bvMinimum Alternate Tax (MAT) Format of computation of tax u/s 115JB Step1.

Net profit arrived in accordance with the provision XXX of Part II and III of Schedule VI of Companies Act Add: Adjustments contemplated u/s 115JB XXX XXX Less: Adjustments contemplated u/s 115JB XXX Book Profit XXX Compute tax@ 10% of Book Profit XXX (A) Step II: compute total income as per the normal XXX provisions of the Income tax Act Compute tax on the above @30% in the case of XXX domestic company or 40%in case of foreign company (B) Higher of (A)or (B)shall be the tax payable u/s 115JB XXX (C) Add: Surcharge @10% or2.5% for doms,estic XXX company or foreign company respectively XXX Add: Education Cess@2% and Higher and Secondary XXX Education Cess@1% Total tax, surcharge and cess payable XXX Calculation of Book profit The following items should be added: a) The income tax paid or payable or its provision. Income- tax, b) The amount carried to any reserves by whatever name called c) The amount or amounts set aside to provisions made for meeting liabilities other than ascertained liabilities: d) The amount by way of provision for losses of subsidiary companies e) The amount or amounts of dividend paid or proposed

f) The amount or amounts of expenditure relatable to any income to which Sec10 Sec11 or 12 apply. .Further the following shall be reduced from the net profit as per the profit and loss account 1. 2. 3. the amount withdrawn from any reserve or provision if any such amount is credited to profit and loss account Exempt Income the amount of loss brought forward or unabsorbed depreciation whichever is less as per books of accounts(for this purpose the loss shall not include depreciation)

Q1) A Ltd.Co furnishes the following details for the year ending 31-310 Rs in lakhs Operating profit 220 Less: transfer to 25 general reserve Proposed dividend 15 40 Net Profit 180 You are further informed that the following items have been debited/ credited to the P/L a/c in arriving at the above mentioned operating profit. Particulars Debit Credit Depreciation on 80 straight line method Income tax 40 Agricultural income 60 (net) Share of the profit 20 from a firm The following additional information is provided 1) depreciation as per Tax method Rs 140 lakhs 2) as per company law book loss brought forward which includes unabsorbed depreciation of Rs 10 lakhs- Rs 30 lakhs 3) As per income tax law business loss brought forward including unabsorbed depreciation of Rs40 lakhs- Rs 45 lakhs You are required to examine the applicability of sec115JB and determine the tax liability accordingly for the assessment year201011. Q2) B Ltd.Co furnishes the following details for the year ending 31-309 Rs in lakhs Operating profit 250 Less: transfer to 25 general reserve Proposed dividend 15 40 Net Profit 210

You are further informed that the following items have been debited/ credited to the P/L a/c in arriving at the above mentioned operating profit. Particulars Debit Credit Depreciation on 50 straight line method Income tax 90 Agricultural income 70 (net) Share of the profit 10 from a firm Amount transfer from 10 Reserves to profit and loss Provision for losses 10 of subisdary Expenditure to 05 agriculture Provision for 02 contingent liabilities The following additional information is provided 1. depreciation as per Tax method Rs 100 lakhs 2. as per company law book loss brought forward which includes unabsorbed depreciation of Rs 10 lakhs- Rs 40 lakhs 3. As per income tax law business loss brought forward including unabsorbed depreciation of Rs40 lakhs- Rs 85 lakhs You are required to examine the applicability of sec115JB and determine the tax liability accordingly for the assessment year200910 Tax deducted at source Deduction of tax at source from salary:(Sec 192) Any person responsible for paying any income chargeable under head salaries ( employer) is responsible to deduct tax at source at regular amount if the income exceeds the taxable anmount.

Deduction of tax at source from interest on securities:(Sec 193) Any person other than individual and HUF responsible for paying interest on securities ( debenture, Bank fixed deposit , central and state government securities) to a resident is required to deduct income tax . Time of tax deduction : Tax has to be deducted at time of payment or at time payment of credit to the account of the payee which ever is earlier. Rate of tax: Rate of tax is 10% ( +SC + EC+ SHEC) in case of debenture of a listed company and and 20 % ( + SC + EC + SHEC) in case of debenture of unlisted company, if the recipient is a noncorporate assessee. Tax is deductible at 20% (+ SC + EC + SHEC ) , if the recipient is a domestic corporate assessee. Tax should be deducted if the amount is not exceeding 2,500 The declaration has to be submitted in Form no 15 H for senior citizen and Form no 15 G for any other person if the tax on the total income for the pervious year nil. The recipient can apply in form 13 to the assessing officer to deduct tax a lower rate or not to deduct any tax. Deduction of tax at source from winnings from lotteries ,crossword puzzles, Card games (Sec 194 B) Any person responsible for paying to any person any income by way of winning from lotteries or crossword puzzles or card game or any other game exceeding 5000/- is required to deduct income tax . Time of tax deduction : Tax has to be deducted at time of payment or at time payment of credit to the account of the payee which ever is earlier. Rate of tax: Rate of tax is 30% ( +SC + EC+ SHEC) . Prize given partly in cash and partly in kind: When the prize is given partly in cash and partly in kind, tax will be deductible from cash prize Where the winnings wholly in kind or where they are partly in cash in cash and partly in kind but cash is not sufficient to meet

the liability for tax deduction in respect of the whole winnings either in cash or kind, ensure that tax has been paid in respect of winnings. Deduction of tax at source from winnings from Horse races(Sec 194 BB) Tax is deductible in case of winning from horse races at the prescribed rate when the amount exceeding 2,500 Time of tax deduction : Tax has to be deducted at time of payment or at time payment of credit to the account of the payee which ever is earlier. Rate of tax: Rate of tax is 30% ( +SC + EC+ SHEC) Deduction of tax at source from payment to contractor and subcontractors ( Sec 194 C) Any person other than individual and HUF responsible for paying any sum of money to a resident contractor for carrying out any work (including supply of labour for carrying out any work) is required to deduct tax at source and when resident contractor is paying to the resident sub contractor. the same is required to deduct tax at source Time of tax deduction : Tax has to be deducted at time of payment or at time payment of credit to the account of the payee which ever is earlier. Tax is to be deducted amount credited or paid to the contractor or subcontractor exceeds Rs 20,000 in a single payment or Rs 50,000 in aggregate during financial year. Rate of Tax : Rate of tax is 1% in case of advertising contract ( +SC + EC+ SHEC), payment for other contract 2% (+SC + EC+ SHEC), payment to subcontractor 1% (+SC + EC+ SHEC) . If the recipient obtains a certificate from the assessing officer and if the recipient furnishes form 15H to the payer no tax have to be deducted. The recipient can apply in form 13ssessing officer to deduct tax a lower rate or not to deduct any tax.

TDS FROM INSURANCE COMMISSION [S. 194H]

(1) WHO

SHOULD DEDUCT TAX: Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of Insurance commission shall deduct tax at source.
(2) WHEN

TAX SHOULD BE DEDUCTED:

Time of tax deduction : Tax has to be deducted at time of payment or at time payment of credit to the account of the payee which ever is earlier. Tax is to be deducted r exceeds Rs 5000. HOW MUCH TAX SHOULD BE DEDUCTED: Rate of tax: Rate of tax is 10% ( +SC + EC+ SHEC) if the recipient is resident non-corporate asseseee and 20% if the if the recipient is a resident corporate assessee. The recipient can apply in form 13 to the assessing officer to deduct tax a lower rate or not to deduct any tax. TDS FROM COMMISSION OR BROKERAGE: [S. 194H] (1) WHOSHOULD DEDUCT TAX: Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of commission or brokerage shall deduct tax at source.
(3) WHEN

TAX SHOULD BE DEDUCTED:

Time of tax deduction : Tax has to be deducted at time of payment or at time payment of credit to the account of the payee which ever is earlier. Tax is to be deducted if the amount credited or paid exceeds Rs 2500. HOW MUCH TAX SHOULD BE DEDUCTED: Rate of tax: Rate of tax is 10% ( +SC + EC+ SHEC) .

The recipient can apply in form 13 the assessing officer to deduct tax a lower rate or not to deduct any tax. TDS FROM RENT: [S. 194-I] WHO SHOULD DEDUCT TAX: Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of rent. WHEN TAX SHOULD BE DEDUCTED: Tax has to deductedat time of payment or at time payment of credit to the account of the payee which ever is earlier No tax is deductible if the amount of rent credited/ paid during the financial year does not exceed Rs. 1,20,000. HOW MUCH TAX SHOULD BE DEDUCTED Rent on plant, machinery or equipment ( individual or HUF) Rate of Tax Rent on Land, building and furniture ( individual or HUF) Rent on plant, machinery or equipment ( other than individual or HUF) Rent on Land, building and furniture ( other than individual or HUF)

10% (SC+ 15% ( SC+ 10%( SC+ 20%( SC+ EC+SHEC) EC+ SHEC) EC+ SHEC) EC+ SHEC)

The recipient can apply in form 13 to the assessing officer to deduct tax a lower rate or not to deduct any tax. TDS FROM PROFESSIONAL AND TECHNICAL FEES : [S. 194J] WHO SHOULD DEDUCT TAX: WHO SHOULD DEDUCT TAX: Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of

professional fees or technical fees . WHEN TAX SHOULD BE DEDUCTED: Tax has to be deducted at time of payment or at time payment of credit to the account of the payee which ever is earlier No tax is deductible if the amount of rent credited/ paid during the financial year does not exceed Rs. 20,000. HOW MUCH TAX SHOULD BE DEDUCTED: Rate of tax: Rate of tax is 10% ( +SC + EC+ SHEC) . No tax under the provision of the act in respect of amount payable to central and state government , RBI, any statutory corporation whose income is exempt from tax., mutual fund. The payer of income tax is supposed to issue a certificate of tax deduction to the recipient in the following format: Different payments In case of salary payment Form No 16

In case of payment other than 16 A salary Due date of deposit of TDS payment with respect to deposit of tax, within one week form the last day of the month in which deduction is made. ADVANCE TAX Every person is liable to pay advance tax if advance tax is payable id Rs 5,000 or more. Advance tax is payable as follows: In case of corporate In case of non assessee corporate assessee On or before June 15 Upto 15% of advance ------------

of the previous year

tax payable

On or before Upto 45% of advance Upto 30% of advance September 15 of the tax payable tax payable previous year On or before Upto 75% of advance Upto 60% of advance December 15 of the tax payable tax payable previous year On or before March Upto 100% of Upto 100% of 15 of the previous advance tax payable advance tax payable year An assesee who is liable to pay advance tax is required to estimate his current income and advance tax thereon without having to submit any estimate of statement of income of assessing authorities. Example: Mrs X individual Y (HUF) Z ( corporate ) 2,00,000

Taxation On or before June 15 of the previous year On or before September 15 of the previous year On or before December 15 of the previous year

4,888 No Advance tax

80,540

------------- 30,000

24,162

60,000

24,162

60,000

10

On or before March 15 of the previous year

32,216

50,000

SEC 234 A: Interest is payable for default in filling the return of income@ 1 % per month commencing from the due return of filling of income till date when return of income is furnished or till date of assessment which ever is earliers. SEC 234 B : Interest is payable if the assesse has not paid advance tax or underestimated installment of advance tax. Simple interest @ 1% p.m. SEC 115-O: Tax on distributed profit is in addition to income tax chargeable in respect of total income. Only domestic company (not foreign company) is liable for dividend distribution tax. Dividend paid out of income generated by SEZ is not subject to dividend distribution tax. The rate of tax is 15% (SC+ EC+ SHEC). Therefore effective rate of tax is 16.995%. The tax on distributed profit shall be paid within 14 days from date of declaration , distribution or payment of dividend which ever is earlier. If the company or the principal officer fails to pay the whole or any part of tax within specified time limit , then he shall be liable to pay Interest @ 1% per month or part of the month thereof . The amount on which interest is chargeable will be amount of tax as reduced by the amount paid within due date . The interest is chargeable for the period commencing from the next day of the after the last date of payment and ending on date of payment

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