The Income Tax Department NEVER asks for your PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts through e-mail.
The Income Tax Department appeals to taxpayers NOT to respond to such e-mails and NOT to share information relating to their credit card, bank and other financial accounts.
This calculator enables valuation of perquisite for medical facility provided to an employee by his employer in India or outside India
Treatment of medical facility provided by the employer to employee is as follows:
Medical facility In India
Note: Fixed medical allowance given by employer to employee is fully chargeable to tax.
Medical facility outside India
Expenditure incurred by the employer on medical treatment of employee is taxable subject to the conditions given below:-
This calculator enables calculation of taxable value of perquisites in case the employer provided rent free accomodation to its employees
Rent Free Accommodation
Rent free accommodation given by employer to employee shall be treated as perquisites in hands of employee and income tax would be levied in the manner specified below:-
Calculation of perquisite value, is given hereunder:
License fees determined by the Central or state government minus Rent paid by employee (if any)
* Population as per 2001 census
Rent paid by the employer or 15% of salary (whichever is lower) minus rent paid by employer.
This calculator enables calculation of taxable and exempt portion of Transport allowance given to an employee by his employer
This calculator enables calculation of taxable and exempt portion of Children Education and Hostel Allowance given to an employee by his employer
Children education and hostel allowance
Children education allowance (by whatever name called) is exempt upto Rs. 100/- per month per child up to a maximum of two children.
Further, any allowance granted to an employee to meet the hostel expenditure on his child (whatever name called) is exempt upto Rs. 300/- per month per child up to a maximum of two children.
House rent allowance received by an employee is taxable. However exemption is available under section 10(13A). This calculator enables calculation of taxable and exempt portion of HRA
House Rent Allowance Calculator
House rent allowance received by an employee is taxable. However exemption is available under
section 10(13A). The exemption is based on certain set of conditions.
Exemption for House rent allowance is regulated by rule 2A. The least of the following is exemption from tax:
a. an amount equal to 50 per cent of salary, where the residential house is situated at Bombay, Calcutta, Delhi or Madras and an amount equal to 40 per cent of salary where the residential house is situated at any other place;
b. house rent allowance received by the employee in respect of the period during which the rental accommodation is occupied by the employee during the previous year; or
c. the excess of rent paid over 10 per cent of salary.
The taxable HRA is a part of income from salaries. While filing Income-tax return, the same should be shown under the income from salary.
This calculator allows to calculate the Total Income and Tax thereon alongwith interest under section 234 A/B/C
Income and Tax Calculator
Section 80C to
80U provides certain deductions which can be claimed from Gross Total Income (GTI). After claiming these deductions from GTI, the income remaining is called as Total Income. In other words, GTI
less Deductions (under
section 80C to
80U) = Total Income (TI). Total income can also be understood as taxable income. Following table gives a better understanding of the difference between GTI and TI :
Computation of gross total income and Taxable Income
Note : Inter source losses, inter head losses, brought forward losses, unabsorbed depreciation, etc., (if any) will have to be adjusted (as per the Income-tax Law) while computing the gross total income.
Click here to view the detailed document on Treatment of Income from Different Sources
Click here to view prevalent tax rates
This calculator allows you to calculate the provisions required to be made for deferred tax as per provisions of AS 22
Deferred Tax Calculator
Deferred Tax is the tax effects of Timing Difference. The whole concept of deferred tax is depend on timing difference. Before proceeding further we need to understand the meaning of Accounting Income and Taxable Income.
Accounting income (loss) is the net profit or loss for a period, as reported in the statement of profit and loss, before deducting income tax expense or adding income tax saving.
Taxable income (tax loss) is the amount of the income (loss) for a period, determined in accordance with the tax laws, based upon which income tax payable (recoverable) is determined.
As per AS-22 Timing differences are the differences between taxable income and accounting income for a period that originate in one period and are capable of reversal in one or more subsequent periods.
In Simple words, Timing Difference is those items of Expense/Income which creates difference between Accounting Income and taxable Income of a period and subsequent period.
This calculator allows you to compute your tax liability on mere input of your taxable income
After ascertaining the total income,
i.e., income liable to tax, the next step is to compute the tax liability for the year. Tax liability is to be computed by applying the rates prescribed in this regard. For rates of tax, refer "Tax Rate" section. Following table will help in understanding the manner of computation of the total tax liability of the taxpayer.
Computation of total income and tax liability for the year
(*) Rebate under
91 is available to a taxpayer in respect of double taxed income,
i.e., income which is taxed in India as well as abroad.
Note : For provisions relating to Minimum Alternate Tax (MAT) in case of corporate taxpayers refer tutorial on "MAT/AMT".
Click here to view prevalent tax rates
This calculator enables estimation of advance tax installments on the basis of taxable income of a tax payer
Advance Tax Calculator
Advance tax is to be calculated on the basis of expected tax liability of the year. Advance tax is to be paid in instalments as given below:
Note: Any advance tax paid on or before 31st day of March shall also be treated as paid during the same financial year.
The deposit of advance tax is made through challan ITNS 280 by ticking the relevant column,
i.e., advance tax.
This calculator enables calculation of TDS to be deducted from specified payments being made to resident/non-resident
Tax is deductible at source at the rates given in table (infra). If PAN of the deductee is not intimated to the deductor, tax will be deducted at source by virtue of
section 206AA either at the rate given in the table or at the rate or rates in force or at the rate of 20 per cent, whichever is higher. Further, under
section 94A(5), if payment or credit is made or given to a deductee who is located in a notified jurisdictional area, tax is deductible at the rate given in the table or at the rate of 30 per cent, whichever is higher. TDS rates for the financial year 2018-19 are as follows—
TDS Rates (in %)
1.1 where the person is resident in India-
Section 192: Payment of salary
Normal Slab Rate
1. In the case of a person other than a company
Section 193: Interest on securities
a) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act;
b) any debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;
c) any security of the Central or State Government;
[i.e. 8% Savings (Taxable) Bonds, 2003 and 7.75% Saving (Taxable) Bonds, 2018]
d) interest on any other security
Section 194A: Income by way of interest other than "Interest on securities"
Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort
Section 194BB: Income by way of winnings from horse races
Section 194C: Payment to contractor/sub-contractor
Section 194D: Insurance commission
Section 194DA: Payment in respect of life insurance policy
Section 194EE: Payment in respect of deposit under National Savings scheme
Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India
Section 194G: Commission, etc., on sale of lottery tickets
Section 194H: Commission or brokerage
Section 194-I: Rent
a) Plant & Machinery
b) Land or building or furniture or fitting
Section 194-IA: Payment on transfer of certain immovable property other than agricultural land
Section 194-IB:Payment of rent by individual or HUF not liable to tax audit
Note: This provision is applicable from June 1, 2017
Section 194-IC:Payment of monetary consideration under Joint Development Agreements
Section 194J: Any sum paid by way of
a) Fee for professional services,
b) Fee for technical services
d) Remuneration/fee/commission to a director or
e) For not carrying out any activity in relation to any business
f) For not sharing any know-how, patent, copyright etc.
Note: With effect from June 1, 2017 the rate of TDS would be 2% in case of payee engaged in business of operation of call center.
Section 194LA: Payment of compensation on acquisition of certain immovable property
Note: With effect from April 1, 2017, no deduction of tax shall be made on any payment which is exempt from levy of income-tax under Right to Fair Compensation Act, 2013.
Section 194LBA(1): Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders.
Any Other Income
1.2 where the person is not resident in India*-
Section 192: Payment of Salary
Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort
Section 194E: Payment to non-resident sportsmen/sports association
Section 194EE: Payment in respect of deposits under National Savings Scheme
Section 194F:Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India
Section 194LB: Payment of interest on infrastructure debt fund
Section 194LC: Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds (including long-term infrastructure bond)
Note: With effect from April 1, 2018 benefit of such concessional TDS rate has been further extended by three years. Now TDS at concessional rate of 5% will be applicable for borrowings made before July 1, 2020.
Section 194LD: Payment of interest on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign Investor
Section 195: Payment of any other sum to a Non-resident
a) Income in respect of investment made by a Non-resident Indian Citizen
b) Income by way of long-term capital gains referred to in
Section 115E in case of a Non-resident Indian Citizen
c) Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of
d) Income by way of long-term capital gains as referred to in Section 112A
e) Income by way of short-term capital gains referred to in
f) Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33), 10(36) and 112A
g) Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in
Section 194LB or
h) Income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to sub-section (1A) of
Section 115A of the Income-tax Act, to the Indian concern, or in respect of any computer software referred to in the second proviso to sub-section (1A) of
Section 115A of the Income-tax Act, to a person resident in India
i) Income by way of royalty [not being royalty of the nature referred to point g) above E] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy
j) Income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy
k) Any other income
Section 196B: Income from units (including long-term capital gain on transfer of such units) to an offshore fund
Section 196C: Income from foreign currency bonds or GDR of an Indian company (including long-term capital gain on transfer of such bonds or GDR)
Section 196D: Income of foreign Institutional Investors from securities (not being dividend or capital gain arising from such securities)
sections 192 tax is deductible from salary. The payer shall calculate salary taxable in the hands of recipient. The amount so determined is subject to tax deduction under
sections 192. Under
sections 192A, tax is deductible on taxable accumulated balnce of provident fund. Under
section 195, tax is deductible only if income is taxable in the hands of recipient in India. In any other case, gross payment is subject to tax deduction.
Category B, tax is deductible at the above rates or the rates specified in ADT agreements entered into by the Central Government under
section 90 (whichever is lower) [ section 2(37A)(iii)].
3. Tax is not deductible under
194EE if the recipient makes a declaration in Form No. 15G/15H under the provisions of
section 197 the recipient can apply the Assessing Officer in Form No. 13 to get a certificate of lower/no tax deduction. This benefit is, however, not available if tax is deductible under
5. Royalty payable by Government or an Indian concern in pursuance of an agreement made by non-resident with the Government or the Indian concern after March 31, 1976, where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to
section 115A(1A) to the Indian concern or in respect of computer software referred to in the second proviso to
section 115A(1A), to a person resident in India.
6. Not being royalty of the nature referred to above, payable by Government or an Indian concern in pursuance of an agreement made by non-resident with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to matter included in the industrial policy, the agreement is in accordance with that policy.
7. Fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by non-resident with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to matter included in the industrial policy, the agreement is in accordance with that policy.
Taxability of capital gains depends on
the nature of a capital asset which can be either long-term or
short-term. Nature of a capital asset is determined on basis of its
period of holding since date of acquisition.
Period of Holding of Capital Assets
1) Date of purchase (through stock exchanges) of shares and Securities
2) Date of transfer (through stock exchanges) of shares and securities
3) Date of purchase/transfer of shares and securities (transaction taken place directly between parties and not through stock exchanges)
4) Date of purchase/sale of shares and securities purchased in several lots at different points of time but delivery taken subsequently and sold in parts
5) Transfer of a security by a depository (i.e., demat account)
a) Date of purchase by broker on behalf of investor.
b) Date of broker's note provided such transactions are followed up by delivery of shares and also the transfer deeds.
c) Date of contract of sale as declared by parties provided it is followed up by actual delivery of shares and the transfer deeds.
d) The FIFO method shall be adopted to reckon the period of the holding of the security, in cases where the dates of purchase and sale cannot be correlated through specific number of scrips.
e) The period of holding shall be determined on the basis of the first-in-first-out method.
earning commission up to Rs. 60,000, who are not maintaining detailed accounts,
can claim ad-hoc deduction.
The benefit of ad hoc deduction is available to agents who do not maintain details accounts for expenses incurred by them and have gross aggregate commission of less than Rs. 60,000 during the previous year.
Ad-hoc Deduction is available as follows:
A) In case of LIC agents
In both the above cases, the ad hoc deduction will be subject to a ceiling limit of Rs. 20,000.
The complete amount of bonus commission is taxable.
B) Agent of UTI Commission , Specified securities and notified mutual fund- 50 per cent
The benefit of ad hoc deduction will not be available to agents who have earned total commission of more than Rs. 60,000 during the year.
To give relief to small transporter, Income-tax Act allows them to compute their income from business of plying, hiring or leasing of goods carriages on presumptive basis. An assessee opting for presumptive scheme is not required to maintain regular books of account and is also exempt from getting the books of account audited.
Section 44AE : PRESUMPTIVE TAXATION FOR ASSESSEE, IN BUSINESS OF PLYING, HIRING OR LEASING GOODS CARRIAGES
To give relief to small assessees,
Income-tax Actallows them to compute their income from business on
presumptive basis. An assessee opting for presumptive scheme is
notrequired to maintain regular books of account and is also exempt from
getting the books of account audited.
Presumptive taxation under
To give relief to small taxpayers from the tedious job of maintenance of books of account and from getting the accounts audited, the Income-tax Act has framed the presumptive taxation scheme under sections 44AD, section 44ADA and section 44AE. This write up briefs about the provisions of
Who can claim
Eligible Assessee for
Eligible assessee for the purpose of section 44AD means a resident taxpayer, being an individual or HUF or partnership firm (not being a Limited Liability Partnership).
Eligible Business:Any Business other than-
➢ Carrying on any agency business
➢ Earning income in the nature of commission or brokerage
➢ Carrying on business of plying, hiring, or leasing goods carriages
➢ Carrying on profession as referred to in
Turnover - Total turnover/Gross receipts during the previous year from such eligible business should not exceed Rs.2 crore (From the assessment year 2017-18).
Benefit of Presumptive Taxation under
➢ Income from the eligible business computed @ 8% of Total turnover/ Gross receipts [Income to be computed @ 6% in case of receipts by an account payee cheque/draft or use of electronic clearance system through a Bank account during the previous year on or before submission of return of income under
➢ There is no bar on declaring higher Income i.e. An eligible assessee can declare a higher income in his return:
➢ No requirement as to maintenanceof Books of accounts;
➢ No requirement as to auditing of books of accounts;
➢ From assessment year 2017-18
○ 100% of the advance tax is to be paid on or before15th March;
➢ Specially Simplified Return Form can be filed i.e.
ITR-4 (Sugam); and
➢ From the assessment year 2017-18, in case of firm no deduction is allowed under
section 40(b) in respect of salary and interest to partners.
When benefit under
Sec. 44AD couldn't be availed?
➢ If a person opts for presumptive taxation scheme then he is also require to follow the samescheme for next 5 years. If he failed to do so, then presumptive taxation scheme will not beavailable for him for next 5 years.
For example, an assessee claims to be taxed on presumptivebasis under
Section 44AD for AY 2017-18. For AY 2018-19 and 2019-20 and he offers incomeon basis of presumptive taxation scheme. However, for AY 2020-21, he did not opt forpresumptive taxation Scheme. In this case, he will not be eligible to claim benefit ofpresumptive taxation scheme for next five AYs, i.e. from AY 2021-22 to 2025-26.;
➢ If Income declared is lower than the specified percentage of 8% or 6% as the case may be, the assessee need to maintain books of accounts as per
section 44AA & get them audited under
section 44AB; and
➢ No further deduction is allowed in respect of section 30 to 38 including depreciation and unabsorbed depreciation from estimated income computed under
Click here to read tutorial on "Tax on Presumptive basis in case of certain Eligible Businesses or Professions"
Click here to read section 44AD
Tangible and Intangible assets used
for purpose of business is subject to depreciation at specified rates.
An additional depreciation is also allowed to certain entities on
certain tangible assets subject to fulfilment of some conditions.
Rates of depreciation
AS APPLICABLE FROM THE ASSESSMENT YEAR 2003-04 ONWARDS
Block of assets
Depreciation allowance as percentage of written down value
AYs 2003-04 to 2005-06
to AY 2017-18
I. BUILDING [See Notes 1 to 4 below the Table]
(1) Buildings which are used mainly for residential purposes except hotels and boarding houses
(2) Buildings other than those used mainly for residential purposes and not covered by sub-items (1) above and (3) below
(3) Buildings acquired on or after the 1st day of September, 2002 for installing machinery and plant forming part of water supply project or water treatment system and which is put to use for the purpose of business of providing infra- structure facilities under clause (i) of sub-section (4) of
(4) Purely temporary erections such as wooden structures
II. FURNITURE AND FITTINGS
Furniture and fittings including electrical fittings [See Note 5 below the Table]
III. MACHINERY AND PLANT
(1) Machinery and plant other than those covered by sub-items (2), (3) and (8) below :
[See Note 5A below the Table]
(2) Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after the 1st day of April, 1990
(3) (i) Aeroplanes - Aeroengines
(ii) Motor buses, motor lorries and motor taxis used in a business of running them on hire
(iii) Commercial vehicle which is acquired by the assessee on or after the 1st day of October, 1998, but before the 1st day of April, 1999 and is put to use for any period before the 1st day of April, 1999 for the purposes of business or profession in accordance with the third proviso to clause (ii) of sub-section (1) of
section 32 [See Note 6 below the Table]
(iv) New commercial vehicle which is acquired on or after the 1st day of October, 1998, but before the 1st day of April, 1999 in replacement of condemned vehicle of over 15 years of age and is put to use for any period before the 1st day of April, 1999 for the purposes of business or profession in accordance with the third proviso to clause (ii) of sub-section (1) of
section 32 [See Note 6 below the Table]
(v) New commercial vehicle which is acquired on or after the 1st day of April, 1999 but before the 1st day of April, 2000 in replacement of condemned vehicle of over 15 years of age and is put to use before the 1st day of April, 2000 for the purposes of business or profession in accordance with the second proviso to clause (ii) of sub-section (1) of
section 32 [See Note 6 below the Table]
(vi) New commercial vehicle which is acquired on or after the 1st day of April, 2001 but before the 1st day of April, 2002 and is put to use before the 1st day of April, 2002 for the purposes of business or profession [See Note 6 below the Table]
(via) New commercial vehicle which is acquired on or after the 1st day of January, 2009 but before the 1st day of October, 2009 and is put to use before the 1st day of October, 2009 for the purposes of business or profession [See paragraph 6 of the Notes below this Table]
(vii) Moulds used in rubber and plastic goods factories
(viii) Air pollution control equipment, being—
(a) Electrostatic precipitation systems
(b) Felt-filter systems
(c) Dust collector systems
(d) Scrubber-counter current/venturi/packed bed/cyclonic scrubbers
(e) Ash handling system and evacuation system
(ix) Water pollution control equipment, being—
(a) Mechanical screen systems
(b) Aerated detritus chambers (including air compressor)
(c) Mechanically skimmed oil and grease removal systems
(d) Chemical feed systems and flash mixing equipment
(e) Mechanical flocculators and mechanical reactors
(f) Diffused air/mechanically aerated activated sludge systems
(g) Aerated lagoon systems
(i) Methane-recovery anaerobic digester systems
(j) Air floatation systems
(k) Air/steam stripping systems
(l) Urea Hydrolysis systems
(m) Marine outfall systems
(n) Centrifuge for dewatering sludge
(o) Rotating biological contractor or bio-disc
(p) Ion exchange resin column
(q) Activated carbon column
(x) (a) Solidwaste control equipments being - caustic/lime/chrome/mineral/cryolite recovery systems
(b) Solidwaste recycling and resource recovery systems
(xi) Machinery and plant, used in semi-conductor industry covering all integrated circuits (ICs) (excluding hybrid integrated circuits) ranging from small scale integration (SSI) to large scale integration/very large scale integration (LSI/VLSI) as also discrete semi-conductor devices such as diodes, transistors, thyristors, triacs, etc., other than those covered by entries (viii), (ix) and (x) of this sub-item and sub-item (8) below
(xia) Life saving medical equipment, being—
(a) D.C. Defibrillators for internal use and pace makers
(c) Heart lung machine
(d) Cobalt Therapy Unit
(e) Colour Doppler
(f) SPECT Gamma Camera
(g) Vascular Angiography System including Digital subtraction Angiography
(h) Ventilator used with anaesthesia apparatus
(i) Magnetic Resonance Imaging System
(j) Surgical Laser
[See Note 5B]
(k) Ventilators other than those used with anaesthesia
(l) Gamma knife
(m) Bone Marrow Transplant Equipment including silastic long standing intravenous catheters for chemotherapy
(n) Fibreoptic endoscopes including Paediatric resectoscope/audit resectoscope, Peritoneoscopes, Arthoscope, Microlaryngoscope, Fibreoptic Flexible Nasal Pharyngo Bronchoscope, Fibreoptic Flexible Laryngo Bronchoscope, Video Laryngo Bronchoscope and Video Oesophago Gastroscope, Stroboscope, Fibreoptic Flexible Oesophago Gastroscope
(o) Laparoscope (single incision)
(4) Containers made of glass or plastic used as re-fills
(5) Computers including computer software [See note 7 below the Table]
(6) Machinery and plant, used in weaving, processing and garment sector of textile industry, which is purchased under TUFS on or after the 1st day of April, 2001 but before the 1st day of April, 2004 and is put to use before the 1st day of April, 2004 [See Note 8 below the Table]
(7) Machinery and plant, acquired and installed on or after the 1st day of September, 2002 in a water supply project or a water treatment system and which is put to use for the purpose of business of providing infrastructure facility under clause (i) of sub-section (4) of
section 80-IA [See Notes 4 and 9 below the Table]
(8) (i) Wooden parts used in artificial silk manufacturing machinery
(ii) Cinematograph films - bulbs of studio lights
(iii) Match factories - Wooden match frames
(iv) Mines and quarries :
(a) Tubs, winding ropes, haulage ropes and sand stowing pipes
(b) Safety lamps
(v) Salt works - Salt pans, reservoirs and condensers, etc., made of earthy, sandy or clayey material or any other similar material
(vi) Flour mills - Rollers
(vii) Iron and steel industry - Rolling mill rolls
(viii) Sugar works - Rollers
(ix) Energy saving devices, being—
A. Specialised boilers and furnaces:
(a) Ignifluid/fluidized bed boilers
(b) Flameless furnaces and continuous pusher type furnaces
(c) Fluidized bed type heat treatment furnaces
(d) High efficiency boilers (thermal efficiency higher than 75 per cent in case of coal fired and 80 per cent in case of oil/gas fired boilers)
B. Instrumentation and monitoring system for monitoring energy flows:
(a) Automatic electrical load monitoring systems
(b) Digital heat loss meters
(c) Micro-processor based control systems
(d) Infra-red thermography
(e) Meters for measuring heat losses, furnace oil flow, steam flow, electric energy and power factor meters
(f) Maximum demand indicator and clamp on power meters
(g) Exhaust gases analyser
(h) Fuel oil pump test bench
C. Waste heat recovery equipment:
(a) Economisers and feed water heaters
(b) Recuperators and air pre-heaters
(c) Heat pumps
(d) Thermal energy wheel for high and low temperature waste heat recovery
D. Co-generation systems:
(a) Back pressure pass out, controlled extraction, extraction-cum-condensing turbines for co-generation along with pressure boilers
(b) Vapour absorption refrigeration systems
(c) Organic rankine cycle power systems
(d) Low inlet pressure small steam turbines
E. Electrical equipment:
(a) Shunt capacitors and synchronous condenser systems
(b) Automatic power cut off devices (relays) mounted on individual motors
(c) Automatic voltage controller
(d) Power factor controller for AC motors
(e) Solid state devices for controlling motor speeds
(f) Thermally energy-efficient stenters (which require 800 or less kilocalories of heat to evaporate one kilogram of water)
(g) Series compensation equipment
(h) Flexible AC Transmission (FACT) devices - Thyristor controlled series compensation equipment
(i) Time of Day (ToD) energy meters
(j) Equipment to establish transmission highways for National Power Grid to facilitate transfer of surplus power of one region to the deficient region
(k) Remote terminal units/intelligent electronic devices, computer hardware/software, router/bridges, other required equipment and associated communication systems for supervisory control and data acquisition systems, energy management systems and distribution management systems for power transmission systems
(l) Special energy meters for Availability Based Tariff (ABT)
(a) 0 to 10 per cent excess air burners
(b) Emulsion burners
(c) Burners using air with high pre-heat temperature (above 300°C)
G. Other equipment:
(a) Wet air oxidation equipment for recovery of chemicals and heat
(b) Mechanical vapour recompressors
(c) Thin film evaporators
(d) Automatic micro-processor based load demand controllers
(e) Coal based producer gas plants
(f) Fluid drives and fluid couplings
(g) Turbo charges/super-charges
(h) Sealed radiation sources for radiation processing plants
(x) Gas cylinders including valves and regulators
(xi) Glass manufacturing concerns - Direct fire glass melting furnaces
(xii) Mineral oil concerns:
(a) Plant used in field operations (above ground) distribution - Returnable packages
(b) Plant used in field operations (below ground), but not including kerbside pumps including underground tanks and fittings used in field operations (distribution) by mineral oil concerns
(c) Oil wells not
covered in clauses (a) and (b) (with effect from the assessment year
(xiii) Renewal energy devices being—
(a) Flat plate solar collectors
(b) Concentrating and pipe type solar collectors
(c) Solar cookers
(d) Solar water heaters and systems
(e) Air/gas/fluid heating systems
(f) Solar crop driers and systems
(g) Solar refrigeration, cold storages and air-conditioning systems
(h) Solar steels and desalination systems
(i) Solar power generating systems
(j) Solar pumps based on solar-thermal and solar-photovoltaic conversion
(k) Solar-photovoltaic modules and panels for water pumping and other applications
(l) Windmills and any specially designed devices which run on wind-mills installed on or before March 31, 2012
(m) Any special devices including electric generators and pumps running on wind energy installed on or before March 31, 2012
(n) Biogas plant and biogas engines
(o) Electrically operated vehicles including battery powered or fuel-cell powered vehicles
(p) Agricultural and municipal waste conversion devices producing energy
(q) Equipment for utilising ocean waste and thermal energy
(r) Machinery and plant used in the manufacture of any of the above sub-items
(9) (i) Books owned
by assessees carrying on a profession—
(a) Books, being annual publications
(b) Books, other than those covered by entry (a) above
(ii) Books owned by assessees carrying on business in running lending libraries
(1) Ocean-going ships including dredgers, tugs, barges, survey launches and other similar ships used mainly for dredging purposes and fishing vessels with wooden hull
(2) Vessels ordinarily operating on inland waters, not covered by sub-item (3) below
(3) Vessels ordinarily operating on inland waters being speed boats [See Note 10 below the Table]
Know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature
1. "Buildings" include roads, bridges, culverts, wells and tubewells.
2. A building shall be deemed to be a building used mainly for residential purposes, if the built-up floor area thereof used for residential purposes is not less than sixty-six and two-third per cent of its total built-up floor area and shall include any such building in the factory premises.
3. In respect of any structure or work by way of renovation or improvement in or in relation to a building referred to in Explanation 1 of clause (ii) of sub-section (1) of
section 32, the percentage to be applied will be the percentage specified against sub-item (1) or (2) of item I as may be appropriate to the class of building in or in relation to which the renovation or improvement is effected. Where the structure is constructed or the work is done by way of extension of any such building, the percentage to be applied would be such percentage as would be appropriate, as if the structure or work constituted a separate building.
4. Water treatment system includes system for desalination, demineralisation and purification of water.
5. "Electrical fittings" include electrical wiring, switches, sockets, other fittings and fans, etc.
5A. Rate of depreciation shall be 40% if conditions
of Rule 5(2) are satisfied.
5B. Applicable from the Assessment year 2004-05.
6. "Commercial vehicle" means "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle" and "medium passenger motor vehicle" but does not include "maxi-cab", "motor-cab", "tractor" and "road-roller". The expressions "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle", "medium passenger motor vehicle", "maxi-cab", "motor-cab", "tractor" and "road-roller" shall have the meanings respectively as assigned to them in section 2 of the Motor Vehicles Act, 1988 (59 of 1988).
7. "Computer software" means any computer programme recorded on any disc, tape, perforated media or other information storage device.
8. "TUFS" means Technology Upgradation Fund Scheme announced by the Government of India in the form of a Resolution of the Ministry of Textiles vide No. 28/1/99-CTI of 31-3-1999.
9. Machinery and plant includes pipes needed for delivery from the source of supply of raw water to the plant and from the plant to the storage facility.
10. "Speed boat" means a motor boat driven by a high speed internal combustion engine capable of propelling the boat at a speed exceeding 24 kilometers per hour in still water and so designed that when running at a speed, it will plane, i.e., its bow will rise from the water.
Depreciation rates for power generating units
(applicable from the assessment year 1998-99
Class of assets
Depreciation allowance as percentage of actual cost
(a) Plant and Machinery in generating stations including plant foundations :—
(ii) Steam electric NHRS & Waste heat recovery Boilers/plants
(iii) Diesel electric and Gas plant
(b) Cooling towers and circulating water systems
(c) Hydraulic works forming part of Hydro-electric system including :—
(i) Dams, spillways weirs, canals, reinforced concrete flumes and syphons
(ii) Reinforced concrete pipelines and surge tanks steel pipelines, sluice gates, steel surge (tanks), hydraulic control valves and other hydraulic works.
(d) Building and civil engineering works of permanent character, not mentioned above
(i) Office & showrooms
(ii) Containing Thermo-electric generating plant
(iii) Containing Hydro-electric generating plant
(iv) Temporary erection such as wooden structures
(v) Roads other than Kutcha roads
(e) Transformers, transformer (Kiosk) sub-station equipment & other fixed apparatus (including plant foundations)
(i) Transformers (including foundations) having a rating of 100 kilo volt amperes and over
(f) Switchgear including cable connections
(g) Lightning arrestor :
(i) Station type
(ii) Pole type
(iii) Synchronous condenser
(i) Underground cable including joint boxes and disconnectioned boxes
(ii) Cable duct system
(i) Overhead lines including supports :
(i) Lines on fabricated steel operating at nominal voltages higher than 66 kilo volts
(ii) Lines on steel supports operating at nominal voltages higher than 13.2 kilo volts but not exceeding 66 kilo volts
(iii) Lines on steel or reinforced concrete supports
(iv) Lines on treated wood supports
(k) Self-propelled vehicles
(l) Air-conditioning plants :
(m) (i) Office furniture and fittings
(ii) Office equipments
(iii) Internal wiring including fittings and apparatus
(iv) Street light fittings
(n) Apparatus let on hire
(i) Other than motors
(o) Communication equipment :
(i) Radio and high frequency carrier system
(ii) Telephone lines and telephones
(p) Any other assets not covered above
Depreciation under Companies Act, 2013
(See section 123)
USEFUL LIVES TO COMPUTE DEPRECIATION
1. Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value. The useful life of an asset is the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity.
2. For the purpose of this Schedule, the term depreciation includes amortisation.
3. Without prejudice to the foregoing provisions of paragraph 1,—
3[(i) The useful life of an asset shall not be longer than the useful life specified in Part 'C' and the residual value of an asset shall not be more than five per cent of the original cost of the asset:
Provided that where a company uses a useful life or residual value of the asset which is different from the above limits, justification for the difference shall be disclosed in its financial statement.
(ii) For intangible assets, the provisions of the accounting standards applicable for the time being in force shall apply, except in case of intangible assets (Toll Roads) created under 'Build, Operate and Transfer', 'Build, Own, Operate and Transfer' or any other form of public private partnership route in case of road projects. Amortisation in such cases may be done as follows:—
(a) Mode of amortisation
Cost of Intangible Assets (A)
Amortisation Amount =
(b) Meaning of particulars are as follows :—
Cost incurred by the company in accordance with the accounting standards.
Actual Revenue for the year (B)
Actual revenue (Toll Charges) received during the accounting year.
Projected Revenue from Intangible Asset (C)
Total projected revenue from the Intangible Assets as provided to the project lender at the time of financial closure/agreement.
The amortisation amount or rate should ensure that the whole of the cost of the intangible asset is amortised over the concession period.
Revenue shall be reviewed at the end of each financial year and projected revenue shall be adjusted to reflect such changes, if any, in the estimates as will lead to the actual collection at the end of the concession period.
Cost of creation of Intangible Assets
Rs. 500 Crores
Total period of Agreement
Time used for creation of Intangible Assets
Intangible Assets to be amortised in
Assuming that the Total revenue to be generated out of Intangible Assets over the period would be Rs. 600 Crores, in the following manner:—
Revenue (In Rs. Crores)
'*' will be actual at the end of financial year.
Based on this the charge for first year would be Rs. 4.16 Crore (approximately) (i.e. Rs. 5/Rs. 600 × Rs. 500 Crores) which would be charged to profit and loss and 0.83% (i.e. Rs. 4.16 Crore/Rs. 500 Crore × 100) is the amortisation rate for the first year.
Where a company arrives at the amortisation amount in respect of the said Intangible Assets in accordance with any method as per the applicable Accounting Standards, it shall disclose the same.]
4. The useful life or residual value of any specific asset, as notified for accounting purposes by a Regulatory Authority constituted under an Act of Parliament or by the Central Government shall be applied in calculating the depreciation to be provided for such asset irrespective of the requirements of this Schedule.
5. Subject to Parts A and B above, the following are the useful lives of various tangible assets:
Nature of assets
I. Buildings [NESD]
(a) Buildings (other than factory buildings) RCC Frame Structure
(b) Buildings (other than factory buildings) other than RCC Frame Structure
(c) Factory buildings
(d) Fences, wells, tube wells
(e) Others (including temporary structure, etc.)
II. Bridges, culverts, bunders, etc. [NESD]
III. Roads [NESD]
(a) Carpeted roads
(i) Carpeted Roads—RCC
(ii) Carpeted Roads—other than RCC
(b) Non-carpeted roads
IV. Plant and Machinery
(i) General rate applicable to plant and machinery not covered under special plant and machinery
(a) Plant and Machinery other than continuous process plant not covered under specific industries
4[(b) Continuous process plant for which no special rate has been prescribed under (ii) below [NESD]
(ii) Special Plant and Machinery
(a) Plant and Machinery related to production and exhibition of Motion Picture Films
1. Cinematograph films—Machinery used in the production and exhibition of cinematograph films, recording and reproducing equipments, developing machines, printing machines, editing machines, synchronizers and studio lights except bulbs
2. Projecting equipment for exhibition of films
(b) Plant and Machinery used in glass manufacturing
1. Plant and Machinery except direct fire glass melting furnaces —
Recuperative and regenerative glass melting furnaces
2. Plant and Machinery except direct fire glass melting furnaces — Moulds [NESD]
3. Float Glass Melting Furnaces [NESD]
(c) Plant and Machinery used in mines and quarries—Portable under ground machinery and earth moving machinery used in open cast mining [NESD]
(d) Plant and Machinery used in Telecommunications [NESD]
2. Telecom transreceivers, switching centres, transmission and other network equipment
3. Telecom—Ducts, Cables and optical fibre
(e) Plant and Machinery used in exploration, production and refining oil and gas [NESD]
2. Oil and gas assets (including wells), processing plant and facilities
3. Petrochemical Plant
4. Storage tanks and related equipment
6. Drilling Rig
7. Field operations (above
ground) Portable boilers, drilling tools, well-head tanks, etc.
(f) Plant and Machinery used in generation, transmission and distribution of power [NESD]
1. Thermal/Gas/Combined Cycle Power Generation Plant
2. Hydro Power Generation Plant
3. Nuclear Power Generation Plant
4. Transmission lines, cables and other network assets
5. Wind Power Generation Plant
6. Electric Distribution Plant
7. Gas Storage and Distribution Plant
8. Water Distribution Plant including pipelines
(g) Plant and Machinery used in manufacture of steel
1. Sinter Plant
2. Blast Furnace
3. Coke ovens
4. Rolling mill in steel plant
5. Basic oxygen Furnace Converter
(h) Plant and Machinery used in manufacture of non-ferrous metals
1. Metal pot line [NESD]
2. Bauxite crushing and grinding section [NESD]
3. Digester section [NESD]
4. Turbine [NESD]
5. Equipments for Calcination [NESD]
6. Copper Smelter [NESD]
7. Roll Grinder
8. Soaking Pit
9. Annealing Furnace
10. Rolling Mills
11. Equipments for Scalping, Slitting, etc. [NESD]
12. Surface Miner, Ripper Dozer, etc., used in mines
13. Copper refining plant [NESD]
(i) Plant and Machinery used in medical and surgical operations [NESD]
1. Electrical Machinery, X-ray and electrotherapeutic apparatus and accessories thereto, medical, diagnostic equipments, namely, Cat- Scan, Ultrasound Machines, ECG Monitors, etc.
2. Other Equipments.
(j) Plant and Machinery used in manufacture of pharmaceuticals and chemicals [NESD]
2. Distillation Columns
3. Drying equipments/Centrifuges and Decanters
4. Vessel/storage tanks
(k) Plant and Machinery used in civil construction
1. Concreting, Crushing, Piling Equipments and Road Making Equipments
2. Heavy Lift Equipments—
Cranes with capacity of more than 100 tons
Cranes with capacity of less than 100 tons
3. Transmission line, Tunneling Equipments [NESD]
4. Earth-moving equipments
5. Others including Material Handling /Pipeline/Welding Equipments [NESD]
(l) Plant and Machinery used in salt works [NESD]
V. Furniture and fittings [NESD]
(i) General furniture and fittings
(ii) Furniture and fittings used in hotels, restaurants and boarding houses, schools, colleges and other educational institutions, libraries; welfare centres; meeting halls, cinema houses; theatres and circuses; and furniture and fittings let out on hire for use on the occasion of marriages and similar functions.
VI. Motor Vehicles [NESD]
1. Motor cycles, scooters and other mopeds
2. Motor buses, motor lorries, motor cars and motor taxies used in a business of running them on hire
3. Motor buses, motor lorries and motor cars other than those used in a business of running them on hire
4. Motor tractors, harvesting combines and heavy vehicles
5. Electrically operated vehicles including battery powered or fuel cell powered vehicles
VII. Ships [NESD]
1. Ocean-going ships
(i) Bulk Carriers and liner vessels
(ii) Crude tankers, product carriers and easy chemical carriers with or without conventional tank coatings
(iii) Chemicals and Acid Carriers :
(a) With Stainless steel tanks
(b) With other tanks
(iv) Liquified gas carriers
(v) Conventional large passenger vessels which are used for cruise purpose also
(vi) Coastal service ships of all categories
(vii) Offshore supply and support vessels
(viii) Catamarans and other high speed passenger for ships or boats
(ix) Drill ships
(xi) Fishing vessels with wooden hull
(xii) Dredgers, tugs, barges, survey launches and other similar ships used mainly for dredging purposes
2. Vessels ordinarily operating on inland waters—
(i) Speed boats
(ii) Other vessels
VIII. Aircrafts or Helicopters [NESD]
IX. Railways sidings, locomotives, rolling stocks, tramways and railways used by concerns, excluding railway concerns [NESD]
X. Ropeway structures [NESD]
XI. Office equipment [NESD]
XII. Computers and data processing units [NESD]
(i) Servers and networks
(ii) End user devices, such as, desktops, laptops, etc.
XIII. Laboratory equipment [NESD]
(i) General laboratory equipment
(ii) Laboratory equipments used in educational institutions
XIV. Electrical Installations and Equipment [NESD]
XV. Hydraulic works, pipelines and sluices [NESD]
1. "Factory buildings" does not include offices, godowns, staff quarters.
2. Where, during any financial year, any addition has been made to any asset, or where any asset has been sold, discarded, demolished or destroyed, the depreciation on such assets shall be calculated on a pro rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.
3. The following information shall also be disclosed in the accounts, namely:—
(i) depreciation methods used; and
(ii) the useful lives of the assets for computing depreciation, if they are different from the life specified in the Schedule.
4. Useful life specified in Part C of the Schedule is for whole of the asset. Where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately.
6. The useful lives of assets working on shift basis have been specified in the Schedule based on their single shift working. Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C above), if an asset is used for any time during the year for double shift, the depreciation will increase by 50% for that period and in case of the triple shift the depreciation shall be calculated on the basis of 100% for that period.
7. From the date this Schedule comes into effect, the carrying amount of the asset as on that date—
(a) shall be depreciated over the remaining useful life of the asset as per this Schedule;
(b) after retaining the residual value, shall be recognised in the opening balance of retained earnings where the remaining useful life of an asset is nil.
8. "Continuous process plant" means a plant which is required and designed to operate for twenty-four hours a day.
1. Corresponds to Schedule XIV of the 1956 Act.
2. Enforced with effect from 1-4-2014.
3. Substituted for clauses (i) to (iii) vide Notification No. GSR 237(E) [F. No. 17/60/2012-CL-V], dated 31-3-2014, w.e.f. 1-4-2014. Prior to their substitution, clauses (i) to (iii) read as under :
"(i) In case of such class of companies, as may be prescribed and whose financial statements comply with the accounting standards prescribed for such class of companies under section 133 the useful life of an asset shall not normally be different from the useful life and the residual value shall not be different from that as indicated in Part C, provided that if such a company uses a useful life or residual value which is different from the useful life or residual value indicated therein, it shall disclose the justification for the same.
(ii) In respect of other companies the useful life of an asset shall not be longer than the useful life and the residual value shall not be higher than that prescribed in Part C.
(iii) For intangible assets, the provisions of the Accounting Standards mentioned under sub-para (i) or (ii), as applicable, shall apply."
4. Substituted vide Notification No. GSR 237(E) [F. No. 17/60/2012-CL-V], dated 31-3-2014, w.e.f. 1-4-2014. Prior to its substitution, clause (b) read as under :
5. Omitted vide Notification No. GSR 237(E) [F. No. 17/60/2012-CL-V], dated 31-3-2014, w.e.f. 1-4-2014. Prior to its omission, Paragraph 5 read as under :
"5. Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Ordinarily, the residual value of an asset is often insignificant but it should generally be not more than 5% of the original cost of the asset."
amended by Finance Act, 2018]
Income earned by a taxpayer from
letting out his house property is taxable under this head. A house, even
if not let out, can be charged to tax if it is deemed to be let-out.
Income from house property
Section 22 of the Act is the charging section for taxing any income under the head "Income from house property".
The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him, the profits of which are chargeable to income-tax shall be chargeable to income-tax under the head "Income from house property"
Manner of computation of income from house property:
This relief is allowed when an
employee receives past dues in current year. As amount is taxable in
current year, Section 89 aims to provide relief from additional tax
paid in the current year on past years income.
An employee can claim relief under section 89 in respect of
• Arrears of salary received by an employee are taxed in the year of receipt if the same were not taxed earlier on due basis.
• Amount of commuted pension which is not exempt from tax
• Leave salary
• Compensation received on termination of employment/ voluntary retirement
section 89, read with
Rule 21A(2), an employee can claim relief in respect of arrears of salary.
Relief can be computed in the following manner:
Step 1: Calculate total tax liability (including surcharge and cess, if any) on the total income, including the additional salary of the previous year in which such salary is received.
Step 2: Calculate total tax liability (including surcharge and cess, if any) on the total income, excluding the additional salary of the previous year in which such salary is received.
Step 3: Find the difference between tax computed at (1) and (2) above.
Step 4: Calculate total tax liability (including surcharge and cess, if any) on the total income, including the additional salary of the previous year(s) to which such salary relates to
Step 5: Calculate total tax liability (including surcharge and cess, if any) on the total income, excluding the additional salary of the previous year(s) to which such salary relates to.
Step 6: Find the difference between tax computed at (4) and (5) above.
Relief under section 89 is the excess of tax computed at Step 3 over tax computed at Step 6. No relief is available, if tax computed at Step 3 is less than tax computed at Step 6.
If the additional salary pertains to more than one previous year, then relief shall be computed in above manner by spreading such salary over the previous years to which such salary pertains to.
Use of own car or employer’s car for
personal purposes or partly for personal and partly for official
purposes is a taxable perquisite. The valuation of such perquisite is
dependent on certain factors, i.e., capacity of car, usage of car, etc.
Motor Car Facility
Value of perquisite in respect of motor car is determined as follows:
• Value of perquisites if running and maintenance expenses met by the employer in respect of a car owned by the employee.
• Value of perquisite in respect of motor car provided by the employer (expenditure on running and maintenance of motor car are met by the employer)
• Value of perquisite in respect of motor car provided by the employer (expenditure on running and maintenance of motor car are met by the employee)
• Value of perquisite in respect of perquisite arising on account of running and maintenance expenditure met or reimbursed by the employer in respect of any automotive conveyance (other than car) owned by the employee.
Refer Section 17(2) for detail.
Employees taking interest free loan or
at concessional rates from the employer are taxable on the perquisite
value of such benefits. The taxable perquisite is computed at rate of
interest charged by SBI for similar loan.
Concessional or Interest free loan
The value of perquisite arising on account of interest free loan or concessional loan granted by the employer will be computed on the basis of the rate of interest on such loans charged by the State Bank of India as on the 1st day of the relevant previous year, in respect of loans for the same purpose advanced by it (i.e., State Bank of India). The value of perquisite will be determined as follows :
Interest shall be computed on monthly basis by considering maximum outstanding monthly balance.
Gratuity receive by an employee from his employer is exempt up to
certain limit if some conditions are satisfied. Gratuity received by a
Government employee is fully exempt from tax.
Tax treatment of gratuity can be classified as follows:
(A) Gratuity received by Government employees and employees of local authority [Section 10(10)(i)] - In case of a Government employee, any death-cum-retirement gratuity received is wholly exempt under
Section 10(10)(i). It should be noted that employees of statutory corporation will not fall under this category.
(B) Gratuity received by non-Government employees : This category will further be classified as follows :
(1) Exemption in respect of gratuity in case of employees covered by the Payment of Gratuity Act, 1972. [Section 10(10)(ii)]
Exemption in this case will be lower of the following amounts :
1. 15 days' salary (*) × years of service
2. Maximum amount specified by the Central Government, i.e., Rs. 10,00,000
/ Rs. 20,00,000 * .
3. Gratuity actually received.
(2) Exemption in respect of gratuity in case of employees not covered by the Payment of Gratuity Act, 1972. [Section 10(10)(ii)]
Exemption in respect of gratuity will be least of the following :
1. Half month's average salary for each completed year of service, i.e.,
[Average monthly salary (**) × ½] × Completed years of service.
2. Maximum amount specified by the Central Government, i.e., Rs. 10,00,000
/ Rs. 20,00,000 *
* Rs. 20,00,000 ceiling limit is applicable if Gratuity is becoming payable on or after 29th March 2018.
**Average monthly salary is to be computed on the basis of average of salary for 10 months immediately preceding the month (not the day) of retirement.
Leave encashment may be received by an employee during employment or on
retirement. Its taxability depends upon various factors like employer
type, period of employment, etc.
Leave salary is taxable on the following basis:
section 10(10AA)(i), any amount received as cash equivalent of leave salary in respect of the period of earned leave at his credit at the time of retirement/superannuation is exempt from tax.
section 10(10AA)(ii), leave salary is exempt to the extent of the least of the following:
(a) Cash equivalent of the leave salary in respect of the period of earned leave to the credit of an employee only at the time of retirement whether on superannuation or otherwise (earned leave entitlements cannot exceed 30 days for every year of actual service rendered for the employer from whose service he has retired); or
(b) 10 months "average salary"; or
(c) Rs 300000
(d) Leave encashment actually received at the time of retirement.
"Average salary" is to be calculated on the basis of average salary drawn during the period of 10 months immediately preceding the retirement/superannuation.
"Salary" means basic salary, dearness allowance if terms of employment so provide and it also includes commission based on fixed percentage of turnover achieved by an employee as per the terms of contract of employment.
“ Leave salary received during employment” is chargeable to tax in the hands of Govt./Non-Govt. Employee. However, relief can be taken u/s 89.
This deduction is available to a resident individual who is certified by the medical authority that he/she is a disable person.
SECTION 80U: DEDUCTION IN CASE OF A PERSON WITH DISABILITY
(1) Introduction: Deduction under section 80U is available to a taxpayer having disability or severe disability or suffering from autism, cerebral palsy or multiple disabilities.
(2) Eligible taxpayer
• The taxpayer is an individual
• The taxpayer can be citizen of India or foreign country
• The taxpayer must be resident(may be ordinarily or not ordinarily resident). Deduction not available if he is non-resident for the relevant assessment year.
(3) Disabilities covered
• Low vision
• Hearing impairment
• Locomotor disability
• Mental retardation
• Mental illness
• Autism, cerebral palsy & multiple disability
(4) Other provisions
• The taxpayer shall have to obtain certificate in Form No. 10-IA from medical authority where the person is suffering from disability.
• If deduction is claimed under this section by taxpayer for himself, no deduction is available under
section 80DD to person on whom person suffering from disability is dependent.
• Where the condition of disability requires reassessment, a fresh certificate needs to be obtained from the medical authority in order to claim the deduction after the expiry of period of original certificate.
(5) AMOUNT OF DEDUCTION TO A TAXPAYER SUFFERING FROM DISABILITY IS AS FOLLOWS…
Taxpayer suffering with disability of…..
Amount of deduction available in rupees
➢ Less than 40%
➢ More than or equal to 40% but less than 80%
➢ More than or equal to 80%
Almost all taxpayers earn some
interest from their saving bank deposits. An assessee can claim
deduction up to Rs. 10,000 from such interest income.
Section 80TTA for Interest on Saving Account
Section 80TTA provides deduction up to Rs. 10,000 in aggregate to an assessee (being an individual or Hindu undivided family) in respect of any income by way of interest on deposits (not being time deposits) as follows:
Up to assessment year 2012-13
From assessment year 2013-14
This deduction is allowed to a
taxpayer if he incurs some expenditure to support his disabled family
members who is dependent on him for support and maintenance.
DEDUCTION UNDER SECTION 80DD FOR MAINTENANCE/ MEDICAL TREATMENT OF DEPENDENT HANDICAPPED
Deduction under Section 80DD is available from Gross Total Income of a taxpayer in respect of maintenance/ medical treatment of a dependent person having disability or severe disability or suffering from autism, cerebral palsy or multiple disabilities.
(2) Prerequisites to claim deduction under Sec. 80DD
✓ Deduction is allowed for medical treatment/ maintenance of a dependent and not the tax payer himself;
✓ The taxpayer is not allowed this deduction if the dependent has claimed a deduction under section 80U for himself/herself.
✓ Dependent in case of an individual taxpayer means spouse, children, parents, brothers & sisters of the taxpayer. For HUF, dependent means any member of the HUF
✓ The Taxpayer should incur any of the following expenditures:
✓ The amount of deduction is fixed based on the disability, irrespective of the amount incurred or deposited under Option 1 and/ or option 2.
✓ Certificate should be obtained in Form No. 10-IA from medical authority where the person is suffering from specified disability.
✓ Where the condition of disability requires reassessment, a fresh certificate needs to be obtained from the medical authority in order to claim the deduction after the expiry of period of original certificate.
(3) AMOUNT OF DEDUCTION
To promote health insurance plans, a
deduction is allowed under Section 80D in respect of premiums paid
towards health insurance policies.
Deduction in respect of medical insurance premium [section 80D]
section 80D provides deduction to an individual or a HUF. In case of an individual, deduction is available in respect of medical insurance policy taken in his own name, or in the name his/her spouse, his/her parents and his/her dependent children. In case of HUF, the policy can be taken on the health of any member of such HUF.
Deduction under Section 80C is allowed
to an individual for investment made by him in life insurance plans,
tuition fees, housing loan repayments, etc. Maximum deduction of Rs.
1,50,000 is allowed to a taxpayer under this provision.
Section 80C provides deduction to Individual/HUF in respect of various items like life insurance premium, investment in Public Provident Fund, investment in NSC, investment in notified units of mutual funds, deposit in Sukanya Samriddhi account, investment in mutual funds, amount paid for tution fees, repayment of principal component of housing loan, investment in Post Office Time Deposit Scheme, Senior Citizens Saving Scheme, etc.
Deduction on account of payment of life insurance premium is restricted to 10% of sum assured.
u/s 80C (along with deduction u/s
80CCD(1)) allowed is up to Rs. 1,50,000.
Minimum holding period
Following is the minimum holding period in respect of certain investments, deposits, etc., prescribed above which should be kept in mind while claiming deduction under section 80C:
If any of the aforesaid investments, subscriptions, etc., is terminated, sold, etc., before the minimum holding period specified above, then the deduction allowed in earlier years would be deemed as income of the previous year of termination, sale, etc. Further, no deduction will be allowed in respect of contribution, payment, etc., made towards such policy, units, etc. (i.e., which is terminated) during the year of termination.
In case of withdrawal during the life time of depositor from Senior Citizens Savings
Scheme or Post Office Time Deposit before the aforesaid period (i.e., before 5 years), the amount received on such withdrawal (excluding interest which is already taxed in earlier years) will be charged to tax in the year of withdrawal.
Saving Certificates are issued with a fixed maturity period. The tenure
of an NSC certificate is 5 and 10 years for the NSC VIII Issue and NSC
IX Issue respectively. However, NSC IX issue has been discontinued with
effect from 20-12-2015.
Interest on NSC
Section 80C provides deduction of investment and interest accrued on NSC. Interest on NSC is taxable on annual accrual basis. Accrued interest on NSC is taxed in the hands of the receiver and the same will be treated as an investment during the year of accrual (except for last year) and will qualify for deduction under section 80C.
A partnership firm is allowed to pay
remuneration to its partner. Such remuneration can be paid within an
overall limit specified under Section 40(b). Any payment above this
limit is disallowed.
Deduction of Partner remuneration paid is allowed under section 40b.
Following sum paid by a partnership firm to its partners shall not be allowed to be deducted:
1) Salary, bonus, commission or remuneration paid to non-working partners;
2) Remuneration or interest paid to the partners is not in accordance with the terms of the partnership deed;
3) Remuneration or interest to partners is in accordance with the terms of the partnership deed but relates to any period prior to the date of the deed;
4) Interest to partners is in accordance with the terms of the partnership deed but exceeds 12% per annum;
5) Remuneration to partners is in accordance with the terms of the partnership deed but exceeds the following permissible limit:
a) On first Rs. 3 Lakhs of book profit or in case of loss - Rs. 1,50,000 or 90% of book profit, whichever is more;
b) On the balance of the book profit - 60% of book profit
gains from sale of a long-term capital asset is calculated after
reducing the indexed cost of acquisition/improvement from the sales
consideration. Indexed cost is calculated after adjusting impact of
inflation on the cost of acquisition.
Indexed Cost of Acquisition and Improvement [Second Proviso to Section 48]
a) In case of transfer of long-term capital assets, indexed cost of acquisition and indexed cost of improvement shall be deducted from the full value of consideration;
b) Indexed cost of acquisition and Indexed cost of improvement shall be computed with reference to Cost Inflation Index ('CII') in the following manner:
Note : The base year for computation of capital gains has been shifted from 1981 to 2001 with effect from assessment year 2018-19. Thus, if any capital asset (acquired before April 1, 2001) is transferred then assessee has option to take its cost of acquisition either as fair market value as on April 1, 2001 or its actual cost.
Levy of income tax is depends on the
residential status of a person. Residential status of a taxpayer is
determined in accordance with Section 6 of the Income-tax Act which can
be a NRI, a RNOR or an Ordinary Resident in India.
(5) As per section 6, an individual may be (a) resident and ordinarily resident, (b) resident but not ordinarily resident, or (c) non- resident
BASIC CONDITIONS TO TEST AS TO WHEN AN INDIVIDUAL IS RESIDENT IN INDIA- As per Section 6(1) an individual is said to be "resident" in India in any previous year, if he satisfies any one of the following basic conditions:
(a) He is in India in the previous year for a period of 182 days or more; or
(b) He is in India for a period of 60 days or more during the previous year and 365 days or more during the four years immediately preceding the previous year.
But there are some Exceptions:
(5.1) ADDITIONAL CONDITIONS TO TEST WHETHER THE CITIZEN IS RESIDENT AND ORDINARILY RESIDENT OR RESIDENT AND NOT ORDINARILY RESIDENT:
(i) He has been resident in India in at least 2 years out of 10 previous years immediately preceding the relevant previous year; and
(ii) He has been in India for a period of 730 days or more during 7 years immediately preceding the relevant previous year.
RULE OF RESIDENCE AT GLANCE