NAME ROLL NO. REG. NO.

SANJEET SHAH 33 CRO0645429

SHREYANSH JAIN 34 CRO0647609

SHUBHAM GOYAL 35 CRO0641722

SHWETA GOUR 36 CRO0651887

 What are Direct Taxes?
 Direct Tax v/s Indirect Tax
 Examples of Direct and Indirect Taxes
 Merits of Direct Taxes
 Demerits of Direct Taxes
 Heads of Income
 A direct tax is a tax imposed upon a person or
property as distinct from a tax imposed upon a
transaction, which is described as an indirect tax.

It cannot be shifted by the taxpayer to someone

else, whereas an indirect tax can be.
 Direct Taxes
 Paid & borne by the
same person
 Levied on a person or a
property
 Compulsory to pay
Indirect Taxes
 Paid & borne by
different persons
 Levied on a transaction
 Only paid on the
occurrence of a
transaction
 Direct Taxes Indirect Taxes
 Income tax  Goods & Services tax
 Corporate tax  Custom duty
 Gift tax  Value added tax
 Sales tax
 The lower income group carries a lower
burden of tax
 Self-payment of direct taxes makes one
socially aware and responsible
 The distribution of wealth is equal under
direct taxation
 Direct tax rates can be used as an anti-
inflationary tool
 Direct taxes might discourage savings and
investments
 The biggest disadvantage being it leads to
tax evasion
 It might be inconvenient to pay direct taxes
as the procedure is complicated
 Income from Salary
 Income from House Property
 Profits & Gains of a Business or
Profession
 Income from Capital Gain
 Income from Other Sources
 Salary income is chargeable to tax on “due
basis” or “receipt basis” whichever is earlier.

 Existence of relationship of employer and

employee is must between the payer and
payee to tax the income under this head.
Income from salary shall consists of
following:

a) Salary due from employer (including former employer) to

taxpayer during the previous year, whether paid or not;
b) Salary paid by employer (including former employer) to
taxpayer during the previous year before it became due;
c) Arrear of salary paid by the employer (including former
employer) to taxpayer during the previous year, if not
charged to tax in any earlier year
 All types of properties are taxed under the head
‘income from house property’ in the income tax
return. An owner for the purpose of income tax is
its legal owner, someone who can exercise the
rights of the owner in his own right.

 When a property is used for the purpose of

business or profession or for carrying out
freelancing work – it is taxed under the ‘income
from business and profession’ head. Expenses on
its repair and maintenance are allowed as
business expenditure.
HOUSE PROPERTY MAY BE:-

Self Occupied Property

Let out Property

Inherited Property
Gross Annual Value XXX

Less: Municipal Tax XXX

Net Annual Value (NAV) XXX
Less: Deduction u/s 24
• Standard deduction u/s 24(a) XXX
(30% of NAV)
• Interest on Borrowings u/s XXX
24(b)
Income/(Loss) from HP XXX/ (XXX)
a) Sec. 2(13) defines “business” to include any trade,
commerce or manufacture or any adventure or
concern in the nature of trade, commerce or
manufacture.

b) Sec. 2(36) defines “profession” to include vocation.

i.e. income earned not on the basis of professional
degree but also on the basis of inborn talent.
a) Profits or gains of any business or profession carried
on by the assesse at any time during the previous
year.
b) Profit on sale of import entitlements or EXIM Scrip.
c) Any profit on transfer of duty entitlement pass book
scheme/replenishment certificate.
d) Any interest salary, bonus due to or received by a
partner of a firm from such firm.
e) Any compensation or other payment due to or
received by a person in connection with termination
or modification of contract
a) Any profit or gain that arises from the sale of a ‘capital asset’
is a capital gain.

b) This gain or profit is considered as income and hence charged

to tax in the year in which the transfer of the capital asset takes
place. This is called capital gains tax, which can be short-term
or long-term.

c) Capital gains are not applicable when an asset is inherited

because there is no sale, only a transfer. However, if this asset
is sold by the person who inherits it, capital gains tax will be
applicable.

d) The Income Tax Act has specifically exempted assets received

as gifts by way of an inheritance or will.
a) Any stock, consumables or raw material, held
for the purpose of business or profession
b) Personal goods such as clothes and furniture
held for personal use
c) Agricultural land in rural India
d) 6½% gold bonds (1977) or 7% gold bonds (1980)
or national defence gold bonds (1980) issued by
the central government
e) Special bearer bonds (1991)
f) Gold deposit bond issued under the gold
deposit scheme (1999)
<12 months in case >12 months in
of equity shares, case of equity
units of UTI shares, units of UTI

<24 months in >24 months in

case of land& case of land&
building building

<36 months in >36 months in

other cases other cases
Any income which is not chargeable
to tax under any other heads of income
and which is not to be excluded from
the total income shall be chargeable
to tax as residuary income under the
head “Income from Other Sources”.
END