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1 Chapter XII Ascertainment of Taxable Income Taxable Income: Assessable Income – Entitled Aggregated Allowances Entitled Aggregate Allowances 1.Resident.

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Presentation on theme: "1 Chapter XII Ascertainment of Taxable Income Taxable Income: Assessable Income – Entitled Aggregated Allowances Entitled Aggregate Allowances 1.Resident."— Presentation transcript:

1 1 Chapter XII Ascertainment of Taxable Income Taxable Income: Assessable Income – Entitled Aggregated Allowances Entitled Aggregate Allowances 1.Resident Individual/Charitable Institution Statutory Allowance (Rs. 300,000/-) Allowance for Qualifying Payments 2.For Others: Allowance for Qualifying Payments

2 2 Chapter XII Ascertainment of Taxable Income Order of Priority for Deductions Statutory Allowance QP s not eligible to be CF d QP s eligible to be CF d Qualifying Payment Allowance Payment enumerated in Section 31(2) of the Act. Reduces the tax payable Are two groups of QP s (Applicable to Individuals & to Companies)

3 3 Chapter XII Ascertainment of Taxable Income Qualifying Payments 12.08 Approved Charity & Specified Institutions 12.09 Donation to Government or Specified Funds 12.10 Expenditure on Projects in a Development Plan of the Government 12.11 Provident Fund Contributions 12.12 Insurance Premium 12.13 Cost of Film Production 12.15 Construction/ Purchase of a House 12.16 Shares in Venture Capital Companies 12.17 Expenditure on Housing (Repayment of Loan – Capital Portion)

4 4 Chapter XII Ascertainment of Taxable Income Limitations of QP – Individuals DescriptionAbility to CF 1 1/3 of AI or Rs. 25,000/- which ever is lower No - Cash donations to specified institutions 2 Up to Rs. 25,000/-Yes - Expenses on Govt approved project 3 1/3 of AI or Rs. 25,000/- which ever is lower No Insurance Premium (Life/ Medical)

5 5 Chapter XII Ascertainment of Taxable Income Limitations of QP – Individuals (Contd…) 4 1/3 of AI or Rs. 25,000/- which ever is lower No EPF Contribution 5 1/3 of AI or Rs. 25,000/- which ever is lower No Money donation to approved charity 3, 4 & 5 in aggregate cannot exceed Rs. 75,000/- or 1/3 of AI

6 6 Limitations of QP – Individuals (Contd…) 6 1/3 of AI or Rs. 100,000/- which ever is lower No Repayment of (capital portion) of an approved housing loan 7 1/3 of AINo Investment in Venture Capital Companies 8 Up to Rs. 10 MillionYes (2 Years) Cost of Film Production 9 100%Yes Donation to the Government (If non monitory it is limited to Rs. 2 million – excess not allowed)

7 7 Chapter XII Ascertainment of Taxable Income Limitations of QP – Companies DescriptionAbility to CF 1/5 of AI 1 - Cash donation to approved charity No 2 - Cash donation to Specified Institution No 3 - Exp on government development project Yes 4 - Investment in Venture Capital Companies No

8 8 Chapter XII Ascertainment of Taxable Income Limitations of QP – Companies 5 Up to Rs. 10 MillionYes (for 2 Years) - Cost of film production 6 100%Yes Donation to Govt. (If non monitory it is limited to Rs. 2 million – excess not allowed)

9 9 Chapter Computation of Income Tax Tax Rates for Individuals (Pg. 370) First 240,000/--10% Next 240,000/--20% Balance -30% Tax Rates for Companies (Pg. 372) Tax Payable/ Balance Tax Payable Taxable Income * Rate = Gross Tax Less - Tax Credits Balance Tax Payable (Tax Credits: PAYE & WHT)

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