1. Overview of Indian Tax System
By CA Jainish Patel
AMKS & Co.
CHARTERED ACCOUNTANTS
GANDHIDHAM | ANJAR | AHMEDABAD
(M) : ( ) :

2. (M) : +91 99799 56793 (E-mail) : jainish@amks.co.in
AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD
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3. Income Under the 5 Heads By CA Jainish Patel
AMKS & Co. CHARTERED ACCOUNTANTS GANDHIDHAM | ANJAR | AHMEDABAD
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4. 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
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5. 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
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6. 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
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7. 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
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8. 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
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9. 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

10. 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
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11. 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
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12. 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
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13. 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
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14. 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

15. 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
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16. 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
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17. 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
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18. 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
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19. 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
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20. 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
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21. 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
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22. 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
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23. Thank You!!!  AMKS & Co. CHARTERED ACCOUNTANTS
GANDHIDHAM | ANJAR | AHMEDABAD
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