The document discusses the taxation of income from various sources such as interest on securities, house property, and other topics. It provides definitions and scope for interest on securities under Section 22, including allowable deductions. For income from house property under Section 24-25, it defines annual value and allowable deductions such as repairs, insurance, taxes, and vacancy allowance. It also discusses securities held for trading and permissible interest deductions.
The document discusses the taxation of income from various sources such as interest on securities, house property, and other topics. It provides definitions and scope for interest on securities under Section 22, including allowable deductions. For income from house property under Section 24-25, it defines annual value and allowable deductions such as repairs, insurance, taxes, and vacancy allowance. It also discusses securities held for trading and permissible interest deductions.
The document discusses the taxation of income from various sources such as interest on securities, house property, and other topics. It provides definitions and scope for interest on securities under Section 22, including allowable deductions. For income from house property under Section 24-25, it defines annual value and allowable deductions such as repairs, insurance, taxes, and vacancy allowance. It also discusses securities held for trading and permissible interest deductions.
The document discusses the taxation of income from various sources such as interest on securities, house property, and other topics. It provides definitions and scope for interest on securities under Section 22, including allowable deductions. For income from house property under Section 24-25, it defines annual value and allowable deductions such as repairs, insurance, taxes, and vacancy allowance. It also discusses securities held for trading and permissible interest deductions.
The following income of an assessee shall be classified and computed under the head “Interest on Securities ” namely (a). interest received by the assessee on any security of the Government ; and (b). interest received by him on debentures or other securities of money issued by or on behalf of a local authority or a company. Fundamentals of Taxation Interest on Securities Section 22 & 23 Scope of the Section
This section deals with interest on securities issued by (a)
Interest on securities is a separate head of charge.
Even if the securities are held as trading assets or dealt with in course of business by financial institutions like bankers of dealer of securities, the interest earned must be assessed under the provisions of this section (interest on securities) not undeSec.28 (income from business or profession) or under Sec. 33 (income from other sources) Supreme Court of India. United Commercial Bank Ltd.V C.I.T.[1957]32 I.T.R.688 Fundamentals of Taxation Interest on Securities Section 22 & 23 Permissible Deductions
As per provisions of Sec. 22 of the Income Tax Ordinance,
1984 any Income derived from Bonds and/ or Securities(T&T Bond, National Investment Bond, Treasury Bond/Bill etc.) Interest received from Debenture, Savings Instruments issued by National Savings Bureau, to be shown as Interest on Securities. Normally, interest paid on Loan borrowed absolutely for procuring the Securities is deductable from the Income. Income under this head which is subject to the Provisions of Sec, 82C will not be subject to such deduction. During Assessment Year 2016-17, amount of Tax Deducted at Source shall be considered as Final Satisfaction of Minimum Tax Liability. Fundamentals of Taxation Interest on Securities Section 22 & 23 Permissible Deductions Collection charges: charges paid by an assessee for collection of interest, generally paid to bank for commisson and or bank charges can be claimed by thee assessee as charge against the income earned but not the expenses incurred by an assessee for self collection. United Commercial Bank Ltd. V. C.I.T.[1953]24 I.T.R. 425 Interest on money borrowed for investment : The interest (paidor accrued) on the amount borrowed specifically for investment in securities is chargeable against the income earned from that particular security. In case of borrowing made for business and not specifically for investment in securities , even if a certain portion of such borrowing is invested in securities, no deduction can be claimed under this section. Indian Steamship Co. Ltd. V C.I.T. [1953] 24 I.T.R. 448 Fundamentals of Taxation Definition Income from House Property Section 24 & 25
Section 24 of the Ordinance
Income out of the annual value of any property consisting of any building and lands appurtenant thereto of which assessee is the owner, other than such portion(s) of the property as the assessee may occupy for the purpose of any business or profession carried by the assessee, is assessable under the head “Income from house property” Fundamentals of Taxation Income from House Property Section 24 & 25
House property : The provisions of
this section are confined to building and land appurtenant thereto. Income from any land not appurtenant to building is subject to be assessed under the provisions of section 33 (Income from other sources) Fundamentals of Taxation Income from House Property Section 24 & 25
Annual value: Under the provisions of sec.24, the annual
value of property is subject to tax. Sec,2(3) of the Ordinance defined annual value as “ the sum for which the property might reasonably be expected to let from year to year” i.e. the amount at which the landlord could let the premises considering all the prevailing circumstances such as the locality, availability of civic facilities etc. In case where the actual rent is more than the annual value, in that case the actual rent shall be considered as annual vale. To summarise, the basis of assessment is “ actual rent or annual value which ever is higher” Fundamentals of Taxation Income from House Property Section 24 & 25 Allowable Deductions (Section-25)
As per the provisions of sec.25 of the act, the following
deductions are allowable in the determination of income from house property 1. In respect of expenditure for repairs, collection of rent, water & sewerage, electricity, salary of watchmen, pumpman, caretaker, liftmen and all other expenditures for maintenance and provision of basic services - when the building is used for residential purpose, 25% of the annual value - when the building is used for commercial purpose, 30% of the annual value Fundamentals of Taxation Income from House Property Section 24 & 25 Allowable Deductions (Section-25)
2. Premium paid to insure the building to cover the risk of damage
and destruction. 3. Interest on loan taken for construction, re-construction, renovation of the building 4. Annual taxes payable to any legal authority not being a capital charge. 5. Ground rent 6. Amount payable to government for land development or rent payable on the land appurtenant to building 7. Proportionate vacancy allowance 8. Interest payable during construction to be allowed over first three years during which income from the said property is