such plant or machinery, it is used for business purposes other than for
distribution by way of dividend or profits or remittance outside India for creation of any asset
therein.
(iii) Particulars of plant or machinery are furnished along with return of income for the previous
year in which such plant or machinery is first put to use.
Consequences of Misutilisation/ Non-utilisation of reserve :

If the amount credited to the reserve is - Taxability
Used for purposes other than acquisition of Amount so misutilised shall be taxable in the
plant or machinery year of misutilisation.
Not used within three years aforesaid Amount not so utilized shall be taxable in the
year immediately following the period of three
years.

(4) Export proceeds to be brought in India within 6 months: Deduction under section 10AA
would be available to a Unit, if the proceeds from sale of goods or provision of services is
received in, or brought into, India by the assessee in convertible foreign exchange, within
a period of 6 months from the end of the previous year or, within such further period as
the competent authority may allow in this behalf.
The export proceeds from sale of goods or provision of services shall be deemed to have
been received in India where such export turnover is credited to a separate account
maintained for that purpose by the assessee with any bank outside India with the approval
of the Reserve Bank of India.
Meaning of Competent authority - Competent authority means RBI or such authority as is
authorized under any law for the time being in force for regulating payments and dealings
in foreign exchange.
(5) Computation of profits from export business for the purposes of deduction:
Export Turnover of Profits and gains of business and
Profits and gains from Unit in SEZ x profession of Unit in SEZ
export business =
Total Turnover of Unit in SEZ
Meaning of Export turnover: It means the consideration in respect of export by the

undertaking being the unit of articles or things or services received in India or brought into
India by the assessee in convertible foreign exchange within 6 months from the end of the
previous year or within such further period as the competent authority may allow in this
behalf.
However, it does not include -
(i) freight
(ii) telecommunication charges
(iii) insurance
attributable to the delivery of the articles or things outside India or expenses incurred in
foreign exchange in rendering of services (including computer software) outside India.
'Export' in relation to Special Economic Zone means taking goods or providing services out of
India from a Special Economic Zone by land, sea, air, or by any other mode, whether physical or
otherwise.
Note: Profits and gains derived from on-site development of computer software (including
services for development of software) outside India shall be deemed to be profits and gains.
derived from the export of computer software outside India.
(6) Transfer of the undertaking in amalgamation or demerger: If the unit, which is entitled
to deduction under this section is transferred before the expiry of the period of deduction, to
another unit in a scheme of amalgamation or demerger, then-
(i) No deduction shall be allowed to the amalgamating or demerged unit for the previous year in
which such amalgamation or demerger took place, and
(ii) The provisions of this section shall apply to the amalgamated or resulting unit, as if no
amalgamation or demerger had taken place.

(7) Losses and allowances to be carried forward or set-off: The losses referred under
section 72 (i.e. business loss, other than speculative business losses) or section 74 (ie. losses
under the head 'Capital Gains'), so far as they relate to the business of the undertaking, shall
be allowed to be carried forward or set-off. Further, unabsorbed depreciation, unabsorbed
capital expenditure on scientific research or family planning shall also be allowed to be carried
forward. However, only those losses or allowance shall be allowed to be carried forward, which
relate to assessment year 2006-07 or any subsequent assessment year.
(8) Report from a Chartered Accountant: Deduction under this section shall be allowed only if
the assessee furnishes, before the specified date referred to in section 44AB, a report from a
chartered accountant certifying that the deduction has been correctly claimed.
(9) Return to be furnished on or before due date: No deduction under section 10AA would
be allowed to an assessee who does not furnish a return of income on or before the due
date specified under section 139(1).
(10) No deduction u/s 35AD admissible: Where a deduction under this section is claimed and
allowed in respect of profits of any of the specified business, referred to in section 35AD, for
any assessment year, no deduction shall be allowed under the provisions of section 35AD in
relation to such specified business for the same or any other assessment year.
(11) Other provisions:

(i) Written down value of assets after tax holiday period will be computed presuming that
depreciation has been allowed on them during the tax holiday period.
(ii) No deduction will be allowed under Section 80-IA or 80-IB in respect of that undertaking
which has claimed exemption under this section.
(iii) Where any goods or services held for the purposes of eligible business are transferred to
any other business carried on by the assessee, or where any goods held for any other business
are transferred to the eligible business and, in either case, if the consideration for such
transfer as recorded in the accounts of the eligible business does not correspond to the market
value thereof, then the profits eligible for deduction shall be computed by adopting market
value of such goods or services on the date of transfer. In case of exceptional difficulty in this
regard, the profits shall be computed by the Assessing Officer on a reasonable basis as he may
deem fit. Similarly, where due to the close connection between the assessee and the other
person or for any other reason, it appears to the Assessing Officer that the profits of eligible
business is increased to more than the ordinary profits, the Assessing Officer shall compute
the amount of profits of such eligible business on a reasonable basis for allowing the deduction.

TDS IN CASE OF INCOME UNDER THE HEAD 'SALARIES' [SECTION 192]
(1) Person responsible for deducting tax at source: Any person responsible for paying
any income chargeable under the head 'Salaries' shall be liable to deduct tax at source.
(2) Time of tax deduction: Tax is deducted at source at the time of making payment
of salary.
(3) Rate of tax deduction: The TDS is to be made at the average of income tax
computed on the basis of the rates in force for the financial year in which the
payment is made, where the employee intimates to the employer his intent to
exercise the option of shifting out of the default tax regime provided under
section 115BAC(1A). In other words, the total tax to be deducted, on the estimated
income of the employee for the relevant financial year, is divided by the number of
months of his employment during that financial year. The employer may increase or
reduce the amount of TDS for the purpose of adjusting any excess or deficiency
arising out of any previous deduction or failure to deduct during the financial year.
(4) Intimation to the employer of intended tax regime: A deductor, being an
employer, has to seek information from each of its employees having income under
section 192 regarding their intended tax regime and each such employee would
intimate the same to the deductor, being his employer, regarding his intended tax
regime for each year and upon intimation, the deductor has to compute his total
income, and deduct tax at source thereon according to the option exercised.
If intimation is not made by the employee, it would be presumed that the
employee continues to be in the default tax regime under section 115BAC and has
not exercised the option to opt out of the default tax regime. Accordingly, in such
a case, the employer has to deduct tax at source,on income under section 192, in
accordance with the rates provided under section 115BAC(1A).
It is also clarified that the intimation would not amount to exercising option under
section 115BAC(6) and the person shall be required to do so separately in
accordance with the provisions of that section [Circular No. 4/2023 dated 05-04-
2023].
Interest on deposit with post office under a scheme eligible for non-deduction of
tax at source under section 194A notified by the Central Government [Notification
No. 27/2023 dated 16.05.2023]
Section 194A provides for deduction of tax @10% by any person (other than an
individual or a HUF whose total sales, gross receipts or turnover from the business or
profession carried on by him/it does not exceed ₹ 1 crore in case of business and ₹ 50
lakhs in case of profession during the immediately preceding financial year) on interest,
other than “interest on securities” credited or paid to residents.
No deduction of tax under section 194A would be made, inter alia, if the aggregate
amount of interest paid or credited by post office during the financial year does not
CA/CS/CMA, Contact no. for classes – 9039600091 Page 38

exceed ₹ 40,000/ ₹ 50,000 (in case of a senior citizen), on any deposit made with it
under any scheme framed and notified by the Central Government.
Accordingly, the Central Government has, vide this notification, specified the Scheme
“Mahila Samman Savings Certificate, 2023”.
“Mahila Samman Savings Certificate, 2023” is a one-time scheme available for two
years i.e., from 1st April, 2023 to 31st March, 2025. It offers a maximum deposit
facility of up to ₹ 2 lakh in the name of women or a girl for 2 years at a fixed interest
rate of 7.5% p.a., compounded quarterly. Consequently, no tax under section 194A would
be deductible by the post office on interest paid or credited under this scheme since
the amount of interest would not exceed ₹ 40,000.
WINNINGS FROM LOTTERY OR CROSSWORD PUZZLE [SECTION 194B]
(1) Person responsible for deducting tax at source: The person responsible for paying
to any person any income by way of winnings from any lottery or crossword puzzle or
card game or other game of any sort or from gambling or betting of any form or
nature (other than winnings from any online game in respect of which TDS u/s
194BA would be applicable) shall be liable to deduct tax at source.
(2) Time of tax deduction: At the time of payment of such income.
(3) Rate of tax deduction: 30 %.
(4) No TDS in the following cases: No tax shall be deducted if the amount or
aggregate of amounts of payment does not exceed 10,000 during the financial
year.
WINNINGS FROM ONLINE GAMES [SECTION 194BA]
(1) TDS on winnings from online games: Any person responsible for paying to any
person (whether resident or non-resident) any income by way of winnings from any
online game during the financial year shall deduct income-tax on the net winnings
in his user account, computed in the manner as may be prescribed, at the end of
the financial year at the rates in force i.e., 30% [Section 194BA(1)]
However, in a case where there is a withdrawal from user account during the
financial year, the income-tax shall be deducted at the time of such withdrawal on
the net winnings comprised in such withdrawal, as well as on the remaining amount
of net winnings in the user account, computed in the manner as may be prescribed,
at the end of the financial year [Proviso to section 194BA(1)].
(2) Winnings wholly in kind or partly in cash or partly in kind: Where the net
winnings are wholly in kind or partly in cash, and partly in kind but the part in
cash is not sufficient to meet the liability of deduction of tax in respect of whole
of the net winnings, the person responsible for paying shall, before releasing the
winnings, ensure that tax has been paid in respect of the net winnings.
(3) Meaning of certain terms:

Term Meaning
1 Computer resource Computer, computer system, computer network, data,
computer data base or software [Section 2(1)(e) of
Information Technology Act, 2000]
2 Internet The combination of computer facilities and
electromagnetic transmission media, and related
equipment and software, comprising the interconnected
worldwide network of computer networks that transmits
information based on a protocol for controlling such
transmission.
3 Online game A game that is offered on the internet and is
accessible by a user through a computer resource
including any telecommunication device.
4 Online gaming An intermediary that offers one or more online games.
intermediary
5 User Any person who accesses or avails any computer
resource of an nline gaming intermediary.
6 User Account Account of a user registered with an online gaming
intermediary.
Guidelines to remove difficulties arising in implementation of the provisions of

section 194BA [Circular No. 5/2023 dated 22.5.2023]
New section 194BA has been inserted by the Finance Act, 2023 requiring to deduct tax
at source by any person responsible for paying to any person (whether resident or non-
resident) any income by way of winnings from any online game during the financial year
on the net winnings in his user account, computed in the manner as may be prescribed,
at the end of the financial year at the rates in force i.e., 30%.
Such net winnings from online games during the previous year would be chargeable to
tax @30% under section 115BBJ. The tax would be calculated on net winnings from
such online games computed in the prescribed manner.
If any difficulty arises in giving effect to the provisions of section 194BA, the CBDT
may, with the previous approval of the Central Government, issue guidelines for the
purposes of removing the difficulty. Accordingly, the CBDT has, vide this circular,
issued the following guidelines:
Question 1: There are a large number of gamers who play with very insignificant
amount and withdraw also very small amount. Deducting tax at source under
section 194BA for each insignificant withdrawal would increase compliance for tax
deductor. Can there be relaxation to ease compliance?
Answer: Tax may not be deducted on withdrawal on satisfaction of all of the following
conditions, namely: -
i. net winnings comprised in the amount withdrawn does not exceed ₹ 100 in a month;

ii. tax not deducted on account of this concession is deducted at a time when the net
winnings comprised in withdrawal exceeds ₹ 100 in the same month or subsequent
month or if there is no such withdrawal, at the end of the financial year; and
iii. he deductor under takes responsibility of paying the difference if the balance in
the user account at the time of tax deduction under section 194BA is not
sufficient to discharge the tax deduction liability.
Question 2: When the net winnings is in kind how will tax deduction under section
194BA operate?
Answer: At the outset, it may be clarified that where money in user account is used to
buy an item in kind and given to user then it is net winnings in cash only and the
deductor is required to deduct tax at source under section 194BA accordingly.
However, there could be a situation where the winning of the game is a prize in kind. In
that situation provision of section 194BA(2) will operate.
According to this where the net winnings are wholly in kind or partly in cash, and partly
in kind but the part in cash is not sufficient to meet the liability of deduction of tax in
respect of whole of the net winnings. In these situations, the person responsible for
paying, shall, before releasing the winnings, ensure that tax has been paid in respect of
the net winnings. In the above situation, the deductor will release the net winnings in
kind after the deductee provides proof of payment of such tax (e.g., Challan details
etc.).
In the alternative, as an option to remove difficulty if any, the deductor may deduct
the tax under section 194BA and pay to the Government.
Question 3: How will the valuation of winnings in kind required to be carried out?
Answer: The valuation would be based on fair market value of the winnings in kind
except in following cases:
i. The online game intermediary has purchased the winnings before providing it to the
user. In that case the purchase price shall be the value for winnings.
ii. The online game intermediary manufactures such items given as winnings. In that
case, the price that it charges to its customers for such items shall be the value for
such winnings.
It is further clarified that GST will not be included for the purposes of valuation of
winnings for TDS under section 194BA.
PAYMENT ON TRANSFER OF CERTAIN IMMOVABLE PROPERTY OTHER THAN

AGRICULTURE LAN [Section 194-IA]
“Agriculture land”, for the purpose of this section, means rural agriculture land.
In other words, transfer of urban agriculture land, will attract the provision of
section 194-IA, if the consideration or the stamp duty value of such land, is ₹50
lakh or more
PAYMENT OF CERTAIN AMOUNTS IN CASH [Section 194N]
Person responsible for deducting tax at source:

However, if the recipient is a co-operative society, tax is required to be deducted

on any sum exceeding ₹ 3crore.
DEDUCTION OF TAX ON BENEFIT OR PERQUISITE IN RESPECT OF BUSINESS

OR PROFESSION [Section 194R]
Person responsible for deducting tax at source:
The provision of section 194R(1) would apply to any benefit or perquisite whether
in cash or in kind or partly in cash and partly in kind.
SPECIAL PROVISION FOR DEDUCTION OF TAX AT SOURCE FOR NON-FILERS

OF INCOME-TAX RETURN [SECTION 206AB]
(1) Applicability: Section 206AB is applicable if amount is paid or payable to specified

person.
"Specified person" means -
(1) a person who has not furnished the return of income for the assessment year
relevant to the previous year immediately preceding the financial year in which tax
is required to be deducted, for which the time limit for furnishing the return of
income under section 139(1) has expired; and
(ii) the aggregate of tax deducted at source and tax collected at source in his case
is ₹ 50,000 or more in the said previous year.
However, the specified person would not include-
(a) a non-resident who does not have a permanent establishment in India; or
(b) a person who is not required to furnish the return of income for the
assessment year relevant to the said previous year and is notified by the Central
Government in this behalf.
Non applicability: the provision of this section will not be applicable where tax is
required to be deducted at source u/s 192, 192A, 194B, 194BA, 194BB, 194-IA,
194-IB, 194LBC, 194M or 194N
PROFITS & GAINS FROM THE BUSINESS OF TRADING IN ALCOHOLIC

LIQUAR , FOREST PRODUCE, SCRAP ETC.[SECTION 206C]
TCS on Remittance of foreign currency by an authorised dealer (AD) under

liberalised remittance scheme (LRS) of Reserve Bank of India (RBI) [Section
206C(1G)] :
Rate of TCS in case of collection by an authorized dealer/ seller of an overseas
tour programme package :
S,No Amount and purpose of Rate of TCS Rate of TCS on
remittance upto 30.9.2023 or after
1.10.2023

(i) Where the amount is for 5% of such 5% till ₹ 7

purchase of an overseas tour amount (without lakhs,20%
programme package any threshold thereafter
limit)
(ii) (a) Where the amount is Nil
remitted for the purpose of (No tax to be collected at source)
education or medical treatment;
and
(b) the amount or aggregate of
the amounts being remitted by a
buyer is less than ₹ 7 lakhs in a
financial year
(iii) (a) Where the amount is Nil
remitted for the purpose other (No tax to be collected at source)
than mentioned in (ii) above; and
the amounts being remitted by a
buyer is less than ₹ 7 lakhs in a
financial year
(iv) (a) where the amount is remitted 5% of the amt or aggregate of
for the purpose of education or amounts in excess of ₹ 7 lakh
medical treatment; and
the amounts in excess of ₹ 7
lakhs is remitted by the buyer in
a financial year
(v) (a) where the amount is remitted 5% of the amt or 20% of the
for the purpose other than aggregate of amt or
mentioned in (iv) above; and amounts in excess aggregate of
(b) the amount or aggregate of of ₹7 lakh amounts in
the amounts in excess of ₹ 7 excess of ₹7
lakhs is remitted by the buyer in lakh
a financial year
(a) where the amount being 0.5% of the amtof aggregate of
remitted out is a loan obtained amounts in excess of ₹ 7 lakhs
from any financial institution as
defined in section 80E, for the
purpose of pursuing any
education; and
the a mounts in excess of ₹ 7
lakhs is remitted by the buyer in
a financial year

Cases where no tax is to be collected:

(i) No TCS by the authorized dealer on an amount in respect of which the sum has
been collected by the seller
(ii) No TCS, if the buyer is liable to deduct tax at source under any other provision
of the Act and has deducted such tax
(iii) No TCS, if the buyer is the Central Government, a State Government, an embassy,
a High Commission, a legation, a commission, a consulate, the trade representation
of a foreign State, a local authority9 or any other person notified by the Central
Government, subject to fulfillment of conditions stipulated thereunder.
Accordingly, the CBDT has, vide notification no. 99/2022 dated 17.8.2022,
notified that the provisions of section 206C(1G) would not apply to a person (being
a buyer) who is a nonresident in India in terms of section 6 and does not have a
permanent establishment in India.
In case any difficulty arises to give effect to, inter alia, the provisions of section
206C(1G), the CBDT is empowered to issue guidelines, with the approval of the Central
Government, for the purpose of removing the difficulty.
In exercise of the power to issue guidelines, the CBDT has, with the approval of
Central Government, vide this circular, issued the following guidelines for removing
certain difficulties-
Question 1: Whether payment through overseas credit card would be counted in
LRS?
Answer: No TCS shall be applicable on expenditure through international credit card
while being overseas till further order.
Question 2: Whether the threshold of ₹ 7 lakh, for TCS to become applicable on
LRS, applies separately for various purposes like education, health treatment and
others? For example, if remittance of ₹ 7 lakh under LRS is made in a financial
year for education purpose and other remittances in the same financial year of ₹ 7
lakh is made for medical treatment and ₹ 7 lakh for other purposes, whether the
exemption limit of ₹ 7 lakh shall be given to each of the three separately?
Answer: lt is clarified that the threshold of ₹ 7 lakh for LRS is combined threshold
for applicability of the TCS on LRS irrespective of the purpose of the remittance.
Thus, in the given example, upto ₹ 7 lakh remittance under LRS during a financial year
shall not be liable for TCS. However, subsequent ₹ 14 lakh remittance under LRS shall
be liable for TCS in accordance with the TCS rates applicable for such remittance.
ln the example, if the remittances under LRS are made in the current financial year at
different point of time, TCS rates for the remaining ₹ 14 lakh remittances under LRS
would depend on the time of remittance as TCS rates changes from 1st October 2023.
TCS rates would be applicable as under:-
Remittances Rate of TCS
First ₹ 7 lakh remittance under LRS No TCS
during the financial year 2023-24 for
education purpose (or for that matter any

purpose)
Remittances beyond ₹ 7 lakh under LRS TCS at 5% (irrespective of the purpose
during the financial year 2023-24, if on or unless it is for education purpose financed
before 30th September 2023 by loan from a financial institution when
the rate is 0.5%)
Remittances beyond ₹ 7 lakh under LRS TCS at 0.5% (if it is for education purpose
during the financial year 2023-24, if on or financed by loan from a financial
after 1st October 2023. institution), 5% (if it is for education or
medical treatment) and 20% (if it is for
other purposes)
Question 3: Since there are different TCS rates on LRS for the first six months
and next six months of the financial year 2023-24, whether the threshold of ₹ 7
lakh, for the TCS to become applicable on LRS, applies separately for each six
months?
Answer: No. The threshold of ₹ 7 lakh, for the TCS to become applicable on LRS,
applies for the full financial year. lf this threshold has already been exhausted; all
subsequent remittances under LRS, whether in the first half or in the second half,
would be liable for TCS at applicable rate.
Question 4: Whether the threshold of ₹ 7 lakh, for TCS to become applicable on
LRS, applies separately for each remittance through different authorised dealers?
lf not, how will authorised dealer know about the earlier remittances by that
remitter through some other authorised dealer?
Answer: lt is clarified that the threshold of ₹ 7 lakh for LRS is qua remitter and not
qua authorised dealer.
Since the facility to provide real time update of remittance under LRS by remitter is
still under development by the RBl, it is clarified that the details of earlier remittances
under LRS by the remitter during the financial year may be taken by the authorised
dealer through an undertaking at the time of remittance. lf the authorised dealer
correctly collects the tax at source based on information given in this undertaking, he
will not be treated as "assessee in default". However, for any false information in the
undertaking, appropriate action may be taken against the remitter under the Act.
It is further clarified that same methodology of taking undertaking from the buyer of
overseas tour program package may be followed by the seller of such package.
Question 5: There is threshold of ₹ 7 lakh for remittance under LRS for TCS to
become applicable while there is another threshold of ₹ 7 lakh for purchase of
overseas tour program package where reduced rate of 5% of TCS applies.
Whether these two thresholds apply independently?
Answer: Yes, these two thresholds apply independently. For LRS, the threshold of ₹ 7
lakh applies to make TCS applicable. For purchase of overseas tour program package,
the threshold of ₹ 7 lakh applies to determine the applicable TCS rate as 5% or 20%.
Question 6: A resident individual spends ₹ 3 lakh for purchase of overseas tour
program package from a foreign tour operator and remits money which is classified

under LRS. There is no other remittance under LRS or purchase of overseas tour
program during the financial year. Whether TCS is applicable?
Answer: ln case of purchase of overseas tour program package which is classified
under LRS, TCS provision for purchase of overseas tour program package shall apply
and not TCS provisions for remittance under LRS. Since for purchase of overseas tour
program package, the threshold of ₹ 7 lakh for applicability of TCS does not apply, TCS
is applicable and tax is required to be collected by the seller. ln this case the tax shall
be required to be collected at 5% since the total amount spent on purchase of overseas
tour program package during the financial year is less than ₹ 7 lakh. The TCS should be
made by the seller.
Question 7: There are different rates for remittance under LRS for medical
treatment/education purposes and for other purposes. What is the scope of
remittance under LRS for medical treatment/education purposes?
Answer: As per the clarification by the RBl, remittance for the purposes of medical
treatment shall include,-
i. remittance for purchase of tickets of the person to be treated medically overseas
(and his attendant) for commuting between lndia and the overseas destination;
ii. his medical expense; and
iii. other day to day expenses required for such purpose.
Education
Remittance for purpose of education shall include,-
(i) remittance for purchase of tickets of the person undertaking study overseas for
commuting between lndia and the overseas destination;
(ii) the tuition and other fees to be paid to educational institute; and
(iii) other day to day expenses required for undertaking such study.
Question 8: Whether purchase of international travel ticket or hotel

accommodation on standalone basis is purchase of overseas tour program package?
Answer: The term 'overseas tour program package' is defined as to mean any tour
package which offers visit to a country or countries or territory or territories outside
lndia and includes expenses for travel or hotel stay or boarding or lodging or any other
expenditure of similar nature or in relation thereto.
It is clarified that purchase of only international travel ticket or purchase of only
hotel accommodation, by in itself is not covered within the definition of 'overseas tour
program package'. To qualify as 'overseas tour program package', the package should
include at least two of the followings:
(i) international travel ticket,
(ii) hotel accommodation (with or without food)/boarding/lodging,
(iii) any other expenditure of similar nature or in relation thereto.
REQUIREMENT TO FURNISH PERMANENT ACCOUNT NUMBER BY COLLECTEE
[Section 206CC]
TCS at higher rate if PAN is not furnished:
However, the maximum the rate of TCS under this section shall not exceed 20%

SPECIAL PROVISION FOR COLLECTION OF TAX AT SOURCE FOR NON-FILERS

OF INCOME-TAX RETURN [SECTION 206CCA)
"Specified person" means a person-

(i) who has not furnished the return of income for the assessment year relevant to the
previous year immediately preceding the financial year in which tax is required to be
collected, for which the time limit for furnishing the return of income u/s 139(1) has
expired; and
(ii) the aggregate of tax deducted at source and tax collected at source in his case is ₹
50,000 or more in the said previous year.
However, the specified person would not include -
(i) a non-resident who does not have a permanent establishment in India; or
(ii) a person who is not required to furnish the return of income for the
assessment year relevant to the said previous year and is notified by the Central
Government in this behalf.

PROVISION FOR FILING RETURN OF

INCOME AND SELF ASSESSMENT
VOLUNTARY RETURN OF INCOME [SECTION 139(1)]
It has been provided that a every person, being an individual or a HUF or an AOP or
BOI or an artificial juridical person has to furnish return of income on or before the
due date in such form and verified in such manner and setting forth such other
particulars, as may be prescribed-
(a) if his total income or total income of any other person in respect of which he is
assessable during the previous year, without giving effect to the provisions of Chapter
VI-A or Section 54 or section 54B or section 54D or section 54EC or section 54F or
section 54G or section 54GA or section 54GB exceeded the basic exemption limit.
The basic exemption limit is ₹ 3,00,000 for individuals/ HUF/ AOPS/ BOIs and
artificial juridical persons under default tax regime under section 115BAC. This
amount denotes the level of total income, which is arrived at after claiming the
admissible deductions under Chapter VI-A i.e., 80CCD (2), 80CCH(2) and 80JJAA
under default tax regime and exemption under section 54/548/54D/ 54EC or 54F
in respect of capital gain. However, the level of total income to be considered for
the purpose of filing return of income is the income before claiming the admissible
deductions under Chapter VI-A and exemption under section 54/54B/54D/54EC or
54F.
However, in case the assessee has exercised the option of shifting out of the
default taxregime provided under section 115BAC(1A), the basic exemption limit
would be ₹2,50,000 for individuals/HUF/AOPS/ BOIS and artificial juridical
persons, 3,00,000 for resident individuals of the age of 60 years but less than 80
years and 5,00,000 for resident individuals of the age of 80 years or more at any
time during the previous year. Also, the assessee would be eligible for other
deductions under Chapter VI-A subject to fulfilling the stipulated conditions.
PERMANENT ACCOUNT NUMBER (PAN) [SECTION 139A]
Further, every person who has not been allotted a PAN and intends to enter into
such transaction as prescribed by the CBDT is also required to apply for PAN to
the Assessing Officer. Accordingly, Rule 114BA has been inserted to prescribe
the following transactions:
Person required to apply for PAN [Rule 114BA] Time limit for making
application for PAN [Rule
114]
(i) Every person, who intends to deposit cash in At least 7 days before the
CA/CS/CMA, Contact no. for classes – 9039600091,

his one or more accounts with a banking date on which he intends

company, cooperative bank or post office, if to deposit cash over the
the cash deposit or the aggregate amount of specified limit, i.e., ₹ 20
cash deposit in such accounts during a financial lakh or more.
year is ₹ 20 lakh or more
(ii) Every person, who intends to withdraw cash At least 7 days before the
from his one or more accounts with a banking date on which he intends
company, co-operative bank or post office, if to withdraw cash over the
the cash withdrawal or the aggregate amount specified limit, ie., ₹ 20
of cash withdrawal from such accounts during a lakh or more.
financial year is ₹ 20 lakh or more
(iii) Any person, who intends to open a current At least 7 days before the
account or cash credit account with a banking date on which he intends
company or a CO-operative bank, or a post to open such account.
Office
CA/CS/CMA, Contact no. for classes – 9039600091,


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INCOME TAX AMENDMENTS (Finance Act 2023)

CHAPTER – 7: INCOME FROM OTHER SOURCES

CA/CS/CMA, Contact no. for classes – 9039600091

issued between bonus exempt.

CA/CS/CMA, Contact no. for classes – 9039600091

CA/CS/CMA, Contact no. for classes – 9039600091

CA/CS/CMA, Contact no. for classes – 9039600091

CA/CS/CMA, Contact no. for classes – 9039600091

Sum assured 45,00,000 55,00,000

CA/CS/CMA, Contact no. for classes – 9039600091

CA/CS/CMA, Contact no. for classes – 9039600091

CA/CS/CMA, Contact no. for classes – 9039600091

Consideration received as on 12,00,000

CA/CS/CMA, Contact no. for classes – 9039600091

TAXABILITY OF CASUAL INCOME [SECTION 115BB]

CA/CS/CMA, Contact no. for classes – 9039600091

TAX IN RESPECT OF WINNINGS FROM ONLINE GAMES [SECTION 115BBJ)

CA/CS/CMA, Contact no. for classes – 9039600091

AGGREGATION OF INCOME AND SET-

CA/CS/CMA, Contact no. For Classes – 9039600091

DEDUCTION UNDER CHAPTER VI-A

CA/CS/CMA, Contact no. for Classes – 9039600091,

DEDUCTION IN RESPECT OF CONTRIBUTION TO AGNIPATH SCHEME [SECTION

CA/CS/CMA, Contact no. for Classes – 9039600091,

DEDUCTION IN RESPECT OF DONATIONS TO CERTAIN FUNDS, CHARITABLE

Eligible assessee: All assessees.

In case of an individual, HUF, AOP (other than a co-operative society) or Bol or an

Funds eligible for 50% deduction without any qualifying limit -

SPECIAL PROVISIONS IN RESPECT OF NEWLY ESTABLISHED UNITS IN SPECIAL

CA/CS/CMA, Contact no. for Classes – 9039600091,

Consequences of Misutilisation/ Non-utilisation of reserve :

CA/CS/CMA, Contact no. for Classes – 9039600091,

Meaning of Export turnover: It means the consideration in respect of export by the

CA/CS/CMA, Contact no. for Classes – 9039600091,

(11) Other provisions:

CA/CS/CMA, Contact no. for Classes – 9039600091,

TDS IN CASE OF INCOME UNDER THE HEAD 'SALARIES' [SECTION 192]

CA/CS/CMA, Contact no. for classes – 9039600091 Page 38

WINNINGS FROM LOTTERY OR CROSSWORD PUZZLE [SECTION 194B]

WINNINGS FROM ONLINE GAMES [SECTION 194BA]

CA/CS/CMA, Contact no. for classes – 9039600091 Page 39

Guidelines to remove difficulties arising in implementation of the provisions of

CA/CS/CMA, Contact no. for classes – 9039600091 Page 40

PAYMENT ON TRANSFER OF CERTAIN IMMOVABLE PROPERTY OTHER THAN

PAYMENT OF CERTAIN AMOUNTS IN CASH [Section 194N]

Person responsible for deducting tax at source:

CA/CS/CMA, Contact no. for classes – 9039600091 Page 41

However, if the recipient is a co-operative society, tax is required to be deducted

DEDUCTION OF TAX ON BENEFIT OR PERQUISITE IN RESPECT OF BUSINESS

Person responsible for deducting tax at source:

SPECIAL PROVISION FOR DEDUCTION OF TAX AT SOURCE FOR NON-FILERS

(1) Applicability: Section 206AB is applicable if amount is paid or payable to specified

PROFITS & GAINS FROM THE BUSINESS OF TRADING IN ALCOHOLIC

TCS on Remittance of foreign currency by an authorised dealer (AD) under

CA/CS/CMA, Contact no. for classes – 9039600091 Page 42

(i) Where the amount is for 5% of such 5% till ₹ 7

CA/CS/CMA, Contact no. for classes – 9039600091 Page 43

Cases where no tax is to be collected:

CA/CS/CMA, Contact no. for classes – 9039600091 Page 44

CA/CS/CMA, Contact no. for classes – 9039600091 Page 45

Question 8: Whether purchase of international travel ticket or hotel

CA/CS/CMA, Contact no. for classes – 9039600091 Page 46

SPECIAL PROVISION FOR COLLECTION OF TAX AT SOURCE FOR NON-FILERS

"Specified person" means a person-