Computation of Income for the Assessment year 2010-11

Chart Showing Computation of Income from Salaries

Rs.
1. Salary/Wage ..
2. Advance Salary ..
3. Dearness Pay ..
4. Dearness Allowance ..
5. Bonus ..
6. Fees ..
. !o""#ss#on ..
$. Allowances %&a'a(le )ar*+ ..
,. -alue o. *a'a(le )er/u#s#*es ..
10. Pro.#*s #n l#eu o. or #n add#*#on *o salary or wages
%A"oun* o. !o")ensa*#on+ ..
11. A"oun* rece#ved #n res)ec* o. encas1"en* o. earned leave
dur#ng serv#ce ..
12. !on*r#(u*#on o. e")loyer #n 2PF #n e'cess o. 123 o. salary ..
13. 4n*eres* on 2PF #n e'cess o. ,.53
5n re*#re"en* o. 6")loyee7add 8 ..
14. 9nrecogn#sed Prov#den* Fund 8
%a+ S1are o. e")loyer ..
%(+ 4n*eres* on s1are o. e")loyer ..
15. &a'a(le )ar* o. gra*u#*y ..
16. &a'a(le )ar* o. encas1"en* o. earned leave ..
1. 4. re*renc1ed:*a'a(le )ar* o. re*renc1"en* co")ensa*#on ..
1$. 4n case o. volun*ary re*#re"en*:*a'a(le )ar* o. volun*ary
re*#re"en* co")ensa*#on ..
1,. Pens#on8
%a+ &a'a(le )ar* o. co""u*ed )ens#on ..
%(+ Pens#on .ro" *1e da*e o. re*#re"en* *#ll *1e end o. )rev#ous year ..
Gross Salary Income ..
Less :
1. S*a*u*ory deduc*#on %under sec*#on 16+
%#+. 6n*er*a#n"en* allowance:;a'. 2s. 5<000
%4n case o. =ov*. 6")loyee+ ........
%##+ Pro.ess#onal &a' ........ ..
Taa!le Salary
..
1


2
3
4

5

Income from salaries
4nco"e .ro" salary
4nco"e (y way o. allowances
&a'a(le value o. )er/u#s#*es
Gross salary
Less " Deduc*#on under sec*#on 16
6n*er*a#n"en* allowance
Pro.ess#onal *a'
Income from salaries
Income from house property
Ad>us*ed ne* annual value
Less" Deduc*#on under sec*#on 24
Income from house property
Profits and gains of business or profession
?e* )ro.#* as )er )ro.#* and loss accoun*
Add" A"oun*s w1#c1 are de(#*ed *o P @ A a/c (u* are no* allowa(le as
deduc*#on under *1e Ac*
Less 8 6')end#*ure w1#c1 are no* de(#*ed *o P @ A a/c (u* are allowa(le as
deduc*#on under *1e Ac*
Less : 4nco"e w1#c1 are cred#*ed *o P @ A a/c (u* are e'e")* under sec*#on 10
or are *a'a(le under o*1er 1eads o. #nco"e
Add: &1ose #nco"e w1#c1 are no* cred#*ed *o P @ A a/c (u* are *a'a(le
under *1e 1ead BPro.#*s and ga#ns o. (us#ness or )ro.ess#onB
#rofits an$ gains of !usiness or profession
Capital gains
A"oun* o. ca)#*al ga#ns
Less8 A"oun* e'e")* under sec*#ons 54< 54B< 54D< 546!< 54F< 54=< 54=A< 54C
Income from capital gains
Income from other sources
=ross #nco"e
Less" Deduc*#ons under sec*#on 5
Income from other sources
Total D %1+ E %2+ E %3+ E %4+ E %5+F
Less 8 Ad>us*"en* on accoun* o. se*7o.. and carry .orward o. losses
Gross Total Income
Less 8 Deduc*#ons under sec*#ons $0! *o $09+
Total Income %or ?e* 4nco"e+
Computation of Ta %ia!ility
&a' on ne* #nco"e
Less8 2e(a*e under sec*#on $$6
Balance
Add" Surc1arge
&a' and surc1arge
Add: 6duca*#on cess D3 )er cen* o. *a' and surc1argeF
Less: 2e(a*e under sec*#ons $6< $,< ,0 and ,1
Ta
Less" Pre7)a#d *a'es
&a'7)a#d on sel.7assess"en*
&a' deduc*ed or collec*ed a* source
&a' )a#d #n advance

Ta %ia!ility
Rs.

Rs.

!1arles Aasrado SG
2
Important points in the Computation of Salary Income
I. General #oints
1. 2ela*#ons1#) o. e")loyer and e")loyee "us* e'#s* *o crea*e salary #nco"e.
2. 5nly rece#)*s .ro" e")loyer are *a'a(le under *1#s 1ead. 2ece#)*s .ro" a )erson o*1er *1an
e")loyer are *a'a(le under o*1er sources.
3. Salary and )ens#on rece#ved (y e")loyees o. 9?5 #s .ully e'e")*ed.
4. Any a"oun* rece#ved a.*er cessa*#on o. e")loy"en* #s also *a'a(le under *1#s 1ead
5. Salary accrues w1ere serv#ce #s rendered (u* .or gov*. e")loyees )os*ed a(road< salary #s dee"ed
*o accrue #n 4nd#a.
6. 4n case salary #s .oregone under legal o(l#ga*#on #* #s e'e")*ed (u* #* .oregone volun*ar#ly< #* #s
*a'a(le.
. Any salary rece#ved #n l#eu o. no*#ce #s also .ully *a'a(le under *1#s 1ead.
$. 4n case salary #s rece#ved a.*er deduc*#on o. .ollow#ng #*e"s< *1ese are added (acH *o ge* .ull
salary 8
#. 5wn con*r#(u*#on *o )rov#den* .und.
##. &a' deduc*ed a* source.
###. 2e)ay"en* o. loan e*c.
#v. A4! Pre"#u"< #. deduc*ed .ro" salary.
v. =rou) #nsurance sc1e"e.
v#. 2en* o. 1ouse )rov#ded (y e")loyer.
4n case "NET", "Received", "After deduction of Or "Amount Credited by BanH g#ven< only
*1en *1e a(ove #*e"s are added.
,. Prev#ous year #n case o. salar#es #s always .#nanc#al year i.e. .or *1e 200,710 #* #s 1747200, *o 317372010.
10. Salary w1en due 8
#. 4. due on *1e las* da*e o. *1e "on*17salary .or A)r#l< 200, rece#ved on 30747200,u)*o
salary .or ;arc1 2010.
##. 4. due on 1s* day o. every "on*17salary .or ;arc1 due on 1747200, u)*o salary .or
Fe(ruary 2010 due on 17372010 #s #ncluded.
II. Salary 9/s 1&'1(
1.)ages* Salary. Fully *a'a(le.
2.Annuity or #ension. Fully *a'a(le.
3.Gratuity. 4* 1as (een *rea*ed se)ara*ely.
4.%a+ Any .ees:Fully *a'a(le.
%(+ !o""#ss#on:Fully *a'a(le.
%c+ Bonus:Fully *a'a(le.
%d+ Per/u#s#*es:%PerHs+ &1ese are *rea*ed se)ara*ely u/s 1%2+.
%e+ Pro.#*s #n l#eu o. salary:&1ese are *rea*ed se)ara*ely u/s 1%3+.
5. Salary in lieu o. leave/Aeave +ncashment. Fully *a'a(le.
6. A$,ance Salary. Fully *a'a(le.
. Arrears o. Salary. Fully *a'a(le.
$. Taa!le portion of Annual Accretion to R#-. 4* cons#s*s o. *wo )ar*s8
(a) 6")loyerIs !on*r#(u*#on *o 2PF. 4* #s e'e")*ed u) *o 123 o. e")loyeeIs salary. 6'cess #s
*a'a(le. Salary J Pay E DA w1#c1 en*ers #n*o )ay .or serv#ce or re*#re"en* (ene.#*s E co""#ss#on on
*urnover ac1#eved (y 1#".
(b) 4n*eres* cred#*ed on 2PF (alance. Fully e'e")*ed #. ra*e o. #n*eres* #s u)*o ,.53. 6'cess #s *a'a(le.
,. Taa!le #ortion of transferre$ !alance o. 92PF *o 2PF.
&1e .und #s *rea*ed as 2PF .ro" *1e day #* was #ns*#*u*ed and e'e")*#on #s allowed. 6'cess #s *a'a(le.
&1e (alance o. unrecogn#Ked )rov#den* .und w1#c1 #s *rans.erred *o 2PF #s called B&rans.erred (alance.B
(i) &1e .und w#ll (e *rea*ed as 2PF .ro" *1e da*e .und was #ns*#*u*ed.
(ii) &1e e")loyerIs con*r#(u*#on *o 92PF s1all /ual#.y .or e'e")*#on u) *o 123 o. salary and e'cess
s1all (e *a'a(le.
(iii) &1e #n*eres* cred#*ed *o *1e accu"ula*ed (alance s1all (e e'e")*ed #. ra*e o. #n*eres* was u) *o ,.53L
6'cess< #. any #s *a'a(le.
%#v+ &1e *a'a(le a"oun* under )o#n* %##+ and (iii) a(ove s1all (e e'e")*ed.
!1arles Aasrado SG
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10. Refun$ from #ro,i$ent -un$.
(a) #. SPF:Fully e'e")*ed.
(b) 4. 2PF:Fully e'e")*ed #. serv#ce #s "ore *1an 5 years. 4n case 1e leaves serv#ce o. 1#s own accord
(e.ore 5 years *1e a"oun* on w1#c1 *a' 1as no* (een )a#d earl#er #s *a'a(le %w1#c1 was e'e")*ed earl#er+.
%c+ 4. 92PF:&a'a(le )or*#on #s added #n salary #nco"e. &a'a(le )or*#on #s e/ual *o e")loyerIs
con*r#(u*#on E #n*eres* on *1#s )ar*. 4n*eres* on own con*r#(u*#on *o 92PF #s *a'a(le under *1e 1ead
B4nco"e .ro" o*1er sources.B
III. Allowances
A. -ully +empte$ Allowances
1. Fore#gn Allowance g#ven (y =ov*. *o #*s e")loyees )os*ed a(road.
2. C.2.A. g#ven *o Gudges o. C#g1 !our* and Su)re"e !our*.
3. Su")*uary Allowance g#ven *o Gudges o. C#g1 !our* and Su)re"e !our*.
.. -ully Taa!le Allowances"
%#+ Dearness Allowance/Add#*#onal D.A./C#g1 !os* o. A#v#ng allowance:Fully &a'a(le.
4n case #* #s "en*#oned *1a* D.A. en*ers #n*o )ay .or serv#ce or re*#re"en* (ene.#*s or #s g#ven under *1e
*er"s o. e")loy"en* #* #s *o (e *rea*ed as )ay and no* D.A. and #s *rea*ed as )ar* o. salary .or all )rac*#cal
)ur)oses.
(ii) !#*y !o")ensa*ory Allowance. (iii) !a)#*al !o")ensa*ory Allowance.
%#v+ Aunc1 Allowance. %v+ &#..#n Allowance.
%v#+ ;arr#age/Fa"#ly Allowance< %v##+ De)u*a*#on/Pro>ec* Allowance.
(viii) Wardens1#) Allowance. (i) ?on7Prac*#c#ng Allowance.
() 5ver*#"e Allowance. (i) F#'ed ;ed#cal Allowance.
(ii) 6lec*r#c#*y and Wa*er Allowance.
(iii) +ntertainment Allowance. 4* #s .ully added #n e")loyeeIs Salary. 4n case o. =overn"en*
e")loyees a $e$uction is allowe$ u*s 1/'ii( a* *1e ra*e o. least of following 8
%a+ S*a*u*ory A#"#* 2s. 5<000 ).a.
(b) l/5*1 o. Bas#c Salary L or
%c+ Ac*ual 6n*er*a#n"en* Allowance rece#ved.
4n case o. o*1er e")loyees (i.e., All non7gov*. e")loyees+ *1#s deduc*#on was allowed u) *o 317372001 only.
C. #artly Taa!le Allowances "
1. Couse 2en* Allowance
%a+ Fully 6'e")*ed< #. rece#ved (y *1e >udges o. C#g1 !our* and Su)re"e !our*.
%(+ Fully *a'a(le< #. rece#ved (y an e")loyee w1o #s l#v#ng #n 1#s own 1ouse or #n a 1ouse .or w1#c1 no
ren* #s )a#d.
%c+ 6'e")*ed u) *o least of following .or *1ose e")loyees w1o are l#v#ng #n ren*ed 1ouses 8
#+ Ac*ual C2A rece#ved (y *1e e")loyee.
%##+ 2en* )a#d #n e'cess o. 103 o. salary
%###+ 403 o. salary #n ord#nary *owns L or 001 of salary #n ;u"(a#< MolHa*a< !1enna# or Del1#.
Salary J Pay E D.A. w1#c1 en*ers #n*o Pay .or Serv#ce or 2e*#re"en* Bene.#*s E !o""#ss#on on
&urnover Ac1#eved (y C#". Taa!le 2RA J C2A 2ece#ved 7 Aeas* o. A(ove.
!1arles Aasrado SG
4
Follow#ng allowances are e'e")*ed u) *o ac*ual e')end#*ure #ncurred .or e")loy"en*. 6'cess< #. any<
s1all (e *a'a(le.
1. Cel)er Allowance.
2. 9n#.or" Allowance.
3. Acade"#c 2esearc1 Allowance.
4. !onveyance Allowance.
5. &ravell#ng Allowance.
Follow#ng allowance are e'e")*ed u) *o a"oun* so no*#.#ed.
1. S)ec#al !o")ensa*ory Allowances.
2. Border Area Allowances.
3. !o")ensa*ory F#eld Area Allowance.
4. !o")ensa*ory ;od#.#ed F#eld Area Allowance.
5. Any S)ec#al Allowance *o coun*er #nsurgency.
6. &r#(al Area Allowance:6'e")*ed u) *o Rs. 200 p.m. #. rece#ved #n *1e s*a*es o. ;P<. &a"#l ?adu<
9.P.< Marna*aHa< &r#)ura< Assa"< Wes* Bengal< B#1ar or 5r#ssa.
. 2unn#ng or Fl#g1* Allowance:4. g#ven *o e")loyees o. *rans)or*a*#on sys*e" w1o do no* rece#ve any
Da#ly Allowance w1#le away .ro" *1e#r )lace o. nor"al du*y #* s1all (e e'e")*ed u) *o 2s. 6<000 ).". or
03 o. suc1 allowance< w1#c1ever #s less N
$. &rans)or* Allowance 8 4* #s e'e")*ed u) *o Rs. 300 ).". w1e*1er *o =ov*. or non7=ov*. e")loyees.
For Cand#ca))ed or (l#nd e")loyees #* #s e'e")*ed u) *o 2s. 1<600 )a 6'cess #s *a'a(le.
,. !1#ldrenIs 6duca*#on Allowance e'e")*ed u) *o Rs. 100 p.m. )er c1#ld .or educa*#on #n 4nd#a o. own
*wo c1#ldren only.
10. Cos*el 6')end#*ure Allowance:6'e")*ed u) *o Rs. 400 p.m. )er c1#ld .or Cos*el e')end#*ure on
own *wo c1#ldren only.
I5. #er6uisites
A. Types of #er7s +empte$ from Ta
1. Free "ed#cal .ac#l#*#es or re#"(urse"en* o. "ed#cal e')end#*ure .or sel.< .a"#ly "e"(ers and
de)enden*s.
(a) 4. *rea*"en* was *aHen .ro" a 1os)#*al "a#n*a#ned (y e")loyer:Fully 6'e")*ed
(b) 4. *rea*"en* #s *aHen .ro" a 1os)#*al "a#n*a#ned (y !en*ral< S*a*e =ov*.< local au*1or#*y or a
1os)#*al a))roved (y !1#e. !o""#ss#oner o. 4nco"e &a':F#ll e'e")*ed.
%c+ 4n case *rea*"en* #s *aHen .ro" a )r#va*e or unrecogn#sed 1os)#*al< *1#s (ene.#* #s e'e")*ed u)
*o 2s. 15<000 ).a.
(d) 4n case e")loyer under a sc1e"e a))roved (y *1e !en*ral =ov*. )ays "ed#cal #nsurance
)re"#u" o. e")loyees< #* #s .ully e'e")*ed.
(e) 4n case any 1eal*1 #nsurance )re"#u" #s )a#d (y e")loyer *o =eneral 4nsurance !or)ora*#on
under no*#.#ed sc1e"e %;ed#cla#" u/s $0D+ *o #nsure *1e 1eal*1 o. #*s e")loyees and "e"(ers o.
*1e#r .a"#l#es< #* #s .ully e'e")*ed.
%.+ 4n case *rea*"en* #s *aHen ou*s#de 4nd#a.
%#+ *1e e')enses on s*ay and *rea*"en* o. )a*#en* and s*ay o. one a**endan* s1all (e e'e")*ed u)
*o .ore#gn e'c1ange allowed (y 2B4 L and
(ii) a**endan* s1all (e .ully e'e")*ed )rov#ded gross *o*al #nco"e o. e")loyee does no* e'ceed
2s. 2<00<000.
!1arles Aasrado SG
5
2. Free re.res1"en* dur#ng worH#ng 1ours.
3. Free recrea*#onal .ac#l#*#es.
4. Prov#s#on o. *ele)1one w1e*1er (as#c or cellular #. e'clus#vely .or o..#c#al worH
5. Free "eals )rov#ded #n re"o*e area or a* o..s1ore #ns*alla*#on are .ully e'e")*ed
6. Free educa*#on< *ra#n#ng or re.res1er course .or e")loyees.
. =oods sold a* concess#onal ra*es.
$. Free ra*#on rece#ved (y "e"(ers o. ar"ed .orces.
,. Per/u#s#*es allowed (y =ov*. *o #*s e")loyees )os*ed a(road.
10. 2en* .ree 1ouse g#ven *o an o..#cer o. Parl#a"en*< a 9n#on ;#n#s*er< and leader o. o))os#*#on #n
Parl#a"en*.
11. !onveyance .ac#l#*#es *o Gudges o. Su)re"e !our* and C#g1 !our*.
12. Free conveyance )rov#ded (y e")loyer *o e")loyees .or go#ng *o or co"#ng .ro" )lace o.
e")loy"en*.
13. Any a"oun* con*r#(u*ed (y e")loyer *owards )ens#on or de.erred annu#*y sc1e"e.
14. 6")loyerIs con*r#(u*#on *o s*a.. grou) #nsurance sc1e"e.
15. !o")u*ers< la)*o)s g#ven *o Dno* *rans.erred+ an e")loyee .or o..#c#al/)ersonal use.
16. &rans.er o. a "ovea(le asse*.Dco")u*er< car or elec*ron#c #*e"sF w1#c1 are "ore *1an 10 years old
w#*1ou* cons#dera*#on.
1. Acc#den* #nsurance )re"#u" )a#d (y e")loyer .or 1#s own (ene.#*.
1$. 4n*eres* .ree loan or loan a* concess#onal ra*e o. #n*eres* *aHen (y e")loyee .ro" e")loyer #. a"oun*
o. loan does no* e'ceed 2s. 20<000 or loan #s *aHen .or "ed#cal *rea*"en*.
1,. -alue o. any s1ares or de(en*ures g#ven .ree o. cos* or a* concess#onal ra*e *o e")loyees under s*ocH
o)*#on sc1e"e a))roved (y *1e !en*ral =ov*.
.. #er7s +empte$ for +mployees (u* &a'a(le .or 6")loyer under -ringe .enefit Ta
-alue o. .ollow#ng (ene.#*s #s no* *a'a(le #n *1e 1ands o. *1e e")loyee. &1e e")loyer 1as *o )ay *a' on
dee"ed #nco"e calcula*ed as )ercen*age o. e')end#*ure #ncurred
1. Any .ree or concess#onal *#cHe* )rov#ded (y *1e e")loyer .or )r#va*e >ourneys o. 1#s e")loyees or
*1e#r .a"#ly "e"(ers.
2. Any con*r#(u*#on (y *1e e")loyer *o an a))roved su)erannua*#on .und .or e")loyees.
3. A. 6')end#*ure #ncurred on en*er*a#n"en* L
B. 6')end#*ure #ncurred on )rov#s#on o. 1os)#*al#*y o. every H#nd (y *1e e")loyer *o any )erson< w1e*1er
(y way o. )rov#s#on o. .ood or (everages or #n any o*1er "anner w1a*soever and w1e*1er or no* suc1
)rov#s#on #s "ade (y reason o. any e')ress or #")l#ed con*rac* or cus*o" or usage o. *rade.
!. 6')end#*ure #ncurred on con.erence %o*1er *1an .ee .or )ar*#c#)a*#on (y *1e e")loyees #n any
con.erence+. For *1e )ur)oses o. *1#s clause< any e')end#*ure on conveyance< *our and *ravel %#nclud#ng
.ore#gn *ravel+< on 1o*el< or (oard#ng and lodg#ng #n connec*#on w#*1 any con.erence s1all (e dee"ed *o
(e e')end#*ure #ncurred .or *1e )ur)oses o. con.erence L
D. 6')end#*ure #ncurred on sales )ro"o*#on #nclud#ng )u(l#c#*y L
6. 6')end#*ure #ncurred on e")loyeeIs wel.are L
F. 6')end#*ure #ncurred on conveyance< *our and *ravel %#nclud#ng .ore#gn *ravel+ L
=. 6')end#*ure #ncurred on use o. 1o*el< (oard#ng and lodg#ng .ac#l#*#es L
C. 6')end#*ure #ncurred on re)a#r< runn#ng %#nclud#ng .uel+ and "a#n*enance o. "o*orcars and *1e
a"oun* o. de)rec#a*#on *1ereon L
!1arles Aasrado SG
6
4. 6')end#*ure #ncurred on re)a#r< runn#ng %#nclud#ng .uel+ and "a#n*enance o. a#rcra.*s and *1e a"oun*
o. de)rec#a*#on *1ereon L
G. 6')end#*ure #ncurred on use o. *ele)1one %#nclud#ng "o(#le )1one+ o*1er *1an e')end#*ure on leased
*ele)1one l#nes L
M. 6')end#*ure #ncurred on "a#n*enance o. any acco""oda*#on #n *1e na*ure o. gues* 1ouse o*1er *1an
acco""oda*#on used .or *ra#n#ng )ur)oses L
!. 6')end#*ure #ncurred on .es*#val cele(ra*#ons L
;. 6')end#*ure #ncurred on use o. 1eal*1 clu( and s#"#lar .ac#l#*#es L
?. 6')end#*ure #ncurred on use o. any o*1er clu( .ac#l#*#es L
5. 6')end#*ure #ncurred on g#.*s L and 6')end#*ure #ncurred on sc1olars1#)s.
C. #er7s Taa!le for All +mployees
1. Rent -ree 2ouse
I. 5alue of 8nfurnishe$ 2ouse
(i) 4n case o. *rans.er o. an e")loyee .ro" one )lace *o ano*1er and 1e #s allowed *o "a#n*a#n *wo
acco""oda*#ons a* *wo )laces< .or a )er#od no* e'ceed#ng ,0 days< *1e value o. one acco""oda*#on w#*1
lower value s1all (e *a'a(le. Bu* #. )er#od ecee$s 90 days *1e value o. (o*1 *1e acco""oda*#ons s1all
(eco"e *a'a(le w#*1 e..ec* .ro" *1e day ,0 days are over.
(ii) ?a*ure o. acco""oda*#on 8 5wned (y 6")loyer/C#red or leased (y e")loyer.
(iii) ;ean#ng o. sa"ary .or ren* .ree 1ouse L
4* s1all #nclude Pay E D.A. %w1#c1 en*ers re*#re"en* (ene.#*s+ E Fee E !o""#ss#on o. all &y)es E
S*a*u*ory Bonus E All Fully &a'a(le Allowances 6'ce)* D.A. w1#c1 does no* en*er re*#re"en* (ene.#* E
&a'a(le )or*#on o. o*1er allowances E Salary #n l#eu o. leave only #. #* rela*es *o encas1"en* o. curren*
yearIs leave.
4* s1all no* #nclude D.A. %w1#c1 does no* en*er re*#re"en* (ene.#*+< arrears< advance salary< )rov#den* .und
e'cess< gra*u#*ous (onus< value o. o*1er )erHs and )ro.#*s #n l#eu o. salary. 4n case salary #s rece#ved .ro"
"ore *1an one e")loyer< salary .ro" all e")loyers #s *o (e *aHen.
2ules regard#ng calcula*#on o. value o. ren* .ree 1ouse 8
A. Couse :wne$ !y employer
%a+ Govt. Employees. &1e value o. 1ouse #s ren* .#'ed Dl#cense .eeF (y *1e gov*. .or suc1 1ouse. 4* can (e
ren* c1arged (y =ov*. .ro" ano*1er e")loyee o. sa"e s*a*us .or s#"#lar *y)e o. 1ouse.
(b) Other Employees. -alue o. 1ouse #s calcula*ed #n .ollow#ng "anner8
%#+ 4n c#*#es w1ose )o)ula*#on #s "ore *1an 25laH1s 8 153 o. e")loyeeIs salary.
(ii) 4n c#*#es w1ose )o)ula*#on #s 10 *o 25 laH1s 8 103 o. e")loyeeIs salary.
(iii) 4n o*1er c#*#es8 .53 o. e")loyeeIs salary.
.. Couse 2ire$ !y employer. Ac*ual ren* )a#d (y e")loyer or 203 o. sa"ary w1#c1ever #s less #s
*a'a(le #n all c#*#es.
;2otel accommo$ation %.or "ore *1an 15 days on *rans.er .ro" one )lace *o ano*1er+ 8 243 o. salary
.or *1e )er#od o. s*ay #n 1o*el or ac*ual 1o*el (#ll w1#c1ever #s less< #s less #s *a'a(le.
II. -or -urnishe$ 2ouse 8
4n case o. all *y)es o. e")loyees calcula*ed value o. un.urn#s1ed 1ouse. 4. .urn#*ure #s owned (y
e")loyer add 103 o. cos* o. *1ese #*e"s. 4. .urn#*ure #s 1#red< ac*ual 1#re c1arges are added.
!1arles Aasrado SG

2. Concessional Rent 2ouse. !alcula*e value o. ren* .ree 1ouse as )er a(ove and deduc* *1e ren* )a#d
(y e")loyee.
3. :!ligation of employee met !y employer. 4n case any o. *1e .ollow#ng "ade (y e")loyer *1ese are
.ully *a'a(le. &1ese are 8
(a) =as and elec*r#c#*y (#lls #ssued on *1e na"e o. e")loyee (u* )a#d (y e")loyer ac*ual
e')enses "e* (y e")loyer are *a'a(le.
%(+ 6duca*#on o. !1#ldren:(#lls #ssued on *1e na"e o. e")loyee (u* )a#d (y e")loyer:ac*ual
e')enses "e* (y e")loyer are *a'a(le. 2e#"(urse"en* o. *u#*#on .ee o. c1#ldren #s also .ully
*a'a(le.
%c+ 4nco"e7*a'< Pro.ess#onal *a' o. e")loyee )a#d (y e")loyer< *1e ac*ual e')enses "e* (y
e")loyer are *a'a(le<
(d) Salary o. do"es*#c servan*s e")loyed (y e")loyee (u* )a#d (y e")loyer< *1e ac*ual e')enses
"e* (y e")loyer are *a'a(le.
4. 5alue of other fringe !enefits
%a+ 9se o. "ovea(le and #""ova(le asse*s owned (y e")loyer7ac*ual (ene.#* der#ved (y e")loyee #s
*a'a(le.
(b) 4n*eres* .ree loans .or an a"oun* e'ceed#ng 2s. 20<000 and loan no* "ed#cal *rea*"en*.
Interest free loan or loan at concessional rate of interest gi,en !y employer to employee<
&a'a(le value o. (ene.#* s1all (e
%#+ 4. loan #s g#ven .ree o. #n*eres* .or 1ouse (u#ld#ng *a'a(le a"oun* w#ll (e calcula*ed as )er
ra*es o. #n*eres* )rescr#(ed (y *1e SB4 as on 1747200,.
%##+ 4. loan #s g#ven .or any o*1er )ur)ose< *a'a(le a"oun* s1all (e calcula*ed as )er ra*es o.
#n*eres* )rescr#(ed (y *1e SB4 as on 1747200,.
%###+ 4. loan #s *aHen .or "ed#cal *rea*"en* o. a d#sease no*#.#ed u/s $0DDB no*1#ng s1all (e
*a'a(le. 4n case any a"oun* #s rece#ved .ro" #nsurance co")any .or "ed#cal *rea*"en*< #n*eres*
on suc1 a"oun* s1all (e *a'a(le.
#v+ 4. a"oun* o. loan does no* e'ceed 2s. 20<000< #n*eres* #s .ully e'e")*ed.
%c+ 9se o. "ovea(le asse*s owned (y e")loyer e'ce)* co")u*ers and la)*o)s:ac*ual (ene.#* der#ved (y
e")loyee #s *a'a(le.
(d) &rans.er o. "ovea(le asse*s *o *1e e")loyee e'ce)* *1ose< w1#c1 are "ore *1an 10 years old.
(e) ;ed#cal B#lls .or *rea*"en* #n )r#va*e or unno*#.#ed 1os)#*als #ssued #n *1e na"e o. e")loyee (u* )a#d
(y e")loyer s1all (e *a'a(le .or an a"oun* w1#c1 e'ceeds 2s. 15<000.
0. %ife insurance premium. 5n *1e l#.e o. e")loyee or any "e"(er 1#s .a"#ly< #. )a#d (y e")loyer #s
.ully *a'a(le. Bu* acc#den* #nsurance )re"#u" )a#d (y e")loyer #. )ol#cy #s .or e")loyerIs (ene.#* #s no*
*a'a(le. 9A4P )a#d (y e")loyer #s also .ully *a'a(le< #n*eres* #s .ully e'e")*ed.
=. #er7s>Taa!le for Specifie$ +mployees :nly
Follow#ng )erHs are *a'a(le only #. e")loyee #s e#*1er a d#rec*or o. co")any or 1as su(s*an*#al #n*eres*
%203 or "ore e/u#*y s1ares+ or 1#s salary #s "ore *1an 2s. 50<000 ).a. &1#s salary "eans all "one*ary
e"olu"en*s< w1#c1 are *a'a(le under *1e 1ead salary a.*er deduc*#ons u/s 16.
1. -ree transport. 4. conveyance #s 1#red or *#cHe* #s )urc1ased (y e")loyer< ac*ual e')enses are
*a'a(le. 4* s1all (e reduced (y any a"oun* )a#d (y *1e e")loyee.
2. -ree e$ucation. 4. e")loyer )rov#des .ree educa*#on *o *1e "e"(ers o. *1e 1ouse1old o. e")loyee
reasona(le a"oun* w1#c1 e")loyee would 1ave s)en* on s#"#lar *y)e o. educa*#on #n sa"e or near(y
local#*y #s *a'a(le.
3. -ree gas? light? water. 4n case connec*#on #s on *1e na"e o. e")loyer and (#ll #s also )a#d (y
e")loyer< ac*ual cos* o. suc1 (ene.#* #s *a'a(le. 4* s1all (e reduced (y any a"oun* )a#d (y *1e e")loyee.
!1arles Aasrado SG
$
4. -ree ser,ants
%a+ 4n case servan*s are e")loyed (y e")loyee (u* *1e#r salary #s )a#d (y e")loyer .ull salary #s *a'a(le
.or all e")loyees.
(b) 4n case serv#ces o. swee)er< gardener and wa*c1"an are )rov#ded (y e")loyer .ull salary o. *1ese
e")loyees #s *a'a(le and #* s1all (e reduced (y any a"oun* )a#d (y e")loyee. 4n case gardener #s
)rov#ded .or ren* .ree 1ouse owned (y e")loyer #*s salary #s added #n F2- and #s no* *a'a(le se)ara*ely.
%c+ 4n case e")loyer )rov#des any o*1er servan* 1#s .ull salary #s *a'a(le .or s)ec#.#ed e")loyees only.
5. Any other !ill .or )ersonal e')enses o. e")loyee )a#d (y e")loyer.
/. -acility of @otor Car
1. Car owne$ or hire$ !y the employer. !ar #s used w1olly and e'clus#vely #n *1e
)er.or"ance o. 1#s o..#c#al du*#es. -alue s1all (e *aHen as n#l )rov#ded *1e )rescr#(ed
cond#*#ons are sa*#s.#ed.
. Car owne$ !y employer an$ it is use$ eclusi,ely for the pri,ate or personal
purpose of the employee or any mem!er of his househol$ "
(i) Ac*ual a"oun* o. e')end#*ure #ncurred on *1e runn#ng @ "a#n*enance ''''
(ii) 2e"unera*#on< #. any< )a#d *o *1e c1au..eur ''''
(iii) De)rec#a*#on O 103 ).a. o. *1e ac*ual cos* o. *1e "o*or car/cars ''''
Less: A"oun* c1arged .ro" *1e e")loyee ''''
-alue o. Per/u#s#*e ''''
!. Car is ta7en on lease an$ it is use$ eclusi,ely for the pri,ate or personal purposes
of employee or any mem!er of his househol$ "
%#+ A"oun* s)en* on runn#ng and "a#n*a#n#ng *1e car '''
%##+ 2e"unera*#on< #. any< )a#d *o *1e c1au..eur '''
!ess8 A"oun* c1arged .ro" *1e e")loyee '''
-alue o. Per/u#s#*e '''
#. Car owne$ or hire$ !y employer. !ar #s used )ar*ly #n *1e )er.or"ance o. du*#es and<
)ar*ly .or )r#va*e or )ersonal )ur)oses o. e")loyee or any "e"(er o. 1#s 1ouse1old 8
%a+ If the entire epenses of maintenance an$ running of the motor-car are
!orne !y the employer 8
%#+ S"all car %!u(#c ca)ac#*y o. eng#ne o. *1e car #s less *1an 1.6 l#*re+ 2s. 1<$00 ).".
%##+ Aarge car %!u(#c ca)ac#*y o. eng#ne o. *1e car e'ceeds 1.6 l#*re+ 2s. 2<400
).".
4. c1au..eur #s also )rov#ded< add 2s. ,00 ).".
'!( If the epenses of maintenance an$ running for his pri,ate or personal purpose
are met !y the assessee 'i.e.? the employee( "
%#+ S"all car 2s.600 ).".
%##+ Aarge car 2s. ,00 ).".
4. c1au..eur #s also )rov#ded< add 2s. ,00 ).".
$. +mployee uses more than one car for pri,ate purposes. W1ere "ore *1an one "o*or
car #s owned or 1#red (y *1e e")loyer and *1e e")loyee or any "e"(er o. 1#s 1ouse1old
#s allowed *1e use o. suc1 "o*or cars %o*1erw#se *1an w1olly and e'clus#vely #n *1e
)er.or"ance o. du*#es+. *1e value o. )er/u#s#*e s1all (e 8
'a( In respect of one car "
%#+ S"all car 2s. 1<$00 ).".
%##+ Aarge car 2s. 2<400 ).".
4. c1au..eur #s also )rov#ded< add 2s. ,00 ).".
%(+ In respect of other car's(" Assu"#ng *1e car%s+ #s used e'clus#vely .or )r#va*e
Aote" W1ere "ore *1an one car #s )rov#ded .or o..#c#al and )r#va*e )ur)oses and *1e
e')enses #ncurred #n rela*#on *o one car are "ore *1an *1e e')enses #ncurred #n rela*#on *o
o*1er car or ou* o. *1ose cars< one car #s s"all and *1e o*1er car #s large< *1e rules do no*
!1arles Aasrado SG
,
)rov#de *1e "e*1od o. valua*#on #n suc1 a s#*ua*#on. Cence< *1e value o. *1e cars "ay (e
de*er"#ned #n suc1 "anner w1#c1 #s (ene.#c#al *o *1e e")loyee.
". Car owne$ !y the employee "
a. &1e ac*ual runn#ng and "a#n*enance c1arges %#nclud#ng c1au..eurIs re"unera*#on+ are "e*
or re#"(ursed (y *1e e")loyer and suc1 re#"(urse"en* #s .or *1e use o. *1e car w1olly and
e'clus#vely .or o..#c#al )ur)oses8 -alue s1all (e *aHen as n#l )rov#ded *1e )rescr#(ed
cond#*#ons are sa*#s.#ed.
(. W1ere re#"(urse"en* o. e')enses o. *1e car #s w1olly .or )ersonal )ur)oses o. *1e
e")loyee or any "e"(er o. 1#s 1ouse1old8 -alue s1all (e *aHen e/ual *o a"oun*
re#"(ursed.
c. W1ere re#"(urse"en* o. e')enses o. *1e car #s )ar*ly .or o..#c#al )ur)oses and )ar*ly .or
)ersonal )ur)oses o. *1e e")loyee or any "e"(er o. 1#s 1ouse1old8
i. #mall car. &1e value o. )er/u#s#*e s1all (e *1e ac*ual a"oun* o. e')end#*ure #ncurred (y
*1e e")loyer less 2s. 1<$00 )er "on*1 E 2s. ,00 ).". .or c1au..eur< #. any< )rov#ded *1e
)rescr#(ed cond#*#ons are sa*#s.#ed.
ii. Large car. &1e value o. )er/u#s#*e s1all (e *1e ac*ual a"oun* o. e')end#*ure #ncurred (y
*1e e")loyer less 2s. 2<400 )er "on*1 E 2s. ,00 ).". .or c1au..eur< #. any< )rov#ded *1e
)rescr#(ed cond#*#ons are sa*#s.#ed.
5. #rofits in %ieu of Salary DSec*#on 1&'4(B
9/s 1%3+ )ro.#*s #n l#eu o. salary #nclude L
%a+ any co")ensa*#on rece#ved .ro" )resen* or )as* e")loyer dur#ng relevan* )rev#ous year on
*er"#na*#on o. serv#ce or on "od#.#ca*#on o. *er"s o. serv#ce.
%(+ any o*1er )ay"en* rece#ved .ro" )resen* or )as* e")loyer e'ce)* g#ven u/s 10%10+< 10%10A+<
40%10AA+< 10%40B+< 10%11+< 10%13+< 40%13A+ and any )ay"en* ou* o. )rov#den* .und *o *1e e'*en* #* #s
*a'a(le.
%c+ any a"oun* due *o or rece#ved w1e*1er #n lu") su" or o*1erw#se (y any assessee .ro" any )erson 8
%#+ (e.ore 1#s >o#n#ng any e")loy"en* w#*1 *1a* )erson L or
%##+ a.*er cessa*#on o. 1#s e")loy"en* w#*1 *1a* )erson.
All a(ove )ay"en*s are .ully *a'a(le unless e'e")*ed u/s 10.
Receipts which are inclu$i!le un$er the 2ea$ Salaries un$er Section 1&'1( or 1&'4(
!ut +empte$ u*s 10
1. %ea,e tra,el concession u*s 10'0(. 6'e")*ed u)*o rules e..ec*#ve .ro" 1.10.1,,.
2. Passage "oney u*s 10'/(. dele*ed .ro" A/P 2004705.
3. Any foreign allowance or per7s u*s 10'&(. 4. g#ven (y =ov*. *o #*s e")loyees )os*ed a(road are .ully
e'e")*ed.
4. Gratuity u*s 10'10(. A =ov*. e")loyee or se"#7=ov*. e")loyee w1ere =ov*. rules are a))l#ca(le:
Fully e'e")*ed.
A. For e")loyees covered under Pay"en* o. =ra*u#*y Ac* %Persons on non7"anager#al )os*s #n .ac*or#es+
:6'e")* u) *o least of following 8
(a) ?o*#.#ed l#"#* 2s. 3<50<000 DAess any a"oun* e'e")*ed earl#erF
(b) 15 days Average wages .or every one co")le*ed year o. serv#ce %Per#od e'ceed#ng 6 "on*1s J 4
year+. Q "on*1Is salary J %Average "on*1ly salary or wages ' %15/26+
%c+ Ac*ual a"oun* rece#ved.
!1arles Aasrado SG
10
B. :ther employees<:6'e")*ed u) *o least of following )rov#ded serv#ce #s "ore *1an 5 years or
e")loyee 1as no* le.* serv#ce o. 1#s own 8
(a) ?o*#.#ed l#"#* J 2s. 3<50<000 DAess any a"oun* e'e")*ed earl#erF<
(b) % "on*1Is average salary .or every one year o. co")le*ed serv#ce. %"on*1s *o (e #gnored+.
(c) Ac*ual a"oun* rece#ved.
Average salary J Salary Dsa"e as .or )rov#den* .undF .or 10 *1e "on*1s )reced#ng *1e "on*1 o.
re*#re"en* d#v#ded (y 10
5. Commutation of pension u*s 10'10A(
4n case co""u*ed value o. )ens#on #s rece#ved
(a) 4. =ov*. e")loyee:#s .ully e'e")*ed.
(b) 4. o*1er e")loyee w1o rece#ves gra*u#*y also:Au") su" a"oun* #s e'e")*ed u)*o
co""u*ed value o. l/3rd o. )ens#on.
4. o*1er e")loyee w1o does no* ge* gra*u#*y:Au") su" a"oun* #s e'e")*ed u)*o co""u*ed value o. %
o. )ens#on.
6. %ea,e encashment u*s 10'10AA(
(a) If rece#ved a* *1e *#"e o. re*#re"en* (y a gov*. e")loyee:Fully eempte$
(b) 4. rece#ved dur#ng serv#ce:Fully *a'a(le .or all e")loyees.
(c) #. rece#ved (y a )r#va*e sec*or e")loyee a* *1e *#"e o. re*#re"en* e'e")*ed u)*o
%#+ ?o*#.#ed l#"#* 2s. 3<00<000<
%##+ Average salary ' 10 "on*1s<
%###+ Ac*ual a"oun* rece#ved<
%#v+ Average salary ' ?o. o. "on*1s leave due. Aeave due #s *o (e calcula*ed *aH#ng one "on*1
leave or ac*ual en*#*le"en* w1#c1ever #s less. Average Salary %Sa"e as .or PF+ .or 10 "on*1s #nclud#ng
*1e "on*1 o. re*#re"en*
. Retrenchment compensation. 2ece#ved (y worHers covered under 4ndus*r#al D#s)u*es Ac* DSec*#on
10%40B+F only .or *1ose worHers w1o .ul.#ll *1e cond#*#ons g#ven under Fac*or#es Ac* %as .or Pay"en* o.
=ra*u#*y Ac*+ *1e leas* o. *1e .ollow#ng #s e'e")*ed.
%#+ ?o*#.#ed l#"#* 2s. 5<00<000< (it) Ac*ual a"oun* rece#ved< (iii) A"oun* )aya(le under 4ndus*r#al D#s)u*es Ac*.
$. Any compensation recei,e$ !y an employee of pu!lic sector un$erta7ings? uni,ersities? #u!lic
Sector Companies 8
%#+ 4. g#ven *o e")loyees o. )u(l#c sec*or under*aH#ngs under a sc1e"e a))roved (y *1e !4& #* #s .ully e'e")*ed.
%##+ For o*1er e")loyees #* s1all (e e'e")*ed u) *o leas* o. *1e .ollow#ng 8
(a) 2s. 5<00<000<
(b) 3 "on*1s salary .or every one year o. serv#ce<
%c+ Ac*ual a"oun* rece#ved< or
(d) Salary ' no. o. "on*1s serv#ce #s due (e.ore ac*ual re*#re"en*.
Salary 1as sa"e "ean#ng as .or PF and salary .or las* "on*1 #s *o (e *aHen.
,. Any ta on per7s pai$ !y employer. 4* #s .ully e'e")*ed u/s 10%10!!+.
10. Any payment rece#ved out of S#-. Any )ay"en* rece#ved ou* o. SPF #s .ully e'e")*ed u/s 10%11+.
11. Any payment recei,e$ out of R#-. Any )ay"en* rece#ved ou* o. 2PF #s e'e")*ed u/s 10%12+ #.
serv#ce e'ceeds 5 years.
12. Any payment recei,e$ out of an appro,e$ superannuation fun$ is .ully e'e")*ed u/s 10%13+.
13. 2ouse rent allowance. C2A rece#ved #s e'e")*ed u)*o )rescr#(ed l#"#*s %see allowances+.
!1arles Aasrado SG
11
14. Any other allowance. It #s e'e")*ed u)*o a"oun* so no*#.#ed u/s 10%14+.

5I. =e$uctions out of Gross Salary CSection 1/B
1. +ntertainment Allowance under sec 1/ 'ii(
4n case o. =ov*. e")loyees ge**#ng en*er*a#n"en* allowance deduc*#on O .ollow#ng s1all (e allowed 8
%#+ S*a*u*ory l#"#* 2s. 5<000 )er annu"<
(ii) l/5*1 o. salary Donly Bas#c SalaryF< or
%###+ Ac*ual 6n*er*a#n"en* Allowance rece#ved.
Aeas* o. *1e a(ove #s allowed as deduc*#on.
2. Ta on +mployment Du/s 1/'iii(B 4n case any a"oun* o. )ro.ess#onal *a' #s )a#d (y *1e e")loyee or
(y 1#s e")loyer on 1#s (e1al. #* #s .ully allowed as deduc*#on.
Taa!ility of #er6uisites
E$empted for All Employees %a$able for All Employees %a$able for #pecified
Employees Only
1. Free "ed#cal .ac#l#*#es as g#ven u/s
1%2+ %Prov#s#on+
2. Free re.res1"en*s dur#ng worH#ng
1ours.
3. Free recrea*#onal .ac#l#*#es.
4. Prov#s#on o. *ele)1one w1e*1er (as#c or
cellular e'clus#vely .or o..#c#al use.
5. Free "eals )rov#ded #n re"o*e area or a*
o..s1ore #ns*alla*#on are .ully e'e")*ed.
6. Free educa*#on< *ra#n#ng or re.res1er
course .or e")loyees.
. Aeave &ravel !oncess#on.
$. Free ra*#on rece#ved (y "e"(ers o.
ar"ed .orces.
,. Per/u#s#*es allowed (y =ov*. *o #*s
e")loyees )os*ed a(road.
10. 2en* .ree 1ouse g#ven *o an o..#cer o.
Parl#a"en*< a 9n#on ;#n#s*er< and
leader o. 5))os#*#on #n Parl#a"en*.
11. Free res#dence and !onveyance .ac#7
l#*#es *o Gudges o. Su)re"e !our* and
C#g1 !our*.
12. Free conveyance )rov#ded (y e")loyer
*o e")loyee .or go#ng *o or co"#ng
.ro" )lace o. e")loy"en*.
13. Any a"oun* con*r#(u*ed (y e")loyer
*owards )ens#on or de.erred annu#*y
sc1e"e.
14. 6")loyerIs con*r#(u*#on lo s*a.. grou)
#nsurance sc1e"e.
15. !o")u*ers< la)*o)s g#ven *o Dno* *rans7
.erredF an e")loyee .or
o..#c#al/)ersonal use.
16. &rans.er o. a "ovea(le asse* Dco")u*er<
car or elec*ron#c #*e"sF "ore *1an 10
years old w#*1ou* cons#dera*#on.
1. Acc#den* #nsurance )re"#u" )a#d
(y e")loyer .or 1#s own (ene.#*.
1$. 4n*eres* .ree loan or loan a* concess#onal
ra*e o. #n*eres* *aHen (y e")loyee .ro"
1. 2en* .ree 1ouse.
2. !oncess#onal 2en* Couse.
3. 5(l#ga*#on o. e")loyee "e* (y
e")loyer.
Suc1 as *1e a"oun*s )a#d (y
e")loyer regard#ng
=as and elec*r#c#*y B#ll
6duca*#
on B#ll
o.
!1#ldre
n
4nco"e *a' o. e")loyee
Pro.ess#onal *a' o. e")loyee.
Salary o. servan*s e")loyed (y
e")loyee
!ar or o*1er conveyance owned
(y e")loyee< used .or )r#va*e
)ur)oses and e')enses are "e*
(y e")loyer
Any o*1er (#ll .or )ersonal
e')enses #ssued #n *1e na"e o.
e")loyee (u* )a#d (y e")loyer.
4. Any o*1er .r#nge (ene.#*s g#ven (y
e")loyer *o e")loyee.
a+ Free "eals #. )rov#ded
dur#ng worH#ng 1ours and
value e'ceeds 2s. 50 )er day.
6'cess #s *a'a(le.
(+ 4n*eres*
.ree loans or loan a*
concess#onal ra*e o. #n*eres* #.
"ore *1an 2s. 20<000 and #. no*
.or "ed#cal *rea*"en*7d#..erence
(e*ween )rescr#(ed ra*e and ra*e
c1arged #s *a'a(le.
c+9se o. "ovea(le assets e'ce)*
co")u*ers and la)*o)s.
d+ &rans.e
1.
=as< wa*er and elec*r#c#*y
.ac#l#*y.
2. 6duca*#on .ac#l#*y .or
!1#ldren.
3. Free *rans)or* allowed
(y e")loyer
engaged #n
*rans)or* (us#ness.
4. Serv#ces o. do"es*#c
servan*s #nclud#ng
swee)er<
wa*c1"an<
gardener )rov#ded
(y e")loyer.
5. Any o*1er (ene.#* or
a"en#*y.
!1arles Aasrado SG
12
e")loyer #. a"oun* o. loan does no*
e'ceed 2s. 20<000 or loan #s *aHen .or
"ed#cal *rea*"en*.
1,. -alue o. any s1ares or de(en*ures g#ven
.ree o. cos* or a* concess#onal ra*e *o
e")loyees under s*ocH o)*#on
sc1e"e a))roved (y *1e !en*ral =ov*.
20. &a' on )erHs )a#d (y e")loyer.
21. 2en* .ree acco""oda*#on g#ven #n
re"o*e or o..s1ore areas
r o. "ova(le asse*s.
5. Any a"oun* o. l#.e #nsurance
)re"#u" )a#d (y e")loyer dur#ng *1e
)rev#ous year.
=e$uction u*s 30C out of Gross Total Income
Rate of $e$uction CSection 30C '1(B
&1#s deduc*#on s1all (e ad"#ss#(le only *o an assessee< (e#ng an #nd#v#dual or a C#ndu und#v#ded .a"#ly.
&1e a"oun* o. deduc*#on s1all (e ac*ual a"oun* )a#d or de)os#*ed dur#ng *1e )rev#ous year #n )rescr#(ed
sav#ng sc1e"es D*o (e called as /ual#.y#ng a"oun* .or deduc*#on u/s $0!F or 2s. 1<00<000 w1#c1 ever #s
less.
Dualifying amount for $e$uction u*s 30C 8
1. 6")loyee or assesseeIs own con*r#(u*#on *o P.F.
4. S.P.F.< .ully /ual#.#es D=ov*.< A4!< 9n#vers#*y< SB4< 2B4 e*c.F
4. 2.P.F.< .ully /ual#.#es.
4. P.P.F.< .ully /ual#.#es. Accoun* can (e #n *1e na"e o. sel.< s)ouse or any c1#ld.
4. 9.2.P.F.< does no* /ual#.y.
2. Any a"oun* con*r#(u*ed (y e")loyee *owards A))roved Su)erannua*#on .und7Fully /ual#.#es.
3. A#.e #nsurance Pre"#u" )a#d (y e")loyee or (y e")loyer *o assure l#.e o. e")loyee< 1#s s)ouse or
c1#ldren %"#nor or "a>or< "arr#ed or un"arr#ed+ s1all /ual#.y u) *o ac*ual )re"#u" )a#d or 201 of sum
assure$ whiche,er is less. Sum assure$ shall not inclu$e !onus or any premium agree$ to !e
returne$.
4. Any a"oun* deduc*ed .ro" *1e salary )aya(le (y or on (e1al. o. *1e =overn"en* *o any #nd#v#dual #n
accordance w#*1 *1e cond#*#ons o. 1#s serv#ce< .or *1e )ur)ose o. secur#ng *o 1#" a de.erred annu#*y or
"aH#ng )rov#s#on .or 1#s s)ouse or c1#ldren< #n so .ar as *1e su" so deduc*ed does not ecee$ one-fifth
of the salary.
5. Any a"oun* con*r#(u*ed *o Hee) #n .orce a con*rac* .or a de.erred annu#*y< no* (e#ng an annu#*y )lan
re.erred *o #n clause %12+. &1e )ersons on w1ose na"e sav#ngs can (e "ade are #n *1e case o. an
#nd#v#dual< *1e #nd#v#dual< *1e w#.e or 1us(and and any c1#ld o. suc1 #nd#v#dual. Suc1 con*rac* does no*
con*a#n a )rov#s#on .or *1e e'erc#se (y *1e #nsured o. an o)*#on *o rece#ve a cas1 )ay"en* #n l#eu o. *1e
)ay"en* o. *1e annu#*y L
6. Any a"oun* deduc*ed (y e")loyer %=ov*.+ ou* o. e")loyeeIs salary under grou) #nsurance sc1e"e
.ully /ual#.#es.
. Any a"oun* #nves*ed (y an #nd#v#dual or C.9.F. w#*1 9&4 or A4! under 9n#* A#nHed 4nsurance Plan
%9A4P+ .ully /ual#.#es.
$. Any a"oun* #nves*ed #n ?S! -444 #ssue .ully /ual#.#es<
,. 4n*eres* Accrued on ?S! -444 #ssue )urc1ased earl#er #s dee"ed *o (e re#nves*ed 1ence .ully /ual#.#es.
10. Any a"oun* de)os#*ed under no*#.#ed de)os#* sc1e"e ,2 .ully /ual#.#es.
11. Any a"oun* )a#d *o A4! under ?ew Geevan D1ara< ?ew Geevan D1ara 1< or ?ew Geevan AHs1ay<
?ew Geevan AHs1ay 4< ?ew Geevan AHs1ay 44 )lans .ully /ual#.#es.
12. Any a"oun* de)os#*ed w#*1 "u*ual .und under a sc1e"e o. )ens#on .und #.e< 9&4 re*#re"en* Pens#on
Fund s1all .ully /ual#.y.
!1arles Aasrado SG
13
13. Any a"oun* de)os#*ed w#*1 na*#onal#sed (anH under 1o"e de)os#* sc1e"e o. ?a*#onal Cous#ng
BanH< .ully /ual#.#es.
14. Any a"oun* de)os#*ed w#*1 an au*1or#*y engaged #n 1ous#ng develo)"en* or *own and rural
develo)"en* .ully /ual#.#es.
15. Any a"oun* de)os#*ed w#*1 1ous#ng .#nance #ns*#*u*#ons .ully /ual#.#es
16. Any a"oun* re)a#d under 1ouse (u#ld#ng loan *aHen .ro" =ov*.< A4!< BanH< CDF!< C9P!5 or
o*1er 1ous#ng .#nance #ns*#*u*#ons or e")loyer. D?o* .ro" .r#ends or rela*#vesF
A"oun* re)a#d as .ull )r#ce or #ns*all"en* o. )r#ce o. a 1ouse )urc1ased .ro" =ov*. or an a))roved
agency s1all /ual#.y u) *o ac*ual a"oun* re)a#d s1all 4 /ual#.y .or deduc*#on u/s &OC.
&1e a"oun* re)a#d "us* no* #nclude #n*eres* on loan or ground ren* (u* s1all #nclude s*a") du*y and
reg#s*ra*#on c1arges.
1. Any a"oun* )a#d as *u#*#on .ees %e'clud#ng any )ay"en* *owards any develo)"en* .ees or dona*#on
or )ay"en* o. s#"#lar na*ure w1e*1er a* *1e *#"e o. ad"#ss#on or *1erea.*er *o 8
(a) any sc1ool< college or un#vers#*y or o*1er educa*#onal #ns*#*u*#on 4nd#a<
(b) .or *1e )ur)ose o. .ull *#"e educa*#on o. any two chil$ren o. *1e #nd#v#dual. &1e a"oun*<
w1#c1 s1all /ual#.y under *1#s sec*#on< s1all no* e'ceed ac*ual a"oun* )a#d as *u#*#on .ee .or *wo
c1#ldren only.
1$. A"oun* )a#d as su(scr#)*#on *o e/u#*y s1ares or de(en*ures o. any eligi!le issue. 4n case suc1 #ssue
#s no*#.#ed (y !BD&< *1e a"oun* #nves*ed s1all /ual#.y .or deduc*#on u/s $0!. &1e a"oun* so #nves*ed #n
on w1#c1 deduc*#on #s cla#"ed s1all no* /ual#.y .or e'e")*#on o. ca)#*al ga#n u/s 546A or u/s 546B or
u/s 6!
1,. A"oun* )a#d as su(scr#)*#on *o any un#*s o. any "u*ual .und. 4n case suc1 un#* sc1e"e o. "u*ual
.unds #s no*#.#ed (y !BD&< *1e a"oun* so #nves*ed s1all /ual#.y .or deduc*#on u/s $0!. &1e a"oun* so
#nves*ed #n on w1#c1 deduc*#on #s cla#"ed s1all no* /ual#.y .or e'e")*#on o. ca)#*al ga#n u/s 546A or u/s
546B or u/s54 6!. &1e s1ares< de(en*ures or un#*s ac/u#red under (1') and (()) a(ove canno* (e
conver*ed #n*o "oney .or *1ree years. 4n case suc1 un#*s or s1ares are co #n*o "oney (e.ore *1e e')#ry o.
*1ree years *1e a"oun* o. re(a*e cla#"ed s1all (eco"e as *a' )aya(le o. *1e year #n w1#c1 *1ese are sold
or o*1erw#se *rans.erred.
20. &er" de)os#*s w#*1 sc1eduled (anHs .or a dura*#on o. a* leas* 5 years as )er *1e sc1e"e .ra"ed (y
!en*ral =overn"en*.
+empte$ Incomes %under sec*#on 10< Applica!le to In$i,i$ual assessee only(
6'e")*ed #nco"es are *1ose #nco"es on w1#c1 #nco"e *a' s1all no* (e c1argea(le.
1+ Agr#cul*ural #nco"e #s e'e")* .ro" *a' 9/S 10%1+. &1e a(ove #nco"e s1all (e .ro" agricultural
purpose and *1e land s1all (e situate$ in In$ia.
2+ Any su" o. "oney rece#ved (y an #nd#v#dual as a "e"(er o. C#ndu 9nd#v#ded Fa"#ly %C9F+ s1all
(e e'e")* .ro" *a' 9/S 10%2+ s#nce C9F #s a se)ara*e *a'a(le en*#*y.
3+ S1are o. )ro.#*s rece#ved (y a )ar*ner .ro" a )ar*ners1#) .#r" #s e'e")* 9/S10%2A+ s#nce )ar*ners1#)
.#r" #s a se)ara*e *a'a(le en*#*y.
4+ Any #nco"e o. a non res#den* (y way o. #n*eres* on no*#.#ed govern"en* secur#*#es or #n*eres* on ?24
e'*ernal accoun* #n 4nd#a no*#.#ed (y F62A< or #n*eres* on no*#.#ed sav#ngs cer*#.#ca*es #s e'e")* 9/S
10%4+.
5+ 2e"unera*#on rece#ved .ro" .ore#gn s*a*e under co7o)era*#ve *ec1n#cal ass#s*ance )rogra" #s .ully
e'e")* 9/S 10%$+
6+ 2e"unera*#on as consul*an* ou* o. .unds "ade ava#la(le *o #n*erna*#onal agenc#es under *ec1n#cal
ass#s*ance )rogra" a))roved (y govern"en* #s .ully e'e")* 9/S 10%$A+.
+ 4nco"e .ro" no*#.#ed (onds/de)os#*s and secur#*#es #s .ully e'e")* 9/S10%45+
$+ Sc1olars1#) rece#ved *o "ee* cos* o. educa*#on #s .ully e'e")* 9/S4056+
!1arles Aasrado SG
14
,+ Da#ly allowance< cons*#*uency allowance and o*1er allowance *o ;AAs and ;PIs #s .ully e'e")*
9/S 10%1+. Cowever *1e a(ove allowances s1all no* e'ceed 2s. 2000 )".
10+ 2eward or award e#*1er #n cas1 or #n H#nd #ns*#*u*ed and a))roved (y govern"en* #n )u(l#c #n*eres* #s
.ully e'e")* 9/S10%1A+
11+ Fa"#ly )ens#on rece#ved (y *1e w#dow or c1#ldren o. "e"(er o. ar"ed .orce #s co")le*ely e'e")*
.ro" *a' 9/S10%1,+. Cowever dea*1 o. suc1 )erson s1all 1ad occurred w1#le on du*y.
12+ Annual value o. any one )alace7 o. an 6'72uler o. 4nd#an S*a*es s1all (e .ully e'e")* 9/S10%1,A+.
Cowever no )ar* o. *1e )alace s1all (e le*ou*.
13+ 4nco"e o. a S!/S& (y way o. #n*eres* or d#v#dend on s)ec#.#ed secur#*#es #s .ully7e'e")* 9/S 10%26+.
14+ Su(s#dy rece#ved (y an assessee engaged #n grow#ng and "anu.ac*ur#ng o. *ea (y *1e *ea (oard .or
*1e )ur)ose o. re)lace"en* #s .ully e'e")* 9/S 10%30+
15+ Su(s#dy rece#ved (y an assessee engaged #n grow#ng and "anu.ac*ur#ng o. 2u((er< !o..ee<
!arda"o" or o*1er no*#.#ed co""od#*#es (y *1e relevan* (oard #s .ully e'e")* 9/S 10%31+.
16+ 4nco"e o. a "#nor clu((ed 9/S 64%1A+< #s e'e")* 9/S 10%32+ u)*o *1e ac*ual a"oun* so #ncluded or
2s. 1<500 )a #n res)ec* o. eac1 c1#ld %w#*1ou* any l#"#* on nu"(er o. c1#ldren+ w1#c1 ever #s less
1+ 4nco"e .ro" un#*s o. un#* sc1e"e 1,64 #s .ully e'e")* 9/S 10%33+
1$+ D#v#dend rece#ved (y a do"es*#c co #s .ully e'e")* 9/S10%34+
1,+ 4nco"e .ro" un#*s o. "u*ual .und #s e'e")* 9/S 10%35+
20+ !a)#*al ga#n ar#s#ng .ro" *rans.er o. ur(an agr#cul*ural land co")ulsor#ly ac/u#red (y *1e !en*ral
=overn"en*/2B4 #s .ully e'e")* 9/S10%3+
21+ A&!= on l#s*ed secur#*#es su(>ec* *o secur#*y *ransac*#on *a' #s e'e")* 9/S10%3$+
22+ 4nco"e .ro" #n*erna*#onal s)or*#ng even*s 1eld #n 4nd#a #s e'e")* 9/S 10%3,+.
CA#ITA% AA= R+5+A8+
&1e 4nco"e &a' Ac* does no* "aHe any d#s*#nc*#on (e*ween ca)#*al and revenueL (u* .or #nco"e
*a' )ur)oses a clear unders*and#ng o. *1e d#s*#nc*#on (e*ween *1e *wo #s very essen*#al< (ecause
#nco"e *a' #s c1arged on #nco"e and no* on ca)#*al unless *1ey are e')ressly *a'a(le.
4n "any cases< #* #s d#..#cul* *o "aHe a d#s*#nc*#on (e*ween ca)#*al and revenue. &1ere are no
1ard and .as* rules #n *1#s regard. 5ne *y)e o. rece#)* "ay a* one *#"e (e ca)#*al and a* ano*1er #*
"ay (eco"e revenue. 4n *1#s connec*#on< *1e accoun*#ng rules regard#ng d#s*#nc*#on (e*ween
ca)#*al and revenue are 1el).ul< (u* a conclus#on (ased on *1e" #s no* .#nal .or #nco"e *a'
)ur)oses. &1e#r d#s*#nc*#on #s also drawn ou* on *1e (as#s o. *1e >udg"en*s o. *1e d#..eren*
cour*s.
For *1e saHe o. conven#ence< *1e s*udy o. *1#s *o)#c #s d#v#ded #n*o *1e .ollow#ng )ar*s8 %#+
2ece#)*s< %##+ 6')end#*ure and %###+ Aosses.
R+C+I#TS
2ece#)*s are o. *wo H#nds8 ca)#*al and revenue. 4* #s no* easy *o "aHe d#s*#nc*#on (e*ween *1ese
*wo< (u* *1e .ollow#ng are so"e o. *1e #")or*an* rules w1#c1 gu#de #n "aH#ng a d#s*#nc*#on
(e*ween *1e"8
Capital Receipt Re,enue Receipt
1. An a"oun* rece#ved as .#'ed ca)#*al #s a
ca)#*al rece#)*.
2. A rece#)* #n su(s*#*u*#on o. a source o.
#nco"e #s a ca)#*al rece#)*< e.g.<
An a"oun* rece#ved as c#rcula*#ng ca)#*al #s
a revenue rece#)*.
A rece#)* #n su(s*#*u*#on o. an #nco"e #s a
revenue rece#)*< e.g.< a reward rece#ved (y
!1arles Aasrado SG
15
co")ensa*#on rece#ved (y an e")loyee
.ro" 1#s e")loyer .or *1e *er"#na*#on o.
1#s serv#ce< (ecause #* #s co")ensa*#on #n
res)ec* o. closure o. 1#s source o. #nco"e<
#.e.< e")loy"en*. 4* #s< 1owever *a'a(le
under *1e 4nco"e &a' Ac*.
3. An a"oun* rece#ved as a co")ensa*#on
.or *1e surrender o. cer*a#n r#g1*s under an
agree"en* #s a ca)#*al rece#)*< (ecause
Ir#g1*sI are a ca)#*al asse* w1#c1 1as (een
g#ven u)< e.g.< w1ere #n accordance w#*1
an agree"en* (e*ween a co")any and #*s
d#rec*or< a.*er *1e *er"#na*#on o. 1#s
serv#ces #n *1e co")any< *1e d#rec*or
rece#ves an a"oun* .ro" *1e co")any #n
cons#dera*#on o. g#v#ng u) 1#s r#g1* *o
carry on co")e*#*#ve (us#ness s#"#lar *o
*1a* o. *1e co")anyL *1e rece#)* w#ll (e a
ca)#*al rece#)*.
4. W1e*1er a )ar*#cular rece#)* #s a ca)#*al or
revenue< de)ends u)on *1e na*ure o. #*s
rece#)* #n *1e 1ands o. *1e rec#)#en*. 4. a
)erson rece#ves an a"oun* as ca)#*al #* #s
a ca)#*al rece#)*< even #. #* #s a revenue
)ay"en* .or *1e )ayer.
5. 4. any asse* #s used (y a )erson #n 1#s
(us#ness or #s He)* as an #nves*"en*< *1e
sale )roceeds *1ereo. w#ll (e a ca)#*al
rece#)*. &1us< sale )roceeds o. a
*y)ewr#*er used #n *1e (us#ness or *1e sale
)roceeds o. s1ares or secur#*#es 1eld as
#nves*"en* w#ll (e ca)#*al rece#)*.
6. 4. an a"oun* #s rece#ved #n #ns*al"en*s
#ns*ead o. #n a lu")7su"< w#ll #* (eco"e a
revenue rece#)* s#")ly (ecause #* 1as
(een rece#ved #n #ns*al"en*sR ?o. For
e'a")le< #. *1e sale )roceeds o. a .#'ed
asse* are rece#ved #n "on*1ly #ns*al"en*s
#ns*ead o. #n lu")7su"< #* w#ll (e ca)#*al
rece#)* (ecause *1#s rece#)* #s #n res)ec* o.
*1e sale o. a .#'ed asse*. 4* #s no* necessary
*1a* a ca)#*al rece#)* "us* always (e #n *1e
lu")7su".
. 4. on accoun* o. devalua*#on or
a))rec#a*#on o. currency< )ro.#*s are "ade
an e")loyee .ro" 1#s e")loyer #n
cons#dera*#on o. 1#s good serv#ces #s a
revenue rece#)*.
An a"oun* rece#ved under an agree"en* as
co")ensa*#on .or loss o. .u*ure )ro.#*s #s a
revenue rece#)*< e.g.< a coll#ery owner
en*ered #n*o an agree"en* w#*1 a coal
"erc1an* *1a* a cer*a#n /uan*#*y o. coal
s1all (e )urc1ased (y 1#" .or .#ve years<
(u* a.*er so"e*#"e *1e "erc1an* co""#**ed
(reac1 o. *1#s agree"en* and #n accordance
w#*1 *1e agree"en* *1e coll#ery owner
rece#ved so"e a"oun*s as co")ensa*#on
.or #*< suc1 a rece#)* w#ll (e o. *1e revenue
na*ure as #* #s #n *1e na*ure o. co")ensa*#on
.or loss o. .u*ure )ro.#*s.
4. a )erson rece#ves an a"oun* as #nco"e<
#* w#ll (e a revenue rece#)* even #. *1e
)ayer 1as )a#d #*< ou* o. 1#s ca)#*al< e.g.< #.
*1e )ro)r#e*or o. a newly co""enced
(us#ness )ays *1e salary o. 1#s "anager ou*
o. ca)#*al #n *1e (eg#nn#ng< *1e salary #n *1e
1ands o. *1e "anager w#ll (e a revenue
rece#)*< (ecause #* #s 1#s salary even #. *1e
)ayer 1as )a#d #* ou* o. ca)#*al.
4. any asse* 1as (een )urc1ased (y a )erson
.or resale a* a )ro.#*< *1e )roceed *1ereo.
w#ll (e a revenue rece#)*< e.g.< #. a )erson<
#n order *o "aHe )ro.#* ou* o. (uy#ng and
sell#ng o. s1ares and secur#*#es< (uys and
resells *1e" *1e sale )roceeds *1ereo. w#ll
(e a revenue rece#)*.
A lu")7su" rece#)* does no* "ean *1a* #* #s
always ca)#*al rece#)*. A revenue rece#)*
can also (e #n lu")7 su". For e'a")le< a
lu")7su" rece#ved #n l#eu o. .u*ure
royal*#es #s a revenue rece#)*< as #* #s an
#nco"e .ro" royal*y.
4. on accoun* o. devalua*#on or a))rec#a*#on
o. currency< )ro.#*s are "ade dur#ng *1e
!1arles Aasrado SG
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#. .ore#gn currency was He)* as #nves*"en*
or on ca)#*al accoun* e.g.< *o ac/u#re so"e
ca)#*al asse*s< #* w#ll (e a ca)#*al )ro.#*.

$. Su(s#d#es or gran*s rece#ved .ro" *1e
govern"en* .or s)ec#.#c ca)#*al )ur)ose
e.g.< .or any develo)"en* sc1e"e or
renova*#on or "odern#Ka*#on )rogra""e<
are ca)#*al rece#)*s.
,. 4nsurance "oney rece#ved .or a ca)#*al
asse* #s ca)#*al
course o. (us#ness .ro" .ore#gn e'c1ange
o)era*#ons< *1e e'cess rece#)*s on
convers#on o. currency w#ll (e revenue
rece#)* or revenue )ro.#*.
Su(s#d#es or gran*s rece#ved .ro" *1e
govern"en* .or< "ee*#ng .ore#gn
co")e*#*#on or o*1erw#se ass#s*#ng *1e
*rader #n 1#s (us#ness are revenue rece#)*s.
4nsurance "oney rece#ved .or a *rad#ng
asse* #s rece#)*.
+amples of capital receipts"
1. 2ece#)* on accoun* o. sala"# or )re"#a and co")ensa*#on .or gran*#ng su(lease o. long
dura*#on< #s a ca)#*al rece#)*.
2. A"oun* de)os#*ed .or )urc1ase o. "ac1#nery re/u#red .or se**#ng u) )lan*. 4n*eres* on suc1
a"oun* #s a ca)#*al rece#)*< w1#c1 would go *o reduce *1e cos*.
3. A"oun* rece#ved (y a )ar*ner as co")ensa*#on< #n l#eu o. reduc*#on o. 1#s s1are #n )ro.#*<
.ro" a newly ad"#**ed )ar*ner #s a ca)#*al rece#)*.
4. Su(s#dy .or wel.are and u)l#.*"en* o. weaHer sec*#on o. co""un#*y (y )rov#d#ng
e")loy"en* .or *1e" #s a ca)#*al rece#)*.
5. Pre"#u" on #ssue o. s1ares #s a ca)#*al rece#)*.
+amples of re,enue receipts"
1. Power su(s#dy rece#ved (y new #ndus*r#es #s a revenue rece#)*.
2. W1ere s1ares are 1eld as s*ocH7#n7*rade< a"oun* rece#ved on l#/u#da*#on o. co")any .ro"
l#/u#da*or #s a revenue rece#)*.
3. =ran* rece#ved .ro" =overn"en* .or )ur)ose o. *rad#ng< #s a revenue rece#)*.
4. Au") su" rece#ved on co""u*a*#on o. )ens#on or regular )ens#on #s a revenue rece#)*.
+E#+A=IT8R+
6')end#*ures are o. *wo *y)es8 !a)#*al 6')end#*ure and 2evenue 6')end#*ure. !a)#*al
e')end#*ure #s #n rela*#on *o ca)#*al and #* #s no* deduc*#(le .ro" *1e gross #nco"e o. (us#ness #n
order *o arr#ve a* *1e *a'a(le #nco"e (u* *1e revenue e')end#*ure #s deduc*#(le. Cence< #* #s very
essen*#al *o Hnow *1e d#s*#nc*#on (e*ween *1e *wo. &1ere are no 1ard and .as* rules o. *1e#r
d#s*#nc*#on. 4* #s no* )oss#(le *o dec#de w1e*1er a )ar*#cular #*e" #s ca)#*al e')end#*ure or revenue
e')end#*ure w#*1ou* Hee)#ng #n v#ew all *1e c#rcu"s*ances and )ar*#culars regard#ng *1a* #*e".
Cowever< *1e .ollow#ng are so"e o. *1e rules on *1e (as#s o. w1#c1< ord#nar#ly a d#s*#nc*#on #s
"ade (e*ween ca)#*al e')end#*ure and revenue e')end#*ure8
!a)#*al 6')end#*ure 2evenue 6')end#*ure
1. !os* o. ac/u#s#*#on and #ns*alla*#on o. a
.#'ed asse* #s a ca)#*al e')end#*ure.
2. An e')end#*ure #ncurred (y a )erson *o
.ree 1#"sel. .ro" a ca)#*al l#a(#l#*y #s a
Purc1ase< )r#ce o. goods (oug1* .or resale
*oge*1er w#*1 e')enses #ncurred regard#ng
*1e#r )urc1ase are revenue e')end#*ure.
An e')end#*ure #ncurred (y a )erson *o .ree
1#"sel. .ro" revenue l#a(#l#*y #s a revenue
!1arles Aasrado SG
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ca)#*al e')end#*ure.
3. An e')end#*ure #ncurred .or *1e ac/u#s#*#on
o. a source o. #nco"e< e.g.< e')enses
#ncurred .or ac/u#r#ng a (us#ness or ge**#ng
a serv#ce #s a ca)#*al e')end#*ure.
4. An e')end#*ure #ncurred .or #ncreas#ng
*1e earn#ng ca)ac#*y o. a (us#ness (y
#")rov#ng #*s .#'ed asse*s #s a ca)#*al
e')end#*ure.
5. 4. an e')end#*ure #s o. a ca)#*al na*ure
.ro" *1e )o#n* o. v#ew o. *1e )ayer #*
w#ll (e a revenue e')end#*ure even #. #*
#s a revenue rece#)* #n *1e 1ands o. *1e
rec#)#en*.
6. 5rd#nar#ly< an e')end#*ure #ncurred #n
rela*#on *o a .#'ed asse* #s a ca)#*al
e')end#*ure.
. 6')end#*ure #n o(*a#n#ng ca)#*al (y
#ssu#ng s1ares #s a ca)#*al e')end#*ure.
e')end#*ure.
An e')end#*ure #ncurred .or *1e )ur)ose o.
earn#ng an #nco"e #s a revenue
e')end#*ure.
An e')end#*ure #ncurred .or "a#n*a#n#ng a
.#'ed asse* #n good cond#*#on #s a revenue
e')end#*ure.
4. an e')end#*ure #s o. a revenue na*ure
.ro" *1e )o#n* o. v#ew o. *1e )ayer #* w#ll
(e a ca)#*al e')end#*ure even #. #* #s a
ca)#*al rece#)* #n *1e 1ands o. *1e rec#)#en*.
5rd#nar#ly< an e')end#*ure #ncurred #n
rela*#on *o s*ocH7#n7*rade #s a revenue
e')end#*ure.
6')end#*ure #ncurred #n ra#s#ng loans or
#ssu#ng de(en*ures #s a revenue
e')end#*ure.
+amples of capital epen$iture"
1. 6')end#*ure .or ac/u#s#*#on o. lease1old r#g1*s %.or sugar .ac*ory+ #s a ca)#*al e')end#*ure.
2. Be**er"en* c1arges )a#d *o e..ec* #")rove"en* on lands %lay#ng o. roads and dra#nage+ are
ca)#*al e')enses.
3. W1ere en*#re a"oun* o. lease #s )a#d e#*1er a* one *#"e or #n #ns*all"en*s< #* would (e a
ca)#*al e')end#*ure.
4. Pay"en* "ade w#*1 a v#ew *o Hee)#ng co")e*#*or ou* o. 1#s .#eld o. (us#ness #s a ca)#*al
e')end#*ure.
5. Pay"en* "ade .or ac/u#s#*#on o. goodw#ll o. a (us#ness< #s a ca)#*al e')end#*ure.
+amples of re,enue epen$iture "
1. 6')end#*ure on *ra#n#ng a))ren*#ces #s a revenue e')end#*ure.
2. Fees )a#d *o )roduc*#v#*y or "anage"en* consul*an*s #s a revenue e')end#*ure.
3. 6')end#*ure on c#v#l de.ence "easures #s revenue e')end#*ure.
4. A"oun* )a#d *o 6lec*r#c#*y Board .or lay#ng serv#ce l#nes .or aug"en*#ng *1e )roduc*#v#*y o.
*1e assessee< #s a revenue e')ense.
5. 6')end#*ure #ncurred #n connec*#on w#*1 #ssue o. (onus s1ares #s a revenue e')ense.
6. =uaran*ee co""#ss#on )a#d on )urc1ase o. ca)#*al asse*< #s a revenue e')ense.
%:SS+S
&1e 4nco"e &a' Ac* )rov#des "e*1od o. co")u*#ng *1e #nco"e o. an assessee. &1e *a'a(le
#nco"e #s arr#ved a* a.*er deduc*#ng *1e allowa(le e')enses .ro" *1e gross #nco"e o. an
assessee. Al*1oug1 *1e Ac* does no* )rov#de *1e "e*1od o. co")u*#ng *1e losses (u* #* #s ev#den*
*1a* #. *1e *o*al allowa(le e')enses e'ceed *1e gross #nco"e< *1e e'cess #s *1e a"oun* o. loss. A
!1arles Aasrado SG
1$
revenue loss #s one w1#c1 #s sus*a#ned (y sell#ng *1e goods o. *1e (us#ness or (y *1e des*ruc*#on
o. *1e goods or on accoun* o. *1e non7recovery o. any a"oun* due #n connec*#on w#*1 *1e
(us#ness and so on and so .or*1. 5rd#nar#ly< a loss w1#c1 rela*es *o ca)#*al asse*s #s a ca)#*al loss.
Bes#des *1#s< *1ere are cer*a#n ca)#*al and revenue losses so"e o. w1#c1 are s*a*ed (elow8
!1arles Aasrado SG
1,
%1+ Aoss on *1e sale o. a ca)#*al asse* #s a ca)#*al loss< (u* loss on *1e sale o. goods o. *1e
(us#ness #s a revenue loss.
%2+ Aoss sus*a#ned on accoun* o. e"(eKKle"en* done (y an e")loyee #s a revenue loss.
%3+ &1e "anage"en* o. *1e Del1# (us#ness o. an assessee was done (y a munim w1o 1ad *1e
)ower *o w#*1draw "oney .ro" *1e (anH accoun* o. 1#s (us#ness. &1e munim w#*1drew
so"e a"oun* .ro" *1e (anH accoun* o. *1e assessee and "#sa))ro)r#a*ed #*. &1e cour* 1eld
*1a* #* was ca)#*al loss< as once *1e a"oun* #s de)os#*ed #n *1e (anH accoun* o. *1e assessee<
#* #s dee"ed *o 1ave (een rece#ved (y *1e assessee< 1ence *1#s loss canno* (e *rea*ed as
(us#ness loss.
%4+ An e")loyee %!as1#er+ o. a (us#ness was go#ng *o a (anH *o de)os#* so"e "oney
(elong#ng *o *1e (us#ness and #n *1e way 1e los* #*. 4* was 1eld *1a* *1#s loss was revenue
loss< (ecause #* was #nc#den*al *o *1e (us#ness.
%5+ Aoss sus*a#ned (y *1e.* co""#**ed (y an e")loyee or (y s*ranger dur#ng usual (us#ness
1ours or ou*s#de (us#ness 1ours #s a revenue loss (e#ng #nc#den*al *o *1e *rade.
%6+ A )erson 1as "ade a secur#*y de)os#* w#*1 a "anu.ac*ur#ng co")any #n order *o ge* *1e
agency o. *1e co")any. 4. a.*erwards *1e co")any goes #n*o l#/u#da*#on and 1#s de)os#* #s
los*< #* w#ll (e *rea*ed as a ca)#*al loss.
%+ Aoss su..ered (y a )erson (e#ng sure*y o. ano*1er )erson #s a ca)#*al loss.
%$+ Secur#*y de)os#* .or due )er.or"ance o. *1e *er"s o. con*rac* #s .or.e#*ed< #* #s a revenue
loss.
!1arles Aasrado SG
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