CA - Inter Income Tax Summary Book May23

2023 EXAMS
CA - INTER
INCOME TAX
SMART
NOTES CA SACHIN GUPTA
ABOUT CA SACHIN GUPTA
1. He is a Fellow Member of ICAI having teaching experience of more 15 years.
2. He is also a Rank Holder in CA exams.
3. He is the Visiting faculty of ICAI &Various Professional Institutes including
4. Academic expert of ICSI & Other Professional Bodies
5. He has Taught over 30,000 students all across India.
6. He is Winner of Best Tax Faculty Award from The Institute of Companies

Secretaries of India.
7. He is Engaged with Professional Institutes for content/study material generation.
8. He had been engaged with Income Tax Department for Training of Income Tax
personnel.
9. His Students have scored All India Merit Ranks & have been amongst All India
Toppers.
10. He has Contributed various Articles for Professional Journals and delivered
lectures at various forums.
CA SACHIN GUPTA
Whats app : 87000 99028
www.taxbysg.com
Email : taxbysg@gmail.com
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INDEX
SNO. CHAPTER NAME PAGE NO.
ABBREVIATIONS 1-2
1. BASIC CONCEPTS OF INCOME TAX 3 – 12
2. RESIDENTIAL STATUS 13 – 18
3. INCOME UNDER HEAD HOUSE PROPERTY 19 – 23
4. SALARY 24 – 44
5. BUSINESS & PROFESSION 45 – 64
6. CAPITAL GAINS 65 - 76
7. OTHER SOURCES 77 –87
8. CLUBBING 88 – 91
9. SET OFF & C/F OF LOSSSES 92 – 95
10. DEDUCTIONS 96 - 104
11. AGRICULTURAL INCOME 105 - 106
12. COMPUTATION OF INCOME 107 – 108
13 ADVANCE TAX 109 – 111
14. TDS 112 – 120
15. AMT 121
16. RETURN OF INCOME 126 – 132
17. EXEMPT INCOME 133 - 134
18. TCS 135 -137

SMART NOTES OF INCOME TAX FOR CA INTER 2023 EXAMS
List of Abbreviations
A/C Account MF Mutual Fund
A/Y Assessment year MTAX Municipal Tax
AJP Artificial Juridical Person MTHS Months
AMT Amount MV Market Value
National Bank for Agricultural &
AO Assessing Officer NABARD Rural Development
AOP Association of Persons NAV Net Annual value
AR Actual Rent NCR National Capital Region
AS Accounting Standard NHB National Housing Bank
Approved Superannuation
ASF Fund NPS National Pension Scheme
B/F Brought Forward NR Non Resident
B/P Business & Profession P&L Profit & Loss A/c
BOA Books of Accounts P&M Plant & Machinery
BOI Body of Individuals P/Y Previous Year
C&M Control & Management PAN Permanent Account Number
C&R Charitable & Religions PFI Public Financial Institution
Chartered Acct / Capital
CA Asset PIO Person of Indian Origin
Central Board of Direct
CBDT Tax POH Period of Holding
CCIT Chief Commission of India RBI Reserve Bank of India
CDT Corporate Dividend Tax RDP Rural Development Programme
Capital Gain Account
CGAS Scheme RNOR Resident & Not Ordinarily Resident
CGOVT. Central Government ROI Return of Income
CII Cost Inflation Index ROR Resident & Ordinarily Resident
COA Cost of Acquisition RPF Recognised Provident fund
Delhi, Mumbai, Kolkatta,
D/M/K/C Chennai RV Reasonable value/ Expected rent
DA forming part of
DA(RB) Retirement Benefits SBI State Bank of India
Electronic Clearing
ECS Scheme SD Statutory Deduction
Securities & Exchange Board of
EE Employee SEBI India
Equity Linked Saving
ELSS Scheme SEZ Special Economic Zone
ER Employer SFC State Financial Corporation
ESI Employee state Insurance SGOVT. State Government
CA SACHIN GUPTA 1
Employee stock option

ESOP plan SI Substantial Interest
F/Y Financial Year SICA Sick Industrial companies Act
State Industrial Investment
FIFO First in First out SIIC Corporation
FMV Fair Market Value SIT Stock in trade
Full Value of
FVC Consideration SLM Straight line Method
GAV Gross Annual value SP Selling price
GTI Gross Total Income SPF Statutory Provident Fund
house property
HP ST Short Term
HRA House Rent Allowance STCA Short term Capital Asset
HUF Hindu Undivided Family STCG Short term Capital Gain
I/O/S Income from other Sources STT Security transaction tax
Industrial Development
IDBI Bank of India TDS Tax deducted at source
Industrial financial
IFCI corporation of India TI Total Income
Indian Institute of
IIT Technology TRP Tax Return Preparer
L&B Land & Machinery URPF Unrecognised provident fund
LC Letter of Credit URSF Unrecognised super annuation fund
LIT Litre UTI Unit trust of India
Limited Liability
LLP Partnership UTI Unit trust of India
LT Long term VRS Voluntary Retirement Scheme
LTC Leave Travel Concession WDV Written Down Value
LTCA Long term Capital Asset
CA SACHIN GUPTA 2
CHAPTER –1
BASIC CONCEPTS
Sections covered in this chapter

Sec 1 Short title, extent & Sec 172 Non-resident shipping business
commencement
Sec 174 Assessment of persons leaving India
Sec 2 Definitions Sec.174A Associations/ bodies formed for short duration
Sec 2(7) Assessee Sec 175 Assessment of person trying to alienate his
Sec 2(9) Assessment Year assets
Sec 2(17) Company Sec 176 Discontinued business
Sec 2(23) Partnership firm Sec 68 Cash credit
Sec 2(26) Indian Company Sec 69 Unexplained investment
Sec 2(31) Person Sec 69B Amount of investment not fully disclosed
Sec 2(34) Previous Year
Sec 2(45) Total Income
Sec 14 Heads of Income
Sec 3 Previous Year Sec 69C Unexplained expenditure
Sec 4 Charge of Tax Sec69D Amount borrowed or repaid on Hundi
Section 1: SHORT TITLE, EXTENT AND COMMENCEMENT
❖ This act is called Income –tax Act,1961 , extend to whole of India w.e.f 1/4/1962
Section 4 : CHARGE OF INCOME-TAX

❖ INCOME TAX for A/Y @ RATES specified by FINANCE ACT
❖ On TOTAL INCOME during P/Y
❖ Of any PERSON who is an ASSESSEE
Section 2(31) : PERSON INCLUDES

1) Individual
2) Hindu Undivided Family
3) Company : Sec 2(17): Company means Indian company or foreign company
4) Firm: Sec 2(23) : Firm shall include PF & LLP
5) AOP/BOI, whether incorporated or not , whether for profit or not
6) Local authority: As per General Clause Act, It means Panchayat / Municipality/ Municipal
committee/ district Board /Cantonment Board
7) AJP not falling within any of preceding categories
CA SACHIN GUPTA 3
Section 2(7) : Assessee :

✓ Person by whom tax or other sum is payable & includes
✓ Person against whom proceeding taken for assessment of income/ loss/ refund
✓ A deemed assessee - A person who is deemed to be an assessee for some other person
✓ Assessee who is deemed to be an ‘Assessee in default ‘
Section 2(9) : Assessment Year

Assessment Year means the period of 12 months commencing on the first day of April every year.
Section 2 (34) : Previous year means previous year defined under Sec 3
Sec 3 : Previous year means F/Y immediately preceding assessment year.
First P/Y for a B/P newly set-up during F/Y or for new source of income:
▪ P/y shall be beginning from date of setting up of business /new source came into existence &
▪ Ending on last day of that F/Y
Cases where income of Previous year is Assessed in the same year
Section Sec 172 : Sec 174: Sec174A : Sec 175 : Sec 176 :
Non Assessment of Association Assessment of Discontinued
resident Persons formed for Persons Likely Business
shipping Leaving India short to Transfer
business duration Property to
Avoid Tax
Applicable Non-Resident Appears to AO Appears to AO Appears to AO Where any
owner/Charter that any that any AOP person is likely to business/
er of Ship individual may formed for sell his assets profession is
Carrying leave India particular during a P/Y discontinued in
passengers, during current purpose. with a view to any P/Y
etc shipped at P/Y & has no & is likely to avoid tax liability
Indian Port intention of be dissolved
during P/Y returning to during P/Y
India
Income 7.5 % of TI of individual TI of such TI of such person B/P income
amount on From first day association commencing commencing from
account of of P/Y Upto Commencing from first day of first day of P/Y
such carriage probable date of from first day P/Y Upto date of Upto date of
his departure of P/Y Upto commencement discontinuance
from India date of its of proceedings
dissolution by AO
When Chargeable chargeable to chargeable to chargeable to chargeable to
taxable to tax in tax in same tax in same tax in same P/Y tax in same P/Y
same P/Y . P/Y P/Y
CA SACHIN GUPTA 4
P/Y FOR UNDISCLOSED SOURCES OF INCOME
In following cases if no satisfactory explanation is provided by assessee, then amount deemed as

Income of P/y of discovery
1. Cash Credit [Sec. 68] : Sum is found credited in BOA of assessee
Shall be treated as explained only if source of funds is also explained by creditor [FA,2022]
2. Unexplained investment [Sec. 69] : Investment not recorded in BOA
3. Unexplained money [Sec. 69A] : Money, jewellery or other valuable article not recorded in
the BOA
4. Investment not fully disclosed [Sec. 69B] : Investments/ bullion/jewellery > amount recorded in
BOA
5. Unexplained expenditure [Sec. 69C] : Unexplained Expenditure
6. Amount borrowed or repaid on Hundi [Sec. 69D] : Amount borrowed /repaid on Hundi
otherwise than through A/C payee cheque
Sec 115BBE : Tax on income referred u/s 68 or 69 or 69A or 69B or 69C or 69D
If Total Income includes any income referred under above sections, income-tax shall be payable @
60%
+ 25% surcharge + 4% HEC
No deduction in respect of any expenditure/allowance shall be allowed in computing his income

referred under above sections.
CA SACHIN GUPTA 5
Some important principles which explain the concept of income for Income-tax purpose
(i) Even illegal income is taxed just like any legal income.
(ii) Diversion of Income : Income which due to compulsory obligation, is diverted before it
becomes due Income after Diversion is taxable
Application of income : income which has become due and afterwards assessee meets an
obligation whether compulsory or self imposed out of such income
Income before Application is taxable
(iii) Pin Money: Money received by wife for her personal expenses from husband is not taxable
(iv) Revenue receipt :Receipt on account of circulating capital. Revenue receipts taxable unless
specifically exempted eg dividend income, though a revenue receipt, is exempt from tax u/s 10.
Capital receipt : Receipt on account of fixed capital. Capital receipts are generally not chargeable
to tax unless specifically taxable eg. profit on sale of capital assets,though it is capital receipt but it
is taxable u/s45
(v) Sec 2(10) : Average rate of income-tax means the rate arrived at by dividing the amount of
income-tax calculated on the total income, by such total income
Income tax calculated on total income /Total Income x 100
(vi) Sec 2(29C) : Maximum Marginal Rate means rate of income-tax (including surcharge on
income-tax, if any) applicable in relation to the highest slab of income in the case of individual,
AOP or, BOI as specified in the Finance Act of the relevant year.
i.e 30% + 37% surcharge + 4% HEC
CA SACHIN GUPTA 6
RATES OF INCOME TAX (ASSESSMENT YEAR 2023-24)
Nature of Person Exemptio SLAB Rates Surcharge

n
Total Income Rate
1. INDIVIDUAL > 50 lakhs : 10%
(Other than 2 ,3 2,50,000 0 – 2,50,000 : NIL > 1 crore : 15%
below) > 2,50,000 upto 5,00,000 : 5% > 2 crore : 25%
> 5,00,000 upto 10,00,000 : 20% > 5 crore : 37%
2. Senior Citizen > 10,00,000 : 30%
(Resident + min 60 Surcharge on Income
yrs & < 80 years 3,00,000 0 – 3,00,000 : NIL u/s 111A, 112
any time during p/y > 3,00,000 upto 5,00,000 : 5% [FA,2022] , 112A &
22-23 > 5,00,000 upto 10,00,000 : 20% Dividend Income
> 10,00,000 : 30%
3. Very Senior Total > 50lakhs : 10%
Citizen Total >1 crores : 15%
(Resident & min 80 5,00,000 0 – 5,00,000 : NIL
yrs any time during > 5,00,000 upto 10,00,000 : 20%
p/y 22-23) > 10,00,000 : 30%
HUF,AOP,BOI & 2,50,000 As applicable to Same as Individual

AJP individual in point 1
AOP consisting only
of Co as members
( Max 10%/15%)
Domestic Company NIL • Turnover upto 400cr p/y 20-21 : 25% >1 crore : 7%
• Covered u/s 115BA : 25% > 10 crore : 12%
• Covered u/s 115BAA : 22%
• Covered u/s 115BAB : 15% Company u/s
• Other case : 30% 115BAA/115BAB :
10% irrespective of TI
Foreign company NIL > 1crore : 2%
40% > 10 crore : 5%
Partnership NIL 30% > 1 crore : 12%

Firm/LLP
Local Authority NIL 30% > 1 crore : 12%
Cooperative society NIL 0 – 10,000 : 10% > 1 crore : 7%

above10,000 upto 20,000 : 20% > 10 crores : 12%
above 20,000 : 30% [FA,2022]
CA SACHIN GUPTA 7
Sec 87A : Rebate of Income Tax : Individual + Resident + Total Income upto ` 5 lac = upto ` 12,500
Computation of Tax Liability of Individual
Step 1 : Bifurcate Total Income into 2 parts

Incomes taxable at Slab rates : Apply Tax at Slab rates
Incomes taxable at Special Rates : Apply Tax at special rates *
Step 2 : Subtract Rebate u/s 87A for Resident Individual, if Applicable
Step 3 : Add Surcharge ,If applicable
Step 4 : Subtract Marginal Relief if applicable
Step 5 : Add 4% Health & Education Cess
Step 6 : Resulting Amount is Total Tax Liability
288B : Rounding off of Tax Liability
Tax payable or refundable, shall be rounded off to nearest multiple of ten rupees & paise shall be
ignored and last figure is 5 or more, increase to next multiple of 10 & if last figure is < 5 ,amount
reduced to lower multiple of 10.
*Incomes taxable at Special rates
1. Sec 111A : STCG on listed Equity shares/Equity oriented mutual funds/Business Trust : 15%
2. Sec 112 : LTCG : 20 %
3. Sec 112A : LTCA : 10%
4. Sec 115BB : Casual Incomes : 30%
5. Sec 115BBE : Income u/s 68 or 69 or 69A or 69B or 69C or 69D : 60%
6. Sec 11BBF : Royalty income for patent developed & registered in India for resident : 10%
CA SACHIN GUPTA 8
Sec 115 BAC : Optional Tax System for Individuals and HUF
(1) Notwithstanding anything contained in this Act, income-tax payable shall, at option of such
person, be computed at rate of tax given in following Table, if conditions contained in sub-section (2)
are satisfied, :—
Sl. No. Total income Rate of tax

1. Up to Rs. 2,50,000 Nil
2. From Rs. 2,50,001 to Rs. 5,00,000 5%
3. From Rs. 5,00,001 to Rs. 7,50,000 10 %
4. From Rs. 7,50,001 to Rs. 10,00,000 15 %
5. From Rs. 10,00,001 to Rs. 12,50,000 20 %
6. From Rs. 12,50,001 to Rs. 15,00,000 25 %
7. Above Rs. 15,00,000 30 %
Provided if person fails to satisfy conditions contained in sub-section (2) in any P/Y, the option shall
become invalid in respect of relevant p/y & other provisions of this Act shall apply, as if option had
not been exercised in relevant P/Y:
Provided further that where option is exercised under clause (i) of sub-section (5), in event of failure
to satisfy the conditions contained in sub-section (2), it shall become invalid for subsequent A/Ys
also and other provisions of this Act shall apply for those years accordingly.
(2) For the purposes of sub-section (1), the total income of Individual or HUF shall be computed,—
(i) without any exemption or deduction under
• Sec 10(5) or Sec 10(13A) or prescribed u/s 10(14) (other than those as prescribed ) or u/s
10(17) or u/s 10 (32) or section 10AA or
• Section 16 or
• Sec 24(b) (for property u/s 23(2)) or
• Section 32(1)(iia) or section 32AD or section 33AB or section 33ABA or Sec 35(1)(ii) or Sec
35(1)(iia) or Sec 35(1)(iii) or Sec 35(2AA) or section 35AD or section 35CCC or
• Section 57(iia) or
• Deductions Chapter VI-A (i,e 80C to 80U) other than section 80CCD(2) or section 80JJAA;
CA SACHIN GUPTA 9
(ii) Without set off of any loss,—
(a) carried forward or depreciation from any earlier A/Y, if such loss or depreciation is attributable to
above deductions
(b) under head “Income from house property” with any other head of income;
(iii) by claiming depreciation u/s 32, except Sec 32(1)(iia), determined in prescribed manner; and
(iv) without any exemption or deduction for allowances or perquisite,provided under any other
law
(3) The loss & depreciation referred to in clause (ii) of sub-section (2) shall be deemed to have
been given full effect to and no further deduction for such loss or depreciation shall be allowed
for any subsequent year:
(4) In case of a person, having Unit in IFSC u/s 80LA which has exercised option under sub-section
(5), the conditions contained in sub-section (2) shall be modified to extent that deduction u/s 80LA
shall be available to Unit subject to fulfilment of conditions contained in the said section.
(5) Nothing contained in this section shall apply unless option is exercised in the prescribed manner
by the person,—
(i) having income from PGBP, upto DDR u/s 139(1) for any A/Y wef 21/22, and such option once
exercised shall apply to subsequent A/Y;
(ii) having income other than PGBP, along with the return of income to be furnished u/s 139(1) for
A/Y:
Provided that the option under clause (i), once exercised for any previous year can be withdrawn only
once for a previous year other than the year in which it was exercised and thereafter, the person shall
never be eligible to exercise option under this section, except where such person ceases to have any
income from business or profession in which case, option under clause (ii) shall be available
CA SACHIN GUPTA 10
Sec 115BAD : New Optional Taxation System Introduced for Cooperative Societies
(1) Notwithstanding anything contained in this Act but subject to the provisions of this Chapter, the
income-tax payable in respect of the total income of co-operative society resident in India, for
assessment year beginning 2021/22, shall, at the option of such person, be computed @ 22%, if the
conditions contained in sub-section (2) are satisfied:
Provided that where the person fails to satisfy the conditions contained in sub-section (2) in
computing its income in any previous year, the option shall become invalid in respect of the
assessment year relevant to that previous year and subsequent assessment years and other provisions
of the Act shall apply, as if the option had not been exercised for the assessment year relevant to
that previous year and subsequent assessment years.
(2) For the purposes of sub-section (1), the total income of the co-operative society shall be
computed,—
(i) without any deduction
• u/s 10AA or
• u/s 32(1)(iia) or u/s 32AD or u/s 33AB or u/s 33ABA or u/s 35(1)(ii) or u/s 35(1)(iia) or u/s
35(1)(iii) or u/s 35(2AA) or u/s 35AD or u/s 35CCC or
• under any of the provisions of Chapter VI-A other than sec 80JJAA;
(ii) without set off of any loss carried forward or depreciation from any earlier assessment year, if
such loss or depreciation is attributable to any of the deductions referred to in clause (i); and
(iii) by claiming the depreciation, if any, u/s 32, other than u/s 32(1)(iia), determined in such
manner as may be prescribed.
(3) The loss and depreciation referred to in clause (ii) of sub-section (2) shall be deemed to have
been given full effect to and no further deduction for such loss or depreciation shall be allowed for
any subsequent year:
Provided that where there is a depreciation allowance in respect of a block of asset which has not
been given full effect to prior to the assessment year beginning on the 1st day of April, 2021,
corresponding adjustment shall be made to the written down value of such block of assets as on the
1st day of April, 2020 in such manner as may be prescribed, if the option under sub-section (5) is
exercised for a previous year relevant to the assessment year beginning on the 1st day of April,
2021.
CA SACHIN GUPTA 11
(4) In case of a person, having a Unit in the International Financial Services Centre, as referred to in
sub-section (1A) of section 80LA, which has exercised option under sub-section (5), the conditions
contained in sub-section (2) shall be modified to the extent that the deduction under the said section
shall be available to such Unit subject to fulfilment of the conditions contained in that section.
(5) Nothing contained in this section shall apply unless option is exercised by the person in such
manner as may be prescribed on or before the due date specified u/s 139(1) for furnishing the return
of income for any previous year relevant to the assessment year commencing on or after the 1st day
of April, 2021 and such option once exercised shall apply to subsequent assessment years:
Provided that once the option has been exercised for any previous year, it cannot be subsequently
withdrawn for the same or any other previous year.
OTHER PROVISIONS :
Sec 14A : Expenditure incurred in relation to income not includible in total income
(1) Notwithstanding anything to the contrary contained in this Act, for the purposes of computing
the total income under this Chapter, no deduction shall be allowed in respect of expenditure
incurred by the assessee in relation to income which does not form part of the total income under
this Act.
(2) The AO shall determine the amount of expenditure incurred in relation to such income which
does not form part of the total income under this Act in accordance with such method as may be
prescribed, if the AO, having regard to the accounts of the assessee, is not satisfied with the
correctness of the claim of the assessee in respect of such expenditure in relation to income which
does not form part of the total income under this Act.
(3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims
that no expenditure has been incurred by him in relation to income which does not form part of the
total income under this Act :
Explanation.— Notwithstanding anything to the contrary contained in this Act, the provisions of
this section shall apply and shall be deemed to have always applied in a case where the income,
not forming part of the total income under this Act, has not accrued or arisen or has not been
received during the previous year relevant to an assessment year and the expenditure has been
incurred during the said previous year in relation to such income not forming part of the total
income.[FA,2022]
CA SACHIN GUPTA 12
CHAPTER – 2
RESIDENTIAL STATUS

Sec 5 Scope of Total income
Sec 6(1) Residential status of an Individual
Sec New condition
6(1A)
Sec 6(2) Residential status of an HUF, Firm, AOP &
BOI
Sec 6(3) Residential status of Company
Sec 6(4) Residential status of other assessee
Sec 6(5) Resident for one source resident for all source
Sec 6(6) Not ordinarily Resident
Sec 7 Income deemed to be received
Sec 9 Income deemed to accrue or arise in India
(1) Residential Status of an Individual
Basic Condition : Sec 6 (1)
1st Condition : Atleast 182 days during P/Y
2nd condition : Atleast 60 day during P/Y

+
Atleast 365 days during preceding 4 P/Y
3rd Condition [Sec 6(1A)]
• Notwithstanding anything contained in Sec 6(1),

• Individual, being citizen of India,
• having total income,
• other than the income from foreign sources,
• exceeding 15 lakhs during p/y
• shall be deemed to be resident in India in that previous year,
• if he is not liable to tax in any other country or territory
• by reason of his domicile or residence or any other criteria of similar nature
Explanation to Sec 6(1A) : Sec 6(1A) shall not apply in case of individual who is
said to be resident in India in previous year u/s 6(1)
CA SACHIN GUPTA 13
Income from foreign sources" means income which accrues or arises outside
India (except income derived from a business controlled in or a profession set up
in India) and which is not deemed to accrue or arise in India
Explanation 1 to Sec 6(1) [4 cases]
In the following Case 1 , Case 2 & Case 3, 60 days of 2nd Basic condition shall be
substituted with 182 days
Case 1 : Indian citizen leaves India for employment abroad during P/Y
Case 2 : India citizen who is working on Indian ship leaves India during P/Y.
The numbers of days of stay in India for such person shall exclude the days
from date of joining as per Continuous Discharge Certificate till date of signing
off on this document.[Rule 126]
Case 3 : Indian citizen or PIO coming to India on a visit during P/Y.
PIO = Himself or Parents or Grand parents born in undivided India

[Explanation to Sec 115C(e)]
In the Case 4, 60 days of 2nd Basic condition shall be substituted with 120 days
CASE 4 :
• Citizen of India or PIO
• Comes on a visit to India in any p/y
• having TI, other than the income from foreign sources,
• exceeding 15 lakhs during p/y
Income from foreign sources" means income which accrues or arises outside
India (except income derived from a business controlled in or a profession set up
in India). and which is not deemed to accrue or arise in India
Additional condition : Sec 6 (6)
1st Condition : Upto 729 days in preceding 7 P/Y
2nd Condition : Non Resident in Min 9 out of preceding 10 P/Y
CA SACHIN GUPTA 14
3rd Condition :
• Citizen of India, or PIO,
• as referred to in Explanation 1 to Sec 6(1),
• having TI,
• other than the income from foreign sources,
• exceeding 15 lakhs during p/y,
• who has been in India 120 days or more but less than 182 days during the p/y
OR
4th Condition : A citizen of India who is deemed to be resident in India u/s 6(1A).
SUMMARY
Status Basic Condition Additional Conditions
ROR Either Neither
RNOR Either Either
NR Neither NA
2) Residential Status of HUF : 6(2) + 6(6)
ROR Any part of C&M situated in India during P/Y &

Karta/Manager Not satisfying any of additional conditions
RNOR Any part of C&M situated in India during P/Y &

Karta/Manager satisfying any additional condition u/s 6(6)
NR No part of C&M situated in India during P/Y
(3) Residential status of Firm, AOP & Other Non Corporate Assessee : 6 (2)
Resident Any part of C&M situated in India during the

P/Y
Non resident No part of C&M situated in India during the P/Y
CA SACHIN GUPTA 15
(4) Residential status of Company : 6(3)
Resident Indian Company or

Foreign Company + Place of effective management(POEM) in
India during P/Y
Non Foreign Company + Place of effective management(POEM)

Resident outside India during P/Y
(5) Residential status of Other Assessee : 6(4)
Resident Any part of C&M situated in India during P/Y
Non Resident No part of C&M situated India during P/Y
Scope of Total Income : Sec 5
Types of Income ROR RNOR NR
Indian Income
- Due in India & Received any where Yes Yes Yes
- Due outside & Received in India Yes Yes Yes
Foreign income
( Due outside & received outside) Yes Yes No
- Business controlled /
Profession set upfrom India Yes No No
- Other Case
CA SACHIN GUPTA 16
Sec 9 : Following Income deemed as accrue or arise in India (Indian income)
1. Income from a Business Connection in India
Significant Economic Presence of a non-resident in India shall constitute "business

connection" in India
If business,of which all the operations are not carried out in India, the income of the
business deemed to accrue or arise in India shall be only such part of the income as is
reasonably attributable to operations carried out in India
Income attributable to the operations carried out in India, shall include income from—
(i) such advertisement which targets a customer who resides in India or a customer who
accesses the advertisement through internet protocol address located in India;
(ii) sale of data collected from a person who resides in India or from a person who uses
internet protocol address located in India; and
(ii) sale of goods or services using data collected from a person who resides in India or
from a person who uses internet protocol address located in India.
Significant economic presence" for this purpose, shall mean—

(a)transaction in respect of any goods, services or property carried out by a non-resident
with any person in India including provision of download of data or software in India, if
the aggregate of payments arising from such transaction or transactions during the
previous year > 2 crores or
(b) systematic and continuous soliciting of business activities or engaging in interaction
with such number of users in India, > 3 lakhs
Provided that the transactions or activities shall constitute significant economic presence
in India, whether or not—
(i) the agreement for such transactions or activities is entered in India; or
(ii) the non-resident has a residence or place of business in India; or
(iii) the non-resident renders services in India
Provided further that only so much of income as is attributable to the transactions or
activities referred to in clause (a) or clause (b) shall be deemed to accrue or arise in India.
2. Income from property asset or source in India
3. Capital gain from Capital asset situated in India
4. Salary from Services rendered in India
5. Salary to Indian citizen from Govt of India (Sec 10(7) : Allowance & Perquisite exempt )
CA SACHIN GUPTA 17
6. Dividend from Indian company
7. Interest/Royalty/Fee for Technical services from Government of India
8. Interest/Royalty/Fee for Technical services from Resident

(Except money/service is utilized for earing income outside India)
9. Interest /Royalty/Fees for Technical services from Non resident

(Provided money/service is utilized for Indian business/profession)
10. Gift of money, paid outside India by resident to non-resident or to foreign company
Sec 7 : Following Income deemed as received in India (Indian income)
1. Employer contribution to RPF> 12% of salary of ee
2. Interest credited in RPF > 9.5% pa
3. Employer contribution to NPS
CA SACHIN GUPTA 18
CHAPTER – 3
INCOME UNDER THE
HEAD HOUSE PROPERTY
Sec 22 : Annual Value of Building owned is taxable under HP(except used for Business/Profession)
(1) Municipal value XXXXX

(2) Fair Rental value XXXXX
(3) Standard Rent XXXXX
(1 or 2,Higher, cannot exceed 3)
(4) Expected Rent XXXXX
(5) Actual Rent Received/Receivable XXXXX
(Excluding Unrealised rent ) Rule 4
( 4 or 5) Higher : GAV XXXXX
Less : Municipal taxes (XXXXX)
(Paid by Owner during P/Y)
NAV XXXXX
Less : Deductions
24 (a) : 30% of Positive NAV (XXXXX)
Actual expenses have no relevance
24 (b) : Interest Due on borrowed Capital (XXXXX)
Interest due during p/y + Interest for

Preconstruction/prepurchase period
Amount after deduction XXXXX
Add : Recovery u/s 25A XXXXX
Amount Taxable under HP XXXXX
Deduction u/s 24(b)

Type of Property Deduction Purpose of loan
u/s 24(b) on
Due basis
Let out property 100% Construction, Purchase, Repair, Renovation,
Reconstruction
Residential property Max 30,000 Construction, Purchase, Repair, Renovation,
whose NAV =NIL Reconstruction
Residential property Max 2,00,000 • loan is wef 1/4/99
whose NAV =NIL • for purchase or construction
• purchase or construction is completed
• Within 5 years from end of f/y in which loan is taken
• Lender certifies loan is for Purchase or construction
CA SACHIN GUPTA 19
IF Assessee has opted for New Tax System u/s 115BAC, Deduction u/s 24(b) shall not be
allowed from Self Residential Property covered u/s 23(2)
Special Points
• Interest on unpaid interest is not deductible.
• Interest on a fresh loan raised merely to repay the original loan taken for the above purpose is
allowable as a deduction under this section.
• Brokerage or commission paid for arranging the loan is not deductible.
• If arrears of interest is paid during the previous year, no deduction is available in respect of
arrears as it has already been claimed on due basis in earlier years.
• Similarly interest paid in advance is not fully deductible in one year, as deduction is on accrual
basis.
• If interest is payable outside India then it must be paid after TDS as per the requirement of
Section 25 of Income Tax Act, otherwise the deduction shall not be allowed.
• If interest is paid on unpaid purchase price to the seller then also deduction can be claimed u/s
24(b).
TAX TREATMENT OF VARIOUS PROPERTY

(1) (2) (3)
Type of Fully let HP partly let out & partly (4)
House out vacant Fully vacant
Property
Case 1 Case 2 Case 3
AR AR < AR < ER Intentio No
>ER ER (Due to n to let Intentio
(Rent vacancy) out n to let
less) 23(1)(c) out
23(1)(c)
(1) ER Entire P/Y Entire Entire Entire Entire Entire
P/Y P/Y P/Y P/Y P/Y
(2) AR Let out Let out Let out Let out Nil Nil
period period period period
GAV 1 or 2, AR ER AR NIL ER
Higher
Less : Paid + Paid + Paid + Paid + Paid + Paid +
M. Tax Owner Owner Owner Owner Owner Owner
CA SACHIN GUPTA 20
xxxx xxxx xxxx xxxx xxxx xxxx

NAV
Less: 30% of 30% of 30% of 30% of NIL 30% of
24(a): SD NAV NAV NAV NAV NAV
Less:
24 (b) : Fully Fully Fully Fully Fully Fully
Interest DUE allowed allowed allowed allowed allowed allowed
of P/Y+ Pre
ownership
period
Amount after xxxx xxxx xxxx xxxx xxxx xxxx
Deduction
Add : 25A xxxx xxxx xxxx xxxx xxxx xxxx
Income xxxx xxxx xxxx xxxx xxxx xxxx

taxable under
HP
(5) Self (6) Not (7) More than 2 (8) Partly let
Residence occupied residence property out &
due to Partly self
B/P/E Sec 23(4) residence
Sec 23(2) Sec 23(2) Residence Deemed

Upto 2 to let out
(1) ER NA NA NA Entire Entire P/Y
P/y
(2) AR NA NA NA Nil Let out period
GAV NA NA NA ER 1 or 2,Higher
Less : Paid + Paid +

M. Tax NA NA NA Owner Owner
NAV NIL NIL Nil
Less: NA NA NA 30% of 30% of

24(a): SD NAV NAV
Less:
24 (b) : Max Max Max Fully Fully
Interest 30,000/ 30,000/ 30,000/ allowed allowed
CA SACHIN GUPTA 21
DUE of P/Y+ Max Max Max

Pre 2,00,000 2,00,000 2,00,000
ownerhip
period
Amount xxxx xxxx xxxx xxxx xxxx
after
Deduction
Add : 25A xxxx xxxx xxxx xxxx xxxx
Taxable xxxx xxxx xxxx xxxx xxxx
Sec 23(5) : Annual value building as Stock In Trade
• NAV shall be Nil of Vacant Property held as stock-in-trade and

• is not let during whole or any part of p/y,
• for period up to 2 YEARS from end of F/Y
• in which certificate of completion of construction of property is obtained from
competent authority
Sec 25 : Deduction of Interest payable outside India

❖ Shall be allowed only if
❖ Tax deposited on such Interest income or
❖ TDS deducted out of such interest income or
❖ some person is treated as agent in India of recipient
Sec 25A : Recovery of Unrealised Rent/Arrears of rent

• Recovered amount taxable under HP in P/Y of receipt
• Whether or not assessee is owner of such property in p/y
of receipt
• 30% deductions allowed from recovered account .
Sec 26 : House Property Owned by Co-owners

✓ If the share of each co-owner
✓ Is definite & ascertainable
✓ Each co-owner shall be taxable for his portion in HP
✓ Otherwise HP income taxable in hands of AOP
CA SACHIN GUPTA 22
Special point :
1.If assessee is dealing in business of letting out,rental income will be chargeable under PGBP
2.If letting is subservient & incidental to running of main business than rental income will be
chargeable under P/G/B/P.
3. Treatment of Composite Rent is done as under
Where rent of property and rent of services / Where rent of property and rent of
assets can be separated services / assets cannot be separated
Rent of letting of Rent of service ,assets
property
Taxable under Other sources or
Taxable under House Taxable under Other Business
property sources or business
Sec 27 : Deemed Owners
❖ Individual transfers House Property to Spouse for inadequate consideration except

,HP transferred under an agreement to live apart
❖ HP transferred to minor except minor married daughter
❖ Holder of impartible estate
❖ Member of Co-op society, Company to whom flat is allotted under house building
scheme
❖ Person allowed to take Possession u/s 53A of Transfer of Property Act
❖ A person acquiring House property on lease for 12 years or more
CA SACHIN GUPTA 23
CHAPTER - 4
INCOME UNDER THE HEAD SALARIES
(1) Master-Servant Relationship:

For income to be taxable under this head, there should be relationship of Master & Servant between
the payer and payee.
(2) Sec 15:Charging Section

(a) Salary is chargeable to tax on Due or Receipt basis, whichever is earlier
(b) Advance salary is taxable in the previous year of Receipt
(c) Arrears of salary is taxable in the previous year of Receipt
(3) Computation of Taxable salary

Step 1 : Compute Gross Salary [After claiming Exemptions]
(A) Basic Salary
(B) Bonus
(C) Commission
(D) Allowances
(E) Perquisites
(F) Leave travel concession
(G) Medical facilities
(H) Retirement benefit
(I) Profit in lieu of salary
Step 2 : Less : Deductions
Sec 16(ia) : Standard Deduction : Max 50,000
Sec 16(ii) : Entertainment Allowance
Central & State Govt employee

Minimum of following 3
(a) Actual Entertainment Allowance
(b) 5,000
(c) 20% of Basic Salary
Sec 16(iii) : Tax on Employment

- Amount Paid during P/Y
Step 3 : TAXABLE SALARY (Step 1 – Step 2)
CA SACHIN GUPTA 24
COMPONENTS OF GROSS SALARY
(A) Basic Salary : Monetary Amount received monthly or otherwise is called Basic Salary.
(B) Bonus : It is reward for good services and also is paid by employer on certain occasions like
Diwali etc
: It is taxable in P/Y of Receipt
(C) Commission : Incentives given by employer so that employee works efficiently. It is

: Generally given as % of Sales, Net profit of employer etc.
: All types of commission are Fully taxable
(D) Allowances : Extra monetary amount given by employer

: For meeting (Personal or official) expenses of employee
: Allowances less exemption is included in Gross Salary
Types of Allowances
I Entertainment Deduction u/s 16(ii) “Discussed Earlier”

Allowance
II. House Rent Allowance Exemption u/s 10(13A) allowed to All Employees
- Minimum of following
(a) Actual HRA
(b) Rent Paid – 10% of Salary
(c) 50% Salary : [Accommodation in D/M/K/C]
40% Salary : [Accommodation other City]
- Salary = Basic + DA(RB) + Commission fixed % of turnover
- Due Basis for which Accommodation taken on Rent
- Exemption calculated Period Wise

III. Special allowance Exemption u/s10(14)
under Rule 2BB(1) Amount Spent for Official Purpose
for Official Purpose
1 Travelling Cost of travel on tour or transfer
Allowance
2 Daily Allowance Daily expenses on tour or transfer
3 Conveyance Cost of travel for official duties

allowance
CA SACHIN GUPTA 25
4 Helper Allowance Cost of Helper for official duty
5 Academic Cost of Research & training for employees

Allowance
6 Uniform Allowance Cost of purchasing & maintaining uniform for official duty
Special allowance under Rule Exemption u/s 10(14)

2BB(2) for Personal Purpose Actual Amount or specified limit, less
1 Children Education allowance ` 100 Pm / per child

(For cost of Education of children) Subject to max of 2 child
2 Hostel Expenditure Allowance ` 300 Pm / per child

(For cost of Hostel expenses of children) Subject to max of 2 children
3 Tribal Area allowance ` 200 pm

(Employee residing Tribal Area)
4 Transport Allowance `3,200 Pm for Blind/Handicap/Deaf/Dumb

(Cost of travel between home & office) only
5 Allowance for Transport employee 70% of allowance or 10,000 pm, less

(Employee working in transport
undertaking)
6 Underground allowance ` 800 Pm

(Employee working in underground
mines)
Other Allowances
IV. 1. Dearness Allowance
2. Lunch Allowance Fully Taxable
3. City compensatory Allowance
4. Servant Allowance
5. Medical Allowance etc.
CA SACHIN GUPTA 26
(E) PERQUISITES : Facilities Provided by Employer to Employee/HM
Types of Perquisites (Sec 17(2)
❖ Rent free Accommodation provided by Employer
❖ Concessional accommodation provided by employer
❖ Sum paid by Employer for obligation of employee
❖ LIC policy /Annuity policy premium payable by employer
❖ Fringe benefits
❖ Value of ESOP/Sweat Equity
❖ Perquisites taxable for Specified Employees
❖ Employer contribution to ASF,RPF & NPS exceeding 7.5 lakh & Interest on
such excess amount
1st Perquisite : Rent free accommodation (RFA)
Central/State Govt. Employee

Unfurnished Furnished
Accommodation Accommodation
(A) Other than in a Hotel In a Hotel
Value as per (A) 24% RFA Salary

License fees Add : or
determined by 10% p.a of actual cost of furniture Actual charges of Hotel
Central/State (owned)
Govt. or Whichever is less.
Actual hire charges ( hired)
CA SACHIN GUPTA 27
Other Employee
Unfurnished Accommodation Furnished Accommodation
(B) (C)
If Owned by employer Not owned Other than Hotel In Hotel
Population of city RFA (e.g Rent or Value (B) or (C)
Salary lease) Add :
Upto 10 lakhs 7.5% Rent Payable 10% p.a of actual Same as for
> 10 lakhs but upto 25 10% by employer cost of furniture etc Govt
lakhs or (owned) employee
> 25 lakhs 15% 15% RFA or
salary Actual hire charges
Whichever is payable ( hired)
less
Specail points :
(a) RFA Salary on DUE BASIS for period for accommodation provided
(b) RFA Salary from ALL EMPLOYERS during above period
(c) RFA Salary = Basic + DA(RB) + Bonus + All Commission + All taxable allowances + Other
monetary payment (except perquisites)
(d) Accommodation in a HOTEL upto 15 DAYS on TRANSFER is exempt.
(e) New accommodation provided on transfer while retaining old accommodation

1st 90 days : Either of accommodation taxable
After 90 days : Both accommodation taxable.
(f) Accommodation in REMOTE AREA and provided on MINING SITE, OIL

EXPLORATION SITE,POWER GENERATION SITE,DAM SITE,PROJECT
EXECUTION SITE is EXEMPT
2nd Perquisite : Concessional Accommodation

Step 1 : Calculate value as if accommodation is provided rent free.
Step 2 : Deduct Rent charged by employer.
Step 3 : Remaining amount is value of Concessional accommodation.
3rd Perquisite : LIC Policy & Annuity Policy

- Taken by Employer
- Premium PAYABLE during previous year
- is taxable as perquisites in hand of employee.
CA SACHIN GUPTA 28
4th Perquisite: Obligation of employee

- PAID by employer
- is taxable as perquisites in hands of employee
5th Perqusite : Fringe benefits
1) Interest free or concessional loans
The valuation of perquisite is done on maximum outstanding monthly balance at rate of interest
charged by SBI as on 1st day of P/Y.
Any interest is charged from employee, reduce such rate from SBI rate
Exemption : The following loans are not taxable perquisite

1. Medical Loans taken for treatment of diseases under Rule 3A .
2. Small loans i.e. Total amount of loan is upto ` 20,000 in P/Y.
2) Use of Movable Assets
Laptop/Computers Exempt as per Rule 3
Telephone including Exempt as per Rule 3

mobile
Motor Cars Taxable under Perquisites for Specified Employees
Other Movable Assets If owned by employer : 10% p.a of original cost

In other cases : 100% of hire charges payable by
employer for such assets
3) Transfer of Movable assets

Computer & Electronic Motor Car Other Assets
Items
Actual cost to Employer Actual cost to Employer Actual cost to
Less : Less : Employer
50% on WDV for each 20% on WDV for each Less :
completed year of use by completed year of use by 10% on SLM for each
employer employer completed year of use
Less : Amt. recovered from by employer
Less : Amt recovered from employee Less : Amt. recovered
employee. from employee
CA SACHIN GUPTA 29
4) Travelling, Tour, Accommodation & Other Expenses

OFFICIAL TOUR
Household Member
Employee Facility maintained by employee Other Cases
& not available for all
employees
Exempt Value at which similar services Actual expenditure of
provided by other agencies to employer
public
PRIVATE TOUR
Employee/Household Member
Facility maintained by employee Other Cases
& not available for all employees
Value at which similar services Actual expenditure of employer
provided by other agencies to
public
5) Free Meals, Tea & Snacks
FREE MEALS/NON ALCHOLIC BEVERAGES TEA AND

Office premises or At eating joints by SNACKS
voucher Other Case
Non Office Office Non Office
Office Hours Hours Hour Hours
s
Nil, if value upto ` 50/- Actual expenditure of
per meal Actual employer Actual
expenditure of Nil expenditure
(If value > 50 excess employer of
taxable) employer
6) Gift, Vouchers or token.

In Kind In Cash
Aggregate value upto Aggregate value > ` 5,000/- during P/Y Any amount
`5,000 during P/Y
Exempt Perquisite Value = Fully
(Actual value – 5,000/-) Taxable
CA SACHIN GUPTA 30
7) Expenditure on credit card including membership & annual fees

Official purpose Other Purposes
Nil, Provided: Expenditure of
a) Details of expenditure maintained by employer and employer
b) Employer certifies that expenditure for official purpose Less: Amount recovered
from employee
8)
Club membership & club expenses (including annual or periodic fees)
Official purpose Other Purposes
Nil, Provided : Expenditure of
a) Details of expenditure maintained by employer & employer
b) Employer certifies that expenditure for official
purpose Less : Amt. recovered
from employee
6th Perquisite : Sweat equity shares/ESOP

Value of Perquisite :
FMV of ESOP/Sweat Equity on date on which the option is exercised by
assessee
Less : Amount recovered from the assessee in respect of such shares/security
7th Perquisites taxable for Specified Employee
Specified Employee
(a) Employee is director of his employer company or
(b) Employee holds at least 20% equity shares of his employer company or
(c) Employee Taxable salary exceeds 50,000 pa. (Excluding non monetary
payment)
CA SACHIN GUPTA 31
1. Motor Car
1. Motor Car owned/ hired by employer & expenses met by Employer

Official Private purpose Partly official & partly
purpose private
a. Sum total of : Car upto 1.6 Lit.
Exempt b. 10% of cost of car (if owned) or Hire 1,800 p.m + 900 pm for
charges (if hired) chauffer(If any)
(Provided
specified Actual running & maintenance expenses + Car > 1.6 Lit.
documents 2,400 p.m + 900 p.m for
are Actual remuneration to chauffeur chauffer (If any)
maintained
by employer) Less: Amt recovered from employee
2. Motor Car owned/ hired by employer & Expenses met by Employee
Official Private purpose Partly official & partly private

purpose
Sum total of Car upto 1.6 Lit.
Exempt Actual remuneration to 600p.m + 900 pm for
chauffeur chauffer.(If any)
c. 10% of cost of car (if owned) or
hire charges (if hired) Car > 1.6 Lit.
d. 900 p.m + 900 pm for chauffeur
Less: Amt recovered from (If any)
employee
3. Motor Car owned by employee & expenses met by Employer

Official purpose Private purpose Partly official & partly private
EXEMPT Amount paid Actual Exp. of employer

by employer Less :
(If specified 1,800 pm + 900 pm (car upto 1.6Lit)
documents are OR
maintained by 2,400 pm + 900 pm (car > 1.6 Lit)
employer)
CA SACHIN GUPTA 32
4. Other Conveyance owned by employee & expenses met by Employer

Official purpose Private purpose Partly official & partly private
EXEMPT Expenditure Actual Exp. of employer

If specified paid by Less : 900 pm
documents employer
maintained by
employer)
Special Points :
a) Where more than one motorcar is for both official & private purposes
Value of One Car = Value as per partly official & partly private
Value of Other Cars = Value as per private purpose
b) Specified Documents :
a) Employees should maintain details of date of journey, destination, mileage, expenditure
incurred
b) And employer gives certificate that expenses incurred wholly & exclusively for official
purpose.
c) Vehicle provided by employer to employee for journey from his residence to his office or
other place
of work & back shall not be regarded as perquisite.
2) Sweeper, Gardener, Watchman or Personal attendant

Value of perquisite : Actual cost to employer Less Amount paid by employee
3) Supply of Gas, Electricity or Water provided to Employee
Purchase from outside agency

From own resources
Amount paid to outside agency
Manufacturing cost
Less: Amount paid by employee
Less: Amount paid by Employee
CA SACHIN GUPTA 33
4) Educational facilities to employee children & members of household
A) Facility in Educational institutions maintained by employer or in other educational

institutions due to employment
To whom Cost of education in Value of Perquisite
similar school in similar
locality
Employee child upto ` 1,000 p.m per child Fully exempt
greater than 1,000 p.m per Cost of education in similar school
child in same locality less 1,000 pm
Household Cost of education in similar school
members Limit of `1,000 irrelevant in same locality
B) Facility in any other educational institutions

To whom Value of Perquisite
Employee child Actual Cost to Employer
Household members Actual Cost to Employer
Education facility to employee in any form like training, seminars, conference etc. is fully exempt.
5) Free or concessional tickets provided to employees of transport undertakings for private

journeys
• Employees of airlines and railways: Exempt in hands of employees

• Employee of other transport undertaking : Value at which such benefit or amenity is provided
by employer to public
8th Perquisite :
Employer contribution to ASF, RPF & NPS exceeding 7.5 lakh & Interest on such excess
amount
TP = (PC/2)*R + (PC1+ TP1)*R
TP Taxable perquisite u/s 17(2)(viia) for current previous year ;
TP1 Aggregate of taxable perquisite u/s 17(2)(viia) for prior p/y
PC Aggregate of employer’s contribution in excess of Rs. 7.5 lakh during previous year
CA SACHIN GUPTA 34
PC1 Aggregate of employer’s contribution in excess of Rs. 7.5 lakh for prior previous year
R I/ Favg ;
I Aggregate of income accrued during previous year in the specified fund /scheme
Favg (Aggregate of balance to credit of specified fund/scheme on first day of current

previous year + Aggregate of balance to credit of specified fund/scheme on last day
of current previous year )/2
(F) LEAVE TRAVEL CONCESSION IN INDIA (LTC) :
Exemption u/s 10(5) read with rule 2B

Journey by Air Journey by Rail Journey by other modes
Connected by Rail
Minimum of following Minimum of following Same as column 2
i. Actual LTC i. Actual LTC Not Connected by Rail

Minimum of following
i. Actual expenditure ii. Actual expenditure i) Actual LTC
ii. Air economy fare of ii. AC 1st class RAIL Ii) Actual expenditure
Air India by FARE by shortest
shortest route route iii) Deluxe fare of Public transport
by shortest route OR
Similar AC 1st class rail fare by
shortest route
Special Points :
1. Exemption available on twice from calendar year 2018 to 2021 & 2022 to 2025
2. ONLY ONE exemption carried forward in 1st Calendar Year of succeeding block.
3. LTC available for a TWO children born on or after 01.10.1998. However, this restriction
shall not apply in respect of children born before 1-10-1998 and also incase of multiple births
after one child.
4. Family means : Spouse & Children

❖ Parents, brother, sisters of employee who are dependent on employee.
CA SACHIN GUPTA 35
(G) MEDICAL FACILITIES (Proviso to sec 17(2))
MEDICAL FACILITIES IN INDIA

( to EMPLOYEE / Family Members)
In Govt Hospital or Premium paid for Other case

local authority hospital Health Insurance
or under approved
Hospital
Govt. approved hospital scheme
maintained
or
by employer
Hospital approved by
CCIT
(For prescribed disease
only)
Fully Exempt Fully Exempt Fully Exempt Fully taxable
EXEMPT PERQ : Sum paid by employer for expenditure actually incurred by employee on his/family
member medical wrt illness relating to COVID-19 subject to conditions notified by CG :
Employee shall submit following documents to employer :
(i) COVID-19 positive report or medical report if clinically determined to be COVID-19 positive
through investigations, in hospital or inpatient facility by a treating physician of a person so admitted;
(ii) all necessary documents of medical diagnosis or treatment for COVID-19 or illness related to
COVID-19 suffered within six months from date of being determined as COVID-19 positive and
(iii) certification of all expenditure incurred on treatment of COVID-19 or illness related to COVID-19
[FA,2022]
MEDICAL FACILITIES OUTSIDE INDIA

On Medical Expenses for On stay abroad of Patient On Travel of Patient along
Patient along with one
with one attendant attendant (total two persons)
(total two persons)
Tax free to extent Tax free to extent Tax free if employee’s GTI
permitted by RBI permitted by RBI UPTO ` 2 lac (before
including such travel
expenses)
CA SACHIN GUPTA 36
(H) RETIREMENT BENEFITS
1)Gratuity 2)Pension 3)Leave salary 4)Retrenchment compensation 5)Voluntary Retirement 6)

Provident fund
1. GRATUITY
Gratuity to be included under Salary = Amount of Gratuity less Exemption u/s. 10(10)
Employee Central/ Employee covered under Other Employees

State/ payment of Gratuity Act, 1972
Local
Authority
Minimum of Following: Minimum of Following:
Exemption 100% of i. Actual Gratuity received. i. Actual Gratuity received.
Amount Gratuity
Exempt ii. ` 20,00,000 ii. ` 20,00,000
iii. [15 X Completed yrs of service iii. [15 X Completed yrs of

Including part excess 6 mths] service Excluding part]
X X
[last month salary / 26] [Average monthly salary / 30]
Salary (as per Gratuity Act.) Salary : Basic Salary + DA

Definition N.A (RB) +
of Salary Basic Salary + 100% DA Commission as fixed % of
turnover
SOME SPECIAL POINTS:

❖ The limit of ` 10,00,000 shall be reduced by exemption claimed in earlier P/Y
❖ Gratuity received from more than one employer in the same P/Y, the limit of ` 20,00,000
would apply to the aggregate of gratuity
❖ Any gratuity paid to an employee, while he continues to remain in service with the same
employer is taxable under the head “Salaries”
CA SACHIN GUPTA 37
2. PENSION
❖ Uncommuted pension i.e. the periodical/monthly pension:
It is 100% taxable for All Employees
❖ Commuted pension i.e. lumpsum pension:

Though it is taxable, exemption u/s 10(10A) can be claimed
Exemption u/s 10(10A):
EE of Government, local authorities & Statutory Corporations:

Commuted pension is 100% exempt
Other Employees
Commuted pension is exempt to the following extent:
(a) If receives Gratuity : 1/3 of Normal commuted value
(b) If he does not receive gratuity : 1/2 of Normal commuted value
NCV = Actual Commutted pension X 100

% of commutation
3. LEAVE SALARY
Exemption u/s 10(10AA)

I. Central Government/ State Govt. Employees
It is fully exempt from tax.
II. Other Employees

(i.e. Private employees including employees of local authority and statutory corporation)
It is exempt to the extent of the minimum of the following
(a) Leave encashment actually received
(b) `3,00,000
(c) 10 X Average Monthly Salary
(d) Unavailed Leave X Average Monthly Salary

30
CA SACHIN GUPTA 38
Unavailed leave =
Step 1 : [Total Leaves given by employer] or [ 30 days X Completed Year of Service, Excl part]
whichever is less
Step 2 : Leaves actually taken
Step 3 : Step 1 – Step 2 is unavailed leave
Meaning of Salary: Basic + DA (RB) + Commission at fixed % of turnover
Average Monthly Salary: is average of salary of 10 months immediately preceding date of

retirement.
SPECIAL POINTS
❖ The limit of ` 3,00,000, shall be reduced by exemption claimed in earlier P/Y
❖ Leave encashment from more than one employer in the same previous year, the limit of `
3,00,000 would apply to the aggregate of leave encashment
❖ Amount paid to the legal heirs of the deceased employee is not taxable
CA SACHIN GUPTA 39
4. RETRENCHMENT COMPENSATION
Exemption u/s.10 (10B) :
Minimum of following is exempt
i) Actual Compensation received.

ii) `5,00,000/-
iii) 15/26 X Average pay X Completed yrs of service including part > 6 months.
Average Pay : Average of last 3 calendar months preceding date of retrenchment
Pay includes all but does not include bonus
5. COMPENSATION ON VOLUNTARY RETIRMENT
Exemption u/s 10(10C)

Conditions to be Satisfied The scheme of Voluntary Retirement should be in
accordance with rule 2BA.
Amount of Exemption - Actual Compensation received/receivable
Minimum
- 5,00,000
- 3 months Total SALARY X Completed years of service

(Part Ignored)
- Current SALARY per month X Balance months of service

left.
Special Points : [Rule 2BA]:
❖ completed 10 YRS OF SERVICE or 40 YRS OF AGE[not applicable for public sector

company employee
❖ Scheme applicable to ALL EMPLOYEE (except Directors)
❖ Scheme to result in OVERALL REDUCTION in existing strength of employees.
❖ Vacancy caused by voluntary retirement should not be filled up.
❖ Retiring employee shall NOT BE EMPLOYED in other concern of same management.
1. Meaning of Salary : Basic + DA(RB) + Commission fixed % of turnover
2. Exemption under 10(10C) can be claimed only Once by the Assessee.
CA SACHIN GUPTA 40
6. TAX TREATMENT OF PROVIDENT FUNDS

Statutory Provident Fund (SPF)
Employees Contribution Employer’s Interest on Payment of Accumulated
Contribution Provident Fund balance
Deduction u/s 80C is Exempt from Exempt from Tax Exempt from Tax u/s
available to employee Tax 10(11)
Recognised Provident Fund (RPF)

Employees Employer’s Interest on Payment of Accumulated balance
Contribution Contribution Provident Fund
Exempt u/s 10(12) if :
Deduction Exempt upto Exempt upto
u/s 80C is 12% of Salary 9.5% p.a i. Service atleast 5 yrs or
available to
employee Excess ii. Termination due to ILL health or
taxable under Excess taxable
Salary u/s 17(1) under Salary u/s iii. Closure of ER business,other
17(1) reason beyond employee control or
iv.Existing balance T/F to new

employer RPF A/c.
If none of above situations exist, then

amount treated as URPF
Salary for the purpose of R.P.F : Basic + DA(RB) + Commission fixed % of turnover
Unrecognised Provident Fund(URPF)

Employees Employer’s Interest on Payment of accumulated balance taxable in
Contribution Contributio Provident Fund p/y of payment
n
No deduction Exempt Exempt Employers contribution + interest taxable
u/s 80C under Salary u/s 17(3)
Interest on Employee contribution taxable
as I/O/S
Public Provident Fund (PPF)

ASSESSEE Employer’s Interest on Payment of Accumulated
Contribution Contribution Provident Fund balance
Deduction u/s 80C is No employers Exempt from Tax Fully exempt 10(11)
available to assessee contributio
CA SACHIN GUPTA 41
The Finance Act 2021 provided that any interest to the extent it relates to the amount
of Provident Fund contribution exceeding Rs 2,50,000 made by employees would be
subject to tax
However, in cases where only the employee is making contributions to the Provident
Fund, the threshold limit of Rs 2,50,000 would be enhanced to Rs 5,00,000.
However, interest accrued on contribution to such funds upto 31st March, 2021 would
be exempt without any limit.
(I) Profits in lieu of salary [Section 17(3)]
Profit in lieu of salary

Terminal Keyman Amount Payment from Other sums
/retrenchment Insurance during Pre & URPF or from
Compensation Policy Post URSF
employment
Amount in Amount Amount from employer All other sums
connection with including ER before contribution and from employer
termination of Bonus) joining or after Interest
employment leaving
Other sections : Sec 10(6) : Remuneration to Foreign citizens from services in India is Exempt
1. Purpose Diplomatic Employee of Non-resident Trainee of
Personnel or trade a foreign ship’s crew foreign
representative in Enterprise Government
India
2. Condition Not engaged in other Foreign Training in office
business, profession enterprise is of
or employment in not engaged in ----- Government/Govt
India & any business company/statutory
in India corporation.
Indian officials in
that foreign country
enjoys a similar
exemption
3. Stay in Any no of days Upto 90 days Upto 90 days Any no of days
India
CA SACHIN GUPTA 42
Sec. 89(1) : Relief Where any portion of Salary is received in arrears or in advance
Step 1: Calculate the tax payable of the previous year in which the arrears/advance
Salary is received
a. On Total income inclusive of additional salary.
b. On Total income exclusive of additional salary.
The difference between (a) and (b) is the tax on additional salary included in the total income.
Step 2: Calculate the tax payable of every previous year to which the additional salary relates
a. On total income including additional salary of that particular previous year.
b.On total income excluding additional salary.
Calculate difference between (a) & (b) for every P/Y to which additional salary relates &
aggregates same.
Step 3: The excess between the tax on additional salary as calculated under step 1 and 2 shall be
the relief admissible u/s 89(1). If there is no excess, no relief is admissible.
If the tax calculated in step 1 is less than tax calculated in step 2, the assessee need not apply for
relief.
CA SACHIN GUPTA 43
SUMMARY OF EXEMPTIONS & DEDUCTIONS UNDER EXISTING & NEW

SYSTEM
New System of TAX Existing System
S. No. Nature of Exemption/Deduction Relating to Head Salaries u/s 115BAC of TAX
RETIREMENT BENEFITS EXEMPTIONS

1 Leave Salary u/s 10(10AA) Allowed Allowed
2 Gratuity u/s 10(10) Allowed Allowed
3 Commutation of Pension u/s 10(10A) Allowed Allowed
4. Retrenchment Compensation u/s 10(10B) Allowed Allowed
5. VRS Compensation u/s 10(10C) Allowed Allowed
6. Leave Travel Concession U/s 10(5) Not Allowed Allowed
ALLOWANCES
7. Exemption u/s 10(13A) and Rule 2A from House Rent Allowance Not Allowed Allowed
8. Exemption u/s 10(14)(i) and Rule 2BB
9. Travelling Allowance Allowed Allowed
10. Conveyance Allowance Allowed Allowed
11. Daily Allowance Allowed Allowed
12. Helper Allowance Not Allowed Allowed
Any allowance granted for encouraging the academic, research
13. and training pursuits in educational and research institutions Not Allowed Allowed
14. Uniform Allowance Not Allowed Allowed
Exemption u/s 10(14)(ii) and Rule 2BB
15. Children Education Allowance Not Allowed Allowed
16. Hostel Expenditure Allowance Not allowed Allowed
17. Tribal Area Allowance Not allowed Allowed

Transport Allowance to Handicapped/Deaf/Dumb/Blind
18. employee Allowed Allowed
19. Transport Allowance to other than above employees Not allowed Not Allowed
Perquisites
Free food and beverage through vouchers provided to the
20. employee upto 50/meal/Tea & snacks Not allowed Allowed
Other Exemptions from perquisites eg Use of Computers
21. ,Laptops etc Allowed Allowed
22. DEDUCTIONS u/s 16
23. Standard Deduction u/s 16(ia) Not Allowed Allowed
24. Entertainment Allowance u/s 16(ii) Not Allowed Allowed
25. Professional Tax u/s 16(iii) Not Allowed Allowed
CA SACHIN GUPTA 44
CHAPTER – 5
INCOME UNDER THE HEAD PGBP
Sec 28 Basis of Charge
Sec 29 Computation of Business Income
Sec 30 Building used for business
Sec 31 P&M, F&F used for business
Sec 32 Depreciation
Sec 35 Scientific research
Sec 35(2AA) Weighted deduction for cont. to national laboratory etc
Sec 35(2AB) Company assessee , In house scientific research
Sec 35AD Deduction of Capital Expenditure for specified Business
Sec 35D Amortisation of preliminary expenses
Sec 35DDA Amortisation of expenditure in case of VRS
Sec 36 Allowable deductions
Sec 37(1) General deductions
Sec 37(2B) Expenditure to political party
Sec 38(2) Building, P&M,F&F not exclusively for business
Sec 40 Deductions not allowable
Sec 40A(2) Expenditure to specified persons
Sec 40A(3) Payment other than by account payee cheque
Sec 40A(7) Disallowance for provision for gratuity
Sec 40A(9) Disallowance of Employer contribution to funds not
required by Law
Sec 41 Deemed profits chargeable to tax
Sec 43(1) Actual cost
Sec 43(2) Meaning of Paid
Sec 43(3) Meaning of Plant
Sec 43(4) Scientific research
Sec 43(6) Written Down Value
Sec 43B Certain deductions on Actual Payment Basis
Sec 44AA Books of account
Sec 44AB Audit of accounts
Sec Deemed business incomes
44AD/44AE/ADA
CA SACHIN GUPTA 45
Section 28 : Following Incomes are chargeable under “P/G/B/P”
1. Profit of any B/P carried by assessee at any time during P/Y
2. Any remuneration by Partner from Firm.
3. Compensation on Termination/Modification of agreement for managing a Company, terms

of Agency, Vesting in Govt, management of any business
4. Non-compete fees & Exclusivity rights
5. Benefits/Perquisites arising from carrying on business or profession
6. Sum received under Keyman Insurance Policy including bonus
7. Export Incentive
8. Income derived by trade, professional from specific services performed for its member.
9. Any sum on received on transfer of Capital asset, if asset allowed deduction u/s 35AD
10. Receipt of compensation/other amount in connection with termination/ modification of

terms & conditions of any contracts relating to his business.
11. Fair market value of SIT as determined in prescribed manner on conversion of SIT into
Capital Asset
Sec. 145 : Profits is calculated on basis of Cash or Mercantile basis regularly employed & in
accordance with AS-I & AS - II
→ If AO is not satisfied about correctness of accounts , or if method of accounting & notified

accounting standards not regularly followed than AO may make an assessment to his best of
judgement
CA SACHIN GUPTA 46
Section 29 : Income referred in sec 28 shall be computed according to Section 30 to 43
Section 30 : Buildings used for B&P , Following deductions allowed

❖ Rent (If taken on rent) , Revenue Repairs , Municipal Taxes & Insurance Premium
Section 31 : Machinery, Plant & Furniture used for B&P , Following deductions allowed
❖ Revenue Repairs & Insurance Premium
Section 32 : DEPRECIATION
❖ Building, Furniture , Plant & Machinery or Intangible assets owned Wholly or Partly
not being goodwill of business or Profession
❖ Used for Business or Profession
❖ [Rate of Depreciation ] X [ WDV of Block Of Asset as on 31/3/2023 ]
WRITTEN DOWN VALUE (WDV) [Section 43(6)]

WDV of block of assets at beginning of relevant P/Y A
Add : Actual Cost of asset acquired B
Less : Money receivable on transfer of Capital asset C
WDV of block of asset as on last day relevant P/Y A+B-C
TYPES OF ASSETS Rate of Depreciation

Building :
- Residential 5%
- Non Residential 10%
- Temporary Structure 40%
CA SACHIN GUPTA 47
Furniture & Fittings including electrical fittings 10%
Plant & Machinery :

40%
- Books (annual publications) for Profession 40%
- Books for Library business 40%
- Air & Water Pollution control equipments 40%
- Energy saving device, renewal energy device 40%
- Books (other than annual publications) for Profession 40%
- COMPUTER including computer software 40%
- Aero planes 30%
- Motor car, buses, used for hire (WN1) 20%
- Ships 15%
- Motor car used for Business & Profession(WN2) 15%
- General rate of other machinery
Intangible Assets : 25%
Depreciation restricted to 50% ( Proviso to sec 32(1))

Where assets acquired in P/Y & put to use < 180 days in that P/Y
Then depreciation on that asset restricted to 50% of normal rate for that P/Y
only
(WN1) : Motor buses, motor lorries and motor taxis used in a business of running them on
hire, acquired between period 23.8.2019 to 31.3.2020 & put to use upto 31.3.2020 :
Depreciation @ 45%
(WN2) : Motor cars other than those used in business of running them on hire, [acquired
between 23.8.2019 to 31.3.2020 and put to use on or before 31.3.2020 : Depreciation @ 30%
CA SACHIN GUPTA 48
Additional Depreciation: Sec 32(1)(iia)
a) New P&M acquired & installed (other than ships & aircraft)
b) Business of manufacture of any article
c) Conditions to be satisfied:
- Should not be second hand
- Not installed in office premises or in residential accommodation
- Not office appliance or road transport vehicle.
- 100% deduction not applicable
d) Additional Depr : 20% for the P/Y in which conditions are satisfied
(If acquired and put to use for less than 180 days then 10% & balance 10% next year
Proportionate Depreciation (4th proviso to sec 32)
-Partnership firm into company u/s 47 or

- Conversion of Private Company or Unlisted Public Company into LLP u/s 47
-Proprietary concern into company u/s 47 or
-Amalgamation or de merger or
-succession otherwise on death
-Depreciation apportioned between the predecessor & successor
-On basis of days the assets used by them during that P/Y.
5. Section 50 : STCG on Sale of Depreciable Assets

CASE 1 CASE 2
All assets of block are transferred All assets not transferred
Sale proceeds >(Opening w.d.v & Actual
Block ceases to exist & cost )
no depreciation for that P/Y Block exist at NIL value &
no depreciation for that P/Y
Computation Computation
Net sale consideration A Net sale consideration A
Less : Opening W.D.V B Less : Opening W.D.V B
Less :Cost of assets acquired during C Less : Cost of assets acquired during C
P/Y P/Y
If, (A-B-C) is positive, then STCG (A-B-C) will always be positive & will
If, (A-B-C) is negative, then STCL result in STCG
CA SACHIN GUPTA 49
6. Is it mandatory to claim depreciation:

Explanation to Sec. 32 : Depreciation provisions shall apply whether or not the assessee has claimed
deduction for depreciation.
7. Carry forward and set off of unabsorbed depreciation

❖ Deduct depreciation from P/G/B/P.
❖ If P/G/B/P is insufficient deduct balance depreciation from other heads .
❖ If Incomes of other heads insufficient, unabsorbed depreciation C/F for any number of
A/Y
❖ In next A/Y ,b/f depr added to depreciation & step 1 to step 4 will be followed
However, if B/F losses are also there in P/Y along with B/F depr, then priority of set off as follows
• 1st setoff current year depreciation
• Then setoff B/F losses
• Then setoff unabsorbed depreciation.
Special points :
1. B/P of which depreciation was computed need not be carried on in P/Y in which b/f depr is set
off.
2. Depreciation can be c/f only by the same assessee.
Exceptions to 2nd point:
a) Firm succeeded by a company u/s 47
b) Proprietary concern succeeded by a company/s 47
c) Amalgamation or Demerger
8. Asset not exclusively used for Business or Profession

❖ Where Building, P&M or Furniture Not exclusively used for B or P
❖ Then deduction u/s. 30, 31, 32
❖ Shall be restricted to such fair proportion as determined by AO
9. If payment or aggregate of payments in excess of `10,000 for acquisition of asset is made to

person in a day, otherwise than by A/C payee cheque drawn on bank or A/C payee bank draft or
ECS through bank account or by other prescribed electronic method, such expenditure shall not
be included in actual cost.
Rule 6ABBA : CBDT has prescribed the following electronic modes
(a) Credit Card
(b) Debit Card
(c) Net Banking
(d) IMPS (Immediate Payment Service)
(e) UPI (Unified Payment Interface)
(f) RTGS (Real Time Gross Settlement)
(g) NEFT (National Electronic Funds Transfer), and
(h) BHIM (Bharat Interface for Money) Aadhar Pay.
CA SACHIN GUPTA 50
Section 35 : Expenditure on Scientific Research
In-house Scientific research carried out by ANY assessee ( Related to Assessee

Business)
Pre commencement (3 years prior to Post commencement (On or after date of
commencement of Business) commencement)
Revenue Capital Revenue Capital
expenditure Expenditure Expenditure Expenditure
Salary of Research Any Capital All Revenue Any Capital
Staff & Purchase of expenditure except Expenditure expenditure except
Material for Land Land
scientific Research
Deduction in P/Y of Deduction in P/Y Deduction in P/Y in Deduction in P/Y
commencement of commencement which incurred in which incurred
Special Point : Applicable for Pre commencement revenue expenditure only

1. Salary does not include perquisites
2. Such revenue expenditure has to be certified by prescribed authority
Calculation of Deduction u/s 35

1.Revenue expenditure on scientific research is 100% allowed as deduction irrespective of profits.
2.Capital expenditure on scientific research are allowed as deduction subject to availability of profit.
Set off & Carry forward same as unabsorbed depreciation
Section 35 (2AB)
❖ Company (Manufacturing any article except XI th schedule)
❖ Expenditure (except on Land & Building) for approved in house scientific research.
❖ Deduction of 100% of such expenditure will be allowed
Deducation for Contributions / Donations to Outsiders

Research related / Research related / Research related / Research related /
Unrelated Unrelated Unrelated Unrelated
Approved Approved association National Laboratory or Indian company
association or or approved university, University or IIT to be having main object of
approved college for Social used for Approved Scientific research
university, college Sciences & Statistical Scientific Research & devp. &
for Scientific Research Programme also approved by
Research prescribed authority
100% of amount 100% of amount paid 100% of amount paid
100% of amount paid
paid allowed allowed allowed
allowed
CA SACHIN GUPTA 51
Special points :
Deduction u/s 35 shall not be disallowed if subsequent to payment ,approval of such association,
institution, company etc is withdrawn.
Section 35 AC: Expenditure on Eligible projects or schemes
No deduction under this section shall be allowed w.e.f A/y 18/19
Sec 35AD : Deduction of Capital expenditure of Specified Business

1)Cold chain facility
Assessee
2) Agricultural Warehousing facilities
3)Laying of Cross-country natural gas/crude/petroleum pipeline
4)Building & operating a Hotel of two-star or above in India
5)Building & operating hospital of atleast 100 beds in India
6)Projects for Slum development & rehabilitation in India
7)Developing & building Affordable Housing project under notified scheme
8)Production of Fertilizer in India
9)Setting up & operating an inland container depot
10) Bee-keeping and production of honey and beeswax
11) Setting up and operating a sugar warehouse
12)Laying & operating a slurry pipeline for transportation of iron ore
13)Setting up & operating a semi-conductor wafer fabrication manufacturing
unit and is notified by Board
14)Developing/operating /maintaining, any infrastructure facility
100% Capital expenditure for above business incurred in P/Y

Deduction
Pre commencement Capital Expenditure allowed in P/Y of commencement
If he opts
If payment or aggregate of payments in excess of `10,000 for capital
expenditure is made to a person in a day, otherwise than by A/C payee cheque
drawn on bank or A/C payee bank draft or use of ECS through bank account or
by other prescribed electronic method, , such expenditure shall not be allowed
as deduction
Does not include expenditure on land, goodwill or financial instrument
Exclusions
1. It is not set up by splitting up or reconstruction of existing business
Conditions
2. Atleast 80% P&M should not be previously used
No deduction shall be available for specified business under Part C of

Limitations
Chapter VI-A i.e. Profit based deductions eg 80IA,80IB etc
CA SACHIN GUPTA 52
Asset on which deduction allowed shall be used only for specified business,
for 8 years beginning with P/Y in which such asset is acquired or
constructed.
Otherwise deduction allowed in one or more P/Y, as reduced depreciation

allowable u/s 32, as if no deduction under this section was allowed, shall be
deemed to be income chargeable under PGBP of P/Y in which the asset is
so used.
Sum received/receivable on account of destruction/ demolition/ discard/
Sale of
transfer of such Capital asset shall be deemed as P/G/B/P
asset
Loss of Specified Business can be set off against profits of other specified
Loss of
business only.
business
Unabsorbed loss will be c/f & set off against profits of specified business of
subsequent A/Y
-C/F & set off for unlimited period
Section 35 D: Amortization of Preliminary expenses
1 Assessee Indian Company or Resident Non Corporate Assessee
2 Expenditure when Before commencement or After commencement for

incurred Extension or Setting up of new unit
3 Specified Expenditure (i) Feasibility/Project report (iii) Market/Other Surveys (iii)

Expenditure under point i to Engineering Services (iv) Legal Charges for drafting
iii, can be incurred by agreements
assessee himself or
approved concern For Company Assessee, expenditure on Memorandum &
Articles, Legal Fees for registration, expenses on public issue
4 Qualifying amount of Non-Corporate Assessee

Specified Expenditure Max 5% of Cost of Project
Indian Company
Max 5% of Cost of Project or 5% of Capital employed,
Higher
5 Period of Deduction Qualifying Amount in 5 Equal annual installments

starting from specified p/y
CA SACHIN GUPTA 53
6 Audit(Not applicable for Accounts audited by CA for the year/s in which

Company, Coop society) expenditure was incurred before the specified date u/s
44AB and assessee furnishes by that date the audit report in
the prescribed form duly signed and verified for the 1st year
of deduction.
Cost of project : Cost of FIXED ASSETS as per books on last day of P/Y.
Capital employed : Issued share capital + Debentures + Long term borrowings on last day of
P/Y
LT Borrowings :
❖ Loan from Govt/IFCI/ICICI/Approved financial institution, repayable in not less than 5
years,
❖ Loan in foreign currency for purchase of P&M outside India, repayable after 7 years
Section 35 DDA : Expenses incurred under Voluntary Retirement Scheme
❖ Any assessee incurs expenditure for payment of sum under V.R.S.
Deduction in 5 equal annual installments starting from the P/Y in which amount paid
Section 36(1) : Other Expenses allowed from Business/Profession
Premium for insurance of SIT used for B/P.

1
2 Health insurance premium paid by employer for his employees by any mode other than cash
under an approved scheme
3 Bonus or Commission to employee provided not payable as profits. (Subject to sec 43B)
4
Interest on loan for B/P (Subject to sec 43B)
5 Prorata amount of discount on a Zero Coupon bond
6 Employer contribution towards RPF or ASF (Subject to sec 43B)
CA SACHIN GUPTA 54
7 Employer contribution towards a NPS u/s 80CCD, on account of an employee upto 10%
of salary ( Meaning of Salary same as HRA)
8
Employer contribution towards Approved Gratuity Fund (Subject to sec 43B)
9 Employee Contribution of Provident fund etc received by Employer provided such amount
credited by the employer on or before specified date
Sec 2(24) :Employees Contribution to Provident fund etc deemed as income of employer.
For the removal of doubts, it is hereby clarified that the provisions of section 43B shall not
apply and shall be deemed never to have been applied for the purposes of determining the
"due date" under this clause
10 Cost of Animals (less SP )used for B/P (not as S.I.T) & have died or become useless
Deduction of Bad Debt in Provided such amount credited in P&L earlier

11
Special Points: Assessee money lending or is Bank condition of credit not applicable
No deduction for provision made for bad and doubtful debt.
Sec. 41(4) : Subsequent recovery of written off bad debt taxable u/s 41(4)
a. Assessee claiming Bad Debt & who recovers the bad debt should be same
b. It is not necessary business is in existence in P/Y of recovery
Company incurred expenditure for Family Planning among Employees

12
Revenue Expenditure : 100% allowed in P/Y in which incurred
Capital Expenditure : Allowed 20% for 5 years
Special Points: Set off & C/F of Capital Expenditure same as depreciation
13 Sum paid as STT on Business Income
14 Sum paid as CTT for Specified Commodities Transactions on business income

Specified Commodities Transaction means a transaction of sale of commodity derivatives in
respect of commodities, other than agricultural commodities, traded in recognised commodity
exchange.
CA SACHIN GUPTA 55
Sec. 37(1) : GENERAL DEDUCTION

❖ If not covered under Sec. 30 to Sec. 36
❖ If incurred during P/Y wholly & exclusively for B/P
❖ If not of Capital Nature
❖ If not a personal expense of Assessee
Special Points:
❖ Expenditure for any offence or which is prohibited by law not allowed as deduction
Expenditure incurred which is offence or prohibited by law shall include expenditure incurred
1.For any purpose which is offence or prohibited by any law in India or outside India or
2.To provide any benefit or perquisite to a person, whether or not carrying on business or
exercising a profession & acceptance of such benefit or perquisite by such person is in violation
of any law or rule or regulation or guidelines, governing the conduct of such person or
3. To compound offence under any law in India or outside India. [FA,2022]
❖ Sec 37(2B) : Advertisement in any souvenir, pamphlet etc. of a political party not allowed as
deduction
❖ Expenditure incurred for CSR u/s 135 of Companies Act, 2013 shall not be allowed as
deduction u/s 37(1).
Sec. 40(a) : Following expenses allowed as deduction subject to certain conditions

Payment to Type of Condition Specified Time for Deposit of TDS
whom payment
Non- If TDS not deducted or after deduction
Resident not deposited within specified time, Due date of Return for A/Y
/Foreign than expenditure fully disallowed
company
If TDS deposited after specified time,
deduction in P/Y of actual deposit of
TDS
CA SACHIN GUPTA 56
Resident If TDS not deducted or after deduction

not depoited within specified time, Due date of Return for A/Y
than 30% of such expenditure is
disallowed
If TDS deposited after specified time,

30% expenditure allowed as deduction
in P/Y of actual deposit of TDS
Govt Income Tax, Tax on Non Monetary Perquisite not allowed as deduction
“Tax” shall include and shall be deemed to have always included any surcharge
or cess, by whatever name called, on such tax. [FA,2022]
Sec. 40A(2) : Expn greater than market value

✓ Revenue expenditure for which payment
✓ to be made to Specified Person
✓ AO may disallow expenditure exceeding FMV
Special Points:
Assessee Specified Persons
Individual -Relative
-Entity in which Individual or relative has SI
Other Assessee -Director/ Partner/Member or their Relatives
-ANY PERSON In whose business director/partner/Relative has SI
-Individual having SI in Assessee & his relative
-Any entity having SI in Assessee & their
director/partner/member/relative
-Any director/Partner/member having SI in Assessee & their
entity/relative
Substantial Interest : Atleast 20% Equity Share/profits at any time during P/Y
Sec. 40A(3): Expenditure >10,000

❖ Payment of Revenue expenditure in excess of ` 10,000 in a day
❖ only by A/C payee cheque or A/C payee bank draft or ECS through Bank Account or other
prescribed electronic method
❖ If not then 100% expenditure disallowed
Special point :
Payment made for plying, hiring or leasing goods carriages limit per day is `35,000
CA SACHIN GUPTA 57
Special points :
❖ Expenditure allowed during P/Y on due basis &

❖ In subsequent P/Y Section 40A(3) not followed
❖ Deemed as P/G/B/P of subsequent P/Y
Rule 6DD: Exceptions to Sec. 40A(3)
a) Banks, LIC, Government.
b) Payment by LC, bill of exchange, ECS, credit card or debit card
c) Payment to producer of agriculture, forest, animal husbandry, dairy, poultry farming or fish
products
d) Purchase of products manufactured by producer without aid of power in a cottage industry
e) Payment in village/town not served by bank on date of payment to person who

resides/carrying on his business/profession/vocation in such village/town
f) Payment of retirement benefits upto ` 50,000
g) Payment on a day bank were closed due to holiday or strike
Sec. 40A(7): Disallowance for Gratuity
No deduction of provision made for payment of Gratuity to employees unless provision made
❖ Towards Approved gratuity fund or
❖ For payment of gratuity actually becoming payable during P/Y
Sec 40A(9):Employer contribution towards funds required by law
No deduction shall be allowed of sum paid by employer towards the setting up/formation or as
contribution to any fund not required to be kept under law
CA SACHIN GUPTA 58
Sec. 43B: Certain deductions on Actual Payment Basis
✓ Assessee following Mercantile basis

✓ Following deductions allowed in P/Y if PAYMENT made upto Due date of return
✓ Otherwise allowed in P/Y of actual payment
Allowable Sum Bonus or Payment Employer Interest Interest on Interest on

Taxes payable Comm. of leave Contribution on Loan loan from loan from
to to salary to to RPF, from schedule deposit
railways employee employee ASF, AGF PFI, /Coop bank taking
for use SFC or other than NBFC
of SIIC a primary or
Railway agricultural systemically
Asset credit important
society or non-deposit
primary taking
coop agrl NBFC
& rural
devp bank
Special Point :
• Where deduction in point 8 is allowed in computing income referred u/s 28, of A/Y 19/20,
or any earlier A/Y) on due basis, the assessee shall not be entitled to any deduction under
this section in respect of such sum in computing income of p/y in which the sum is actually
paid by him
• Deduction of any sum, being interest payable under point 8 shall be allowed if such interest
has been actually paid and any interest referred to in that point which has been converted
into a loan or borrowing shall not be deemed to have been actually paid.
• Deposit taking NBFC means NBFC which is accepting or holding public deposits and is
registered with RBI
• Systemically important non-deposit taking NBFC means a NBFC which is not accepting or
holding public deposits and having total assets atleast 500 crore rupees as per last audited
balance sheet & is registered with RBI
• Deduction of interest payable shall be allowed if such interest has been actually paid & any
interest which has been converted into loan or borrowing or debenture or any other
instrument by which the liability to pay is deferred to a future date[FA,2022] shall not be
deemed to have been actually paid.
CA SACHIN GUPTA 59
Deemed Profits Chargeable to tax
Sec. 41(1): Recovery of Loss/Deductions etc. allowed earlier

❖ Deduction allowed in any P/Y for loss/Expense or Trading liability
❖ Subsequently during any P/Y, same assessee or his successor
❖ Recover any amount or remits such liability
❖ Then such amount shall deemed to be P/G/B/P of P/Y in which received
Sec. 41(5) : Loss of P/Y in which business cease to exist can be set off from Deemed incomes u/s.
41(1), (3), (4). (Exception to rule that business loss can be carried forward for 8 years only)
Special Points : Sec 41 will apply even if business is not in existence in p/y of recovery
Sec. 44AA: Maintenance of accounts by Persons carrying on Profession or Business

SPECIFIED PROFESSION OTHER PROFESSION / BUSINESS
Gross Receipt > `10,00,000 Other case
Gross Receipts > ` 1,50,000 Other case (For Individual/HUF
for All 3 preceding P/Y `25,00,000
Or
Income from P/G/B/P >
`1,20,000 (For Individual/HUF
`2,50,000)
in Any of 3 years preceding

P/Y’s
Specified books of accounts to Such books of accounts to enable AO to Not required

be maintained for that P/Y compute his TI to maintain
(i.e. Cash Book, & Ledger) any BOA
Special Points:
1. Specified profession : Legal, Medical, Engineering, Architectural, Accountancy, Technical
Consultancy, Interior decoration or other notified profession
2. Specified books of accounts :
❖ Journal (if accounts on mercantile basis).
❖ Cash Book & Ledger.
❖ Carbon copies of bill issued > ` 25
❖ Original bills or receipts for exp. > ` 50
❖ Payment vouchers for exp. incurred upto ` 50
These books are required to be kept and maintained for 6 years from end of relevant A/Y
3. A Doctor shall also maintain daily case register & stock register
CA SACHIN GUPTA 60
Sec. 44AB: Compulsory Audit of Accounts

BUSINESS Case 1 :
Cash receipts upto 5% of total receipts during p/y & Cash payments upto 5% of total
payments during p/y
Compulsory audit of accounts for that P/Y in which Sales/Gross receipts exceed ` 10 crores
Business Case 2 : Not Covered under case 1
Compulsory audit of accounts for that P/Y in which Sales/Gross receipts exceed ` 1 crore
PROFESSION:
Compulsory audit of accounts for that P/Y in which Fees/Gross receipts exceeds ` 50 lakhs
Special Points:
Payment/receipt by a cheque/bank draft drawn on bank which is not account payee,
shall be deemed to be the payment or receipt, as the case may be, in cash.
Accounts have to be audited u/s. 44AB by a CA one month before due date u/s 139(1) and also the
audit report is to be furnished on or before the said date.
COMPUTATION OF P/G/B/P ON PRESUMPTIVE BASIS

SEC 44AD SEC 44AE
1. Overriding Sec 28 to 43C Sec 28 to 43C
2. Assessee Resident Individual, Resident Any Assessee (Resident/Non
HUF or Resident Partnership Resident)
Firm Excluding LLP
3. Business Any Business except business u/s Plying, Hiring or Leasing goods
44AE carriage
4. Limitations Provided Gross receipts/turnover Owns upto 10 goods carriage at

upto 2 crore any time during P/Y
5. Sum 8 % of Gross Receipts/ Turnover For Heavy goods vehicle
deemed as in P/Y `1,000 per ton pm or part owned in
P/G/B/P p/y
6% of Total turnover /Gross or amount claimed to have been
receipts received during p/y or actually earned from such vehicle,
before due date u/s 139(1) of that whichever is higher;
p/y
CA SACHIN GUPTA 61
Other than heavy goods vehicle

by A/c payee cheque or `7,500 pm or part owned in p/y or
A/c payee bank draft or amount claimed to have been
by ECS through bank A/c or actually earned from such vehicle,
by prescribed electronic method whichever is higher.
Heavy goods vehicle means goods

vehicle having gross
weight/Unladen weight is more
than 12,000 kgs (more than 12
tonne)
6. PGBP No deduction u/s Sec. 30 to 38 No deduction u/s Sec. 30 to 38
Deductions shall be allowed shall be allowed
7. B/F losses Brought Forward losses shall be Brought Forward losse shall be
available available
8. Benefits Deemed income or higher ,then Deemed income or higher ,

sec44AA & 44AB not applicable sec44AA & 44AB not applicable
Sec 40(b) : Tax Treatment in hands of Partner in Firm
Payment Salary/Bonus/Commission Interest on Capital

Partner Working Partner All Partner
Partnership Authorized by Partnership Deed / Authorized by Partnership
deed Change should be prospective Deed/
Change should be prospective
Book Profits Maximum Deduction
Amount of Upto 3,00,000 ` 1,50,000 or Upto 12 % P.a
deduction (Including Loss) 90% of BP
(whichever is more)
Balance Book 60% of BP
profit
Computation of Book Profits
1. Compute Net profit as per P&L A/C of the firm Under Head P/G/B/P.
2. Add: Below items, if already debited to P&L A/C
i) Remuneration paid to ALL Partner
ii) Interest to ALL partners in excess of 12% P.a
CA SACHIN GUPTA 62
Sec 40(ba) : Tax Treatment in hands of Partner in Firm
Any interest, salary, bonus, commission or remuneration, by whatever name called, made by such
AOP/BOI to members is not allowed as deduction
Sec 44ADA : Profits and Gains of Profession on presumptive basis
1. Assessee : Resident person who is Individual or Partnership firm other than LLP
engaged in specified profession u/s 44AA + Gross receipts is upto 50 lakh in P/Y.
2.Sum Deemed as business profits : 50% of Total Gross Receipts in P/Y or sum higher claimed
to have been earned by assessee
3. Deductions : Deduction u/s 30 to 38 not allowed
4. WDV of block : WDV of asset used for purposes of profession shall be deemed to have been
calculated as if assessee had claimed & had been actually allowed deduction of depreciation for
each of relevant A/Y.
5. Lower Profits : Assessee who claims that professional income are lower than deemed profits &
whose total income exceeds exemption limit shall be required to keep & maintain such books of
account and other documents u/s 44AA and get themAudited u/s 44AB
Sec 43CA : Sale consideration in case of Real Estate Transactions
• Tansfer of land/building/both (Not being a capital asset )

• Stamp duty valuation(SDV) >110% of consideration on
• SDV deemed as consideration for computing Business Profits
Option available to Assessee

• Assessee can claims before AO that
• SDV > FMV of property
• AO may refer the valuation of Asset to Valuation Officer
Valuation of Valuation Officer

• Valuation of valuation officer < SDV,
• value of valuation officer = Full value of consideration
CA SACHIN GUPTA 63
Special point :
• Where Date of agreement for transfer of asset and Date of registration of such transfer are
different,
• SDV on date of Agreement shall be considered
• if consideration or part is received by account payee cheque or account payee bank draft or
by use of ECS through bank account or by other prescribed electronic method
• on or before date of agreement for transfer of the asset.
Proviso to 43CA(1) :
In case of transfer of residential unit, instead of “110% the words “120%.” is substituted, if
following conditions are satisfied,––
(i) Transfer of residential unit takes place between 12th Nov,20 and 30th June, 21;
(ii) Transfer is by first time allotment of residential unit to any person; and
(iii) Consideration as a result of such transfer does not exceed 2 crore rupees.
Explanation.––“Residential Unit” means an independent housing unit with separate facilities

for living, cooking and sanitary requirement, distinctly separated from other residential units
within the building, which is directly accessible from an outer door or through an interior
door in a shared hallway and not by walking through the living space of another household.
MISSL
1. SEC 115BAC : IF assessee is covered u/s 115BAC the he is not allowed the following
deductions
• u/s 32(1)(iia) or
• u/s 32AD or
• u/s 33AB or
• u/s 33ABA or
• u/s 35(1)(ii) or u/s 35(1)(iia) or u/s 35(1)(iii) or u/s 35(2AA) or
• u/s 35AD or
• u/s 35CCC
CA SACHIN GUPTA 64
CHAPTER – 6
INCOME UNDER THE
HEAD CAPITAL GAINS
Sec 45(1) Basis of charge
Sec 45(IA) Destruction of Capital Asset
Sec 45(2) Conversion of Capital Asset into SIT
Sec 45(2A) Transfer of Demat Securities
Sec 45(5) Compulsory acquisition of Capital Asset
Sec 46(1)(2) Liquidation of Company
Sec 46A Buy back of own shares
Sec 47 Transfers not regarded as transfers
Sec 50B Slump sale
Sec 50C Real estate transaction
Sec 54 Exemptions from capital gains
Series
Sec 55 Cost of acquisition and cost of improvement
Sec 55A Reference to valuation officer
Other sections
Sec 2(14) Capital asset
Sec 2(47) Transfer
Sec 10(37) Capital gain exempt on Compulsory acq. of urban agrl.
land
Sec 111A STCG @ 15% on shares,units
Sec. 45(1): Charging Section

❖ Profit on TRANSFER Of CAPITAL ASSET
❖ Taxable under Capital Gain In P/Y of transfer
Sec. 2(14) : Capital Asset

✓ Any kind of Property whether or not connected to B/P
✓ ULIP issued on or after 1.2.2021, to which exemption u\s 10(10D) does not
apply (Aggregate Premium payable exceeding ₹2,50,000 for any PY during
term of policy/policies)
It does not include:
❖ SIT for B/P (Exception : Securities held by FII as per SEBI regulations)
❖ Movable personal assets Excluding Jewellery, Antiques, Drawings, Paintings, Sculptures, Art
❖ Agricultural Land in Rural area in India
❖ Gold Deposit Bonds issued under Gold Deposit Scheme 1999
CA SACHIN GUPTA 65
URBAN AREA : SEC 2(1A)

(a) Area within Jurisdiction of Municipal corporation + population of atleast 10,000 or
(b)Upto 2 kms from above jurisdiction having population > 10,000 but upto 1,00,000 or
(c)Upto 6 kms from above jurisdiction having population > 1 lac but upto 10 lac or
(d)Upto 8 kms, from above jurisdiction having population of > 10 lac.
Section 2(47): Transfer Includes

❖ Sale, Exchange or Relinquishment
❖ Extinguishment of any right in CA
❖ Compulsory Acquisition of CA under any law
❖ Conversion of CA into SIT of business
❖ Possession of Immovable Property transferred u/s 53A, Transfer of Property Act
❖ Transaction of becoming a member in Coop. society/company which enables enjoyment of
Immovable property
❖ Maturity or redemption of Zero coupon bonds
Computation of Capital Gains

There are 2 types of Capital Gains :
1. Short Term Capital Gain (STCG) : Transfer of STCA
2. Long Term Capital Gain (LTCG) : Transfer of LTCA
CAPITAL ASSETS
-Listed Security (other than unit of MF)
on recognised stock exchange Unlisted shares Other Capital Asset
Immovable Property
- Unit of UTI or Equity oriented fund
- Zero Coupon Bonds

Held for Held for more than Held Upto Held for Held Upto Held for
Upto 12 months 12 months 24 months more than 36 months more than
preceding preceding preceding 24 months preceding 36 months
date of transfer date of transfer date of preceding date of preceding
transfer date of transfer date of
transfer transfer
STCA LTCA STCA LTCA STCA LTCA
CA SACHIN GUPTA 66
Section 48 : Computation of Capital Gains

Short Term Capital Gain Long Term Capital Gain
FULL VALUE OF CONSIDERATION FULL VALUE OF CONSIDERATION
Less : Selling Expenses Less : Selling Expenses
: Cost of Acquisition of STCA : Indexed Cost of Acquisition of LTCA
: Cost of improvement of STCA : Indexed Cost of Improvement of LTCA
Special Points: No deduction of STT whether paid on purchases or sale
Indexed Cost of Acquisition

CII of F/Y of transfer
Cost of Acquisition X-------------------------------------------------------------------
CII of ( F/Y asset held ) or (F/Y 01-02), later
No indexation of Bonds (other than capital indexed bonds of Govt/Gold sovereign bonds) &
Debentures
In case of a capital asset land or building or both, FMV of such asset on 1/4/2001shall not exceed
the stamp duty value, wherever available, of such asset as on 1/4/2001.
Indexed Cost of Improvement

CII of F/Y of transfer
Cost of Improvement X -----------------------------------------------------------
CII of F/Y of improvement
Cost Inflation Index

Financial Year Cost Inflation Financial Year Cost Inflation
Index Index
2001-02 100 2012-13 200
2002-03 105 2013-14 220
2003-04 109 2014-15 240
2004-05 113 2015-16 254
2005-06 117 2016-17 264
2006-07 122 2017-18 272
2007-08 129 2018-19 280
2008-09 137 2019-20 289
2009-10 148 2020-21 301
2010-11 167 2021-22 317
2011-12 184 2022-23 331
CA SACHIN GUPTA 67
Section 55: COST OF ACQUISITION
Types of Capital Asset Cost of Acquisition Period of holding

A 1) Goodwill of NIL
Business/profession [If Self generated]
2) Trademark, Brand name Or Date of Purchase
of Business/Profession Purchase price /Self development
3) Tenancy Rights [If purchase] To
4) Stage Carriage permits Date of Transfer
(route permit) FMV on 1.4.2001 not
5) Loom Hours available if purchased before
6) Right to manufacture any 1.4.2001
article/carry any
Business/Profession
B Shares purchased from Amount actually paid to Date of Allotment To
company company Transfer
Shares purchased from Amount actually paid to Date of broker note To
Broker/Market broker including brokerage Transfer
Right Shares subscribed Amount Actually paid to Date of Allotment To

company Transfer
Right offer renounced Nil STCA
Person purchasing Amount paid to Seller of Date of allotment of right
renounced right and Company To
offer Date of sale
Bonus Shares/Other Asset Nil (FMV on 1.4.2001 Date of allotment of bonus
allotted free of cost available if such assets are shares To transfer
purchased upto 31.3.2001)
C Other Capital Assets Cost of Acquisition Date of Acquisition
FMV on 1.4.2001 available if To
such assets purchased upto Date of Transfer
31.3.2001
Section 55 : Cost of Improvement

A Capital Assets Cost of improvement
-Goodwill of Business NIL
-Right to manufacture, process any (Whether capital asset is Self generated or purchased)
article
-Right to carry on any business
B Other Capital Assets • Capital Expenditure by Assessee on improvement
• On or after 1.4.2001
CA SACHIN GUPTA 68
COMPUTATION OF CAPITAL GAINS IN CERTAIN CASES
Section Type of Transfer POH FVC Indexation

Sec45(1A) Destruction of Capital Date of Acquisition Money/FMV of P/Y of
Asset due to Natural TO Date of asset on date of Acquisition TO
Disaster, Riot , Accidental Destruction receipt P/Y of
Fire or Enemy action Destruction
Taxable in P/Y of receipt

of compensation
Sec 45(2) Conversion of CA into Date of Acquisition FMV of CA on P/Y of

SIT TO Date of conversion Acquisition
conversion to SIT (SP – FMV) is TO P/Y of
Taxable In P/Y of sale of P/G/B/P Conversion
SIT
Sec 45(5) CA is Compulsory Date of acquisition Full amount of P/Y of

acquired under any law TO Date of Compensation Acquisition TO
compulsory P/Y of
Taxable in P/Y in which acquisition. Compulsory
compensation/part is 1st Acquisition
received
Enhanced Compensation SAME as original Actual

Taxable in P/Y of receipt compensation. enhanced NIL
compensation
BUY BACK NOT COV Date of acquisition Amount from P/Y of
Sec 46A
U/S 115QA of Shares/Securities company for Acquisition TO
TO buy back P/Y of Buy
Buy Back of Date of Buy Back Back
shares(listed/unlisted)
exempt in hands of
shareholder u/s 10(34A) if
TAX paid by Domestic
company on buy back of
shares u/s 115QA
Sec 46(1) Distribution of CA by Such distribution NOT regarded as Transfer In hands of

Company to its company
shareholders on liquidation
CA SACHIN GUPTA 69
Sec 46(2) Shareholder receives any Date of Money + MV of P/Y of

money or other assets on acquisition of asset on acquisition TO
liquidation shares TO distribution - P/Y of
Date of Deemed dividend Liquidation
Taxable as in P/Y of liquidation u/s 2(22)(c)
Receipt
Sec 50B Cap Gain of P/Y of slump Date of FVC on transfer of LTCA , no
sale ownership of the capital asset. indexation
undertaking TO =
COA : Value of Assets Date of slump FMV capital assets
Less Value of liability sale as on date of
transfer or FMV
Non depr assets at Book of consideration,
value & Depr assets at higher
WDV
Assessee shall furnish in

prescribed form report of
CA before specified date
u/s 44AB certifying Net
Worth
Sec 51 Forfeiture of Advance shall be deducted from COA of Capital Asset
Money by Assessee
W.e.f 1/4/14 Forfeited amount taxable under IOS &
therefore not reduced from COA
Sec 45(5A) : Capital gain in case of Joint Development Agreements
• Individual/HUF + Transfer of land or building under joint development agreement

• capital gains chargeable in p/y of issuance of certificate of completion
• FVC = SDV (on date of issue of certificate) of his share, being land or building or both in
Project + cash consideration, if any
Special point :
If assessee transfers his share in project on or before date of issue of certificate , Section 45(5A)
shall not apply & capital gains shall be deemed to be income of p/y in which such transfer takes
place & other provisions of this Act shall apply
CA SACHIN GUPTA 70
Section 47: Following transfers will not be regarded as transfer
1. Distribution of CA on Total/Partial partition of H.U.F
2. Transfer of CA under Gift/ Will/ Irrevocable Trust

(Excludes transfer under gift of shares, debentures allotted by company under E.S.O.P)
In the above cases No Capital Gain will arise in hands of transferor.

When transferee transfers the above Capital Assets, he will be chargeable to Capital Gains
Special point : Computing cap gains in hands of transferee

COA to transferee Cost to previous owner who had actually
purchased the CA
POH Period for which held by previous owner will
also be included
3. Transfer of Shares of Amalgamating Co by S/H to Amalgamated Indian Co under

Amalgamation provided transfer made for shares in Amalgamated Co
Special Point :
COA of shares in COA of shares of Amalgamating Co against
Amalgamated Co which shares allotted in Amalgamated co
POH Period of holding shares in Amalgamating Co
will also be included.
4. Issue of Share by resulting Co to shareholders of demerged Co for consideration of Demerger

Special Points:
1. COA of shares in Cost of acq. of shares in De merged co.
Resulting Co. X Book value of assets T/F in Demerger
Net worth of De merged company
2. COA of shares of Reduce Original cost by above
De merged Co.
5. Transfer by any person to Govt, University, National Museum/Gallery of work of art,

archaeological, scientific or art collection, books, manuscript, drawing, painting,
photograph
6. Conversion of bonds or debentures of a co. into Shares /Debentures of that Co.

Special Points: If converted shares/debentured are transferred:
1. COA of converted shares/ Cost of that part of Bonds or
Debentures Debenture, which is so converted
CA SACHIN GUPTA 71
2. POH of such converted From the date of conversion to

shares/debentures date of sale of such converted
share/debenture
7. Transfer of a capital asset in transaction of Reverse Mortgage under CG notified scheme
Section 55A : Reference to valuation officer.
❖ For FMV of Capital Asset u/s 45(1A), 45 (2), 45 (4), 46 (2), 55, Exchange of asset u/s 2 (47)
& 50(C)
❖ The AO may refer valuation of CA to valuation officer in following cases
Case 1 Case 2
Value claimed by assessee according Where value claimed by assessee is not
to according to estimate by Registered Valuer
estimate by Registered Valuer
If AO is of opinion that If AO is of opinion that
MV > value claimed by assessee • MV > value claimed by assessee
• 15% or Rs. 25,000, less.
Section 50C: FVC for Real Estate transactions

✓ Stamp valuation > 110% of Sale consideration on transfer of L&B
✓ then Stamp Value Deemed as FVC
Section 50C(2)
❖ Assessee claims that Stamp Valuation > FMV on date of transfer
❖ AO may refer the valuation to valuation officer u/s 55A
• IF Valuation determined by valuation officer u/s. 50C(2)

• Is less than Stamp valuation
• then value u/s 50C shall be Deemed to be FVC
Sec 50CA : FVC for transfer of share other than quoted share
• If consideration
• For transfer of unlisted share
• is less than fair market value(FMV) of such share (determined in prescribed manner)
• FMV shall be
• deemed to be consideration
The provisions of this section shall not apply to any consideration received or accruing as a result of
transfer by such class of persons and subject to such conditions as may be prescribed.
CA SACHIN GUPTA 72
Sec 50D : FMV deemed to be FVC in certain cases

Consideration due to transfer of a capital asset is not ascertainable, then FMV of asset on date of
transfer shall be deemed as FV
TAX RATE FOR CAPITAL GAIN for A/Y 23/24
Short Term Capital Gain (STCG)
10(37) 111A Other STCG
Exempt 15% Taxable at slab rate/General

Rate
Long Term Capital Gain (LTCG)
10(37) u/s 112A Listed securities other than Units of Other LTCG
MF or Zero Coupon Bonds
20% (with Indexation) Or
Exempt 10% 10% (without indexation) 20%
whichever is lower
Special point :
Section 10(37) : Compulsory acquisition of land
❖ Individual or HUF
❖ Compulsory acquisition of Urban agricultural land (LT or ST)
❖ Used 2 yrs before transfer for agricultural purposes by individual/parents/HUF
❖ capital gains shall be exempt
Section 111A:
❖ STCG on Listed Equity Shares or listed units of EOMF
❖ and such transaction is chargeable to STT
❖ STCG shall be chargeable @ 15%
CA SACHIN GUPTA 73
LTCG on Sale of Listed Equity Shares or listed units of EOMF
Sec 112A : LTCG on above transaction will be taxable @ 10% in excess of ` 1,00,000.
Salient features of Sec 112A

1. STT paid on acquisition & transfer of equity share & paid on transfer of unit of EOMF or unit of
business trust.
2. Deduction u/s 80C to 80U shall not be allowed from LTCG u/s 112A
3. Rebate u/s 87A shall not be allowed from the Tax payable u/s 112A
4. Shifting of exemption limit allowed from LTCG u/s 112A
5.While computing LTCG ,indexation benefits will not be allowed.
Sec 55(2) : Cost of acquisition if Sec 112A is Applicable
Equity shares or units of EOMF or unit of business trust acquired before 1/2/2018
COA shall be higher of—
(i) Cost of acquisition of such asset
(ii) lower of FMV OR FVC
CA SACHIN GUPTA 74
EXEMPTIONS FROM CAPITAL GAINS (SEC 54 to 54H)
Section 54 : Transfer of Residential 54B : Transfer of 54EC : Transfer of LTCA 54EE : Investment in units of
Property Agricultural land start up India fund
1 Assessee Individual or HUF Individual or HUF Any Assessee Any Assessee
2 Capital Asset Urban Agricultural Land Land or Building Any Capital Asset
Transferred Residential House used by assessee / parent for
agricultural purpose for min 2
years prior to date of
transfer.
3 Nature of CA LTCA STCA or LTCA LTCA LTCA
4 New Asset One Residential house in India Agricultural Land (any Investment in specified bond, Units issued before1/4/19 of
area) redeemable after five years startup India fund as notified by
Assessee may, at his option, Central Government
Specified bonds means bond of
purchase or construct TWO NHAI/RECL/Other notified
residential houses in India, Bonds(PFCL/IRFC)
provided LTCG does not
exceed `2 crore Max Investment in specified bonds in
F/Y of Transfer & Subsequent F/Y is
50 lakhs
5 Time period of Within 1 year before or Within 2 yrs after transfer Within 6 months of transfer Within 6 months of transfer
New Assset within 2 years after transfer or
construct within 3 yrs after transfer
6 Capital Gain Deposit in CGAS upto
A/C Scheme DDR u/s. 139(1) -Do- NA NA
7 Exemption LTCG invested in New asset + LTCG invested in Specified LTCG invested in Specified Units
Deposited in CGAS upto DDR -Do- Bonds upto 6 months of transfer upto 6 months of transfer
8 Transfer of
New Asset If New Asset transferred within 3 years If New Asset is t/f or converted into If New Asset is t/f or converted into
from date of purchase/ construction, then -Do- money within 3 years from date of money within 3 years from date of
Cost of acquisition of new asset acquisition., then exempt LTCG acquisition., then exempt LTCG
Reduced by Capital Gain exempted taxable in p/y of transfer/ taxable in p/y of transfer/ conversion
earlier conversion into money. Loan into Money.
taken on security of new asset = Loan taken on security of new asset =
conversion in money conversion in money
CA SACHIN GUPTA 75
Section 54F : Transfer of LTCA 54D : Compulsory Acquisition of Land & Building
1 Assessee Individual or HUF Any Assessee
2 Capital Asset Any Capital Asset Compulsory acquisition of Land & Building used for Industrial undertaking
Transferred (Other than Residential house) in Any Area & Used by Assessee for Business for 2 years immediately prior to
date of acquisition
3 Nature of CA LTCA STCA or LTCA
4 New Asset One Residential house in India Land/Building for shifting of undertaking in any area
5 Time period Within 1 year before or within 2 yrs after transfer or Within 3 years after transfer
of New Asset constructed within 3 yrs after transfer
6 CGAS deposit Available Available
upto DDR
7 LTCG X Same as Sec. 54.
Exemption (Cost of new asset +
Amount deposit in CGAS)
-----------------------------
Net Consideration
8 Transfer of If New Asset t/f within 3 yrs from date of purchase/ Same as Sec. 54.
New Asset construction, then
Exempt Capital Gains taxable in P/Y of transfer of new
asset.
COMMON POINT FOR ALL EXEMPTIONS

Non utilization of balance in Capital Gain A/c. Scheme:
a. Amount deposited is not utilized wholly or partly for specified purpose by specified time.
b. Exemption claimed on unutilized amount is taxable as Capital Gain of P/Y in which specified time expires.
Section 54H : Extension of time for acquiring new asset

✓ Where transfer of capital asset is by compulsory acquisition under any law.
✓ Time limits for acquiring new asset & for depositing in CGAS shall be
✓ Computed from date of receipt of compensation and not from the date of compulsory acquisition
CA SACHIN GUPTA 76
CHAPTER - 7
INCOME UNDER THE
HEAD OTHER SOURCES

Sec 56(1) General Charging Section
Sec 56(2) Specific Charging Section
Sec 145 Method of accounting
Sec 2(22) Deemed dividend
Sec 115R Dividend Tax by Mutual funds
Sec 115BB Rate of Tax on lottery Incomes
Sec 194B TDS on Lottery ,etc
Sec 115BB TDS on horse races
Sec 2(22B) Interest on security
Sec 193 TDS on interest on Security
Sec 194A TDS on interest other than interest on Security
Sec 10(15) Interest exempt from Tax
Sec 57 Deductible expenses from I/O/S
Sec 58 Non Deductible expenses from I/O/S
Sec. 56(1) : GENERAL SECTION

❖ Income Not Excluded from Total Income & Not chargeable to tax under other 4 heads
❖ chargeable under I/O/S
Sec. 56(2): SPECIFIC CHARGING SECTION

Following Incomes SHALL BE chargeable under I/O/S
1. Dividend Income
2. Winnings from Lotteries, cross word puzzles , card games etc(casual incomes).
3. Interest on Securities ,if not under P/G/B/P
4. letting of P&M/Furniture, if not under P/G/B/P
5. Composite letting of BUILDING with P&M/Furniture, which is inseparable,if not under
P/G/B/P
6. Sum under Keyman Insurance Policy, if not chargeable under salary or P/G/B/P
7. Gifts received by Any Person
8. Interest received on compensation or on enhanced compensation
9. Advance money forfeited on capital asset w.e.f 1/4/2014
10. Share premium in excess of fair market value received by Closely Held Company.
11. Compensation/other payment, due/received for termination of employment /modification of
terms & conditions relating thereto.
CA SACHIN GUPTA 77
Method of Accounting : Sec. 145 : Profits is calculated on Cash or Mercantile basis regularly
employed
Taxation of Dividend Received in hands of company
As per Sec 1150 ,Domestic company was liable to pay CDT on dividend Actual or Deemed.
However this section is not applicable wef 1/4/2021
Taxability of dividend in hand of shareholder

Dividend from domestic company will now will be taxable in hands of shareholder.
Domestic company Sec 2(22A):

Indian company or foreign company made arrangement for distribution of dividend in India
Special Points :
1. Dividend includes actual dividend & deemed dividend u/s. 2(22) (a), (b), (c), (d) & (e)
2. Dividend includes both Interim & final dividend.
3. Sec 57 : Deduction of Commission/remuneration for realising taxable dividend.
Sec. 2(22): Dividend Includes

Distribution by a Company to shareholders
Sec. 2(22)(a) Sec. 2(22)(b) Sec.2(22)(c) Sec. 2(22)(d)
All or part of Debentures, Bonus money/ asset Money / Asset on
its Assets deposit certificate shares on Reduction of
liquidation capital
Sec. 2(22)(e) : Taxable in hands of receiver

Closely held Company Gives loan or Advance TO
❖ Specified Shareholder (atleast 10% equity shares)
❖ CONCERN in which specified shareholder is
partner/member & has SI
❖ Any person on behalf of specified shareholder
Special Points: Substantial Interest means: at least 20% income/ equity shares (any
time)
CA SACHIN GUPTA 78
Sec 2(18) : Company in which the public are substantially interested ( Widely held company)
A company is said to be a company in which the public are substantially interested if
a. owned by Government or RBI or
b. Its atleast 40% shares are held by Government or RBI or
c. company registered u/s 25 of Companies Act or
d. company whose principal business is to accept deposits from its members or
e. company in which atleast 50% equity shares were throughout P/Y held by co-operative
societies
A company not covered under above categories is a closely held company
Taxation of Dividend received from Mutual funds including UTI:
As per Sec 115R ,Domestic mutual funds were liable to pay Distribution Tax on
Income distributed to unitholders. However this section is not applicable wef
1/4/2021
Therefore Income received by unit holders on Mutual fund units will now will be
taxable in hands of unitholders.
Sec 57 : No deduction shall be allowed from dividend income, or income of units of Mutual Fund
other than deduction on account of interest expense, and
Such deduction shall not exceed 20% of dividend income, or income from units.
115QA : Tax payable by company on Buy back
Domestic company shall pay tax on distributed income on buy-back of shares (not being shares
listed on a recognised stock exchange)
Special point :
(i) Buy-Back means purchase by company of its own shares
(ii) Distributed income" means consideration paid by company on buy-back of shares less amount
received by company for issue of such shares.
(iii) Sec 10(34A) : Any income arising to shareholder due to buy back of shares by company u/s
115QA is exempt
CA SACHIN GUPTA 79
(B) : Winning from Lottery,Crossword Puzzle, Races incl horse race,Card game/othergame,
Gambling/betting
Sec. 115BB: Tax on above @ 30%
TDS Sec 194B Sec 194BB

1. Payment Lottery, Crossword Puzzle, Horse Races
Card /Other game
2. Rate of 30% (Sec 115BB) 30% (Sec 115BB)
TDS
3. Limit Aggregate > `10,000 in P/Y Aggregate > `10,000 in P/Y
Special Points :
(a) Deduction u/s 80C to 80 U will not be available from such Incomes.
(b) Sec. 58: No deduction for any Expenditure or Allowance from such incomes
Amount to be included in Total Income is Gross amount and not Net amount received after TDS
Gross Amount to be = Net Amount Received after TDS X 100
included in Total Income 100 - TDS rate
(C) Interest on Securities : Interest on Securities is covered Under I/O/S if not under
PGBP
Sec. 10(15) : Interest Exempt from Tax
1. Post office Saving Bank account upto 3500/upto 7000 in joiunt account
2. Post office Time deposit
3. Special Bearer Bonds
4. Notified Capital Investment Bond
5. Notified Relief Bonds, 2003.
6. Notified Bond/Debenture of Public Sector Companies.
7. Bonds of Local Authority, i.e. Municipal Bonds.
8. Interest on Gold Deposit Bonds issued under Gold Deposit scheme 1999.
9. Interest to non-resident by unit located in International Financial Services Centre in
respect of monies lended by it
CA SACHIN GUPTA 80
Sec. 193: TDS on Interest on Securities

1. Type of Payment Interest on Securities
2. Rate of TDS 10%
3. No TDS in 1. securities of Central or State Government
following cases 2. Listed securities in Demat form
3. Interest payable to Resident Individual/HUF on
debenture of company in which the public are
substantially interested, if
(a) Aggregate interest during P/Y is upto 5,000
(b) Interest is paid by account payee cheque
Special Point :
1. Amount to be included in Total Income is Gross amount & not Net amount received after TDS
Gross Amount = Net Amount Received after TDS X 100
100 - TDS rate
Bond Washing Transactions : Sec 94(1)
✓ If owner of security(Transferor)
✓ Sells security before record date &
✓ Acquires the same after record date
✓ Interest received by transferee
✓ Deemed as Income of transferor
However Deeming provisions of sec 94(1) is not applicable if
1. If there is no avoidance of Income tax or
2. Avoidance of tax was exceptional & not systematic & no avoidance during last 3 preceding
P/Y
Sec. 194A: TDS on Interest other than “Interest on Securities
1. Type of Payment Interest other than Interest on Securities

2. Rate of TDS 10%
3. No TDS in 1. Interest by firm to a partner
following cases 2. Interest by coop. society(Other than coop bank) to
member
3. Interest by bank on saving account/recurring account
4. Exemption Limit Payer Bank/Post office : Interest upto `40,000 in P/Y
Other Payer : Aggregate upto ` 5,000 in P/Y
For Deposit of senior citizen : Limit is Rs.50,000

CA SACHIN GUPTA 81
(D) Income from letting of machinery, plant or furniture belonging to assessee

If P&M etc. is NOT let out as part of business than income from such hire will be taxable
I/O/S
If letting is as part of his business activity than under P/G/B/P
(E) Income from composite letting of machinery, plant furniture and buildings
If letting of building is inseparable from letting of P&M etc. & letting is NOT a part of
business activity, than income arising from such letting will be taxable I/O/S
If letting is as part of his business activity than under P/G/B/P
Deduction from Composite letting of building or Plant or Machinery / Furniture (Sec 57)
❖ Revenue Repair & Insurance to premises, machinery, plant or furniture.
❖ Depreciation on such building ,machinery, Plant or furniture
❖ Other revenue expenditure
(F) Sum received under Keyman insurance policy including Bonus

is taxable as I/O/S provided not chargeable under head salary or P/G/B/P
(G) Sum/Property received by any person as Gifts
A. Taxation of Monetary Gifts
❑ In excess of `50,000 in P/Y other than special circumstances

❑ 100% of such sum
❑ Shall be included in income of receiver under head I/O/S
B. Taxation of Property as Gift /Inadequate consideration other than special circumstances

Property means :
• Immovable property ,
• Shares and securities ,
• Jewellery, Bullion,
• Archaeological collections , Sculptures
• Drawings , Paintings ,
• Any work of art
• Virtual Digital Asset [FA,2022]
CA SACHIN GUPTA 82
Sec 2(47A) : Virtual digital asset means :

(a) any information or code or number or token (not being Indian currency or foreign
currency), generated through cryptographic means or otherwise, by whatever name
called, providing a digital representation of value exchanged with or without
consideration, with the promise or representation of having inherent value, or functions
as a store of value or a unit of account including its use in any financial transaction or
investment, but not limited to investment scheme; & can be transferred, stored or traded
electronically;
(b) a non-fungible token or any other token of similar nature, by whatever name called;
(c) any other digital asset, as the Central Government may, by notification in the Official
Gazette specify:
Provided that CG may, by notification in the Official Gazette, exclude any digital asset
from the definition of virtual digital asset subject to such conditions as may be specified
therein.
Further, vide Notification no. 74/2022, Central Government has notified that gift card or
vouchers, mileage points, reward points or loyalty cards; and subscription to websites or
platforms or application shall be excluded from the definition of virtual digital asset.
[FA,2022]
Taxation of Non Monetary Gifts

Transfer Immovable property IOS of Movable property IOS of
receiver receiver
Gift SDV upto 50,000 Exempt FMV upto 50,000 Exempt
SDV > 50,000 SDV FMV > 50,000 FMV

For Consideration < SDV Consideration <
SDV - FMV -
Consideration and difference is SDV
Consideration Consideration
higher of 50,000 or and difference is
10 % of more than 50,000
consideration
In case of property being referred to in the second proviso to section 43CA(1),

the provisions of the words “ 10% , the words “20%” had been substituted.
Sec 49(4) : If Kind gift taxable in hands of receiver, Stamp value/FMV Deemed as Cost of
Acquisition
CA SACHIN GUPTA 83
SPECIAL CIRCUMSTANCES
1. Sum of Money/Property received from following will not be included in Income
1. From RELATIVE
2. On Marriage of Individual
3. Under will or inheritance
4. Received in contemplation of death of payer/donor
5. From/By registered Trust , Local authority
6. From any university /educational institution/hospital/trust/institution u/s 10(23C)
7. By individual by trust created/established solely for benefit of relative of Individual
8. From such class of persons and subject to such conditions, as may be prescribed.
9. By individual, from any person, for expenditure actually incurred by him on his
medical treatment or treatment of any member of his family, for any illness related
to COVID-19 subject to such conditions
Conditions notified
(i) COVID-19 positive report of individual or his family member, or medical report
if clinically determined to be COVID-19 positive through investigations in a hospital
or an in-patient facility by a treating physician for a person so admitted; and
(ii) all necessary documents of medical diagnosis or treatment of individual or

family member due to COVID-19 or illness related to COVID-19 suffered within six
months from the date of being determined as a COVID-19 positive.
10. By member of family of a deceased person—
(A) from employer of deceased person; or
(B) from any other person or persons to extent that such sum or aggregate of such
sums does not Rs.10 lakhs,
Where cause of death of such person is illness related to COVID-19 & payment is—
(i) received within 12 months from the date of death of such person; and
(ii) subject to conditions
Conditions Notified :
(i) Death of the individual should be within six months from the date of testing positive or
from the date of being clinically determined as a COVID-19 case, for which any sum of money
has been received by the member of the family;
CA SACHIN GUPTA 84
(ii) Family member of the individual shall keep a record of the following documents, -
(a) the COVID-19 positive report of the individual, or medical report if clinically determined
to be COVID-19 positive through investigations in a hospital or an inpatient facility by a
treating physician; and
(b) a medical report or death certificate issued by a medical practitioner or a Government

civil registration office, in which it is stated that death of the person is related to corona virus
disease (COVID-19). FA,2022 [WREF A/Y 20/21]
For (9) and (10) "family", in relation to individual, shall have same meaning u/s 10(5).
(spouse & children of individual ; and parents, brothers and sisters of individual or any of them,
wholly or mainly dependent on the individual)
2. RELATIVE means
- Members in case of HUF
- In case of individual as follows

(a) Spouse , Brother or Sister
(b) Brother or sister of spouse
(c) Brother or sister of either of the parents
(d) Any lineal ascendant or descendant of Individual or spouse
(e) Spouse of the above persons
(f) Members of HUF
(H) : Interest received on Compensation or Enhanced Compensation due to compulsory

acquisition of capital asset shall be deemed to be the income of the previous year in which it is
received.
Sec 57 : Deduction of 50% from such Interest shall be allowed.
(i) : Advance money forfeited on capital asset on or after 1/4/2014 is taxable under I/O/S
CA SACHIN GUPTA 85
(J) : Share premium > of fair market value to be treated as income of Closely Held Company
• Where a company, not being a company in which the public are substantially interested,
• Receives, From a resident
• Any consideration for issue of shares that exceeds
• Face value of such shares
• Excess of aggregate consideration received for such shares over FMV of shares
• Shall be treated as income
Sec 57 : Other Deductions available from I/O/S
Sec 57 : Deduction against family pension

33.33 % of Pension OR `. 15,000/- whichever is less
If assessee is covered u/s 115BAC then deduction of family pension shall not be allowed.
However following pension are exempt from tax

10(18) Pension received by Individual or Family Pension by family member if Individual
has been in service of C/S Govt. & awarded Vir Chakra /Mahavir Chakra /Param Vir
Chakra/other notified gallantry awards.
Family pension received by widow /children/ heir on death of member of armed
10(19) forces during duty
Sec 57 : General Deduction

Any other Revenue expenditure exclusively for purpose of earning such income.
Missl provisons :
Sec 115BBF : Tax on income from Patent
(1) Royalty income from patent developed & registered in India : Tax rate @ 10%.
(2) No deduction of any expenditure or allowance shall be allowed
(3) The eligible assessee (RESIDENT + FIRST TIEM INVENTOR + NAME UNDER PATENT
ACT) may exercise option u/s 115BBF upto DDR for relevant P/Y.
CA SACHIN GUPTA 86
(4) If Eligible assessee opts for this section for any p/y & offers income for taxation for any of 5
subsequent p/y succeeding p/y not u/s 115BBF, then, assessee shall not be eligible to claim
benefit of of this section for 5 p/y subsequent to p/y which such income has not been offered to
tax in accordance with above provisions
Sec 115 BBG. : Transfer of Carbon Credit
(1) Income by way of transfer of carbon credits : Tax Rate @ 10%
(2)No deduction of any expenditure or allowance shall be allowed.
Special point : Carbon credit in respect of one unit shall mean reduction of one tonne of carbon
dioxide emissions or emissions of its equivalent gases which is validated by UN Framework on
Climate Change and which can be traded in market at its prevailing market price.
Sec 115BBH : Tax on Income from Virtual Digital Asset
(1) Where total income of an assessee includes any income from the transfer of any virtual
digital asset, notwithstanding anything contained in any other provision of this Act,
the income-tax payable @30%
(2) Notwithstanding anything contained in any other provision of this Act,—
(a) No deduction in respect of any expenditure (other than cost of acquisition, if any) or
allowance or set off of any loss shall be allowed to the assessee under any provision of this Act
in computing the income u/s 115BBH and
(b) no set off of loss from transfer of the virtual digital asset computed under clause (a) shall
be allowed against income computed under any provision of this Act to the assessee and such
loss shall not be allowed to be carried forward to succeeding assessment years.
(3) For the purposes of this section, the word “transfer” as defined in clause (47) of section 2,
shall apply to any virtual digital asset, whether capital asset or not.
CA SACHIN GUPTA 87
CHAPTER - 8
CLUBBING OF INCOME

Sec 60 Transfer of Income without transfer of asset
Sec 61 Revocable transfer of asset
Sec 62 Irrevocable transfer of asset
Sec 63 Revocable transfer defined
Sec 64(1)(ii) Clubbing of spouse remuneration
Sec 64(1)(iv) Asset transferred to spouse
Sec 64(1)(iv) Asset transferred to sons wife
Sec 64(1)(vii) Asset transferred to AOP/Other person for benefit of spouse
Sec 64(1)(viii) Asset transferred to AOP/Other person for benefit of sons
wife
Sec 64(1A) Clubbing of Minor Income
Sec 10(32) Exemption from clubbed minor income
Sec 64(2) Self acquired property converted into HUF property
ANY PERSON (i.e. Transferor)

Transfers to
ANY PERSON (i.e. Transferee)
INCOME of an asset The ASSET

(under revocable or
irrevocable transfer)
[Sec.60]
Under Revocable Under

Transfer (Sec.61) Irrevocable transfer
All income of (Sec.62)
transferee All income of transferee
Income of Transferee
(However, when power to
Clubbed with income Revoke the transfer arises such income shall
of transferor be included with transferor)
CA SACHIN GUPTA
he Transferor 88
Sec. 62: Irrevocable transfer

❖ Transfer not revocable during lifetime of Transferee &
❖ Transferor derives no benefit from such income
Sec. 63: Revocable Transfer

❖ A transfer which provides for transfer of Income/Asset to transferor during life time of
transferee OR
❖ gives transferor right to re-assume power over Income/Asset during life time of transferee
Sec 64(1)(ii) 64(1)(iv) Sec. 64(1)(vi) Sec. 64(1)(vii) Sec. 64(1)(viii)

Clubbing of Income from Income from Asset Asset
Spouse Asset Asset transferred to transferred to
Remuneration transferred to transferred to Person/AOP for Person/AOP for
spouse for Son’s wife for Inadequate Inadequate
Inadequate Inadequate consideration consideration
consideration consideration
When If an individual Individual Individual Individual Individual

has SI in transfers Any transfers transfers transfers Any
Concern asset(other than Any asset Any asset to any asse to any
house property) directly/ Person/AOP for Person/AOP for
Individual directly/ indirectly to benefit of Spouse benefit of Sons
himself or with indirectly to Son’s wife wife
relative at any Spouse
time during p/y
hold atleast
20% equity
/20% profit
Clubbing Salary from Income of Income of Income of Income of
with that concern transferred asset transferred transferred asset transferred asset
Individual drawn by arising to asset arising arising to arising to
Spouse spouse to sons wife Person/AOP person/AOP
Exceptions No clubbing if No clubbing if No clubbing if
Spouse 1.Transfer under Father/mother

Professionally agreement to in law &
qualified/ live apart daughter in law
experience relation does
2.Husband/wife not exist at
relation does not transfer of asset
exist either at or at accrual of
transfer of asset income
or at accrual of
Income.
CA SACHIN GUPTA 89
Clubbed when spouse/ son’s wife invests transferred asset in Sole Prop Business
Investment out of T/f asset in

Income from Business X business on 1st day of P/Y
------------------------------------------
Total Investment by transferee
as on 1st day of P/Y
Clubbed when spouse/ son’s wife invests transferred asset in Firm
Investment out of T/f asset in

in partnership firm as on 1st day of P/Y
Interest from firm X ------------------------------------------
Total Investment by transferee
as on 1st day of P/Y
Sec. 64(1A): Clubbing of Minor’s Income
❖ All incomes of Minor child

❖ clubbed with income of that Parent
❖ whose TI (excluding minor income) is Greater
Special Point:
❖ If marriage does not exist, minor income clubbed with that parent who maintains minor in p/y
❖ Once income is clubbed with either parent, Income of next P/Y will also be clubbed with that
❖ parent only, unless AO is satisfied it is not necessary to do so
Minor income will be taxable in the hands of minor only
❖ Minor suffering from disability specified in Sec.80U

❖ Income of minor arising due to Manual work done by him
❖ Income of minor due to his skills, talent or specialised knowledge and experience
Special Points:
❖ If minor’s income is clubbed, exemption u/s. 10(32) subject to Max. `. 1500/- per minor
❖ If assessee is covered u/s 115BAC,then exemption us 10(32) is not allowed
❖ If Minor attains majority during P/Y, income till date of majority to be clubbed
❖ Minor child includes step and adopted child
❖ If minor income taxable in his hands, Income on such income shall be clubbed with parent
CA SACHIN GUPTA 90
Sec. 64(2): Income from self-acquired property converted to Joint family Property
❖ If Self-acquired property of individual is Converted into Joint Family Property for inadequate
consideration, the income of HUF from such property, Shall be clubbed with that individual’s
income
❖ Where such converted property is subsequently partitioned, then income derived by spouse
from portion received by her, is to be clubbed with individual’s income
Misc. Provisions of clubbing
• Clubbing of Income includes Clubbing of Loss also.
• If form of transferred asset is Changed by transferee, then income from such changed asset
shall be clubbed.
• If transferee Sells the asset, then capital gain so arising shall also be clubbed.
• Income on Clubbed income will not be clubbed.
• Clubbing provisions are mandatory, even if it results in benefit to the individual or loss to
the revenue.
CA SACHIN GUPTA 91
CHAPTER – 9
SET OFF, OR CARRY FORWARD
AND SET-OFF OF LOSSES

Sec 70 Intra head adjustments
Sec 71 Inter head adjustments
Sec 71B Carry forward of House property loss
Sec 72 Carry forward of Business Loss
Sec 73 Carry forward of Speculation Loss
Sec 74 Carry forward of Capital Loss
Sec 74A Carry forward of loss from owning & maintaining race
horses
Sec 94(7) Dividend stripping
Sec 94(8) Bonus stripping
TAX TREATMENT OF LOSS

Same head set off Inter head set C/F & Set off
Same Other off *
Nature of Loss Source source A/Ys from
SALARY NO LOSS
HOUSE ✓ ✓ ✓ Max 2 8 Same Head

PROPERTY lacs
(u/s 71B)
PGBP
✓ ✓ ✓ 8 Same Head
NON SPECULATIVE Except Salary
(u/s 72)
✓ X X 4 Same Source
SPECULATIVE
(u/s 73)
CAPITAL GAINS
(u/s 74) ✓ ✓ X 8 Same Head
STCL
✓ X X 8 Same Source
LTCL
L
CA SACHIN GUPTA 92
OTHER SOURCES
Loss cannot be set off & C/F
Casual incomes
Owning & ✓ X X 4 Same Source

maintaining race
horses (u/s 74A)
✓ ✓ ✓ NA NA
Other
* No loss can be set off from the following incomes

1. Sec 115BB : Casual Incomes : 30%
2. Sec 115BBE : Income u/s 68 or 69 or 69A or 69B or 69C or 69D : 60%
3. Sec 11BBF : Royalty income for patent developed & registered in India for resident : 10%
4. Sec 115BBG : 10%
Other Important sections of chapter
1. Losses can be carried forward for 8 Assessment Years : Exceptions
a) Sec 41(5) : (Explained under head P/G/B/P)
b) Proviso to Sec 72(1)

• Business discontinued in P/Y due to Natural calamity/ riots/ accidental fire
/enemy action
• is re-established before expiry of 3 years from end of that P/Y
• Losses of that P/Y including B/F losses shall be C/f for set off from the year in
which business re-established and subsequent 7 A/Y
c) Sec 73A : Loss of business for which deduction claimed u/s 35AD
2. Priority of Set off under P/G/B/P
Step 1 : 1st set off current P/Y depreciation, current P/Y capital expenditure on scientific
research and current P/Y capital expenditure on family planning
Step 2 : Then set off B/F business loss
CA SACHIN GUPTA 93
Step 3 : Then B/F depreciation, B/F capital expenditure on scientific research and B/F
capital expenditure on family planning
3.Unabsorbed depreciation, unabsorbed capital expenditure on scientific research, & unabsorbed

expenditure on family planning are not business losses & can be C/F for any number of A/Y
4. Sec. 80 : No Loss shall be carried forward u/s 72, 73, 74, 74A, unless ROI filed u/s.139(3)
Sec. 139(3) : For C/F of losses u/s. 72, 73, 74, 74A, assessee have to file ROI within time
u/s.139(1)
Therefore, loss u/s. 71B, (House property Loss) can be C/f even if return filed after due date
5. Carry forward & set off possible against Clubbed income also
6. Sec 70 and 71 are mandatory.
7. If losses are C/f under sec 71B to 74A & are not set off against profits of succeeding year inspite
of profits being there, they cannot be set off in later years
9. Sec. 94(7) : Dividend Stripping
• Any person Buys securities or units within 3 months before Record Date &
• Sells securities within 3 months Or units within 9 months after such record date
• Dividend/Income on such securities/units is Exempt
• Then, LOSS upto the amount of exempt dividend cannot be set off/C/F
CA SACHIN GUPTA 94
10. Sec 94(8): Bonus Stripping
• Any person Buys UNITS within 3 months prior to record date
• Such person is allotted BONUS UNITS
• He sells all or any of ORIGINAL UNITS while continuing to hold all or any of BONUS UNITS
within 9 months after record date
• Then, LOSS cannot be set off/C/F
Special point : Such LOSS shall be deemed to be COA of BONUS UNITS held on date of such
sale
CA SACHIN GUPTA 95
CHAPTER – 10
DEDUCTIONS
Sections covered in this chapter :

Sec 80C Deduction of Life insurance etc
Sec 80CCC Contribution to pension fund
Sec80CCD Contribution to notified pension scheme
Sec 80CCE Limit of I.5 lac
Sec 80D Medical insurance premium
Sec 80DD Medical treatment of disabled relative
Sec 80DDB Medical treatment for specified disease
Sec 80E Interest on loan for higher education
Sec 80G Donations
Sec 80GG Deduction of rent paid
Sec 80GGA Contribution for scientific research, rural devp. etc
Sec 80GGB Contribution to political party by company
Sec 80GGC Contribution to political party by non corporate
Sec 80JJAA Employment of new workmen
Sec 80QQB Deduction of Royalty from Books
Sec 80RRB Deduction of Royalty from patents
Sec 80TTA Deduction of interest of saving account
Sec 80U Deduction for person with disability
Basis rules while computing deductions u/s 80C to 80U
1. Deductions cannot exceed amount of GTI

2. Deductions not allowed from Incomes chargeable at special rates
a) Sec 111A : STCG on listed Equity shares/Equity oriented mutual funds/Business Trust :
15%
b) Sec 112 : LTCG : 20 %
c) Sec 112A : 10%
d) Sec 115BB : Casual Incomes : 30%
e) Sec 115BBE : Income u/s 68 or 69 or 69A or 69B or 69C or 69D : 60%
f) Sec 11BBF : Royalty income for patent developed & registered in India for resident : 10%
g) Sec 115BBG : Income form transfer of carbon credit : 10%
CA SACHIN GUPTA 96
Sec. 80C : Individual or HUF : Amount deposited in specified investments/securities upto 1,50,000
Investments Deposits Expenses Repayment of loan

• LIP for himself ,spouse & child • National Housing Bank Tuition fees Repayment of
Excess amount ignored • Public Sector Co. for any 2 Principal amt for
engaged in LT Finance for children loan for Purchase/
- Premium>10% sum assured Residential Houses in for Full Construction of
ignored if policy issued India. time Residential House
wef1/4/12) education From Central/State
• Authority in India, to govt. bank ,LIC,
- Premium >15% of sum assured Providing Housing University, NHB,Public
Ignored for person with accommodation College, Company / Co-Op
disability u/s 80U or disease u/s School in Society / employer
80DDB wef 1/4/13 • 5 Yr deposit in Schedule India
bank under Cgovt scheme Includes registration
• EE contribution to (Excluding charges
SPF/RPF/ASF/PPF • 5 Yr time deposit in post development
office fees & C
• NSC VIII + Accrued interest donation)
• Senior citizen saving
• Shares /Debentures of Public scheme
company /public financial
institution for infrastructure • Deposit for girl child in
• Bonds of NABARD sukanya smridhi scheme
• ELSS,2005
• Employee of CGovt, as contribution

to specified account of pension
scheme u/s 80CCD + min 3 years
1.Exemption u/s 10(10D) : Sum received under LIC policy including bonus is exempt
Exceptions : The following amount is taxable under Other Sources

-Policy u/s 80DD ,
-Keyman Insurance Policy ,
-Policy where annual premium > specified % of sum insured (However sum received on death is exempt).
2.Sec 194DA : TDS on LIC payments

Life insurance receipts (other than amount exempt u/s 10(10D)), shall, at time of payment , be subject to TDS
@ 5 % on the amount of income comprised in receipt.
Provided No TDS if aggregate amount during P/Y is less than 1,00,000.
3.Interest Accrued on NSC VIII issue

1. Interest accrued every year is included in Income under IOS of each P/Y
2. Interest excluding last year is deemed to be reinvested and therefore allowed as deduction u/s 80C
CA SACHIN GUPTA 97
SEC PERSON INVESTMENT CONDITIONS DEDUCTION

Sec. Individual Contribution to Out of income Upto ` 1,00,000
80CCC National Pension chargeable to tax
Scheme
Sec. Individual Contribution to Employee 80CCD(1) : Max 10%of salary
80CCD Central Govt 80CCD(IB) : Max 50,000
N.P.S 80CCD(2) : ER cont or 10%* of
salary
*14% for cgovt or SGovt [FA,22]
employer
Non employee Sec 80CCD(1) : Max 20% of GTI
Sec 80CCD(IB) : Max 50,000
Sec
80CCE 80C + 80CCC + 80CCD(1) : Max 1,50,000
Sec. 80D Ind or Medical Out of Income Himself , spouse, Dep children :
HUF Insurance chargeable to tax Max 25,000
Premium (Upto 25,000 Extra deduction for
(non cash) Senior citizen
or If premium paid in
Expn for lump sum in p/y for Parents : Max 25,000.
preventive health more than year, then, (Upto 25,000 Extra deduction for
check deduction allowed Senior citizen)
for each of the
or
relevant p/y, equal to
Medical the appropriate
Preventive Heath check up :
expenditutre for fraction of premium Max 5,000
senior citizen paid.
(no mediclaim) Medical expenditure on health
of a Senior Citizen : Max 50,000
Sec. 80 Ind or Medical Incurred Disability : ` 75,000

DD HUF Treatment of Expenditure or
(Resident) Handicpped deposit under Severe Disability : ` 1,25,000
Provided Disabled relatives maintenance
dependant (HDR) scheme of
not insurance co Scheme provides for payment of
claimed (Spouse, Child, annuity or lump sum amount for
80U Parents, Brothers benefit of HDR
& Sisters who are (i) on death of individual or
dependent) member of HUF in whose name
subscription to scheme has been
made; or
CA SACHIN GUPTA 98
(ii) on attaining the age of sixty

years or more by such individual
or member of HUF, and payment
or deposit to such scheme has
been discontinued [FA,2022]
If HDR predeceases the

individual or member of HUF,
amount equal to amount paid or
deposited under scheme deemed
to be income of assessee of
previous year of receipt
EXCEPTION :
Amount received by HDR is
exempt, before his death, by way
of annuity or lump sum on
attaining the age of sixty years or
more by such individual or
member of HUF, and payment or
deposit to such scheme has been
discontinued [FA,2022]
Sec. 80U Individual Suffering from No expenditure Disability : ` 75,000 ,
(Resident) Disability required Severe Disability : ` 1,25,000
Sec. 80 Ind or Expenses for Disease u/r 11DD Amount paid or `40,000/-
DDB HUF Medical whichever is less
(Resident ) Treatment of Self
or Relative `1,00,000/- (If any of above is
(Relative same as senior Citizen)
80DD)
Sec. 80E Individual Loan from Himself/spouse/ Actual Interest paid
Financial child/Legal
Institution/Bank / guardian 8 A/Y starting from A/y in which
approved interest paid
Charitable Higher education:
Institution Any course after
12th
CA SACHIN GUPTA 99
Sec Individual loan from any Interest payable (i)loan sanctioned 1/4/16 upto
80EE financial subject to max 31/3/17
institution for 50,000 (ii) Loan upto `25,00,000
acquisition of (iii) Residential house is upto `40
residential house lac
(iv) No residential house on date
of sanction of loan
(V)Deduction allowed under this
section than such interest not
allowed under other provisions of
Act
Sec 80 Individual loan from any Interest payable (i)loan sanctioned 1/4/19 upto
EEA not financial subject to max 31/3/22
entitled to institution for 1,50,000 (ii) Stamp duty value of residential
80EE acquisition of house property does not exceed 45
residential house lakhs
(iii) No residential house on date
of sanction of loan
(iv)Deduction allowed under this
section than such interest not
allowed under other provisions of
Act
Sec Individual Loan taken from Interest payable (i)loan sanctioned 1/4/19 upto
80EEB any financial subject to max 31/3/23
institution for 1,50,000 (ii)Deduction allowed under this
purchase of section than such interest not
electric vehicle. allowed under other provisions of
Act
Sec. All Donations > Refer Annexure 1 1st Category : 100%

80G Assessees 2,000 by non Limit =
cash 10% of 2nd Category : 50%
GTI
Less :
LTCG 112/112A
3rd Category : 100% (Total or
LIMIT,
Less : less)
STCG 111A th
4 Category : 50% (Total or
Less : other LIMIT,
Deductions
less
CA SACHIN GUPTA 100

Sec. Individual Rent paid for Assessee/ Spouse/ (a) Rent paid – 10% of LIMIT
80GG Residential House Minor Child no (b) 25% of LIMIT
house at place of (c) ` 5,000/- PM , less
Employee Not duty &
entitled to HRA Limit = GTI
Assessee no house Less : LTCG 112/112A
at other palace Less : STCG 111A
whose NAV = Nil Less : Other Deductions
Sec. All Contribution > Provided no Appr association for Scientific

80GGA Assessee 2,000 by non P/G/B/P Income /Social /Statistical Research
cash
Govt Co/Local
Authority/Association for social &
economic welfare
Association for Rural

Development /RDP
Claim for deduction in return of income filed, shall be allowed on basis of information relating to
such sum furnished by payee to prescribed income-tax authority or person authorised by such
authority, subject to verification as per risk management strategy formulated by Board
Sec. Indian Contribution to Political Party / 100% sum contributed

80GGB Company Electoral Trusts
Cash donations not allowed
Sec. Other Contribution to Political Party / 100% sum contributed

80GGC than Electoral Trusts
Indian (except institution funded by Govt.)
Company Cash donations not allowed
Sec. Business + Employee emoluments 30% of such employee cost in P/Y

80JJAA 44AB upto `25,000 pm for
Employed min240 days 3 Assessment Years
during p/y
(Manufacturing of
apparel or footwear or
leather product,150
days applicable )
Employee to
participate in RPF
CA SACHIN GUPTA 101

Sec. Individual Royalty for Following royalty not Eligible Royalty income or
80QQB Resident Author of eligible ` 3,00,000/- whichever is less
Books
Excluded: Regular royalty > 15%
Text Books of books sold during
for schools, p/y
Magazines
,newspaper, Foreign Exchange
Journals, royalty not brought into
Guides, India within 6 months
Pamphlets from end of P/Y
Sec. Individual Royalty in True & 1st inventor Eligible Royalty Income or `
80RRB Resident respect of under patents act & 3,00,000/-, whichever is less
in India patent includes Co-patentee.
Foreign Exchange
royalty not brought into
India within 6 months
from end of P/Y not
eligible for deduction
Sec Individual Interest on
80TTA /HUF+ saving account Max 10,000
Non with bank/post
Senior office
Citizen
Sec Individual Interest on any Max 50,000
80TTB +Senior deposit with
Citizen bank/post
office
Annexure : The following donations are eligible for deduction u/s 80G
100% deduction without qualifying Limit

i. National Defence Fund/National Sports Fund /National Cultural Fund/National Illness
Assistance Fund.
ii. National Children Fund.
iii. Army/Naval/Air Force Welfare Fund / PM National Relief Fund.
iv. National Foundation for communal Harmony.
v. National Trust for Welfare of Person with Mental Retardation & Mental Disabilities.
vi. National/State Blood Transfusion Council.
vii. Maharashtra CM Earthquake Relief Fund.
viii. Andhra Pradesh CM Cyclone Relief Fund.
CA SACHIN GUPTA 102

ix. Gujarat Fund for Earthquake Relief.

x. Chief Minister Relief Fund for the state or Lieutenant Governor relief Fund for union territory.
xi. Africa (Public Contribution India) Fund.
xii. Any Fund set by State Government for Medical Relief of Poor.
xiii. Zila Saksharta Samiti of a District.
xiv. Approved University/Education Institution of National Eminence.
xv. Fund for technology Development Set by Central Government.
xvi. National Fund for Control of Drug Abuse
xvii. Swachh Bharat Kosh, set up by Central Government, other than sum spent by assessee for
Corporate Social Responsibility u/s 135 of Companies Act,2013
xviii. Clean Ganga Fund, set up by CG, where such assessee is resident, other than sum spent by
assessee for Corporate Social Responsibility u/s 135 of Companies Act, 2013
xix. PM CARES FUND
50% Deduction without qualifying Limit

i. Jawaharlal Nehru Memorial Fund.
ii. Prime Minister Drought Relief Fund.
iii. Indira Gandhi Memorial trust.
iv. Rajiv Gandhi Foundation.
100% Deduction subject to Qualifying Limit

i. Govt./Local authority for promoting Family Planning.
ii. Sum paid by Company to IOA for development of sports
50% Deduction subject to Qualifying Limit

i. Govt/Local Authority for any Charitable Purpose (except Family Planning).
ii. Approved Charitable Institution u/s 80G(5).
iii. Authority engaged in planning, development of cities, towns
iv. Corporation established by C Govt or S Govt. for promoting interest of minority community.
v. Notified Temple, Church, Mosque, Gurdwara notified by CG of Artistic Importance
CA SACHIN GUPTA 103

Sec 10AA : Newly Established units in Special Economic Zones
1 Undertaking engaged in Export of any Article/compute software

Assessee
2 Manufacture on or after p/y 05/06 upto p/y 20/21 in SEZ
Conditions
3 Amount of (a) 100% profit for 5 consecutive A/Y from A/Y of commencement
Exemption of production
(b) 50% profit for next 5 consecutive A/Y
(c) Next 5 consecutive A/Y: Amount transferred to SEZ reinvestment
reserve or 50% of profits ,whichever is
less
4. Computation Profit of 10AA Export turnover of 10AA undertaking

of Profits Undertaking X --------------------------------------------
Total turnover of undertaking
ET = Consideration brought into India within 6 months & extension
5 Restriction of Unabsorbed depreciation, scientific research expenditure or family

other Tax Benefits planning expenditure or business losses or capital gain losses can be
c/f., for A/Y after expiry of the tax holiday period.
6 Option not to Assessee can choose not the claim benefits for any A/Y during tax
claim Tax holiday holiday period provided declaration filed before due date of ROI
for relevant A/Y
7. Limitation Where a deduction under this section is claimed & allowed u/s 35AD,
for any A/Y, no deduction shall be allowed u/s 35AD in relation to
such specified business for the same or any A/Y year.
Special Point :
For the removal of doubts, it is hereby declared that the amount of deduction under this section shall
be allowed from the total income of the assessee computed in accordance with the provisions of this
Act, before giving effect to the provisions of this section and the deduction under this section shall
not exceed such total income of the assessee.
CA SACHIN GUPTA 104
CHAPTER – 11
AGRICULTURAL INCOME
Sec. 10(1) : Agricultural Income shall be exempt from Income Tax
Sec. 2(1A) : Agricultural Income includes

a) Rent derived from Land situated in India & used for agriculture or
b) Income derived from such land
- By Agriculture or
- By process employed by cultivator to render produce fit for market or
- Through Sale of the produce raised or received as rent in kind or
c) Income derived from any Building occupied by cultivator provided:
- Building is situated on such agricultural land & is used as Dwelling House or
Store House
&
- Land assessed to local rates or situated in rural area &
- L & B is used for Agricultural purposes only & not for other purposes
1)Any income from seedling or sapling grown in nursery is also agricultural

Income.
2)Agricultural Income will not include Income from transfer of land situated in
Urban Area
Income which is Partially Agricultural and Partially from Business

RULE 8 RULE 7A RULE 7B
Growing & mfn Growing & Mfn Growing & manufacturing COFFEE
TEA RUBBER
Agrl. Non Agrl. Non Coffee grown & Coffee grown , cured,
Agrl. Agrl. cured roasted & grounded
Agrl. : Non Agrl. Non Agrl.
60% 40% 65% 35% Agrl.
75% 25% 60% 40%
Computation of Income in case of Tea, Rubber & Coffee
a. Compute the Income from Growing & Manufacture Operations under head P/G/B/P
b. Then Apply the % as above in order to determine Agrl. & Non Agrl. Income
CA SACHIN GUPTA 105

Computation of Income for Growing & manufacture product

(other than Tea ,Rubber, coffee) ( Rule 7)
Agricultural Income Non-Agricultural Income

MV of Agricultural produce grown Sale value of other product
& used as raw material in business
Less : Market value of Agrl Produce grown &
Less : Cultivation expenses used as raw material in Business
Less : Other Business expenses
Partial Integration of Agricultural Income with Non-Agricultural Income
 Individual/HUF/AOP/BOI/AJP
 Agricultural Income > ` 5,000 &
 Non-Agricultural Income (Slab Rate) > Exemption Limit
Step 1 : Compute Total Income without Including Agrl Income
Step 2: Divide Total Income into two parts Slab Incomes and Special rate Income
Step 3 : Compute Tax @ slab Rates on Slab Income + Agriculture Income
Reduce Tax @ Slab Rates on Exemption Limit + Agriculture Income
Compute Tax @ Special Rates on Special Rate Incomes
Step 4 : Deduct Rebate u/s 87A (if applicable)
Step 5 : Add Surcharge (if applicable)
Step 6 : Add 4 % Education Cess
Step 7 : Tax Liability(R/O u/s 288B)
CA SACHIN GUPTA 106

CHAPTER – 12
COMPUTATION OF INCOME
Step 1 : Find Residential Status for P/Y & determine his Income as per Residential Status. (Sec 5)
Step 2 : Compute his Total Income as follows
Computation of Total Income of ………
for Assessment Year ______ (P/Y _______)
Heads of income `. `.
(A) Income under head Salary
GROSS SALARY (after allowing exemptions)

: Standard Deduction u/s 16(ia) ---------
: Entertainment Allow. u/s 16 (ii) ---------
: Employment Tax u/s 16(iii) ---------- ---------
(B) Income under head House Property
NAV of House Property u/s 23 ----------

Less : Statutory Deduction u/s 24(a) ----------
: Interest Payable u/s 24(b) ----------
Add : Recovery of Unrealised rent/ , ----------
Arrear u/s 25A -----------
(C) Income under head P/G/B/P
Net profit as per P&L a/c -----------

Add: adjustments as per Sec 30 to 43 -----------
Less: adjustments as per Sec 30 to 43 ----------- -------------
(D) Income under head Capital Gains

Long Term Capital Gains -----------
Short Term Capital Gains -----------
Less: Exemptions u/s 54 ------------ ------------
(E) Income under head Other Sources
Gross Income -----------

Less : Deduction u/s 57 ----------- ------------
(F) ADD : Income to be Clubbed u/s 60 to 64
(Under EACH Head)
(G) LESS: Set off & carry forward of losses u/s 70 to 80
(Under EACH Head)
Gross Total Income [ GTI ]
(A + B+ C+ D+ E + F -G) _________
Less: Deductions under chapter VI-A _________

(Sec 80C to 80 U)
Total Income [ TI ] _________

(Rounded off to nearest 10 rupee u/s 288A)
CA SACHIN GUPTA 107

Special Point: Deductions from 80C to 80U not available against incomes taxable at Fixed rates
Step 3 : Computation of Tax on Total Income
Computation of Tax of ……… For Assessment Year ________
Tax on Total Income XXXX

---------
C XXXX
Less : Rebate u/s 87A if TI upto 5 lacs (Ind+R) XXXX

XXXX
Add : Surcharge is applicable XXXX

XXXX
Add : HEC @ 4% XXXX

---------
X XXXX
LESS: Relief u/s 89(1) XXXX
---------
Total Tax Liability XXXX
LESS : Advance Tax / T.D.S / TCS XXXX

----------
Tax Payable or (Refundable) XXXX
(Rounded off to Nearest 10 rupee u/s 288B) ----------
CA SACHIN GUPTA 108

CHAPTER - 13
ADVANCE TAX

Sec 207 Liability for payment of advance tax
Sec 208 Advance tax if 10,000 or more
Sec209 Computation of advance tax
Sec 210 Computation of advance tax by AO
Sec 211 Due date of advance tax
Sec 234A Interest for payment of Tax after due date of
return
Sec 234B Interest for non payment of advance tax
Sec 234C Interest for deferment of advance tax
Proviso to sec Advance tax in case of capital gain/casual
234C income
Sec 207 : Liability for payment of advance tax

❖ Tax shall be payable in ADVANCE during any F/Y
❖ on Total Income chargeable in following A/Y as per sections 208 to 219
Sec 208 : Advance tax payable during a F/Y if advance tax liability is 10,000 or more
Special point : Advance Tax not applicable for Individual + Senior Citizen + NO PGBP
Sec 209 : Computation of Advance tax Liability

Step 1 : Estimate TOTAL INCOME of the current financial year
Step 2 : Compute Tax on such estimated income after Rebates & surcharges
Step 3 : Add HEC @ 4%
Step 5 : Deduct T.D.S
Balance is advance tax liability during the financial year
Sec 210 : Payment by assessee on his own

❖ Every person who is liable to pay advance tax shall on his own Pay Advance tax
❖ on or before due date u/s 211 & Calculated in manner u/s 209
Increase or decrease of subsequent installments

❖ A person who pays any installment of advance tax
❖ May increase or reduce advance tax payable in remaining installment
❖ In accordance with estimate of current income
CA SACHIN GUPTA 109

Sec 211: Due dates for payment of advance tax

Due Date of % of Advance Tax
installment
Upto 15 June Atleast 15%
of current financial of advance tax liability
year
Upto 15 September Atleast 45%
year
Upto 15 December Atleast 75%
year
Upto 15 March Atleast 100%
year
Special point
1. Where assessee declares profits u/s 44AD/44ADA, whole amount of such advance tax can
be paid on or before the 15th March of the F/Y
2. Any amount paid by way of advance tax on or before 31st day of March shall also be
treated as advance tax paid during F/Y ending on that day for all the purposes of this Act.
Section 234C: Interest for 234B: Interest for Non 234A : Interest for payment
Deferment of advance Payment of tax upto 31st of tax after due date of
tax march of P/Y return
Default No advance tax paid or Advance tax paid < Tax paid after due date of
Advance tax paid after 90% of tax as per ROI return
Due dates
Interest 1% per month 1% per month /part 1% per month /part
Duration 3 months/1 month for last 1st April of A/Y Date after DDR
installment to to
Date of payment Date of payment
Amount Actual Advance tax Tax as per ROI Tax as per ROI
liability on due date
less Advance tax less Advance tax paid less Advance Tax Paid
deposited upto due date
CA SACHIN GUPTA 110

Interest u/s 234C For assessee covererd u/s 44AD/44ADA
Advance tax paid upto 15th 1% pm 1 month 100% of Tax as per ROI
March is less than 100 % of Less
Tax as per ROI Advance tax paid upto 15th
March
Exception to Interest u/s 234C : No interest liability will arise u/s 234C if
1) Advance tax paid
• upto 15th June is upto 12% of tax as per ROI or
• upto 15th September is upto 36 % of tax as per ROI
2) Proviso to Sec 234C:

✓ If Capital gain/Casual income/Dividend/New business arises after due date of
installment
✓ & if entire tax payable on such incomes is paid in remaining installments
✓ If such income arises after 15 march, then entire tax should be paid by 31st march of
relevant F/Y
244A : Interest on Refunds

Interest will be receivable on tax refundable at ½ % pm or part from 1st April of A/Y to date on
refund
Special point :
1) No interest u/s 244A shall be receivable if amount of refund is < 10%of tax as per ROI
2) If proceedings of refund are delayed due to assessee, such period of delay shall be excluded
from period for which interest is payable
Sec 210 : Payment of advance tax on order of AO

❖ If AO may issue an order u/s 210 requiring a person To pay advance tax
❖ Provided that person has already been assessed by way of regular assessment
❖ Such order can be passed any time during the financial year but not later than last date of
February
Sec 209 : Computation of advance tax by AO

For computing advance tax AO shall take the higher of following
❖ Total income of latest P/Y of regular assessment OR
❖ Total income declared in return for any p/y after above previous year
CA SACHIN GUPTA 111

CHAPTER –14
TAX DEDUCTED AT SOURCE

Sec 191 Direct payment
Sec 192 TDS on salary
Sec 193 TDS on interest on security
Sec 194 TDS on dividend
Sec 194A TDS on other interest
Sec 194B TDS on lottery, crossword puzzles etc
Sec 194BB TDS on Horse races
Sec 194C TDS on Contractor
Sec 194D TDS on Insurance commission
Sec 194E TDS on payment to NR sportsman or sports
Association
Sec 194G TDS on commission on sale of lottery tickets
Sec 194H TDS on commission & Brokerage
Sec 194I TDS on rent
Sec 194J TDS on fees for professional/technical services
Sec 194LA TDS on compulsory acquisition of immovable
[property
Sec 206AA Deductee to disclose PAN
*Specified payer : TDS u/s 1 9 4 A 1 9 4 C , 194H, 1 9 4 I , 1 9 4 J , 1 9 4 I B , 1 9 4 R
- Individual and HUF (payers)

– Business turnover > 1 crore in preceding f/y
– Professional receipts > 50 lakhs in preceding f/y
–
-Non individual & Non HUF in all cases irrespective of turnover
CA SACHIN GUPTA 112

Section 192 194 192A 194B 194BB 194C
Lottery,
Income Salary Dividend RPF Horse Payment to
Crossword
payment races Contractor/Sub
Puzzles, contractor
Card Game/
Other game
Payer Any Employer Domestic EPF trustees Any Payer Any Payer *Specified
company Payer
Payee Any Employee Resident Employee Any Person Any Resident

Shareholder Person contractor
Exemption 2,50,000
Ind Less than 30,000 per
Limit 3,00,000 / 10,000 10,000
5,00,000 shareholder 50,000 payment &
+ non cash 1,00,000
+ upto aggregate
5,000
Time of Payment Payment or Payment Payment Payment Payment or
Deduction Distribution credit, earlier
Rate of At Slab rates + 10% 30% 30% Contractor
deduction HEC 10% Ind/HUF : 1%
TDS @
Other case: 2%
MMR if
payee does Nil rate if
not disclose transporter
his PAN to quotes his PAN
Payer
Other Employee may No TDS for No TDS by
provisions furnish details of dividend Ind/HUF if
previous salary to paid to payment for
current employer insurance personal
co purpose
Employee can
also disclose
other income
&TDS on them
or loss from HP
to employer
In both cases
employer shall
take the above
& then deduct
tax
CA SACHIN GUPTA 113

Section 194 D 194E 194G 194H 194I 194IB
Insurance Income u/s

Income Commission Commission/ Rent of Rent of
commission 115BBA to on sale of Brokerage P&M/F&F/ L&B
NR Sportsmen/ lottery L&B
Association or ticket
Entertainer
Payer
Any Payer Any Payer Any Payer *Specified *Specified Non
Payer Payer specified
payer
Payee Resident Non resident Any person Resident Resident Resident
sportsmen/Sport
association/
Entertainer
Exemption
limit 15,000 NIL 15,000 15,000 1,80,000 50,000pm
Time of Payment or Payment or Payment or Payment or Payment or Payment or

Deduction credit, earlier credit, Earlier credit,earlier credit, earlier credit, earlier credit, earlier
P&M : 2 %
Rate of 5% for non 20% 5% 5% 5%
deduction company L&B or
10% for F/F : 10%
Company
CA SACHIN GUPTA 114

Section 194 J 194K 194 LA 194IA 194IC 194M
Income Fee for Income Compensation Consideration Amount 194C+194H

Professional from on acquisition for transfer of under +194J
/Technical units of of land (other Immovable collaboration
services/Royalty mutual than Property agreement
Amount to non fund agriculture (other than u/s 45(5A)
employee land) or Rural
director building Agricultural
land)
IND /HUF
Payer *Specified Mutual Any Payer Any Payer Any payer (not cov u/s
Payer fund 194C, 194H
194J)
Payee Resident Resident Resident Resident Resident Resident
unit
holder
Exemption 30,000 5,000 2,50,000 Both Nil 50,00,000

limit Consideratio
& SDV
EACH <
`50,00,000
[FA,2022]
Time of Payment or Payment Payment or Payment or Payment or Payment or
Deduction credit, earlier or credit, credit, earlier credit, earlier credit, earlier credit,
earlier earlier
Rate of 2% for FTS, 10% 10% 1% of 10% 5%
deduction Call centre Consideration
& Royalty of or
cinema films SDV,higher
[FA,2022]
10%other cases
Other No TDS by Deductor need Deductor Deductor
provisions Ind/HUF if not apply for need not need not
payment for TAN apply for apply for
personal Consideration TAN TAN
include charges
purpose
like club
membership
fee, car parking
fee, electricity
water facility
advance fee
etc)
CA SACHIN GUPTA 115

Sec 194N : Payment of certain amounts in cash

Bank incl coop bank , Post office,
• paying aggregate sum, in cash, > `1 crore during p/y, to any person
• from one or more accounts maintained by recipient ,
• at time of payment,
• deducts amount @ 2%. of sum > `1 crore
If recipient has not filed returns of income for all of 3 p/y preceding the p/y in which payment of
sum is made ,
the deduction shall be—
(a) @2% of aggregate sum in cash > 20 lakhs during p/y but upto `1crore or
(b) @5% of aggregate sum in cash exceeds > 1 crore during p/y
Sec 194O : Payment by E- Commerce Operator (ECO) to E-Commerce Participant (ECP)
(1) Sale of goods or provision of services of ECP is facilitated by ECO through its digital/electronic
platform ,
such ECO shall, at time of credit or payment, earlier to account of ECP deduct income-tax @ of
1%. of gross amount of sales or services or both.
(2) No deduction from account of ECP, being individual or HUF, if gross amount of sale/services
during p/y is upto 5 lakhs and such ECP has furnished PAN or Aadhaar number to ECO.
(3), Transaction under which TDS deducted by ECO under sub-section (1), or which is not liable to
deduction under sub-section (2), shall not be liable to TDS under any other provision of this
Chapter:
Provided that provisions of this sub-section shall not apply to aggregate of amounts received or
receivable by ECO for hosting advertisements or providing any other services which are not in
connection with the sale or services referred to in sub-section (1).
Special point :
• Electronic commerce means supply of goods or services or both, including digital products, over
digital or electronic network
• ECO means person who owns, operates or manages digital or electronic facility or platform for
electronic commerce;
• ECP means a person resident in India selling goods or providing services or both, including digital
products, through digital or electronic facility or platform for electronic commerce;
• Services" includes "fees for technical services" and fees for "professional services", as defined in
the Explanation to section 194J.
CA SACHIN GUPTA 116

Section 194P: TDS by specified bank in case of Specified Senior citizen (SSC)
Applicability & rate of TDS
A notified banking company shall compute total Income of SSC for relevant A/Y, computed after giving
effect to –
• Deduction allowable under Chapter VI-A; and
• Rebate allowable u/s 87A
& Deduct Income-Tax on such Total Income on the basis of the rates in force
Exemption from filing return of income
The SSC is exempted from filing his return of income for p/y in which TDS deducted u/s 194P
Meaning of certain terms
Specified bank : A banking company which is scheduled bank & appointed as agents of RBI u/s 45 RBI
Act, 1934
Specified Senior Citizen :

• Individual + Resident &
• min 75 years any time during p/y &
• is having pension income [no other income except interest income from any account
maintained by SSC in same specified bank in which receiving pension income &
• furnished declaration to specified bank containing such particulars, in prescribed form and
verified in prescribed manner..
Section 194Q : Deduction of tax at source on purchase of goods
Applicability and rate of TDS.

• Any person,
• being a buyer who is responsible
• for paying any sum to
• any resident-seller
• for purchase of goods
• of the value or aggregate of such value
• exceeding ₹ 50lakhs in a previous year,
• to deduct tax at source @0.1%
• of such sum exceeding₹ 50 lakhs.
CA SACHIN GUPTA 117

Non-applicability
Transaction on which -
• Tax is deductible under any of provisions of this Act; and
• Tax is collectible u/s 206C, other than section 206C(1H).
In case of transaction to which both section 206C(1H) and section 194Q applies, tax is
required to be deducted under section 194Q.
Meaning of buyer
• Buyer means person
• whose total sales, gross receipts or turnover
• exceed 10 crores from business carried on by him
• during the F/Y
• immediately preceding the F/Y
• in which purchase of goods is carried out.
However, buyer does not include a person as notified by the Central Government for this purpose,
subject to fulfillment of the stipulated conditions.
Sec 194R : Deduction of tax on benefit or perquisite in respect of business or profession

[FA,2022] wef 1/7/22
• Any person responsible

• for providing to resident,
• any benefit or perquisite,
• whether convertible into money or not,
• arising from business or exercise of profession,
• by such resident,
• shall, before providing such benefit or perquisite
• to such resident,
• ensure that tax has been deducted i
• n respect of such benefit or perquisite
• @ 10% of the value or aggregate of value of such benefit or perquisite:
Provided that in a case where the benefit or perquisite, is wholly in kind or partly in cash and
partly in kind but such part in cash is not sufficient to meet the liability of deduction of tax in
respect of whole of such benefit or perquisite,
CA SACHIN GUPTA 118

the person responsible for providing such benefit or perquisite shall, before releasing the
benefit or perquisite,
ensure that tax required to be deducted has been paid in respect of the benefit or perquisite:
Provided further that the provisions of this section shall not apply in case of a resident where
the value or aggregate of value of the benefit or perquisite provided or likely to be provided to
such resident during the financial year does not exceed Rs.20,000/-
Provided also that the provisions of this section shall not apply to a person being an individual
or a Hindu undivided family, whose total sales, gross receipts or turnover does not exceed one
crore rupees in case of business or fifty lakh rupees in case of profession, during the financial
year immediately preceding the financial year in which such benefit or perquisite, as the case
may be, is provided by such person.
(2) If any difficulty arises in giving effect to the provisions of this section, the Board may, with
the previous approval of the Central Government, issue guidelines for the purpose of
removing the difficulty.
(3) Every guideline issued by the Board under sub-section (2) shall, as soon as may be after it
is issued, be laid before each House of Parliament, and shall be binding on the income-tax
authorities and on the person providing any such benefit or perquisite.
Explanation.—For the purposes of this section, the expression "person responsible for
providing" means the person providing such benefit or perquisite, or in case of a company,
the company itself including the principal officer thereof.
206AA : Requirement to furnish PAN
✓ The payee (Deductee) shall furnish his PAN
✓ to the person responsible for deducting such tax ( Deductor)
If Deductee does not disclose his PAN,
TDS will be deducted at Applicable TDS rate or *20%, higher
*5% for TDS u/s 194O / 194Q
CA SACHIN GUPTA 119

206AB : Higher rate of TDS for non-filers of income-tax return
TDS by Person to Specified person, at higher of following rates-
@ Twice rate prescribed in relevant provisions of Act;

@Twice rate mentioned in Finance Act; or
@ 5%
Section 206AB is not applicable in case of TDS u/s 192, 192A, 194B 194BB, 194IA, 194
IB, 194LBC, 194M or 194N.[FA,2022]
If section 206AA is also applicable to specified person, in addition to sec 206AB then, tax is
required to be deducted @ higher of two rates provided u/s 206AA and u/s 206AB.
Specified person : A person who has not filed Return of income for A/Y relevant to p/y
immediately prior to p/y in which tax is required to be deducted for which the time limit of filling
return of income u/s 139(1) has expired & aggregate of TDS & TCS in his case is ₹ 50,000 or
more in p/y
However, the specified person does not include a non-resident who does not have PE in India.
CA SACHIN GUPTA 120

Chapter 15
AMT
ALTERNATE MINIMUM TAX (SEC 115JC)

Tax payable by Non Corporate Person shall be
• Regular Income tax or
• AMT = [Adjusted Total Income X 18.5*%] , Whichever is higher

*15% for Coop Society [FA,2022]
Special point :
1. Non Applicability : Individual or HUF or AOP or BOI or AJP, if Adjusted total income
> `20 lakh
2. Adjusted Total Income is Total income as increased by

(a) Profit bases deductions from 80C to 80U eg 80IA,80IB,etc
(b) Sec 35AD as reduced by depreciation allowable u/s 32
(c) Section 10AA.
3. Person shall obtain a prescribed report, from an accountant, certifying that computation is
per this Chapter before the specified date referred to in section 44AB.
4. All other provisions of this Act shall apply to Eligible person
5. The provisions of this section shall not apply to person who has exercised option u/s
115BAC or 115BAD.
Sec 115JD : Tax credit for Alternate Minimum Tax
1. Tax credit of an assessment year to be allowed = [AMT] – [Regular Income Tax]
2. No interest shall be payable on tax credit
3. Tax credit shall be carried forward and set off upto 15 succeeding A/Y
4. Maximum set off in succeeding A/Y = [Regular Income Tax of succeeding A/Y] – [AMT of
such year]
CA SACHIN GUPTA 121

5. The provisions of this section shall not apply to who has exercised option u/s
CHAPTER - 16
Return of Income
Sec.139(1): Furnishing of Return of Income
➢ Every Person
✓ Company or Firm
✓ Being a person other than a company or firm , if his GTI + Sec 54 series exceeds
exemption limit of 2.5lacs/3lacs/5lacs
➢ Shall file return of income
➢ On or before due date
➢ In prescribed form
➢ Verified in prescribed manner And containing prescribed particulars
Mandatory return for assessee

Case 1:
• ROR ,who is not required to furnish a return u/s 139(1)
• Holds, Any asset (including any financial interest in any entity) located outside India or
• has signing authority in any account located outside India; or
• shall furnish ,Return of income or loss, on or before the due date,
Case 2 :
• Persons who during P/Y
• Has deposited aggregate amounts exceeding 1 crore in one or more current accounts
• maintained with banking company or a co-operative bank; or
• Has incurred aggregate expenditure exceeding 2lakh for himself or other person for
• travel to foreign country; or
• Has incurred aggregate expenditure exceeding 1lakh towards consumption of electricity; or
• Fulfils such prescribed conditions
Case Prescribed Prescribed Monetary
transaction(s) threshold
(1) (2) (3) (4)
(i) A person carrying His total sales, > ` 60 lakhs during the
on business turnover or relevant P.Y.
gross receipts,
in business
(ii) A person carrying His total gross > ` 10 lakhs during the
on profession receipts in relevant P.Y.
profession
CA SACHIN GUPTA 122

(iii) (a) A resident The aggregate ≥ ` 50,000 during the relevant

individual who is of TDS and TCS P.Y.
aged ≥ 60 years at in his case
any time during the
relevant P.Y.
The aggregate ≥ ` 25,000 during the relevant
(b) Any other of TDS and TCS P.Y.
person in his case
(iv) A person having The deposit in ≥ ` 50 lakhs during the

savings bank one or more relevant P.
account savings bank
account of the
person, in
aggregate
DUE DATE OF FILING RETURN OF INCOME
Assessee required to furnish a report u/s 92E : 30th Nov. OF A/Y
Assessee is a Company : 31th Oct. OF A/Y
Other than Company
1) Accounts audited under this act. or any other law : 31th Oct. OF A/Y
2) Partner of firm & Firms accounts are : 31st Oct. OF A/Y

audited under this act or any other law
3) Spouse of such partner if the provisions of : 31st October of A/Y

section 5A applies to such spouse
3) Other assessee : 31st JULY OF A/Y
Special Point : Sec 92E: International transaction during P/Y + obtain report from CA
Sec 234F : Fees for Late filing of Return

Person required to file return u/s139, fails to file within time u/s 139(1), he shall pay fees of
`5,000.
Special point : If total income upto 5 lakhs, fee shall not exceed `1,000.
CA SACHIN GUPTA 123
Sec. 139(3) : Return of Loss
➢ Loss under
• Business/Profession
• Speculation
• Specified Business u/s 35AD
• Capital Gains or
• Owning & maintaining race horses
➢ Can be carried forward only if
➢ return of Loss is furnished
➢ Within due date prescribed u/s. 139(1)
Special Points:
1. Return filed u/s 139(3) shall be deemed to be return filed u/s. 139(1)
2. If loss return not filed within due date, then loss cannot be carried forward
3. Set off of Losses : Sec. 139(3) restricts only carry forward of losses. Therefore, losses can be
set off even if ROI filed after due date
4. Unabsorbed Depreciation: Sec. 139(3) deals with C/f of losses only. Therefore, unabsorbed
depreciation can be C/f if ROI filed after due date
5. Loss under Head House Property: HP loss can be C/f even if ROI filed after due date
Sec. 139(4) : Belated Return

✓ Person not furnished ROI
✓ within time allowed u/s. 139(1) or 142(1)
✓ He may still furnish ROI
✓ At any time before
✓ three months prior to end of relevant A/Y or completion of Assessment , whichever is earlier
Sec. 139(5) : Revised Return

✓ Person having furnished ROI u/s. 139(1) or 139(4)
✓ Discovers any Omission or Wrong statement
✓ May furnish Revised ROI
✓ At any time before
✓ three months prior to end of relevant A/Y or completion of Assessment , whichever is earlier
CA SACHIN GUPTA 124

Special Points :
❖ Revised return substitutes original return
❖ Loss return u/s. 139(3) can be revised
❖ Return can be revised any number of times
Sec 139(6) : Particulars to be furnished with the return of income
As per section 139(6), the prescribed form of return of income, shall in certain prescribed cases,
require the assessee to furnish the particulars of:
1) Income exempt from tax;
2) Assets of the prescribed nature &value
3) Details of bank account and credit card held ;
4) Expenditure exceeding prescribed limits incurred under prescribed heads; and
5) Such other prescribed expenditure
Sec 139(8A) : Updated Return [FA,2022]
• Any person,
• whether or not he has furnished return
• u/s 139(1) or u/s 139(4) or u/s 139 (5), for an A/Y,
• may furnish an updated return of his income or
• income of any other person in respect of which he is assessable,
• for any assessment year,
• at any time within 24 months from the end of relevant A/Y
• in prescribed form, verified in prescribed, manner and containing prescribed particulars
Provided that the provision of this sub-section shall not apply, if the updated return,—
(a) is return of a loss; or
(b) has the effect of decreasing the total tax liability determined on basis of return furnished
under 139(1) or u/s 139(4) or u/s 139 (5) ; or
(c) results in refund or increases the refund due on the basis of return furnished 139(1) or u/s
139(4) or u/s 139 (5), for the relevant assessment year:
CA SACHIN GUPTA 125

Sec. 139(9) : Defective Return
ROI as defective unless it is filed in prescribed form with all columns &annexures duly filled in.
Special Points:
1. Notice by AO to rectify defect
➢ intimate assessee to rectify the defect
➢ within 15 days from tdate of receiving intimation
➢ AO can also extend time limit of 15 days upon application by assessee
If defect is not rectified within above time period then return treated as void-ab-initio.(invalid)
2. Unsigned return is not invalid return but void-ab-initio. (invalid)
Sec. 140 : Verification of ROI
1. Individual
▪ Present in India : Himself

▪ Ab
▪ sent from India : Either himself or authorised person
▪ Mentally Incapacitated : Legal Guardian
▪ Other reasons : Authorised Person
(Where ROI is verified by an authorised person, attach Power of Attorney with ROI)
2. Partnership Firm
❑ Ifthere is a Managing Partner : Managing Partner.

❑ Due to unavoidable reasons MD cannot verify or If no Managing Partner: Any partner
(not a minor)
3. Limited Liability partnership

✓ By Designated Partner or
✓ Due to unavoidable reason such designated partner cannot verify or If no designated partner
: Any partner or Prescribed person
CA SACHIN GUPTA 126

4. Company
If there No MD or Where Company Company Application for

is MD cannot sign company is being manageme corporate insolvency
due to a Non- wound-up nt taken resolution process has
been admitted by
unavoidable resident over by C
Adjudicating
reasons or S Govt Authority under
Insolvency &
Bankruptcy Code,
2016,
By By any By any By the By By insolvency
Managin Director or person duly liquidator Principal professional
g Prescribed authorised Officer appointed by such
Director person Adjudicating
himself Authority
5. HUF
➢ By the Karta himself

➢ If Karta is absent from India or Mentally incapacitated : By Any Adult member
6. Political Party : By Chief Executive Officer of the Party
7. Local Authority : By the Principal Officer of the authority
8. AOP/BOI : By any member or Principal Officer of such AOP/BOI
9. Any other Assessee : By that person or a person who is competent to act on his behalf
The CBDT has, vide Notification No.93/2021 dated 18.8.2021, specified that “any other person” referred to in
section 140(c) and 140(cd) shall be the person, appointed by Adjudicating Authority (i.e., NCLT constituted
under Companies Act, 2013) for discharging the duties and functions of an interim resolution professional, a
resolution professional, ora liquidator, as the case may be, under the Insolvency and Bankruptcy Code, 2016
CA SACHIN GUPTA 127

Sec. 139A : Permanent Account Number (PAN )
Application for allotment of PAN shall be made in the following cases
Total Income exceeds exemption limit Upto 31st May of A/Y relevant to
P/Y
Total sales are or likely to exceed 5 lakhs in any p/y Before end of F/Y
If return is to be filed u/s 139(4A) Before end of F/Y
Non Individual + resident, enters into financial transaction of Upto 31st May of A/Y relevant to
aggregating to 2,50,000 or more in f/y P/Y
MD, director, partner, trustee, author, founder, karta, CEO, Upto 31st May of A/Y relevant to
principal officer or office bearer of person in pt 4 P/Y
Person who intends to enter into such transaction as may be Atleast 7days before date on
prescribed by Board in interest of revenue which he intends to enter into
said transaction
Cash deposit or cash withdrawals aggregating to minimum
20 lakhs in f/y, in one or more account of person with
banking company or co-operative bank to which Banking
Regulation Act, 1949 applies (including any bank or
banking institution u/s 51 of that Act or Post Office
Opening of current account or cash credit account by

person with banking company or co-operative bank to
which Banking Regulation Act, 1949 applies (including
any bank or banking institution u/s 51 of that Act) or
Post Office. [FA,2022
]
Every person who is required to furnish or intimate or quote his PAN , and who,—
(a) has not been allotted PAN but possesses Aadhaar number, may furnish his Aadhaar number in
lieu of PAN, and such person shall be allotted PAN in prescribed manner;
(b) has been allotted PAN, and who has intimated his Aadhaar number, may furnish his Aadhaar
number in lieu of PAN.
CA SACHIN GUPTA 128

Person entering into prescribed transaction, shall quote his PAN or Aadhaar number in documents
pertaining to such transactions & also authenticate such PAN or Aadhaar number, prescribed
manner
Cases where PAN has to be quoted
❖ In all returns, correspondences with any Income Tax authority

❖ In all challans for payment of any sum due under this act
❖ In documents relating to PRESCRIBED TRANSACTIONS
Prescribed Transactions where PAN has to be Quoted : Rule 114B
Particulars of Transactions Value of

Transaction
1. Sale & Purchase of Immovable property
2. Payment to a dealer for purchase of bullion or jewellery > `10,00,000 or
SDV > 10 lacs
3. Sale/Purchase of Securities > `1,00,000 per

transaction
4. Time deposit with any bank > `50,000 or
5. Deposit with post Office Saving Banks >5 lacs in F/Y
6. Cash Payment for purchase of bank draft, pay order, banker
cheque from any bank during one day >`50,000
7. Cash Deposit in any bank/Post office in one account in a day
Paymen
8. Payment to Mutual Fund for purchase of units
9. Payment to company for acquiring shares
10. Payment to company for acquiring debentures or bonds
Paymen
11. Payment to RBI for acquiring bonds
12 Payment of life insurance premium to an insurer in F/Y
13. Cash Payment of Hotel/Restaurant bill at one time > `50,000
14. Cash payment for travel to foreign country or purchase of

foreign currency
CA SACHIN GUPTA 129

15 Sale or Purchase of unlisted shares > `1,00,000 per

transaction
16 Sale or purchase of goods & services other than above > `2 lakhs per
transaction
17. Sale/Purchase of Motor vehicle (other than 2 wheelers)
18. Application for installation of Telephone/Cellular Any value
19. Opening an Account with any bank [other than Time
Deposit/Basic Saving Account]
20 Application for Credit/Debit Card
21. Opening a Demat Account
Special Points : A person does not have PAN Has to give declaration in Form 60
139B : Scheme for submission of returns through Tax return Preparer
➢ Every person Other than

➢ A company or person required to get his accounts audited under any law
➢ May furnish his return
➢ Through Tax Return Preparers
➢ Authorised to act under scheme framed by CBDT
Special Points :
1. Every TRP shall assist, the person furnishing the return, in manner as specified in scheme and
affix his signature on such return
2. TRP shall not include

→ Officer of schedule bank in which assessee has current a/c or has regular dealings or
→ a Legal practitioner in civil courts or
→ a Chartered accountant or
→ an employee of a company or whose accounts are audited u/s 44AB
CA SACHIN GUPTA 130

139AA : Quoting of Aadhaar number
✓ Every person who is eligible to obtain Aadhaar number shall, w.e.f 1/7/17, quote Aadhaar
number—
✓ Application;
(i) in PAN
✓
(ii) in return of income:
✓ If person does not possess Aadhaar Number, Enrolment ID (28 digit) of Aadhaar application
form shall be quoted
✓ Every person allotted Pan upto 1/7/17 & eligible to obtain Aadhaar number, shall intimate
his Aadhaar number to such authority , on or before a date notified by Central Government
in Official Gazette i.e 31/3/2022
✓ Provided on failure to intimate Aadhaar number, PAN allotted shall be made inoperative
wef 1/4/2022
In order to mitigate inconvenience to taxpayers, a window of opportunity has been

provided to the taxpayers up to 31st of March, 2023 to intimate their Aadhaar to the
prescribed authority for Aadhaar-PAN linking without facing
repercussions/consequences. [FA,2022]
✓ Sec 139AA shall not apply to such person or class or classes of persons or any State or part
of any State, as may be notified by the Central
Central Government hereby notifies that the provisions of sec 139AA shall not apply to
individual who does not possess the Aadhaar number or the Enrolment ID and is:—
• Residing in States of Assam, Jammu and Kashmir and Meghalaya or

• Non-resident as per the Income-tax Act, 1961 or
• Age of eighty years or more at any time during the p/y or
• not citizen of India
CA SACHIN GUPTA 131

Sec 234H : Fee for Default relating to intimation of Aadhaar number.
• Where person is required to intimate his Aadhaar number u/s 139AA

• such person fails to do so on or before such date, as may be prescribed,
• he shall be liable to pay such fee, as may be prescribed, not exceeding one thousand rupees,
• at the time of making intimation after the said date.
From 1/4/22 to 30/6/22 : Late fees Rs.500

Wef 1/4/22 : Late fees Rs.1,000
CA SACHIN GUPTA 132

CHAPTER – 17
INCOMES WHICH ARE EXEMPT
SECTION NATURE OF INCOME
10(1) Agricultural income in India

10(2) Sum received by member of HUF out of family Income
10(2A) Partner’s share in the total income of the firm or LLP
10(4) Income by way of interest on moneys standing to his credit in a Non-resident

(External) Account (NRE A/c), is exempt in the hands of an individual, being a
person resident outside India asper the FEMA, 1999 or in the hands of an individual
who has been permitted by the RBI to maintain such account.
10(6D) Income arising to non-corporate non-resident and foreign companies, by way of
royalty from or fees from technical services rendered in or outside India to, the
National Technical Research Organisation (NTRO)
10(10BB) Payment to Bhopal Gas Victims
10(10BC) Any amount received or receivable from Central Govt or State Govt or local authority
by an Individual or his legal heir by way of compensation on account of any Disaster
10(11A) Any payment from an account, opened in accordance with the Sukanya Samriddhi
Account Rules, 2014 made under the Government Savings Bank Act, 1873
10(16) Scholarship to meet cost of education
10(17) Daily & constit uency allowance received by any Member of Parliament or of
StateLegislatures or any Committee thereof
10(17A) Payment in Cash or Kind

- For Award in public interest by Central Govt., or State Govt, or by body approved
by Central Govt.
- For Reward by Central Govt., or State Govt, for purpose approved by Central
Govt.
10(18) Pension received by an individual who has been in service of Central or State
Government and has awarded “ParamVir Chakra” or “MahaVir Chakra” or “Vir
Chakra” such other gallantry awardas the Central Government notifies is exempt
CA SACHIN GUPTA 133

from tax.
10(26) Income from any source in the specified areas or States in which member of a
Scheduled Tribe is residing or income by way of dividend or interest on securities is
exempt in the hands of member of the Scheduled Tribe.
10(26AAA) Income from any source in the state of Sikkim, dividend income and interest on
securities is exempt in the hands of a Sikkimese individual. This exemption is not
available to a Sikkimese woman who, on or after 1st April, 2008, marries a non-
Sikkimese individual.
10(30) Amount of any subsidy received by any assessee engaged in the business of
growing and manufacturing tea in India through or from the Tea Board
10(31) Amount of any subsidy received by an assessee engaged inthe business of

growing and manufacturing rubber, coffee, cardamom or other specified commodity
in India from or through the Rubber Board, Coffee Board, Spices Board or any
other
10(43) Amount received by an Individual as a loan, either in lumpsum or in instalment, in a

transaction of reverse mortgage referred in sec 47
CA SACHIN GUPTA 134

CHAPTER - 18
TCS
1.Sec 206C : Tax Collected at Source (TCS)
Every person, being a seller shall, at time of debiting of amount payable by buyer to account of
buyer or at time of receipt of such amount from the said buyer in cash or by issue of cheque or draft
or by any other mode, whichever is earlier, collect from buyer of goods, a sum equal to specified
percentage of such amount as income-tax
Following are the items on which collection of TCS applicable:
Category A
1. Alcoholic liquor for human consumption : 1%
2. Tendu leaves : 5%
3. Timber obtained under a forest lease : 2.5%
4. Timber obtained by any mode other than under a forest lease : 2.5%
5. Any other forest produce not being timber or tendu leaves : 2.5%
6. Scrap : 1%
7. Minerals being coal or lignite or iron ore : 1%
Category B (Grant of lease\license o following)

Parking lot, toll plaza, mining and quarrying : 2%
Category C
Motor vehicle exceeding 10 lakhs : 1%
Category D [wef 1/10/2020] : 5%*
Authorised dealer, receives amount exceeding 7 lakhs, for remittance out of India from buyer, being
person remitting such amount out of India under Liberalised Remittance Scheme of RBI
Seller of overseas tour program package, who receives any amount from buyer, being person who
purchases such package,
*1.5% if Authorised dealer receives amount which is remitted out ,is loan obtained from any
financial institution u/s 80E, for pursuing any education:
CA SACHIN GUPTA 135

Category E : 0.1%
Seller, receives consideration for sale of any goods aggregate of such value > 50 lakhs in any p/y,
other than the goods being exported out of India shall,
If buyer has not provided PAN or Aadhaar number to seller, then u/s 206CC TCS shall be deducted
@ 1%
TCS is not applicable if buyer is liable to deduct TDS under any other provision of this Act on the
goods purchased by him from the seller and has deducted such amount.
Buyer means a person who purchases any goods, but does not include,—
(A) Central Government, State Government, local authority embassy, High Commission,
legation, commission, consulate and the trade representation of foreign State; or
(B) Person importing goods into India or any other person as Central Government may,
by notification in the Official Gazette, specify;
Selle means person whose total sales from business exceed 10 crore rupees during f/y immediately
preceding the f/y in which the sale of goods is carried out, not being a person as the Central
Government may, by notification in the Official Gazette, specify
Sec 206CC : Requirement to furnish PAN
Collectee shall furnish his PAN to person responsible for collecting TCS, otherwise TCS will be
collected at higher of following rates :
(i) Twice the rate or
(ii) 5%
Section 206CCA : Higher rate of TCS for non-filers of income-tax return
TCS to be collected from specified person, at higher of following rates-

@ Twice the rate prescribed in the relevant provisions of Act;
@Twice rate or rates in force i.e.rate mentioned in Finance Act; or
@ 5%
If section 206CC is also applicable to specified person, in addition to section 206CCA, then, tax is
required to be deducted at higher of two rates provided in sec 206CC and sec206CCA.
CA SACHIN GUPTA 136

Specified person : A person who has Not filed the Return of income for A/Y relevant to p/y
immediately prior to p/y in which tax is required to be deducted for which ime limit of filling return
of income u/s 139(1) has expired and aggregate of TDS and TCS in his case is₹ 50,000 or more in
p/y
Specified person does not include a non-resident who does not have PE in India.
CA SACHIN GUPTA 137

CA - Inter Income Tax Summary Book May23

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2023 EXAMS

1. He is a Fellow Member of ICAI having teaching experience of more 15 years.

2. He is also a Rank Holder in CA exams.

3. He is the Visiting faculty of ICAI &Various Professional Institutes including

4. Academic expert of ICSI & Other Professional Bodies

5. He has Taught over 30,000 students all across India.

6. He is Winner of Best Tax Faculty Award from The Institute of Companies

7. He is Engaged with Professional Institutes for content/study material generation.

SNO. CHAPTER NAME PAGE NO.

1. BASIC CONCEPTS OF INCOME TAX 3 – 12

3. INCOME UNDER HEAD HOUSE PROPERTY 19 – 23

5. BUSINESS & PROFESSION 45 – 64

7. OTHER SOURCES 77 –87

9. SET OFF & C/F OF LOSSSES 92 – 95

10. DEDUCTIONS 96 - 104

11. AGRICULTURAL INCOME 105 - 106

12. COMPUTATION OF INCOME 107 – 108

13 ADVANCE TAX 109 – 111

14. TDS 112 – 120

15. AMT 121

16. RETURN OF INCOME 126 – 132

17. EXEMPT INCOME 133 - 134

18. TCS 135 -137

Employee stock option

Sections covered in this chapter

Section 4 : CHARGE OF INCOME-TAX

Section 2(31) : PERSON INCLUDES

2) Hindu Undivided Family

3) Company : Sec 2(17): Company means Indian company or foreign company

4) Firm: Sec 2(23) : Firm shall include PF & LLP

5) AOP/BOI, whether incorporated or not , whether for profit or not

7) AJP not falling within any of preceding categories

Section 2(7) : Assessee :

Section 2(9) : Assessment Year

Cases where income of Previous year is Assessed in the same year

P/Y FOR UNDISCLOSED SOURCES OF INCOME

In following cases if no satisfactory explanation is provided by assessee, then amount deemed as

2. Unexplained investment [Sec. 69] : Investment not recorded in BOA

5. Unexplained expenditure [Sec. 69C] : Unexplained Expenditure

No deduction in respect of any expenditure/allowance shall be allowed in computing his income

Income tax calculated on total income /Total Income x 100

RATES OF INCOME TAX (ASSESSMENT YEAR 2023-24)

Nature of Person Exemptio SLAB Rates Surcharge

HUF,AOP,BOI & 2,50,000 As applicable to Same as Individual

Partnership NIL 30% > 1 crore : 12%

Cooperative society NIL 0 – 10,000 : 10% > 1 crore : 7%

Computation of Tax Liability of Individual

Step 1 : Bifurcate Total Income into 2 parts

Step 2 : Subtract Rebate u/s 87A for Resident Individual, if Applicable

Step 3 : Add Surcharge ,If applicable

Step 4 : Subtract Marginal Relief if applicable

Step 5 : Add 4% Health & Education Cess

Step 6 : Resulting Amount is Total Tax Liability

288B : Rounding off of Tax Liability

*Incomes taxable at Special rates

2. Sec 112 : LTCG : 20 %

3. Sec 112A : LTCA : 10%

4. Sec 115BB : Casual Incomes : 30%

5. Sec 115BBE : Income u/s 68 or 69 or 69A or 69B or 69C or 69D : 60%

Sl. No. Total income Rate of tax

(i) without any exemption or deduction under

• Sec 24(b) (for property u/s 23(2)) or

(ii) Without set off of any loss,—