~

previous year in case of deemed incomes

Income Section Previous year
t--- d. [68]
1. cash ere 1t Financial year in which found to be entered.
~ explained investmen t [69] Financial year preceding the assessment year.

J. Unexplained bullion, [69A] Financial year in which found in the possession

cash, jewel1ary of the assessee.
,___ ----- -:-:- --:-- :---- -r--- ----+ ----- ----- ----
investmen
4. Partly explained t [69B] in which investment was made.
Financial year

5. Unexplained expenditu re [69C] Financial year in which expenditure was incurred.

6. Payment of Hundi, [69D] Financial year in which such payment was made.
money in cash

and
Note. It is important to note that above deemed incomes are taxed at MMR of 30% (plus surcharge
education cess) without allowing any deduction.

ILLUST RATIO N 3
For the assessment year 2020-21 find out the previous year in following cases
(i) For a business commen cing on 1-1-2020, books of account of which are maintained
on
calendar year basis.
(ii) An employe e joins his job on 10th September 2019.
(iii) A new business is set up on 1st May 2019.
(iv) A new business maintaining accounts on Diwali to Diwali basis (Set up on Diwali
2019).
(v) A persons wins a lottery prize during 2019-20.

SOLUT ION
Determi nation of previous year for the A/Y 2020-21
Income Previous year
(i) For a business books of account of which are maintained
on calendar year basis 1-1-2020 to 31-3-2020
(ii) An employe e who joins his job on 10th September 2019; 10-9-2019 to 31-3-2020
(iii) A new business is set up on 1st May 2019; 1-5-2019 to 31-3-2020
(iv) A new business maintaining accounts on Diwali to
Diwali basis Diwali 2019 to 31-3-2020
(v) A persons wins a lottery prize on 1-11-2019. 1-4-2019 to 31-3-2020

ILLUST RATIO N 4
An assessee is having income from various sources. Find out the previous years of such incomes
which, shall be taxable in the assessment year 2020-21 :
(i) Salary income for job joined on 1-7-2019;
(ii) Newly set up business on Diwali 2019;
(iii) New house completed on and let out from 1-10-2019;
(iv) Expenditure incurred on marriage of daughter held on 1-10-2019 ~ 6,50,000 but he could
give satisfactory explanation only for f 3,80,000 ;
(v) Income from examinership fee from university in April, 2019.
 - - - - -- - - - - -- - - - - - - - - - - -- - - - - - - - -J~
l--.vUJ.•1.r...
SOLUTION
--------
- - -- JJ\.A I~W

Assessee is liable for all sources of income for the previous year relevant to assessment year
2020-21 and income for following previous years shall he aggregated
Income Previous year
(i)Salary income for job joined on 1-7-2OJ 9 J- 7-201 9 to 3 I -3-2020
(ii)Newly set up business on Diwali 2019 Diwali 201 9 to 3 1-3 -2020
(iii)New house completed on and Jet out from 1-10-2019 )-10-20 19 to 31-3-202()
(iv) Expenditure incurred on marriage of daughter held
on 1-10-20 I 9 ~ 6,50,000 but he could give satisfactory
explanation only for ~ 3,80,000
Deemed income of~ 2,70,000 shall be taxable as income
of previous year 1-4-201 9 to 31 -3-2020
(v) Income from examinership fee from university in Apri l 2019 J-4-2O19 to 3 J-3-2020
I LLUSTRAT ION 5
Find out the assessment year for the following previous years :
Income Previous Year
(i) Salary income of Mr. A April 2019 to March 2020
(ii) Business income of Mr. B April 2019 to March 2020
(iii) Newly set up business on 12-5-2019
(iv) Newly set up business on Diwali 2019
( v) House property income April 2020 to March 2021
S OL UTION
Determination of assessment years
Income Previous Year Assessment year
Salary income
(i) April 2019 to March 2020 2020-21
Business income
(ii) April 2019 to March 2020 2020-21
Newly set up business on
(iii) 12-5-2019 to 31-3-2020 2020-21
(iv)Newly set up business on Diwali 2019 to 31-3-2020 2020-21
(v) House property income April 2020 to March 2021 2021-22
 /,ess : l{chc1W uh, ~7 A (Jf t1J ~;1l irirhrt1': 11J 1 ri 1rdi ·11t1 ;~, /,' ,,,,-,·, :-', ~l'J"/ J,
<5,00,000 IRchalc •111!1 bc,H.,tu;,I 1~1. ·,r"' i %'~f/ 11, ,.., .· ~·-
Total tax
Add : Hcallh and E<lucation ct.:-,(, r,!( 4% <1f 1~1, J» ,·, ·, 1; ',(.✓,:'ff, , 1 ✓, • ,

Total Tax.
Less : Relief u/s 86 and 89( I )
Balance Tax
Less : Prepaid taxes : Tax deducted at :.,1;t.1 ru.;
Ad vance tax paid

Net tax payable at the time of fi ling of return (Scli 2:.-:.:,.:;-. ~:-:_::-:-. : /-A

(To be rounded off to nearest multiple of HJ. u/~ 2MB

Note. Surchage @ l 0% of tax shall be added if total income of 2 ~~ =---..:o:6 ~ Y.,, ·u~- ~ :::-..t.:t: :a,
exceed~ l crore and @ 15% if total income exceeds: ~ J C7Clf':: ~ 6:a :.t..-i: ~~--- <: ::=-:e. £; -~
if total income exceeds ~ 2 crore but does not exeeerl t 5 ::-c-~ d ~ ?""".:;: ~ 1:n • !:X--:ce ~--.-- ~
S crore. In case taxable income falls u/s 111 A or 11 2..\. :i::~ ::c - ? ~ ::-'~ : : i;::-f;JJ ~ ... ,, .... ::t
only 15%.

3. Rates of tax
(A) On Normal Incomes.
The rates of tax for the assessment year 2010-21 arc :
I. For Resident Senior Citizens [Age 60 years or more at any time durtng P.Y. bt.-:· sss
than 80 years on the last day of P.Y.]
If total income is up to t 3,00,000 NIL
If total income exceeds t 3,00.000 5~ of income e:-c1..'t"nfu:~ ~ : .:t•.:(l-
but does not exceed t 5.00.000
If total income exceeds t 5.00.000 ~ l0.000 + 2Wi: \):· '·°'-"-'=~~ c\,:~-=::f , ~ .:CX(
but docs not exceed ( l 0.00.000
H total income exceeds ~ 10.00.0<.X) ~ l.l0.000 + A'\<-~- 1.)i m,,,::·,~ ~,,~ t :,: XLll
II. For Resident Super Senior Citizens [Age 80 years or more at any time ol.!1i.,Q be
P.Y.] ~

If lutal incomt.: is up to ~ 5.00.0<.)0 NIL

If total i11c o111(• l'Xt:Cl'ds ~ 5.00.000
but dol·s 1101 e xl·l' ed ~ , o.oo.noo
It' totill i11rn11w l'Xl'l'l.'Us ~ 10.00.001.) ~ l,l\,()JIOi.\ + } t)'\' ,)f in-., m_"R~ ~'---"'-~'\.'~:"~ ~ :,\.Y, .\Y
Ill. For any other lndlvldual (Male or Female). HUF. AOP, B01 and ,.\rt~i Jw+--l..-'-~
person
II' 1,11 ul i11 n 111w is up IP ~· ~.50.000 NH
If 1111 11 1 i11rn 11H· n l'l'('ds ~ 2j0,()()\l
hut d,ws 11111 i'Xrt'l'd ~ ~.oo.noo
II' 1111 111 llll'llllh' l"'i\·n ·tls r .\ ()(
l,l'IOO
h111 ,h,t·s 11,11 t'X l' l' r d ~ ltl ,(l(l ,ll<l<l
II 1t1l11 I 1m•1111w l'x ,·,·r d s ~ IO.t)U,01.1\l
 1.26
_INCOME TAX L\\l{
(B) On Special Incomes
For short tenn capital gain on shares which are
subje ct to Secu rity Tran sacti on Tax
For long term capital gain on sale of shares
or units specified u/s 112A 15 %
(on LTCG exce edin g~ 1,00,000)
For long term capital gains (excluding long term 10%
capital gain on share s cove red
u/s 112A)
For casual incomes (Lotteries, races, puzzles 20%
etc.) 3Qo;,
Surcharge : Surcharge @ 10% of tax shall be
added in those cases where total income of lh:
assessee exceeds ~ 50 lakhs but does not exce
ed ~ l crore and @ 15% if total income excee
~ l crore but does not exceed ~ 2 crore ds
and @ 25% if total incom e exce eds ~ 2 crore
not exceed ~ 5 crore and @ 37% if total incom but does
e exceeds ~ 5 crore.
Note. In case taxable income falls u/s l llA or 112A
, then the maxi mum rate of surcharge shall be
15%. onl,

Health and Education Cess : It is to be levied

@ 4% of tax plus surch arge, if any.
The detailed application of these rates is given
in part III of this book under the chapter
"Computation of tax liability."
ILLU STR ATIO N 6
Compute the tax liability in following cases separ
ately for the asses smen t year 2020-21 :
An individual A resident A resident super
senio r citize n senior citizen
t ~
Case A
2,46,363
t
Case B 2,96, 904 4,86, 363
5,65,403 5,65,403
Case C 5,65,403
10,15,309 10,15,309
SOL UTIO N 10,15,309

Computation of tax liability for the Assessment

Year 2020 -21
An A resident A resident
individual senior super senior
Case A citizen citizen
~ ~
Tax liability shall be nil in all three cases as t
income does not exceed the exempted limit of
~ 2,50,000 in case of an individual
~ 3,00,000 in case of a resident senior citizen,
and
~ 5,00,000 in case of a resident super senior citize
n NIL NIL NIL
Case B
An individual ~ 12,500 + 20% of~ 65,400
A resident senior citizen ~ 10,000 + 20% of~ 25,58 0
65,400
A resident super senior citizen 20% of~ 65,40 23,080
0
13,080
Add : Surcharge 25,58 0 23,080 13,080
NIL NIL NIL
Add : Health and Education cess 25,580 23,080 13,080
@ 4% of tax
1,023 923 523
26,603 24,003 13,603
Rounded off to
26,600 24,000 13,600
 ~

An individual t I, 12,500 + 30% of "~ 15,310

Ca"C 1, 17 .093
A resident senior citizen ~ 1, 10,000 + 30%
oft 15,310 1, 14,593
A resident super senior citizen ~ 1,00,000 + 30% of
1,04,593
f 15,310
1, 17,093 1, 14,593 1,04.593
Add : Surcharge NIL NIL NTL
1,17,093 1, 14,593 1.04,593
Add : Health and Education cess @ 4 % of tax 4,684 4 ,584 4,18,'.;

1,21,777 1,19,177 l ,08 ,7T

Rounded off to 1,2 1,780 1,19,180 1,08.78(

Note 1. With effect from assessment year 2013-14, the difference in the exemption limit of male and femalt
assessees has been abolished.
Note 2. Total income shall be rounded off to nearest multiple of 10.
An individual A resident senior citizen A resident super senior citize
Total Income Rounded off Total Income Rounded off Total Income Rounded ol
t t t t ~ ~
2,46,363 2,46,360 2,96,904 2,96,900 4,86,363 4,86,36
5,65,403 5,65,400 5,65,403 5,65,400 5 ,65 ,403 5 ,65,4C
10,15,309 10,15,310 10,15,309 10,15,310 10, 15,309 l 0 , 15,3 1
Note 3. No surcharge as total income in all cases does not exceed t 50 lakhs.

Q. No. 1
Miss Nita, a popular singer from America came to India for the first time in her life in January 2020. She
gave several performances for which she received ~ 1,00,000. She was to board the plane on 18th March
2020 when a notice was served on her by the I.T.0. asking her to pay tax immediately. Her reply was : "My
previous year is to end on 31st March 2020 and I am liable to pay tax in the assessment year 2020-21 ."
What is your view !
[Hints : U/s 174 she can be asked to pay tax in assessment year 2019-20 itself]
Q. No. 2
What will be the previous year in relation to assessment year 2020-21 in following cases :
(,) A business keeping its accounts on financial year basis.
(_'.') A newly started business commencing its operations on 1-1-2020.
(m) A person giving ~ 1,00,000 as loan @ 12% p.a. interest (on monthly basis) on 1-9-2019.
[Hints: (1) 1-4-2019 to 31-3-2020, (ii) 1-1-2020 to 31-3-2020, (iii) 1-9-2019 to 31-3-2020]
Q. No. 3
Compute the tax liability in following cases separately for the assessment year 2020-21 :
Total income An individual A senior citizen A super senior
(other than senior citizen) Mr. 8 citizen
Mr. A/Mrs. A Mr. C
Case I
t ~ t
2 ,44,875 2 ,98,600 4,60,672
Case II
5 ,43,649 5,43,649 5,43,649
Case Ill
10,17,851 10,17,851 10,17,851
[Hints:
Case I Tax 11· b·1· .
, Ca · a 11ty 1s NIL in all three cases .
. C se II. Mr. A~ 22,080 ; Mr. B t 19,480; Mr. C f 9,080.
1
, - !::._!!!· Mr. A ~ 1,22,570; Mr. B ~ 1, 19,970; Mr. C ~ 1,09,570]
, a