Session 27

Tax Laws- II

By
Prof. Atul Kochhar
C.A, C.S, Insurance Inst. Of India, MDP- IIM-A
Visiting Faculty, IBS Gurgaon
atulkochhar1@Hotmail.com
+91-9876247722 1
Atul Kochhar C.A, C.S
 Income from Capital Gains

Any profits or gains arising from the transfer of a capital asset effected in the previous year shall be
chargeable to income-tax under the head capital gains.

1. Short-term capital asset An asset held for a period of 24 months or less is a short-term capital asset. For
immovable properties such as land, building and house property, this rule is applicable.

However for other movable assets like listed equity shares, debentures, bonds, mutual funds, the period
is considered as 12 months. So , if these assets are sold within 12 months from the date of purchase then the
gain is taxed as Short term Capital Gain and taxed at a rate of 15% as per section 111A.

2. Long-term capital asset An immovable asset that is held for more than 24 months is a long-term capital
asset. The period of 24 months is not applicable to movable property such as jewelry, debt-oriented mutual
funds etc. They will be classified as a long-term capital asset if held for more than 24 months as earlier.

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Atul Kochhar C.A, C.S
 Income from other sources

Any income, profit or gains of

the assessee, which cannot be
included in any other heads
of income (salary /House
Property/Business or
Profession/ Capital Gains) is
chargeable under
the head Income from other
source.
Some common examples are:
1. Dividends which have now
become taxable from FY20-
21 in the hands of recipient
2. Winnings from Lotteries,
game shows, races
3. Interest on saving bank
account & FDR
4. Gifts received
unrelated person (not a
from
3
blood relative) beyond 50K
per annum Atul Kochhar C.A, C.S
 Chapter VI A – Deductions allowed under Income Tax
Section 80C - Investments

Deduction upto INR 1.50 lacs per annum is allowed in totality if any of the following is done to save taxes

❖ Contribution to Employee Provident Fund

❖ Contribution to PPF
❖ Any life insurance premium paid to LIC, SBI Life or any other private sector insurance company
❖ Tuition fees paid for children. Only tuition fees is allowed and not money paid to school under other heads
❖ Principal amount repaid under home loan (Interest on home loan is allowed as deduction under section 24)
❖ Investment in National Saving Certificate (NSC), Kisan Vikas Patra (KVP), ULIP plans, Infrastructure bonds,
registration & Stamp duty paid for house property, 5 year postal or special Bank deposits, Senior citizen saving
scheme
Section 80 CCC – Contribution to National Pension Scheme – INR 50 K per annum allowed as deduction

Section 80 D –Deduction for Health Insurance Premium – 25K p.a for self and family. For senior citizens it is INR 50k p.a

Section 80 E – Deduction for education loan taken for higher studies (like MBA, MBBS etc) as defined in the Act.

Section 80 G – Deduction for contribution made as DONATIONS. 100% deduction for amount paid to Prime Minister
National Relief fund, National Illness Assistance Fund 4
Section 80 TTA – INR 10K p.a allowed as deduction for interest earned during the FY Atul Kochhar C.A, C.S
 Important Dates for filling taxes & Returns

S.No Particulars Dates & Remarks

1 Date of Filling tax returns for which no audit is required 31st July

2 Date of Filling tax returns for which Tax audit is required 30th September

before 7th of next month for TDS deducted last

3 Payment of TDS every month month

4 Quartlery due date of filling TDS returns 31st July / 31st Oct / 31st Jan / 31st May

5 Advance tax payment due dates for companies 15% of tax for the year upto 15th June
For previous year 45% of tax for the year upto 15th Sept
2020-21, which
meand AY 2021-22 75% of tax for the year upto 15th Dec
ITR date extended to 100% of tax for the year upto 15th March
30th Sept (salaried &
non audit cases) &
30th Nov in view of
5
Covid
Atul Kochhar C.A, C.S
Case Study – How to calculate tax
Particulars Amount (Rs)
Income from salary 10,00,000

Income from house property 500,000

Profits and gains of business or profession 600,000
Capital gains ( short term ) NIL
Income from other sources 450,000

Gross Total Income Calculate

Less : Deductions under Chapter VI-A
(i.e. under section 80C to 80U)
Sec. 80 C (LIC – 90,000 + Tuition fees – 20,000
+ NSC – 70,000)
Sec. 80 D 20,000

80 G (P.M National Relief Fund) 10,000

80TTA 5,000
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Total Income (i.e., taxable income) Calculate

Atul Kochhar C.A, C.S

 Case Study – How to calculate tax… Gross Total Income

Particulars Amount (Rs)

Note 1
Income From Salary 1,000,000
Income From House Property Amount (Rs)
Income From House Property(note 1) 350,000
Annual Rent 500000
Income from Business 600,000
Less : Deduction @30% (150,000)
Capital Gains -

Income from Other Sources 450,000

Net Taxable Rent 350,000 Gross Total Income 2,400,000

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Atul Kochhar C.A, C.S
Case Study – How to calculate tax… Net Taxable Income
Particulars Amount (Rs)

Income From Salary 1,000,000

Income From House Property 350,000

Income from Business 600,000

Capital Gains -

Income from Other Sources 450,000

Gross Total Income 2,400,000

Less: Deductions

80C (subject to maximum of 1.50Lacs) (150,000)

80D – (Maximum allowed 25K) (20,000)

80G (10,000)

80TTA (5,000)
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Net Total Taxable Income 2,215,000
Atul Kochhar C.A, C.S
 Other Important Provisions

➢Clubbing of income in case income shown in minor’s name

➢Clubbing of income in certain other cases

➢Set off of losses incurred under one head of income within the same heads

➢Set off of losses incurred under one head of income with other heads

➢Carry forward of losses in case not fully settled / set off as mentioned above

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Atul Kochhar C.A, C.S
 The Road Ahead….Direct Tax Code (DTC)

➢Moving from the concept of EEE (Exempt – Exempt – Exempt) to EET ( Exempt – Exempt – Taxed)

➢ Tax slabs to go for a major overall.

➢Various deductions & exemptions under the head Salary income to be abolished (HRA for
example)

➢ Tax return forms to be simplified

➢ Income (read tax) recognition under the head capital gains to undergo change

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Atul Kochhar C.A, C.S