Welcome

Income Tax Lecture by Krishan Kant

 What is Tax?
• Tax is mandatory payment made to the Government without
any guarantee of direct and equal benefit in return.

• Why it is levied?
1) Resource Mobilisation i.e Source of Income
2) Resource Allocation i.e investment
3) Redistributive justice i.e equal distribution of wealth
 Types of Taxes
• On the basis of ultimate burden

Tax
Direct Tax Indirect Tax

Income Tax VAT

(Corporate Tax Sales Tax
(27.35) Personal Service Tax
income tax (23.3%)) Entertainment Tax
Excise Duty (11.4%)
Property Tax
GST (32.8%)
Wealth Tax Custom Duty (5%)
(Abolished)
 What governs income tax
in India?
• Income Tax Act 1961
• Income Tax Rules 1962
• Notifications and Circulars or Clarifications
• Judicial Pronouncements
 Question Time
• Which of these tax reform is related to sales tax in India?
A. Direct Tax Code
B. Wealth Tax
C. Goods and Services tax (GST)
D. Specific anti-avoidance rules
 Question Time
• VAT is:
A. Value added tax
B. Value augmenting tax
C. Value addition tax
D. Value augmented tax
 Question Time
• GST is?
A. Goods sales tax
B. Great service tax
C. Goods and services tax
D. Guruji Seva Tax
 Question Time
• Which of the following taxed have highest proportion in
government’s revenue?
A. Goods and Services Tax
B. Custom duty
C. Corporate Tax and personal Income Tax
D. Property Tax
 Question Time
• Which of these is not a Direct Tax?
A. Value Added Tax
B. Income Tax
C. Corporate Tax
D. Non of the above
 Important Definitions
• Previous Year u/s 3
• Assessment Year u/s 2(9)
• Assessee u/s 2(7)
• Person u/s 2(31)
• Exemption v/s Deduction
 Question Time
• Which of the following statements is False.
A. Exemption can never exceed the amount of income
B. Exemption may be more than the amount of income
C. Deduction is given from income chargeable to tax
D. There is a difference between exemption and deduction
 When taxable in Previous
Year itself?
• Shipping business of Non residents u/s 172
• Person leaving India permanently u/s 174
• AOP or BOI formed for particular purpose or Event u/s 174A
• Person likely to transfer property to avoid tax u/s 175
• Discontinued Business u/s 176
 Procedure
• Determine Residential Status and Scope of Income
• Calculate Taxable incomes under 5 Heads
• Clubbing of income
• Set-off and carry forward of losses
• Determine Gross total income
• Less deductions u/s 80C to 80U
• Determine Total Income
• Apply rates given in relevant finance act
 Residential Status
• Individual and HUF – 3 Categories
• Other – 2 Categories
• Rules?
Scope of Income
 Question Time
• Which of these incomes is taxable for RNOR.
A. Income received or deemed to be received in India whether
earned in India or not
B. Income accrue or arise or deemed to be accrue or arise in
India whether received in India or not
C. Income accrue or arise and received outside India from
business or profession controlled from India
D. All of the above
 Question Time
• ABC Ltd. Is a Company registered in Singapore. Place of
Effective management is situated in India. Its Residential
Status will be-
A. Non-Resident
B. Resident
C. Resident but not ordinary resident
D. Resident and ordinary resident
 Question Time
• ABC Ltd. Is a Company registered in India. Place of
Effective management is situated in Singapore. Its
Residential Status will be-
A. Non-Resident
B. Resident
C. Resident but not ordinary resident
D. Resident and ordinary resident
 Salary
• Basis of Charge – Due or receipt whichever earlier
• When income is chargeable under the head Income From Salary

• Basic
• Commission or bonus etc
• Allowances
• Perquisites
• Retirement Benefits (Gratuity & Leave Encashment Limit?)
• Gross Salary
• Less- Deductions
• u/s 16(i) Standard Deduction 50,000 (in place of TA and MR)
• u/s 16(ii) Entertainment Allowance
• u/s 16(iii) Professional Tax
• Income From Salary
 Question Time
• Salary is taxable when-
A. It is accrued
B. It is received
C. It is due
D. Due or receipt whichever earlier
 Question Time
• Mr A, a chartered accountant is employed as an internal
auditor with X Ltd. He requests the employer to call his
salary as internal audit fee. It will be taxed under the head:
A. Salary
B. Other Sources
C. Profits or gains of business or profession
D. Capital Gains
 Income From House
Property
• Building or land appurtenant thereto, Owner or Deemed
Owner, not used for own business
• Gross Annual Value
• Less- Municipal Taxed Paid
• Annual value (NIL for Upto 2 Self occupied properties)
• Less- Deductions u/s 24
• A) Standard deduction @30%
• B) Interest on loan borrowed (Limit?)
• Income From House Property
 Capital Gains
• Chargeability 45(1)
• Transfer u/s 2(47)
• Capital Asset u/s 2(14) (other than SIT, PE, RAL)
• Transaction not transfer u/s 47
• When not taxable in previous year of Transfer.
• Short Term Vs Long Term (12 Months vs 24 Months Vs 36 months)
• Base Year Shifted from 1981-82 to 2001-02
• Exemption u/s 54 available for investment in 2 houses (2Cr)
• LTCG from Transfer of Listed Equity Shares exceeding 1,00,000
not taxable @10%
• Rates (10%, 15%, 20%, Slab)
 Question Time
• Long term Capital Gains from transfer of equity shares is
chargeable @10% if Capital gain exceeds
A. 50000
B. 10000
C. 100000
D. 1000000
 PGBP
• Limit of Payment to single person in a single day in mode
other than specified reduced from 20000 to 10000.
• Presumptive income u/s 44AD
Turnover limit increased to 2 Cr and presumptive income
reduced to 6% of turnover in case of receipts through electronic
mode
• Presumptive income for profession u/s 44ADA
Taken as 50% of Gross Receipts
 Other Sources
• Dividend from Indian Company exceeding 10 Lac in Previous
Year is now taxable @10%.
 Clubbing of income
• Transfer of income without transferring asset
• Income from asset transferred to spouse without adequate
consideration
• Income from asset transferred to Son’s wife without adequate
consideration
• Remuneration to spouse from business concern in which
assessee has substantial interest.
• Income of minor child
Set off and Carry Forward
Loss Time Limit
Speculative Business 4 Years
Race horses 4 Years
Specified business, Depreciation, No limit
scientific asset, family planning
others 8 years
 Deductions
• 80C limit – 150000
• 80D limit for senior citizen is now increased from 30000 to
50000.
• 80TTB introduced which gives upto 50,000 deduction to
senior citizens in respect of income from interest of FDs or
Savings A/C.
 Rates And Slabs
• For Individual (Not Senior Citizen)
Upto 250000 – Exempt
250001 to 500000 – 5%
500001 to 1000000 – 20%
Above 1000000 – 30%

Plus surcharge @10%(Income >50lav but <= 1Cr)

@15%(Income >1Cr)
Plus Health and Education Cess @4% of Tax+Surcharge
Rebate of Rs 12500 if Income Does not exceed Rs 5,00,000
 Rates And Slabs
• For Individual (Senior Citizen)
Upto 300000 – Exempt
300001 to 500000 – 5%
500001 to 1000000 – 20%
Above 1000000 – 30%

Plus surcharge @10%(Income >50lav but <= 1Cr)

@15%(Income >1Cr)
Plus Health and Education Cess @4% of Tax+Surcharge
 Rates And Slabs
For Individual (Very Senior Citizen)
Upto 500000 – Exempt
500001 to 1000000 – 20%
Above 1000000 – 30%

Plus surcharge @10%(Income >50lav but <= 1Cr)

@15%(Income >1Cr)
Plus Health and Education Cess @4% of
Tax+Surcharge
 Rates And Slabs
Company
• Domestic Company – 30% (25% if turnover upto 250Cr)
Surcharge – 7% (Income >1Cr but <=10Cr)
12% (Income >10Cr)
• Foreign Company – 40%
Surcharge – 2% (Income >1Cr but <=10Cr)
5% (Income >10Cr)
 Other Points
• No person shall receive Rs 2 Lac or more in Cash.

• Penalty of Late Filing of return u/s 234F

5,000 – Delay upto 31st december
10,000- thereafter
(1,000 for people having income upto 5 Lac)
• TDS limit for interest from FDs increased from 10,000 to
40,000
• TDS limit for Rent increased from 1,80,000 to 2,40,000
 Question Time
• Which of the following statements is not correct
A. Deduction u/s 80C is upto 1,50,000
B. Maximum deduction of health insurance premium u/s 80D
for senior citizen is 50,000
C. Surcharge for individual having Total Income of 60,00,000
will be 15%
D. Maximum deduction on account of Interest on loan for self
occupied house property is upto 2,00,000
 Question Time
• For the previous year 2018-19, surcharge of 15% is
applicable for individual if the total income exceeds-
A. 10 Lac
B. 50 Lac
C. 1 Cr
D. 10 Cr
 Question Time
• Which of these Incomes is exempt from tax u/s 10?
A. Income from house property
B. Interest paid to a resident
C. Share of income in a firm
D. All of the above
 Thank You
and
Best Wishes for the Exam