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Overview of Indian Tax System
By CA Jainish Patel AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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(M) : +91 99799 56793 (E-mail) : jainish@amks.co.in
AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Income Under the 5 Heads By CA Jainish Patel
AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Income From Five Heads are as Follows
Income from salary Income from house property Income from profit or gain from business or profession. Income from capital gain. Income from other sources. AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Complete Process of Computation of Taxable Income & Tax
1. Determine the residential status of the assesse 2. Determine the incidence of tax 3. Classify income after considering specific exemption into respective head. 4. Aggregate the income. 5. Apply clubbing Provision. 6. Setoff/Carry forward losses (if any) 7. Balance shall be gross total income. 8. Deductions under Chapter VI AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Cont 8. Allow deduction 80C to 80U chpt VI A.
9. Balance shall be total income. 10. Determine the tax payable, applying the rates applicable. 11. Deduct rebate/relief of tax. 12. Add surcharge. 13. Add educational cess. 14. Balance is tax payable. 15. File return of income before the due date of filing. AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Income From Salary Salaries U/S 17(1) include following:- Wages
Pension Gratuity Any fees, Commission, Perquisite, Profit in lieu of salary Any advance salary etc AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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List of Allowance exempted from tax
Conveyance allowance . Children education allowance . Any allowance granted to an employee to meet the hostel expenditure of his child . Transport allowance . House rent allowance . Provident Fund . Gratuity . Leave travel concession . Compensation received at the time of voluntary retirement . Encashment of earned leave at the time of retirement . Computation of pension . Entertainment allowance . AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Statement of total income from salary
Statement of total income from salary Particular Rs Basic salary XXX Dearness Allowances (DA) House Rent Allowances xxx Less :- Exemptions Under sec10 (13 A) Eduacation Allowances Exemptions Under sec10 (14) Conveyance Allowance Exemption Under sec 10(14) Bonus Gratuity Less:- Exemption Under sec 10(10) Perquisities (Taxable) Entertainment Allowances Gross Salary Deductions U/S 16 U/S 16(2) U/S 16(3) Taxable Income from Salary
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INCOME FROM HOUSE PROPERTY
Sec 22 of Income Tax Act 1961 Income from houses, buildings, bungalows Tax is based on Annual value. AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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POINTS TO BE REMEMBERED
Assessee should be the Owner of the Property Should be not be used for Own Business or Profession In Case of Dispute Regarding Title Property Let Out along with other Assets In case of sub-Letting AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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ANNUAL VALUE (SEC 23) EXPECTED RENT FAIR RENT The rent which a similar property will fetch at the same or nearby similar locality. Municipal Rent Value (MRV) X X X Fair Rental Value (FRV) Whichever is higher (ER) X X X ( If no SR) Standard Rent (SR) ( If available) Whichever is less (ER) AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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The value fixed by the municipal or local authority
MUNICIPAL RENT The value fixed by the municipal or local authority STANDARD RENT Rent fixed by the Rent Control Act Max rent an owner can claim from his tenant as rent ACTUAL RENT Rent for which property has been let out AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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COMPUTION OF HOUSE PROPERTY INCOME
Particulars amount Gross Annual Value xxx Less: Municipal tax -Paid by owner xxx Net Annual Value Deduction U/S 24 1. Standard deduction -30% of NAV 2. Int. on borrowed capital- Paid or due Income from House Property AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD
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Eg: CALCULATION OF GAV Particular House 1 House 2 MRV 1,05,000 FRV
1,07,000 Whichever is higher SR 1,35,000 ER (Whichever is Less) AR 1,12,000 98,000 GAV AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Income from Profit/Gain from Business/Profession
Chargeability Under sec 28 Profit/Gain from any business/Profession Profit on sale of import entitlement license Duty drawback Value of benefit arising from any business/profession Income derived by trade/profession Income from speculative transaction Income received under keyman insurance policy Any interest, salary, Bonus, commission or remuneration received by partner of a firm. AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Case business income is not taxable u/s 28
Rental business Dividend on share Speculative transactions excluded :-Hedging contracts and derivative transaction. AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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How to compute PGBP U/S 30 Deductions allowed Rent taken
Insurance premium U/S 31 Deductions allowed w.r.t plant & machinery. Sec 32 Depreciation AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Income from Capital Gain
Chargeability U/S 45 (1) Capital Gain tax liability arises when following conditions get satisfied:- There should be a Capital Asset There should be a Transfer Transfer should be in previous year Result of transfer should be profit or gain Such Profit/Gain is not exempt. AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Exemption for Capital Assets
Any Stock-in-Trade. Movable Property (excludes jewellery archeological, Drawings, Paintings, Sculpture). Agricultural Rural Land. 65% Gold Bond / 7% Gold Bonds-1980/ National Defense Gold Bond issued by Central Government. Special Bearer Bonds 1991. Gold Deposit Bond issued under Gold deposit scheme 1999. AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Types of Capital Assets
There are two types of Capital Assets Short Term Capital Asset Long Term Capital Asset AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Income from Other Sources
Chargeability U/S 56(2) It includes the following Dividend. Windfall from lotteries crossword gambling. Income by way of interest on securities. Income from Royalty Director fees Income from investment AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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Thank You!!! AMKS & Co. CHARTERED ACCOUNTANTS
GANDHIDHAM | ANJAR | AHMEDABAD (M) : ( ) :
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