S.Y.B.B.

SEMESTER V

INCOME TAX AND GST

KEY PART OF
SALARY INCOME
INCOME FROM HOUSE PROPERTY
INCOME FROM BUSINESS INCOME
INCOME FROM CAPITAL GAIN
INCOME FROM OTHER SOURCES

CA Nikunj M Shah
Mo: 98252-16555
 1

SALARY INCOME

Salary =
Relationship between payer & payee Employee & Employer
Chargeable due or paid whichever is earlier
Forgoing salary not chargeable to Tax

Leave Salary

During Employment Retirement

Government Non Government Government Non Government

Taxable Taxable Tax Free
Least of Following Exempt

1. Period of Leave(Completed Year of Service*30 Leave Enjoy/30)*Average salary

2. 10 Month (10 *Average Monthly salary)
3. Maximum 3,00,000
4. Actual Received Leave Salary
Salary= Basic+DA(Retirement) +% Commission Fixed On Sales
Average Salary =Last 10 Month Average Salary
Gratuity
1. Government = Exempt
2. 1972 Act (Least of Following is Exempt)
1. Last drawn salary*15/26*No of Year Service
2. Rs 20,00,000
3. Actual Gratuity Received
Salary= Basic (Last Drawn Salary +DA)
No of Year = More than 6 Month Covert in to year
 2

3. Any other Employee(Least of Following is Exempt)

1. Salary(last 10 month)*1/2*No of year Service
2. Rs 20,00,000
3. Actual Gratuity Received
Note:
Salary= Basic (Last 10 Month Salary+DA(retirement) +% Commission on Sales )
No of Year = More than 6 Month Ignore

Pension

UNO Exempt
Armed force Exempt
Received By Family Person 1/3 Pension or 15000 Whichever is less
Uncommuted Pension (Regular ) Taxable
Government+Non GovernmentEmployee
Commuted Pension Government Employee =Exempt
Commuted Pension Non Government Employee =
Gratuity Received =1/3 of Entitle Pension
Exempt
If Gratuity Not Received= ½ of Entitle
Exempt from Tax
NPS
1. 80CCD (2) =Employer Contribution deduct up to 10% of salary
2. 80CCD(1)= Employee Contribution Up To 10% of salary Deductible=
(80C+80CCC+80CCD1=150000)
3. 80CCD (1B)=50000 towards NPS Additional Amount=Extra
4. Salary= Basic +DA(retirement) +% Commission on Sales )
Compensation Received Voluntary Retirement= Up to 5.00 Lakh Exempt

Allowance

HOUSE RENT ALLOWANCE

Lease of Following is Exempt
1. 50% (Bombay +Calcutta+Delhi +Madras) or 40% Salary
2. Rent Paid -10% Of Salary
3. Actual HRA Received
 3

Notes= Salary= Basic +DA(retirement) +% Commission on Sales )

Entertainment Allowance
1. Government Employee
Least of Following is Tax Free
1. Rs 5000
2. 20% of Salary
3. Actual Received
2. Non Government Employee =Taxable
Other Allowance
Fully Taxable DA+ CCA+ Medical Allowance+
Servant Allowance +Tiffin Allowance
Allowance Depend on Expenses
Amount of Allowance Travelling Allowance
Or Conveyance Allowance
Amount Utilized Daily Allowance
Helper Allowance
Research Allowance
Uniform Allowance
Not depend on Expenses
Children Allowance 100 Per Month Per child(Two child
Hostel allowance Maximum)
300 Per Month Per child(Two child
Maximum)

Perquisite
Rent Free Accommodation

Central Government Licence fees

Private Sector (Employer own house)
Rent Paid By Employer
7.5 % Salary( up to 10 lakh Population)
10.00% salary ( ( 10 to 25 lakh population)
15.00% salary( More than 25 lakh)
15% of Salary
Or
Lease Rent Paid (Whichever is less)
 4

Salary Basic+DA(Retirement
Benefit)+Bonus+Commission+All Other
Taxable Allowance
Furnished Accommodation 10% p.a of Original Cost (Owned Asset)
Actual Rent Paid (rented)
Hotel 24% of Salary or Rent paid whichever is
less
Concessional Rent Deduct Rent Recover from Employee

Other Perquisite

Free Domestic Servant Actual Cost paid Employer Less Amount Paid By Employer
Gas Electricity Actual Cost paid Employer Less Amount Paid By Employer
Free Education Training Cost= Exempt
Facility to family Member = Taxable
Children employee To Employer Institute = Taxable
Reasonable cost (Up to 1,000 Exempt per child
( No child Limit)
Scholarship = Exempt
Leave Travel Amount of Economy Class Rent or Amount Spent Whichever
Concession is less Exempt
Only Two journey in block of 4 Year
Interest free loan Up to 20,000 Loan Exempt
Interest As Per SBI bank Rate-Amount Recover
Use Movable Asset 10% of Original Cost
Sale of movable Asset Actual Cost-Depreciation-Sale Consideration
50% Computer (WDV)
20% Car (WDV)
10% other Asset (SLM)
Medical Facility Own Hospital of Employer =Exempt
Central government =Exempt
Health Insurance Premium = Exempt

Luch /Refreshment
Travelling & Touring
Accommodation
Gift Voucher
Credit card
Club Expenses
Sweat Equity Share
16 (i)Standard Deduction
16(ii)Entertainment Allowance
16 (iii) Professional Tax
LIC
Re Provident fund+
Statutory provident fund
PPF
Term Deposit of 5 year
NPS Account
5
Other Expenses= Taxable
Outside India = Medical Treatment+ Cost of
Abroad=Exempt
Outside India=Cost of travelling=Upto 2.00 lakh Exempt
Refreshment Noting is taxable
Remote Area Food= Tax Free
At any other place= 50 per meal free-Amount
Recover
Actual Exp-Amount Recover from Employee
In Kind up to 5,000 Tax Free
Actual Expenses-Office Purpose-Amount Recover
Expenses to health club facility+Deposit = Tax free
For Others= Actual Expenses Office Purpose-Amount
Recover
FMV of Highest Volume of Share Exchange =Average
Price
FMV Take Exercise of the option-Amount Recover
Deduction from Salary Income
50000
As Per Above Note
Professional Tax Paid
80C=Important
Superannuation fund Notified housing bank
contribution
NSC Tution Fees=2 Child
(School +College Fees)
Notified Annuity Plan Repayment of Housing loan
Seniour Citizens Savings 5 Year plan of Post Office
Scheme
 6

Salary
Leave Salary Basic+DA+% of commission on Sales
Gratuity 1972 Baisc +DA
Other Employee Gratuity Basic+DA+% of commission on Sales
House Rent Allowance Basic+DA+% of commission on Sales
Entertainment Allowance Basic Salary only
Rent free Accommodation Basic+DA+All taxable Allowance

No. Particulars Statutory Recognised Unrecognised

Prov.Fund Prov.fund prov.fund
(1) Qualifies for Contribution qualifies No amount qualifies for
own deduction for deduction from deduction
contribution (a from total total gross income U/S
type of saving) gross income 80C
U/S 80C
(2) Fully Exemption 12% of the Not included in the
contribution exemption salary.The excess is salary income (because
(an additional added to the salary it is fully taxable in the
income ) income. year when the fund is
received).

(3) Interest Fully Exemption from Not included in the

credited to the exemption incometaxupto 9.5% salary income.(Because
fund (an p.a. The excess it is fully taxable when
additional amount is included in the amount of fund is
income) the salary income. received).

(4) Total Qualifying Yes Yes Rs.1,50,000. No

Amunt U/S 80C Rs.1,50,000.

(5) Accumulated Fully Fully exemption

Balance paid on exemption subject to certain contribution and
retirement condition. Otherwise , interest thereon are
it Will be assessed as taxable =Salary
if it is an unrecognised
fund. contribution is also
taxable.=income From
other sources
 Valuation of perquisite in respect of motor-car:

Where car is owned or hired by employee

When car expenses When running and

are met by the maintenance
employee . It is not a expenses are met or
perquisite and hense , reimbursed by the
not taxable.
employer.

If the car is used If the car is used If the car is partly

only for official only for private used for official
purposes. Nothing is purposes : purposes and partly
taxable. for private purposes :
Taxable value = Taxable value =
Actual expenses Actual expenses
incurred by the incurred by the
employer employer less
less amount standard amount *
recovered from the used for official
employee. purposes

less amount recovered

from the employes .
 Valuation of perquisite in respect of motor-car :
Where car is owned or hired by Employer

When running and

When running and
Maintenance Expenses are
Maintenace Expenses are
met or reimbursed by the
met by the employee.
employer.

If the car is If the car is partly If the car is If the car is partly used
used only for used for official used only for for official purposes and
official purposes and official partly for private
purposes : partly for private purposes : purposes :
Nothing is purposes : Nothing is Taxable value =(1)
taxable. taxable. RS.600 p.m. where the
(1) Rs.1,800 p.m.
where the cubic cubic capacity of the
capacity of the If the car is used only engine dose not exceed
If the car is used only for 1.6 liters +
engine dose not for private purposes :
private purposes : RS. 900 p.m. if chauffeur
exceed 1.6 litres Taxable Value =
Taxable value = is provided ,or
(=1,600 c.c.) + RS. Expenditure incurred
Actual expenses incurred by 900 p.m. if by the employer in the
(2) RS.900 p.m. if the
the employer (including chauffeur is form of wear and tear
cubic capacity of the
provided ,or (@ 10% p.a. of cost of
engine exceeds 1.6 litres
(2) RS. 2,400 p.m. car) or hire charges
10% p.a.dep of actual cost of + Rs.900p.m. if chauffeur
if the cubic payable +
the car for is provided.
capacity of the
less amount recovered from engine exceeds payable by the
the employee. 1.6 litres (=1,600 employee
c.c.) + RS.900
p.m. if chauffeur
is provided.
Note : Nothing is
deductibe for
amount
recovered from
the employee.
 1

HOUSE PROPERTY INCOME

Particulars Particulars Amount

STEP I (A) (a)Municipal Tax Valuation 84,000
(b) Fair Market Value 1,08,000
Whichever is Higher
STEP I (B) (a) Answer A Above
1,08,000
(b) Standard Rent 1,20,000
Whichever is Lower

STEP -II Rent Receivable 1,44,000

Less =Unrealized Rent 12,000
Final Rent Received 1,32,000

STEP -III STEP I & II 1,08,000 & 1,32,000

Whichever is Higher
Whichever is higher

STEP -IV Vacant Rent 12000

STEP V STEP III-STEP-IV 1,32,000-12,000=1,20,000

GROSS ANNUAL VALUE 1,20,000

LESS : Municipal Tax 10,000
NET ANNUAL VALUE 1,10,000
Less : Deduction
(1)Standard Deduction 30% 33,000
(2) Interest 40,000 73,000
INCOME FROM HOUSE PROEPRTY 37,000
Note:
1.
 2

Let Out Property interest Before 1-4-99 No Limit Of Deduction

After 1-4-99 No Limit Of Deduction

Self Occupied Property Before 1-4-99 30,000

Interest
After 1-4-99 2,00,000
(New House)
After 1-4-99(Renovation) 30,000
Pre Construction period From Date of loan to 31- Example
st March Immediately to Loan 1- 6-2018
the date of completion Const Complete=
30-9-23
Pre Construction Period
=1-6-18 to 31-3-23
Deduction of Pre Total 5 year 2022-23
Construction period Constu completion year 2023-24
Interest +Next 4 Year 2024-25
2025-26
2027-28

General note
Condition for Income From House
Property
How Much Property For Self Occupied
If More Than Two Property And all Are
Self Occupied
Only One Property Self Occupied
If Part month Let Out +Part Month Self
Occupied
1. Owner of Property
2. Land & building
3. Not Use For Business
Only TWO
Other Then Two Consider Deemed To be
Let Out (Calculate STEP I to V)
Not require to Calculate STEP 1 To V
Only One Deduction Available =Interest
Assume Full year Let out (Calculate Step I
to V)
 3

INCOME FROM BUSINESS & PROFESSION

Business
Carried By Assessee
Carried During previous Year
Beneficial Owner also Taxable
Anticipated Profit Not Consider
Notional Profit (Which is occurred but not Received) Not consider
Method of Accounting

Deduction Condition= Depreciation

Own Asset
Business & Profession
Used During Previous Year

Particulars Amount
Opening Balance --
Add: New Addition --
Less =Sale Value --
WDA As on --
Depreciation --
WDA As on After Depreciation --
Deprecation Chart = from page No 215 Remember it
Asset use Less Than 180 days = Half Depreciation
For Depreciation Two Condition
Block Should be there
Asset Should be There
Deduction Read from page no 257-258-259
Amount not Deductible payment to relative sec 40A(2)page No 267
Any payment Exceeding 10000 Not available as a Deduction (Read Page =267)
44AA Books Of Account = Page No 278
44AB =Audit= Page No 279
44AD+44ADA+44AE=Page No= 282-283-284
 4

INCOME FROM CAPITAL GAIN

Excluded from Capital Asset
Stock In trade
Rural Area Agricultural Land
Long Term capital Asset =More Than 12Month
Equity Share Preference Share Debenture Listed In Exchange Units of UTi+Mutaul fund
Long Term capital Asset =More Than 24 Month
Unlised Equity +Preference Share+ Immovable property
Long Term capital Asset =More Than 36 Month
Movable Property Like Diamond
Short Term capital Gain Long term Capital Gain
Particulars Amount Particulars Amount
Sale Consideration -- Sale Consideration --
Less : Cost of Acquisition -- Sale Consideration
Less : Cost of Improvement -- Less:Less Index Cost of Acquisition
Less : Cost on transfer -- Less : Index Cost of Improvement
Deduction = 54B+54D+54G -- Less : Cost on transfer
Capital Gain -- Deduction = 54+54B+54D+54EC+54F
Capital Gain

Asset Purchased Before 1-4-2001 = Take FMV As On 1-4-2001

Exemption
Question 54 54B 54D 54EC 54F 54G
Capital LTCG LTCG+STCG LTCG+STCG LTCG LTCG LTCG+STCG
Asset
Sale Residence Agricultural Compusolory Land & Any Shift From
Land Acquisition of building property land
Land & Other Than building &
building By Residence machinery
Gov Urban to
Rural Area
Purchase Residence Agricultural Land & Bonds Residence land
Land building for NHAI+REC building &
Ind Purpose machienry
Time Limit 1 year back 2 year forward 3 year forward 6 month 1 year back 1 year back
2YearForward 2YearForward 3YearForward
3 year=const 3 year=const
Page No 381
 5

INCOME FROM OTHER SOURCES

Income From Other Sources
Dividend
Lottery
Interest
Rent Income
Rental income of Machinery
Gift
Category Tax Rs 50,000
Single or All Transaction
Gift cash or Cheque Above 50000 Taxable All Transaction
Immovable Property Above 50000 Taxable Single Transaction
(Without consideration)
Immovable Property Stamp Duty-Consideration Single Transaction
(With consideration)
Movable Property Above 50000 Taxable All Transaction
(With consideration) FMV Taxable
Movable Property FMV-Consideration All Transaction
(With consideration)

Exempt
1. Relative
2. Marriage Gift
3. Will
4. Local Authority
5. Charitable Institution
6. University

Page No = 392-393-Page No 399 Example

 PAPER STYLE=IT +GST
Question NO CHAPTER NAME Mark Theroy Sum

1 UNIT -2 SALARY Sum 12 2

UNIT -2 SALARY Sum 2
UNIT -2 SALARY Sum 2
UNIT -3 Business Income+ Capital Gain+Income From Other Sources Pratical 2
UNIT -3 Business Income+ Capital Gain+Income From Other Sources Pratical 2 0
UNIT -3 Business Income+ Capital Gain+Income From Other Sources Pratical 2 0

2 UNIT -1 PRACTIAL +THEROY 12 8 4

OR
PRACTIAL +THEROY

3 UNIT -2 SALARY INCOME SUM 12 0 12

OR OR
SALARY INCOME SUM

4 UNIT -3 HOUSE PROEPRTY SUM 8 0 8

CAPITAL GAIN SUM 4 4
OR OR
HOUSE PROEPRTY SUM
CAPITAL GAIN SUM

5 UNIT -4 GST +PRACTICAL +THEROY GST 12 8 4

TOTAL 60 20 40
 HOW MUCH REQUIRE TO READ (INCOME TAX)
SR NO NO CHAPTER NAME Require to Read Topic Total Page
PAGE NO PAGE NO
1 CHAPTER NO 1 INCOME FROM SALARY 75 to 175 80-81-82 41.1 3
113-114 44.10 2
124-125-126 44.21 3

2 CHAPTER NO 2 INCOME FROM HOUSE PROEPRTY 176 TO 207 NIL NIL 0

3 CHAPTER NO 3 INCOME FROM BUSINESS & PROFESSION 208 TO 311 224 TO 247 24
251 TO 257 7
(No Sum Ask In Exam ) 260 TO 266 7
269 TO 278 10
280 TO 281 2
285 TO 311 27

4 CHAPTER NO 4 CAPITAL GAIN 312 TO 384 323 TO325 3

328 TO 344 17
355 TO 370 16

5 CHAPTER NO 5 INCOME FROM OTHER SOURCES 385 TO 413 394 to 398 5

(No Sum Ask in Exam) 400 to 413 14

TOTAL TOTAL PAGE 339 140