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    IN ENGLISH & TAMIL POR YOUR LAST MINUTE PREPARATION FOR LL.B / B.L. EXAMINATIONS OF Qe ALL UNIVERSITICS _ To help you prepare effectively for the university examinations in the last miaute, Usha Ja: have prepared the most expected and often del questions in sizaple language and in fullscape papers with laser printing for each | university separately. I THE COST FOR EACH SUBJEGT IS Rs.7 (RUPEES SEVEN HUNDRED ONLY) You can BNSURE your SUCCESS by studying these 2 apters / questions/ short notes, as we have short no amination etc., as the answ ferent for every universi! Orders may be placed through Draft/Cheque fa VJAGANATHAW payable at Madurai, or deposit “For Further details contact» ———SS*SY UJLS, 32, Narmadha Nathi Street, Mahathma Gandhi Nagar, Madurai - 625024. Celt No, 9994449005, 9600700655 & 9944999308. } | he 20 chapters - Question and Answer Mocute are expected questions and hence UJLS and the Authors are not in any way if the chapters/ questions do not a; 1S.) BEER EEEEE KK. Renate (Understand Law & Achieve Wisdom) (ignorance of law is no excuse} LAW OF TAXATION [rue icome tax act 1961, ‘THE CENTRAL SALES TAX act 1956 THE WEALTH Tax act 1957 & . SOLVED INCOME TAX PROBLEMS] FULL SYLLABUS COVERED WITH ANSWERS FOR PREVIOUS YEAR UNIVERSITY QUESTIONS P. Jaganathan, MA., MBAG Mail,” ML.(Contracts}., ML(Adhin, 9 Ttisn : (Gold Medalist, & Madras Onigersie Rdhasrenacrcin: for alt the three years of BL. COUPER} 9K 2g Usha Jaganathan, MA., ML., com J.P. Arjun MA., MBA., LLB., Advocates | Price: 200/- An Appeal ... In spite of our best care and caution, errors and omissions might have crept in in this book inadvertently for which our readers are requested to bear with us and such discrepancies. noticed may kindly be brought to our notice so that they are corrected in our future editions. Purther, neither the Publishers nor the Authors and Printers are responsible/ liable for any damage or loss which may be caused to any person/s due to this publication. AUTHORS COPIES CAN BE HAD FROM J.P. ARJUN, PROPRIETOR, Usha Jaganath Law Series, I Floor, 32, Narmadha Nathi Street, Mahathma Gandhi Nagar, Madurai - 625014, Tamil Nadu PHONE/MOBILE Purchase Enquiries : 9994449005, 9944939308 Landline 452 - 2532434 E-mail : ushalawseries@gmail.com © reserved with Authors v PLEASE READ THIS PASSAGE WITHOUT FAIL ( SPECIALLY PREPARED STUDY MATERIALS) IN ENGLISH & TAMIL FOR YOUR LAST MINUTE PREPARATION FOR LL.B. / B.L. EXAMINATIONS To help you prepare effectively for the university examinations in the last minute, Usha Jaganath Law Series have Prepared the most expected and often repeated 20 CHAPTERS with short notes and model questions in simple language and in fullscape papers with laser printing for each university separately. THE COST FOR EACH SUBJECT IS Rs.700/- (RUPEES SEVEN HUNDRED ONL! You can ENSURE your SUCCESS by studying these 20 most important chapters / questions/ short notes, as we have chosen these chapters /questions / short notes carefully by reviewing the pattern of repetition of university questions in the past twelve years. Please inform the university name, the year of examination etc., as the answers for the expected questions are different for every university and examination. Orders may be placed through Draft/Cheque favouring “P. JAGANATHAN’ payable at Madurai, or deposit in the specified Bank Account. For Further details contact - UJLS, 32, Narmadha Nathi Street, Mahathma Gandhi Nagar, Madurai - 625014. Cell No. 9994449005, 9600700655 & 9944939308. (The 20 chapters - Question and Answer Module are only expected questions and hence UJLS and the Authors are not responsible in any way if the chapters/questions do hot appear in the university examinations.) ENSURE YOUR SUCCESS IN LLB /'BL EXAMINATIONS Our ‘Specially Prepared Last Minute Preparation Study Materials’ (Cost per subject is Rs.700/- only) ensure your success in LLB/BL Examinations. If you cannot spare sufficient time for studies, then this ‘Last Minute Preparation Study Materials’ is of your help to ensure your success in LLB / BL Examinations. ADVANTAGES OF STUDYING THE LAST MINUTE PREPARATION STUDY MATERIALS > Specially prepared study materials in simple language > Study Materials prepared examination point of view. > About ‘20 Most Expected Topics’ for the ensuing examinations prepared purely based on the pattern of repetition of previous ten year univer- sity question papers. > Study Materials contain most important Essay Questions, Short Notes and Case Laws and/ or Solved Problems. purely from > Study materials presented in simple points for easy understanding, easy remembrance, easy recollection and casy review. > Study materials prepared on fullscape paper with the laser printing for convenient study. Only Limited Copies are available! Order your copies early! vii PREFACE]! The term ‘Taxation’ signifies the process of collecting money by the Government from the individual citizens, corporate firms and others.The money so collected goes to Public Treasury/Consolitated fund of India so that such money can be used for the defence, public welfare schemes, national infra structure development, ete. . In any nation, it is the people’s ability to pay tax which guide the Government to implement equitable, non-arbitrary and economically sound system of taxation. Income Tax is one of the direct taxes and when a person’s income exceeds a specific limit, he is subject to levy of tax by the Government. The taxation law is an important study for a law student and also an Advocate and the specialisation in this field enables him to effeciently practise on the taxation side. This book has been written in a simple language and in essay form so that even a layman can easily understand and grasp the subject matter. An indepth study of the book will give an excellent insight in the subject matter. We fervently hope that this revised edition will be both academically and from the examination point of view - immensily useful. : AUTHORS, viii INDEX ‘S.NO ‘TOPICS: P.NO LAs x PART -1 INCOME TAX ACT, 1961 PART I-A INCOME TAX - THEORY GENERAL PRINCIPLES /CANONS AND MEANING OF INCOME TAX ‘NO TAX WITHOUT AUTHORITY OF LAW’ (Art. 265) TAX RELATIONSHIP BETWEEN STATE AND CENTRE (Arts. 264 ~ 291 of the 1 Relationship between State and Centre) Indian Constitution) (Finan: MEANING OF IMPORTANT TERMS AND DEFINITIONS AGRICULTURAL INCOME [Sec. 2 (1)] CAPITAL ASSET Sec. 2 (14)] TA 15 15 19 ix S.NO TOPICS P.NO 3-C. TRANSFER (Sec. 2 (47)] 22 3-D. AMALGAMATION [Sec. 2 (1-B)) 23 3-E. PREVIOUS YEAR (Sec. 3] 24 3-F. OBJECTS AND PRINCIPLES OF TAXATION a7 3G. CAPITAL RECEIPTS AND REVENUE, RECEIPTS 30 3-H. VALUE ADDED TAX 33 34. * SPECIAL ECONOMIC ZONE, 33-A 4.% BASIS OF CHARGE OR DETERMINATION OF RESIDENTIAL STATUS OF ASSESSEE AND TAX LIABILITY (Sec. 4 to 9) 34 5-A. COMPUTATION OF TOTAL INCOME 42 5-B.* INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME OR INCOMES EXEMPT FROM TAX (Sec. 10) 45 10.* 1. 12." PERMISSIBLE DEDUCTIONS (IN RESPECT OF CERTAIN INCOME AND CERTAIN Payments) (Sec. 80 C to SOU) 69 EXEMPTIONS OF INCOME FROM RELIGIOUS AND CHARITABLE TRUSTS. AND. INSTITUTIONS (Sec. 11 & 12) 94 INCOME FROM SALARIES (Sec. 15, 16 & 17) 107 ALLOWANCES (See. 10} 123 INCOME FROM HOUSE PROPERTY (Sec. 22 to 27) 129 PROFITS AND GAINS OF BUSINESS OR PROFESSION (Sec. 28 to 44D) 137 CAPITAL GAINS (Sec. 45 - 55A) 189 INCOME FROM OTHER SOURCES (Sec. 56) “179 xi | SNO TOPICS P.NO 13.4 INCOME OF OTHER PERSONS. INCLUDED IN ASSESSE'S TOTAL INCOME (CLUBBING OF INCOME) (Sec. 60 to 65) 18s 14, INCOME TAX ON FIRMS (Sec. 184] 190 152 CARRY FORWARD AND SET OFFOF LOSSES OR AGGREGATION OF INCOME: (See. 66 to 60) 193 16. DOUBLE TAXATION RELIEF (Sec. 90 & 91) 200 17, AVOIDANCE OF TAX (Sec. 92 to 94) 201 PART I-B INCOME TAX - PROCEDURAL ASPECTS. ¥18** DEPRECIATION AND TYPES OF DEPRECIATION (Sec. 115VK) 203 "197" INCOME TAX AUTHORITIES (Sec. 116 to 138) 217 xiii ‘S.NO 20.*8 21. 22, 23 24, 28, TOPICS PROCEDURE AND TYPES OF ASSESSMENT (Sec. 139 to 158) ESCAPED INCOME (Sec. 147) LEGAL REPRESENTATIVE AND REPRESENTATIVE.ASSESSEE (See. 159) DEDUCTION OF TAX AT SOURCE (CoLusction at source) (Sec. 192 to 206) ADVANCE PAYMENT OF TAX, (Sec. 207 to 219) COLLECITON AND RECOVERY OF TAX (Sec. 220 to 232) P.NO 231 250 251 254 267 272 S.NO TOPICS NO 26. REFUND OF TAX (Sec. 237) 279 27. APPEALS, (Sec. 246 to 255, 260-A, 261), REFERENCE (Sec. 256) AND REVISIONS (Sec, 263 & 264) 282 27-A. RECTIFICATION OF MISTAKES, (Sec. 154, 254 (2) & 269-N) 294-A 28. PENALTIES UNDER THE INCOME TAX ACT 1961 295 29. OFFENCES AND PROSECUTIONS, UNDER THE INCOME TAX ACT 1961 299 ** Denore Most Iuportant Cuarrer * — Denores Important CHAPTER 3 10.* 1s 12. 13.* 14. 15.* 16.* l7* SHORT NOTES TOPICS Advance payment of tax Aggregation of income Agricultural income Allowances of M.P./M.L.A. Allowances Amalgamation Annual value of house property Appellate Tribunal Assessee Assessment Assets (Capital asset) Avoidance of tax Bad debt Balancing charge Best Judgement Assessment Block of assets Bonus 267 193 1s 54 123 23 135 285 241-4 19 201 182 210 246 204 110 1 i is." 19.4* 20.* 21 20+ 23.* 24, 25.* 26. 27. 28. 29. 30. 31. 32+ 33 Business Capital asset Capital gains Capital Receipt and Revenue Receipt Casual income Central Board of Direct Taxes Charitable institution Clubbing of income Commutation of pension Cost of acquisition of asset Deductions at source Deduction from pension fund Deduction in income from business or profession Deduction in income from salaries ° Deduction in respect of medical treatment Deduction in the income of house property 159 30 46 217 94 186 49 167 254 7 147 17 73 130 xvi ‘S.NO TOPICS P.NO 35, 36. 37." 38." 39." 40.* 41 420 43, 44, 45. 46° 47. Deductions in profits and gains of business income Deductions in respect of deposit under National Savings Scheme or payment to a deferred annuity plan Default in payment of tax Definition of tax Depreciation on investments Depreciation Development allowance Development rebate Direct and indirect taxes Donation to certain funds Donation to Charitable Institutions Donations for Scientific Research/ Rural Development Double Taxation Relief Duty and Fine 147 70 272 209 203 214 212 80 200 xvii ——— ‘S.NO TOPICS P.NO EE 48." Duty of filing returns E 234 49, Earnings in convertible forcign exchange 87 50. Entertainment allowances 124 S1.* Escaped income (income Escaping Assessment) 250 52. Failure to file return of income 241 53." Free medical facility 116, 54. Gratuity 49 SS. Hedging transaction 143, 56. House rent allowance 123 57.* Illegal income 4B 58. Income 4A 59, Income from foreign sources 92 60.* Income from other sources 179 61.* Income Tax Act and Finance Act 1 62.* Income Tax Officer 221 63, Indirect taxes 64.* Interest on security 52, 180 S.No TOPICS PNO Rr CeCe 65. Investment Deposit Account 148 66. Irrecoverable rent 132 67. Leave encashment 50 68.* Leave Travel Allowance 47 69. Legal Representative and Representative Assessee 251 70. Loan for higher education 74 71, Long term capital asset and short term capital asset 20 72.* Long term capital gain and Short term capital gain z 165 73.* Medical expenses for cancer treatment 73 74.* Medical Insurance Premium 72 75. Medical treatment of handicapped dependents 72 76. Newly established 100% export oriented units 65 ‘S.No. 77 78. 79. 80. 81. 82+ 83. B44 85. 86+ 87. 88.* 89.* 90.** TOPICS Newly established industrial undertakings or hotel business in backward areas Newly established small scale industrial undertaking Non resident Non-capital assets Not ordinarily resident Object of taxation Owner of house property Pension Pension received by awardee ‘Param Vir Chakra’ or ‘Maha Vir Chakra or ‘Vir Chakra’ Permanent Account Number Permanent physical disability Perquisites Person Previous Year . 83 36 36 7 130 107 55 235 93 xx : xxi See eee eee eee eee ee S.NO TOPICS P.NO. | S.NO TOPICS P.NO 91.* Principles of taxation 27 109.* Self Assessment 242 92. Profits and gains of business or 110.* Set off and carry forward of profession 137 losses ta 93.* Provident fand ey 111.* Short term and Long term F ital t 20 94.* Rebate of Income Tax 119 eee 112.* Short term capital gain and 95.* Rectification of mistakes 294-A pa Long term capital gain 165 96.* Reference to High Court 289 113. Site restoration fund 149 97. Refund of tax 279 114. Special compensatory allowance 126 98.* Registration of a firm 190 115.* Special Economic Zone 33-A, 62 99. Regular Assessment 243 116.* Speculative transaction 142 100. Rehabilitatio: LI 149, 216 z eee 117.* Standard deduction u7 101.* Resident esiden 35 siaeopee 7 102.* Resident in India 35 thos neeeatones 4A 103.**Residential status of individuals 35 Tagen 3 104.* Retirement benefits 49 121." ‘Tax and Toll aA 105. Return of income 231 122, Tax avoidance 201 106. Royalties from forcign enterprises 90 123.* Tax clearance certificate : 277 | 107.* Salary 109 124, ‘Tax free perquisites or Tax | 108. Scientific Research 80 free benefits 114 oe 92. 93.* 94." 95. 96.* 97, 98.* 99, 100. ‘TOPICS Principles of taxation Profits and gains of business or profession Provident fund Rebate of Income Tax Rectification of mistakes Reference to High Court Refund of tax Registration of a firm Regular Assessment Rehabilitation allowance 101.* Resident 102.* Resident in India 103.**Residential status of individuals 104.* Retirement benefits 105. 106. Return of income Royalties from foreign enterpris: 107.* Salary 108. Scientific Research 137 51 119 294-4 149, 289 279 190 243 216 231 90 109 80 n S.NO TOPICS P.NO pee ee eee eee eee Eee tema 109.* Self Assessment 242 110.* Set off and carry forward of losses 195 11L* Short term and Long term capital asset 20 112.* Short term capital gain and Long term capital gain 165 113. Site restoration fund 149 114. Special compensatory allowance 126 115.* Special Economic Zone 33-A, 62 116.* Speculative transaction 142 117." Standard deduction 117 118.* Tax 2 119. Tax and Cess 4A 120.* Tax and fees 3 121.* Tax and Toll 4A 122. Tax avoidance 201 123.* Tax clearance certificate 277 124, ‘Tax free perquisites or. Tax free benefits 114 xxiv Sun 7 ae iO TOPICS P.NO LIABILITY TO INTER - STATE SALES TAX (Sec. 6) REGISTRATION OF DEALERS (See. 7) DECLARED GOODS OR GOODS oF SPECIAL IMPORTANCE IN INTER STATE TRADE OR COMMERCE [Sec. 14 & 15) 329 CENTRAL SALES TAX APPELLATE, AUTHORITY (OR) AUTHORITY TO SETTLE DISPUTES IN COURS EOF INTER-STATE TRADE OF COMMERCE ° 331A Dexore Mosr Important Cuarrer Denotes Important CHaprer SHORT NOTES S.NO FORICS P.NO aoe Appropriate State 307 2.** Business 306 3." Cancellation of the Registration Certificate 326 4.* Cancellation of registration under the Central Sales Tax Act, 1956 326 5.* Casual Trader 307-F 6.* Central Sales. Tax Appellate authority 331-A ait Dealers 303, 8.** Declared goods 306, 329 9.*. Delivery 308 10.* Export or Import (Crossing custom frontiers in India) 317 11.* Goods 305 12.* Goods of special importance in inter State Trade or Commerce 329 13.“ Liability.to pay tax on other State sales 319 ‘S.NO ‘TOPICS P.NO 14.* Multi point tax 307-1 15.* Registration of dealers 323 16.* Sale 307-C 17. Sale or purchase taking place outside a State 315 18.* Sale price 307-F 19.* Single point tax 3074 20.* Sites of sale 307-C 21 Taxable turnover 307 22. Transfer of document of title to the goods _ 312 23.* Turnover 307 24.** Works contract 307-B Denore Most Important SHort Nore * Denotes Imporrant Suort Nore xxvii CASE LAWS S.NO TOPICS P.NO SOE eRe 1. Asbestos Cement Ltd.Vs. Government of Tamil Nadu 312 2 Atlas cycle Industries Limited Vs. State of Haryana TA 3. Bagalkot Cement Vs. State of Mysore 305 4. E.B. Gymkhana Vs. Wealth Tax Commissioner 7-C 5. Grasion Industries Limited Vs. State of M.P. TD 6. International Cotton Corporation Vs. Commercial Tax Officer 321 7. Joint Director of Food Vs. State of Andhra Pradesh 305 8. Larson and Toubro Ltd, Madras Vs. Commercial Tax Officer, Madras 313 evi SRO tories 5 PEE eee ee 9. Mahalakshmi Textile Mills Ltd.Vs. ” State of Madras 318 10. Manganese ore (India) Ltd Vs. Regional Assistant Commissioner, Sales ‘Tax 318 11. Mohammed Ali Khan Vs. Commissioner ‘of Wealth Tax 7-C 12. Oil India Ltd. Vs. Superintendent _ of Taxes 314 13 State of Tamil Nadu VS. A. Vishwanathan 305 14. T. Lakshmi Narasimaiah Setty and Sons Vs. State of Mysore 321 18. Tata Engineering and Locomotive Co.Ltd, 311 Vs. Assistant Commissioner 316 16. Tata Oil Mills Co. Ltd. Vs. Commissioner of St. Lucknow 312 xxix ‘TOPICS P.NO S.NO PART - WEALTH TAX ACT 1957 {Act No. 27 of 1957) 1." DEFINITIONS (Sec. 2) 332 CHARGE OF WEALTH TAX - (NET WEALTH) (DEEMED ASSETS} (BXEMPTIONS FROM WEALTH TAX) (Sec. 3 to 7) 339 3.* WEALTH TAX AUTHORITIES. (Sec. 8 to 13-A) 348, 4.* TYPES OF ASSESSMENT (Sec. 14 to 18-C) 350 5.* LIABILITY TO ASSESSMENT IN, SPECIAL CASES (Sec. 19 to 22) 370 ES eee ee eee xxxi SNOT Emenee eee eee ee NO SHORT NOTES 6. SETTLEMENT OF WEALTH TAX CASES S.NO TOPICS P.NO eed oot 1. Appeal to Supreme Court 400 2. Appellate Tribunal 394 7.* APPEALS, REVISIONS AND REFERENCES 3. Application for settlement of cases 3384 (Sec. 23 to 29-B) 391 4.* . Assessee 5 332 5S. Assessment in the case of assets 8. PAYMENT AND RECOVERY OF of Hindu Undivided Family 4 371 WEALTH TAX (Sec. 30 to 34-AE) 403, 6. Assessment in case of Executors 371 7.* Assets of kings under the 9, OFFENCES UNDER THE WEALTH Wealth Tax Act 345 ‘TAX ACT (Sec. 35-A to 35-1A) a 8. Assessment of persons residing outside India 378 9.* Best Judgment Assessment : 354 10.* Charge of wealth tax 339 ** Dewore Mosr Important CHAPTER 11.* Debt owed . 335 12.* Deemed assets 341 Denotes Inporrawr Carrer 13.* Escaped wealth assessment 357 14. Liability of transferees of Oe properties 405 15.* Net Wealth 335 | xxii ‘S.NO_ TOPICS P.NO ee 16. 17. 18, 19, 20. 21 22. 23, 24.%6 25." 26. 27." Notice on Demand Penalty for failure to furnish returns Power of Settlement Commission to reopen completed proceedings Refund of Wealth Tax Registered Valuers Repetitive Appeals Revisional Powers of Commissioner Self Assessment Valuation date Valuation officer Wealth Escaping Assessment Wealth Tax Settlement Commission “Denote Most Iportant Snort Nore * Dewores Important Snort Nore eS fe 403 360 387 406 408 368 396 353 337 356 357 382 TIPS FOR IMPROVING BETTER CONCENTRATION AND REDUCING STRESS Make a proper timetable Make brief points or notes of important topics Use charts, tables, diagrams, maps, etc to organize information for easy recall Take short breaks of 5 — 10 minutes after 40 — 45 minutes of continuous study, to optimise con centration levels. ‘Take up difficult chapters fiist, when you’ re mentally fresh. SOME SIMPLE METHODS TO RELAX Deep Breathing Proper diet Exercise Good sleep. 7 TIME MANAGEMENT FOR SUCCESS” TIPS Proper time management is very essential for success. By making a proper schedule, one can get control of most of his time available in a day. The schedule of activities must cover everything ie., studies, entertainment, physical exercise, social activities, etc., In other words, it should be a balanced time schedule. One has to set realistic goals so that they are achievable. One can’t do many things at a time. The relative importance of cach item must be noted and there should be a time budget to do each item. One has to make a ‘To-Do List” every day and place things that are most important at the top and do them first. One should find out the time in a day, when he can work more efficiently. He must do the tough works at that time. For eg., Brain work in the morning hours, as mind is fresh in the morning than late at night. 10. 11. 12. 13. B Review of schedule every day is important. Review helps to figure out where mistakes have been committed and how to avoid them in future. Communication of the time schedule to the family members and friends is necessary so that they should know when you are available for contact. One should not worry about something which has not been done according to time schedule. It is only waste of time and it increases the stress. Alternatively, one should plan ahead to avoid such mistakes in future Sound sleep is necessary for the brain to get rest so that the next day’s performance will be at its péak. Lack of sleep makes the day seem longer and the tasks seem more difficult. ‘The time schedule must be for a week. When the next week's schedule is planned, one could review the capacity of performance by the number of works completed in the previous weck’s schedule and alter the schedule suitably. Last but not least, a schedule that is best suited to one’s habits (good) and needs well never fail: oS Sa Allahabad Andhra Pradesh Bombay Calcutta Chattisgarh | 2000 Guwahati Gujarat HIGH COURTS OF INDIA JURISDICTION Andhra Pradesh Maharashtra, Goa, Dadra and Nagar Haveli and Daman and Diu West Bengal, Andaman and Nicobar Islands Chattisgarh Assam, Manipur, Meghalaya, Nagaland, Tripura, Mizoram and Arunachal Pradesh Allahabad (Bench - Lucknow) Hyderabad Mumbai (Benches at Nagpur, Panji and Aurangabad) Kolkata (Cireuit bench at Port Blair) Bilaspur Delhi Guwahati (Benches at Kohima,| Aizawl, Imphal, Shillong and Agartala] Ahmedabad Himachal Pradesh Srinagar and Jammu Karnataka Bangalore (Benches at Hubli, Dharwad & Gulbarg) Kerala and Lakshweep __|Ernakulam Madhya Pradesh 1956 Madhya Pradesh Jabalpur (benches at Gwalior and Indore) Orissa Orissa Cuttack Tamil Nadu Tamil Nadu Chennai (Bench at Madurai) Patna [Punjab and Punjab, Haryana and) Chandigarh Haryana Chandigarh Rajasthan Rajasthan Jodhpur (Bench at Jaipur) | INCOME TAX SLAB RATE FOR THE | ASSESSMENT YEAR 2008 - 2009 (Fwanctat, Year 2007 - 2008) INCOME TAX SLAB RATE FOR MEN TAXABLE INCOME Upto Rs. 1,10,000/- Rs. 1,10,001/- to Rs. 1,50,000/- Rs. 1,50,001/- to Rs. 2,50,000/- Above Rs. 2,50,001/- INCOME TAX SLAB RATE FOR WOMEN TAXABLE INCOME RATES Upto Rs. 1,45,000/- NIL Rs; 1,45,001/- to Rs. 1,50,000/- “10% Rs. 1,50,001/- to Rs. 2,50,000/- Above Rs. 2,50,001/- 20% 30% INCOME TAX SLAB RATE FOR SENIOR CITIZENS Above Rs. 2,50,001/- ‘TAXABLE INCOME RATES Upto Rs. 1,95,000/- NIL Rs. 1,95,001/- to Rs. 2,50,000/- 20% 30% INCOME TAX SLAB RATE FOR THE ASSESSMENT YEAR 2009 - 2010 (Fuvancrat ¥ear 2008 - 2009) INCOME TAX SLAB RATE FOR MEN TAXABLE INCOME RATES Upto Rs. 1,50,000/- NIL Rs. 1,50,001/- to Rs. 3,00,000/- : 10% Rs. 3,00,001/- to Rs. 5,00,000/- 20% Above Rs. 5,00,000/- 30% INCOME TAX SLAB RATE FOR WOMEN ‘TAXABLE INCOME RATES Upto Rs. 1,80,000/- NIL Rs.. 1,80,001/- to Rs. 3,00,000/- 10% Rs. 3,00,001/ to Rs. 5,00,000/- 20% Above Rs. 5,00,000/- 30% INCOME TAX SLAB RATE FOR SENIOR CITIZENS TAXABLE INCOME RATES Upto Rs. 2,25,000/- NIL Rs. 2,25,001/- to Rs. 3,00,000/- 10% Rs. 3,00,001 to: Rs. 5,00,000/- 20% Above Rs. 5,00;000/- 30% Iv INCOME TAX SLAB RATE FOR THE ASSESSMENT YEAR 2010 - 2011 (Fivancrat Year 2009 - 2010) INCOME TAX SLAB RATE FOR MEN ‘TAXABLE INCOME RATES Upto Rs. 1,60,000/- NIL Rs. 1,60,001/- to Rs. 3,00,000/- 10% Rs. 3,00,001/- to Rs. 5,00,000/- 20% Above Rs. 5,00,000/- 30% INCOME TAX SLAB RATE FOR WOMEN TAXABLE INCOME I RATES Upto Rs. 1,90,000/- NIL Rs. 1,90,001/- to Rs. 3,00,000/- 10% Rs. 3,00,001/ to Rs. 5,00,000/- 20% Above Rs. 5,00,000/- 30% INCOME TAX SLAB RATE FOR SENIOR CITIZENS TAXABLE INCOME RATES Upto Rs. 2,40,000/- NIL Rs. 2,40,001/- to Rs. 3,00,000/- 10% Rs. 3,00,001 to Rs. 5,00,000/- 20% Above Rs. 5,00,000/- 30% SS U INCOME TAX SLAB RATE FOR THE ASSESSMENT YEAR 2011 - 2012 (Financia, Year 2010 - 2011) | Income TAX SLAB GENERAL TAX PAYERS Income tax slab (in Rs.) 0 to 1,80,000 1,80,001 to 5,00,000 '5,00,001 to 8,00,000 ‘Above 8,00,000 INCOME TAX SLAB RATE FOR WOMEN © - come tax slab (in Rs.) Tax 0 to 1,90,000 No tax :1,90,001 to 5,00,000 10% 00,001 to 8,00,000 20% "Above 8,00,000 30% E INCOME TAX SLAB RATE FOR SENIOR CITIZENS: {Acep 60 years Bur LESS THAN 80 YEARS) ‘Income tax slab (in Rs.) 7 Tax ‘0 to 2,50,000 No tax 2,50,001 to 5,00,000 10% 9,00,001 to 8,00,000 20% Above 8,00,000 30% a INCOME TAX SLAB RATE FOR VERY SENIOR CITIZENS (Azove 80 years) Income tax slab (in Rs.) 0 to 5,00,000 '5,00,001 to 8,00,000 ‘Above 8,00,000 PART I INCOME TAX - THEORY 1. GENERAL PRINCIPLES/CANONS AND MEANING OF INCOME TAX SYNOPSIS: A. Introduction (Income Tax Act and Finance Acts) . Kinds of taxes . Difference between Tax and Fee . Definition/concept of Income . Assessee [Sec. 2 (7)] . Person [Sec. 2 (31)] A. INTRODUCTION: (INCOME TAX ACT AND FINANCE ACTS) The Income Tax Act, 1961 is a comprehensive Act and contains 298 Sections, Sub-Sections and Schedules. The Income Tax Act 1961 has been amended several times for accommodating the changing circumstances. Finance Acts: are enacted by the parliament every year reflecting the Government's economic position Every year the economic situation of the nation change and Tax rates like Income tax, Central Excise, Customs, etc., are fixed by the Annual Finance Act and not by the Income Tax Act. 2 DirreReNCE BETWEEN INcome Tax Act anp Finance Act: 1. The Income Tax is a permanent Act, whereas the Finance Act is passed every year and its main purpose is to fix the rates to be charged under the Income Tax Act for that year. 2. Tax is charged for a year in accordance with and subject to the provisions of the Income Tax Act, but the said charge will be in accordance with the rates prescribed under the Finance Act. 3. The liability to tax for any year is imposed under the Income tax Act 1961, and its quantification only being dependent on the Finance Act of the said year. 4. The power to levy income tax need not necessarily be confined to the Income Tax Act 1961 alone but it may be derived even from the Finance Acts. The law of Indian Income Tax is dealt under the Income Tax Act, 1961 and the rules framed under it. Income Tax is tax on the “Income”. The “T: on a person’s income or property. So, the meaning of “Income” is a very important one. B. KINDS OF TAXES: There are two kinds of taxes: 1. Direct taxes 2. Indirect taxes 1. Direct taxes like Income Tax, Wealth tax, Gift tax, etc., are those which the assessce pays directly to the revenue of the Government and paid after the income is received by the tax-payer. It is levied on the net income or net asset of an individual 3 2. Indirect taxes like Sales tax, Octroi, Customs, Central Excise, etc., are those which the tax payer indirectly pays during the purchase of good’ and commodities, etc. Even before the goods reach the tax payer, the indirect tax is paid and they are mainly imposed on goods or commodities. Revenue collected by the Government through indirect taxes is larger than that collected through direct taxes. 7 C. DIFFERENCE BETWEEN TAX AND FEE: A tax and a fee are not the same thing. Tax is levied for the public at large. The money collected from a tax payer does not help him directly in any way. It goes to the conéolidated fund of India and it is used for the general welfare of the public. There is no direct return to the tax payer. : In other words, there-is no quid pro quo (something in return). A fee is a specific charge for some direct services rendered. There is quid proquo and the fee payer gets some special services or treatment. For e.g., payment of college fees, payment of temple worship fee, have the element of quid pro quo. A fee docs not go to the consolidated fund of India. It is not used for the welfare of the common pcople. A tax is a charge on the person's income or property, whereas fees is a payment for special services rendered. 4 ‘tax is a compulsory payment for which the tax payer does not get direct benefit, whereas payment of fees is for some work done for the benefit of the person who pays the fees. ‘Though tax can be levied only within the tax entries, fees can be collected for a non tax entry. The fees collected for the various services go to, the particular department whereas tax collected is merged in the general revenue. Bg. of Tax: Income Tax, fixed sum collected by the Municipality for supply of water, amount charged for registration of document, ete. Bg. of fees: Fee for getting a licence as a Stamp vendor, supply of water by a municipality according to the meter reading and collection of charges according to the water supplied, ete. = Government may charge user fees, tolls, or other types of fees in exchange of particular goods, services, or use of property. These are generally not considered taxes, as they are levied as payment for a direct benefit to the individual paying. For eg., toll fee. TOLL FEE: 1, This is a fee charged to travel - via a road, bridge, tunnel, canal, waterway or other transportation facilities. 2. Toll fee are used as fee to pay for public bridge, road and tunnel projects. 3 2. Indirect taxes like Sales tax, Octroi, Customs, Central Excise, etc., are those which the tax payer - indirectly pays during the purchase of goods and commodities, etc. 4 ‘Tax is a compulsory payment for which the tax payer does not get direct benefit, whereas payment of fees is for some work done for the benefit of the person who pays the fees. Even before the goods reach the tax payer, the indirect tax is paid and they are mainly imposed on goods or commodities. Though tax can be levied only within the tax entries, - fees can be collected for a non tax entry. The fees collected © for the various services go to the particular department Revenue collected by the Government through indirect taxes is larger than that collected through direct taxes. Bg. of Tax: Income Tax, fixed sum collected by “the Municipality for supply of water, amount charged for registration of document, etc C. DIFFERENCE BETWEEN TAX AND FEE: Bg. of fees: Fee for getting a licence as a Stamp Peter ee cet ton etna nate] mei etae “yendor, supply of water by a municipality according to levied for the public at large. The money collected from a tax payer does not help him directly in any way. It goes to the consolidated fund of India and it is used for 4 the general welfare of the public. There is no direct return to the tax payer. . Government may charge user fees, tolls, or other “types of fees in exchange of particular goods, services, 4 ir use of property. In other words, there-is no quid pro quo (something in return). A fee is a specific charge for some direct 4 services rendered. There is quid proquo and the fee payer | gets some special services or treatment. 3 These are generally not considered taxes, as they __are levied as payment for a direct benefit to the + individual paying. For eg., toll fee. For e.g., payment of college fees, payment of temple | worship fee, have the element of quid pro quo. A fee does not go to the consolidated fund of India. It is not used for the welfare of the common people. This is a fee charged to travel via a road, bridge, tunnel, canal, waterway or other transportation facilities. Toll fee are used as fee to pay for public bridge, road and tunnel projects. A tax is a charge on the person’s income or property, whereas fees is a payment for special services rendered. 2. Indirect taxes like Sales tax, Octroi, Customs, Central Excise, etc., are those which the tax payer indirectly pays during the purchase of goods and commodities, ete. Even before the goods reach the tax payer, the indirect tax is paid and they are mainly imposed on goods or commodities. Revenue collected by the Government through indirect taxes is larger than that collected through direct taxes. ©. DIFFERENCE BETWEEN TAX AND FEE: A tax and a fee are not the same thing. Tax is levied for the public at large. The money collected from a tax payer does not help him directly in any way. It goes to the conéolidated- fund of India and it is used for the general welfare of the public. There is no direct return to the tax payer. 7 In other words, there-is no quid pro quo (something in return). A fee is a specific charge for some direct services rendered. There is quid proquo and the fee payer gets some special services or treatment. For e:g., payment of college fees, payment of temple worship fee, have the element of quid pro quo. A fee does not go to the consolidated fund of India. It is not used for the welfare of the common people. A tax is a charge on the person’s income or property, whereas fees is a payment for special services rendered. 4 Tax is a compulsory payment for which the tax payer does not get direct benefit, whereas payment of fees is for some work done for the beriefit of the person who pays the fees. ‘Though tax can be levied only within the tax entries, fees can be collected for a non tax entry. The fees collected for the various services go to the particular department whereas tax collected is merged in the general revenue. Bg. of Tax: Income Tax, fixed sum collected by the Municipality for supply of water, amount charged for registration of document, etc. Eg. of fees: Fee for getting a licence as a Stamp vendor, supply of water by a municipality according to the meter reading and collection of charges according to the water supplied, etc. ‘ Government may charge user fees, tolls, or other types of fees in exchange of particular goods, services, or use of property. ‘These are generally not considered taxes, as they are levied as payment for a direct benefit to the individual paying. For eg., toll fee. TOLL FEE: l. This is a fee charged to travel - via a road, bridge, tunnel, canal, waterway or other transportation facilities. 2. Toli fee are used as fee to pay for public bridge, road and tunnel projects. The toll fee is a fixed charge, varied depending on the vehicle type, or the distance covered on long routes, DIFFERENCE BETWEEN TOLL AND TAX: Toll fee is collected from the transport users for the use of the transport links like roads, bridges, water Way ete., and the toll so collected are used to construct haw transport links, maintenance existing transport links etc., which are of direct use to the transport users. Tax collected, on the other hand, is used for overall national development and there is no direct benefit to the tax payer. DIFFERENCE BETWEEN TAX AND CESS; Cess means tax on tax. Tax is calculated as a porcent from income/transaction, whereas Cess ic calculated on tax. For eg., In India, to give a lift to primary education in the country, education cess of two Percent on income fa%, corporation tax, excise and customs duties and service tax is levied. The entire amount is allocated for education including nutritious cooked mid-day meal. The 4B ‘The other small cesses collected are - Cess on Bidis, iron ore, Limestone and ee Feature films, Coal and coke, Copra, Coffee, Oil a oi Jute, Rubber, Salt, Sugar, tea, eds, Vegetable oil, Jute, conan Textiles, Handloom cess, woolen fabrics, ae fabrics, Manmade fabrics, Tobacco, Paper, Straw board, fabrics, Automobiles and Matches. Dory: It is an indirect tax. The Central enema es collec: the State Government imposes the duty to -coilec! i f goods, transfer of import, export, sale o: eeu ie. Stamp duty, Customs duty, estate property, etc. E.g: duty, etc. Fine: Any person who fails to pay tax, fees, a ae within the time specified by the statute; shall - a is called penalty under Income Tax to pay fine. Fine is cal at dealt under sections 140 A (3), 133 (1A), 221 (1) ant 271 to 273. The difference between tax and fine is that = is payable to the Government on a Person eeene property whereas fine is payable when 1

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