Total income Presented by, Mrinalini singh Anurag samaddar

Contents First head: House property. Second head: Business and Profession. Third head: Capital gain. Forth head: Other sources. Set off and carry forward of loses. Total income First head: House property. Second head: Business and Profession. Third head: Capital gain. Forth head: Other sources. Set off and carry forward of loses. Total income

Total income comprise with 4 heads property House And profession Business gains Capital sources Other

First head House property

Three ways to use house property: Self occupied. Business. Rented.

There are two condition falls under this calculation: Computation of gross annual value There are two condition falls under this calculation: If the standard rent is not given. If the standard rent is given. Fair rent Municipal value Standard rent Expected rent Actual rent

Computation of house property particulars amount Gross annual value Less : municipal tax unrealized rent Annual value less : standard deduction on annual value interest on loan Taxable income

Question An assessee owns three house property . The following are the particulars: particulars 1st house 2nd house 3rd house Standard rent 13000 3600 - Municipal value 12000 4000 10000 Rent received 4800 Municipal tax paid 2000 500 How used Let out for business Let out for residency Self occupied Repairs 600 200 Interest on mortgage(loan not taken for house property) Ground rent 50 30 Fire insurance premium 70

Solution particulars Amount First house: Gross annual value 12000 Less : municipal tax 2000 Annual value 10000 Less : standard deduction 30% of annual value 3000 Income from first house 7000 Second house 4800 500 4300 1290 Interest of loan Nil Income from second house 3010

Particulars Amount Third house Annual value Nil TOTAL INCOME FROM HOUSE PROPERTY 10010

Second head Business and profession

Computation of business particulars Amount Net profit as per p/l account Add : disallowed items Less : items not taxable under this head Income from business

Disallowed items House hold expenses All type of provisions Interest on capital Wealth tax Life insurance premium Private expenses

Not taxable under this head Dividend Interest from govt securities Rent from house property Gifts from family member

Allowed depreciation rate Patent 25% Surgical equipment and motor car 15% Building 10% books Annual publication 100% Other than annual publication 60%

Computation of profession particular amount Gross professional earnings less : professional expenses Taxable income

Question Mr. Z running a cloth business, has prepared the following profit and loss account for the year ended 31st march,2011. you are required to compute his income from business and his gross total income for the assessment year 2011-2012. Profit and loss account Particulars Amount Trade expenses 450 Gross profit 219400 Establishment charge 2200 Dividend net 3140 Rent, rates and taxes 1400 Int on non govt securities 3600 Household expenses 1850 Discount allowed 200 Income tax 700 Advertisement

Particulars Amount Postage and telegram 100 Gifts to relatives 125 Fire insurance premium 250 Donation to prime minister national relief fund 800 Repairs,etc 1600 Life insurance premium 850 Wealth tax 600 Interest on capital 400 Audit fees Net profit 213915 226140

Solution particular Amount Net profit as per p/l a/c 213915 Add : disallowed items Household expenses 1850 Income tax 700 Gifts to relatives 125 Donation 800 Life insurance premium 850 Wealth tax 600 Interest on capital 400 Less : income not taxable under this head Dividend 3140 Interest on non government securities 3600 Income from business 212500

THIRD HEAD CAPITAL GAIN

Exemptions 54 Transfer of property used for residency. 54B Transfer of agriculture land. 54D Compulsory acquisition of land and building. 54EC Transfer of a long term capital assets invested in long term specified assets. 54F Capital gain on investment from other assets invested in residential house. 54G Shifting of industrial undertaking from urban to rural area.

Types of capital assets Long term asset held more than 36 months .In the case of shares more than 12 months. Short term Asset held not more than 36 months .in the case of shares not more than 12 months.

Computation of Capital gain Particulars amount Sales consideration Less : selling expenses Net sales consideration Less: cost/index cost of assets Capital gain Less: exemptions under sections Taxable capital gain

Question Mr. sanjeev is a resident of India . He furnishes the following information about his income during previous year 2010-2011: Capital gain of rs 10500 from a house which he acquired before two years of the date of sale 31st July 2010. On 31st aug 2010 , he sold equity shares to thapad ltd. For rs 85000 were purchased by him on 1st April 1985 for rs 21000. He sold an machinery for rs 25500 during the previous year . The land was owned by him for the last five years , which was purchased for rs 6000 . On 1st march 2011 he sold a flat for rs 770000 which was purchased by him on 1st Jan 1976 for rs 60000 . The fair market value of this flat was rs 90000 on 1st April 1981. Compute the taxable income for the year 2011-2012 . Cost inflation index was 1981-82:100;1985-86:133;2010-11:632.

Solution Particulars Amount Total Case 1st Capital gain(short term) 10500 Case 2nd Sales consideration 85000 Less: index cost 112263 Long term capital loss (27263) Case 3rd 25500 8220 Long term capital gain 17280 Case 4th 770000 639900 130100 TOTAL INCOME FROM CAPITAL GAIN 130617

Forth head Other sources

Including items Any kind of interest received. Dividend from foreign company and co operative society. Management consultation fees. Rent of factory , machinery , ground , open land , field , etc . Winning from lottery , cross word puzzle , card games , betting . Horse race and income from maintaining race horses. Director fees. Salary of an member of parliament and M . L . A. Royalty. Income from sub let house. Foreign agriculture income.

Conditions of grossed up When net , tax free , and received . if any one of these 3 words mention in the statement then it should be grossed up. But in the case of government securities the word tax free should be written in the statement for grossing up the government securities.

Rates of Deduction of tax If the co’ is domestic 30% Horse race Lottery , cross word Card games

ON INTEREST OTHER THAN INTEREST ON SECURITY IF THE CO’ IS DOMESTIC 10% ON ANY OTHER INCOME ON INTEREST OTHER THAN INTEREST ON SECURITY

Company is not domestic 30% LOTTERY,CROSS WORD AND CARD GAMES. HORSE RACE 20% LONG TERM CAPITAL GAIN. MONEY BORROWED IN FOREIGN. 15 AND 40% SHORT TERM CAPITAL GAIN. ON ANY OTHER INCOME. RESPECTIVELY

Question Shri kalyan singh is a political leader . The particulars of his income for the year 2010-2011 are as follows: Winning from lottery net received rs 7000. Dividend on equity shares rs 10000.and incurred rs 1500 as collection charges. Rs 3600 as interest on tax free debentures of gunjan electrical ltd. Rs 1800 , tax free debentures of textile company. He received income from foreign agriculture of rs 10000. Compute his taxable income under the head other source.

Solution particulars Amount Winning from lottery 10000 Dividend on equity shares Nil Tax free debentures of gunjan elects ltd 4000 tax free debentures textile ltd 2000 Income from foreign agriculture 24000 Less: collection charges Income from capital gain 40000

Set off and carry forward Heads Set off Carry forward 1.Loss on house property By any head( c. y) 8 years By any head (n.y) 2.Loss on business 2.1 non speculation business By any head except salary(c.y ) By own head (n.y) 2.2 speculation business By own head(c.y ) 4 years By own head(n.y) 3.Capital gain 3.1 short term capital loss By long and short term(c.y) By short term 3.2 long term capital loss By own head

Particulars Set off Carry forward 4.Other sources 4 years Loss on maintain the race horse Profit on maintaining race horses in (c.y) and(n.y)

Total income

Exemptions 80IA- Deduction in respect of infrastructural facilities. 80G- Deductions in respect of donations TO APPROVED FUNDS OR INTITUTIONS. 80GGA- Payment to scientific research or to a university and college etc. for scientific, social and statistical research. 80GGB- Deduction in respect of contribution given by companies to political parties. 80IA- Deduction in respect of infrastructural facilities. 80IAB- Regarding development of special economic zone. 80IB- Deduction in respect of profits OF NEW INDUSTRIAL UNDERTAKINGS OR HOTEL BUSINESS.

80JJAA- Deduction in respect of employment of new workmen. 80IC- Special provision in respect of certain undertakings or enterprises in certain special category states. 80ID- Provides for a five year tax holiday to new hotel of two, three ,four, star category and conventions centers. 80IE- An undertakings engaged in the business of hotel(not below two star category)located in north eastern states.(states are A.P , ASSAM , MANIPUR , MEGHALAYA , MIZORAM , NAGALAND , SIKKIM , AND TRIPURA. 80JJA- Deduction in respect of profit and gain from business of collecting and processing of bio-degradable waste. 80JJAA- Deduction in respect of employment of new workmen. 80LA- Deduction in respect of certain incomes of offshore banking units and international financial service centers.

Question From the following particulars of income of Mr. Ashok Kumar for the year ended on 31st march 2011, calculate his total income for the assessment year 2011-12: Rent receive from house property let out to state bank of India Rs. 200000. Business profit Rs. 352000. setting off Rs. 20000 paid as donation to the chief minister relief fund Long term capital gain Rs. 180000 and having a short term capital loss of Rs. 1300. he received interest of Rs. 10000. He paid Rs. 50000 in respect of scientific research. He contribute Rs.20000 in respect of political parties.

Provide money for development for special economic zone Rs. 15500. Income from 3 star hotel situated in Manipur Rs. 12000. Having a business which relates to bio degradable processing and receive a profit of Rs. 6100. His winning from lottery Rs. 100000. he had purchased a lottery ticket of Rs. 500.