Basis of Charge (Residential Status) under Income Tax Act.

Basis of Charge (Residential Status)

1. Introduction and Meaning of Residential Status
   
2. Residential Status of an Individual
   1. Resident (Ordinary Resident) [Section 6(1)]
   2. Resident But Not Ordinarily Resident
   3. Non-resident [Section-2(30)]
      
3. Residential Status of H.U.F.
   1. Ordinary Resident [Section 6(2)]
   2. Not Ordinarily Resident [Section 6(6)(b)]
   3. Non-Resident [Section 2(30)]
      
4. Residential Status Of FIRM And AOP Or BOI
   1. Ordinary Resident [Section 6(2)]
   2. Not Ordinarily Resident
   3. Non-Resident [Section 2(30)]
      
5. Residential Status of a ‘Company’
   1. Resident [Section 6(3)]
   2. Not Ordinarily Resident
   3. Non-Resident [Section 2(30)]
      
6. Residential Status of ‘Every’ other Person
   
7. Residential Status In A Nutshell

Basic Knowledge/Concepts about Income Tax

Basic Knowledge/Concepts about Income Tax

1. Agricultural Income [Section 2(1A)] - Definition under I.Tax
   
2. Person [Section 2(31)] - Definations under I.Tax.
   
3. Income [Section 2(24)] - Definations under I.Tax.
   
4. Heads of Income [Section-14 ]
   
5. Gross Total Income [Section-80B (5)]
   
6. Total Income [Section 2(45)]
   
7. Rounding off of Total Income [Section 288A]
   
8. Rounding off of Tax [Section 288B]
   
9. Assessment Year [Section 2(9)]
   
10. Previous Year [Section 2(34) r.w. Section 3]
    
11. Income is Taxed in the same Year in which it is Earned
    
12. Constitutional Provision Governing Taxation in India [Article 246 (Seventh Schedule)]
    
13. Taxes to be imposed only by Authority of Law [Article 245]
    
14. Sources Of Law Relating To Income Tax (Documents containing Laws relating to Income Tax)

TAX SAVING SCHEME ON NATIONAL SAVINGS SCHEMES ELIGIBLE U/S 80C

TAX  SAVING  SCHEME ON NATIONAL SAVINGS SCHEMES ELIGIBLE U/S 80C Saving Instrument Rate of Int. p.a. Lock-in Period ( in Yrs.) Aggregate Tax Exemption Limit U/s 80C Bank Depsoit-Tax Saving 8 - 9 % 5 1.5 Lakh Equity Linked ( ELSS) Fund Scheme Market Defined 3 1.5 Lakh Nationa Saving Certificate (NSC) 8.50% 5 1.5 Lakh Post Time Depsot Account ( 5 Yrs.) 8.50% 5 1.5 Lakh Public Provedent Fund (PPF) 8.70% 15 1.5 Lakh Unit Linked Insurance Plan ( ULIPs) Market defined variable 1.5 Lakh Prem. paid on Life Insurance Policies including Pension Plan 5% - 7% 3 1.5 Lakh Senior Citizen Saving Scheme 9.20% 5 1.5 Lakh

TAX SAVING SCHEME ON "NATIONAL SAVINGS CERTIFICATES (NSC)"

TAX SAVING SCHEME ON "NATIONAL SAVINGS CERTIFICATES (NSC) " • Can buy Single / Jointly. • Duration 6 years / 10 years.. • Inrerest rate is 8.5% p.a. for 5 years. & 8.8% for 10 years.. • Interest accrued between 1st. & 5th. year is deemed to have been reinvested. • Investment & deemed reinvestement upto Rs. 1,50,000 is eligible U/s 80C..

TAX SAVING SCHEME ON EQUITY LINKED SAVINGS SCHEME (ELSS)

TAX SAVING SCHEME ON EQUITY LINKED SAVINGS SCHEME (ELSS) • Most favourite investment • Open ended. Lock-in 3 period years. • Many of the Funds have given excellent returns during recent past. Max. tax benefit plus max. returns. • Tax Exemption/Benefit: Eligible for exemption u/s 80C for overall Investment upto Rs. 1.5 Iakh. • Dividend earned is exempt u/s 10(33).

TAX SAVING SCHEME ON LIC’S JEEVAN AKSHAY VI

TAX SAVING SCHEME ON LIC’S JEEVAN AKSHAY VI • Immediate Pension Plan for individual between 30 & 85 years. • Mi Investment: Rs. 1,00,000. • e.g. Investment of Rs. 10 lakh forage at entry 40 will give monthly pension of Rs. 5892. • Tax Exemption : Eligible for exemption uls BOC for overall Investment upto Rs. 1.5 lakh.

TAX SAVING SCHEME ON LIFE INSURANCE POLICIES (LIC)

TAX SAVING SCHEME ON LIFE INSURANCE POLICIES (LIC) • Variety of Plans available. • Major Benefit: Life Risk Cover.  • Encourages to save compulsorily.  • Besides covering life risk, gets tax benefit both at entry (premiums paid) & exit point (Maturity + Bonus).  • Asset is created without having one.  • Tax Exemption: Eligible u/s 80C for overall Investment upto Rs.1.5 lakh & maturity amount (Investment + Bonus) is totally exempt u/s 10(100). For policies taken on or after 1.4.2003, prem. exceeding 20% of the S. A. & policies taken on or after 1.4.2012 prem. exceeding 10% of the S.A. in any year, will not enjoy tax free returns uls 10 (10 D) or benefit u/s 80C.

TAX SAVING SCHEME ON BANK DEPOSITS

TAX SAVING SCHEME ON "BANK DEPOSITS " • A term Deposit to be opened with a scheduled Bank in the prescribed form. • Mi Investment Rs. 100/-Max. 1 Lakh. • The Term will be 5 Years. • Premature encashment not permitted. • Income-tax benefit amount of term deposit invested along with PPF/LIC/ NSC/ULIP, etc upto a max. of Rs.1.5 Lakh eligible for deduction u/s 80C. • interest earned on the deposit is taxable.

PUBLIC PROVIDENT FUND (PPF)

PUBLIC PROVIDENT FUND (PPF) • Option to continue after maturity for every 5 years. • Investment: Mm. 500; Max : 1.5 lac p.a. • Int. @ 8.7% compounded annually. • Can withdraw 50% of the balance from 7th year onwards. • An amount equal to withdrawal can be invested from current year’s income to make the account a self sustaining one. • Loan upto 25% of balance available (2 years ago) is allowed upto the end of 5th year. • Second loan is given after clearing the first loan. • No loan is given after 6 years from the date of first subscription. • After 15 years entire balance can be withdrawn. • Interest earned is totally exempt u/s 10(11). • Tax Exemption : lnvest uptoRs.1,50,000 qualifies for deduction u/s 80C.

POST OFFICE TIME DEPOSIT ACCOUNT

POST OFFICE TIME DEPOSIT ACCOUNT • An individual can open only one account besides his GPF account. • Option to pay each contribution in one Iumpsum p.a. or in 12 installments. • Period: 15 yrs.(Min. 16 annual contributions). Can be contd. Further every 5 yrs. • Any individual can open an account singly or jointly. • More than one account can be opened without any limit. • Account can be opened for 1,2,3 and 5 years. • Interest for 5 years deposit is 8.4% • Premature withdrawal after 1 year attracts 2% penalty on interest applicable. • Amount withdrawn before 5 years period, tax will have to be paid on the withdrawn amount treating it as the income of that year. • Tax Exemption: Only 5 years term deposit with a Max. Investment of Rs. 1.5 Iakh eligible u/s 80C.

SENIOR CITIZENS TAX SAVINGS SCHEME

SENIOR CITIZENS SAVINGS SCHEME • Individual above 60 years (VRS persons 55 and above) can invest. • Duration 5 years. Can be extended for further 3 years. • Multiple/Joint accounts are allowed. • Maximum Limit 15 Lakh. • Lock-in period 1 year. Premature closure allowed with penal interest. • Interest @ 9.2% p.a. payable Qly. • 1.5 Iakh invested earns Rs. 3450 per Qtr. • Interest earned is taxable. • Tax Exemption: Eligible for exemption U/s 80C for overall Invest. upto Rs. 1.5 lakh. Int. earned is taxable.

Computation of Total Taxable Income

1. Income from 'Salary'

> Computation of "Gross Salary" > Computation of "Net Salary Income" > Allowances Under Section 17(3) > 'Perquisies' & 'Income Tax' ( Taxable & Exempted) > Profit in Liew of Salary > Exemption of Amounts Specified in the Income Tax Rules > Deductions Under Sec.80C > Chat Showing Computation of 'Salary' Income

2. Income from 'House Property'

> Sec. 22 : Definition of "Income from House Property" > Income Excluded from Tax Under " Income from House Property" > Computation of Income from 'Let-Out Property' > Sec.23(1) : Gross Annual Value > Deduction of Municipal Tax > Deductions Under Sec. 24 > Computation of Income from 'Self-Occupied Property' > Chat Showing Computation of House Property Income > Check List for Assessment of House Property Income

3. Income from 'Business or Profession'

> Meaning of 'Business' and 'Professions' > Expenses than can be Claimed as Deductible Expenses > Expenses that are considered 'Expenses not Deductible' > Charging Deemed Profits to Tax > Meaning of 'Set-Off' and 'Carry Forward' of Business Losses > Professional / Businessmen who have to Maintain Books of Accounts > Chat Showing Computation of Profits and Gains of 'Business or Professions'

4. Income from 'Capital Gain'

> Capital Gains - Basis of Charge > Rate of Tax - Capital Gains > Long and Short-Term Capital Gains Tax > Exemptions uder Capital Gains > Sec.48 : Computation of Capital Gains > Charging of Tax for Short-Term / Logn-Term Capital Gains > Chat Showing Computation of Capital Gains > Check List for Assessment - Capital Gains

5. Income from 'Other Sources'

> Sec.56 : Basis of Charges > Deductions from 'Income from Other Sources' > Amounts Expressly Disallowed > Income From Other Sources – in  Nutshell

6. 'Clubbing of Income' - Aggregation of Income

> Sec.60 : Transfer of Income without Transfer of Assets > Sec.61 : Revocable Transfer of Assets > Sec.64 : Inclusion of Income of Spouse, Minor Child , etc. in income of Individual

7. 'Set Off and Carry Forward of Losses'

> Sec.70 : Set-Off of Loss from one Source against Income from another Source Under the Same Head of Income. > Sec.71 : Set-Off of Loss from one Head against Income from another Head > Sec.71 B : Carry Forward and Set-Off of Loss Under the Head 'Income from House Property' > Sec.72 : Carry Forward and Set-Off of Business Losses > Sec.73 : Losses in the Speculation Business > Sec.74 : Losses Under the Head 'Capital Gains'. > Sec.74a : Losses from Certain Specified Sources Falling Under the Head 'Income from Other Sources' > Table showing Set Off and Carry Forward of Losses

8. 'Deductions' from Gross Total Income

> Deductions in Respect of Certain Payments > Deductions in Respect of Certain Incomes > Other Deductions

"Appeals" Under Income Tax Act. 1961.

1.      ‘Right To Appeal’ Is A Statutory Right Under Income Tax Act.

1A.      Parties to an Appeal

1B.      Various Appellate Authorities under Income Tax Act

1C.      Appealable Order Before Commissioner (Appeals) [Section 246A]

1D.      Appeal By Person Denying Liability To Deduct Tax In Certain Cases [Section 248]

1E.        Form Of Appeal, Fee And Time Limit [Section 249]

1F.       Pre-requisites for appeal

1G.      Procedure in appeal [Section 250]

2.      Powers of Commissioner (Appeals) [Section 251)

3.      Appeal to Appellate Tribunal

4.      Constitution of Tribunal (Section 252)

5.     Appealable Orders [Section 253]

6.      Form, Fee And Time Limit Of Appeal [Section 253 (6)]

7.      Orders Of The Appellate Tribunal [Section 254]

8.      Procedure in Appeal [Section 255]

9.      Appeal to National Tax Tribunal (NIT) w.e.f. 6-1-2006

A1.      Establishment of National Tax Tribunal [Section 3]

A2.      Composition of National Tax Tribunal [Section 4]

A3.      Constitution and Jurisdiction of Benches [Section 5]

A4.      Qualification of Chairperson and Members [Section 6]

A5.      Appointment of Chairperson and Members [Section 7]

A6.      Terms of Office of Chairperson and other Members [Section 8]

A7.      Resignation of Chairperson and other Members [Section 9]

A8.      Removal and Suspension of Chairperson and Other Members [Section 11]

A9.      Officers and Employees of National Tax Tribunal [Section 12]

A10. Appearance before National Tax Tribunal

A11. Member to act as Chairperson or to discharge his functions in certain circumstances

A12. Who can file an Appeal ? [Section 15(2)]

A13. Time limit for filing Appeal [Section 15(2)(a)]

A14. Form and Fees of Appeal [Section 15(2)(b)&(c)]

A15. Formulation of ‘Question of Law’ [Section 15(3)]

A16. Deposit of Tax before Filing Appeal [Section 15(4)]

A17. Procedure and Powers of National Tax Tribunal [Section 16]

A18. Finality of Orders of National Tax Tribunal [Section 17]

A19. Decision by Majority [Section 18]

A20. Special Bench [Section 19]

A21. Interim Order [Section 20)

A22. Power to Punish for Contempt [Section 21]

A23. Order of National Tax Tribunal [Section 22)

A24. Transfer of Pending Cases from High Court [Section 23]

A25.    Appeal to Supreme Court [Section 24]

10.    Direct appeal to High Court from 1-10-98 onwards [Section 260A]

11.    Appeal to Supreme Court after 1-10-98 [Section 261]

Charitable & Religious Trust :Formation-Registration-Management-Taxation

1. What is ‘Charitable Purpose’ for Income Tax Purposes ?  [ Sec. 2(15)] 2. Laws Applicable to Charitable Institutions / Trusts 3. Provisions Relating to Anonymous Donations & Gifts [ Sec. 115BBC ] 4. Formation Of A ‘Charitable & Religious Trust’ 5. TRUST DEED of A ‘Charitable & Religious Trust’ 6. Practical Tips on Drafting of Trust Deed of A ‘Charitable & Religious Trust’ 7. Need for Registration of A “Charitable & Religious Trust” 8. Types of Registrations of A “Charitable & Religious Trust” 9. Procedure for Registration of Trust under the Indian Trusts Act, 1882 10. Registration of Trust under Sections 11 & 12 of the Income Tax Act, 1961 11. Cancellation of Registration of A “Charitable & Religious Trust” 12. Belated Filing of Application for Registration of A “Charitable & Religious Trust” 13. Practical Problem on Registration of a ‘Trust’ U/s. 12A 14. Creation of a Valid Charitable or Religious Trust 15. Income Tax Provisions For A “Charitable & Religious Trust” 16. ‘Exemption’ Provisions For A “Charitable & Religious Trust” 17. Approval Of “Trust”  U/S 80G Of The Income Tax  Act. To Give Some Benefits To Its Donors 18. Deduction To A Trust U/s 35AC 19. Power Of The ‘Trustees’ Of ‘Trust’ 20. [Section 2(15)] : Exemption of Income of a Charitable & Religious Trust 21. [Section 11(2)] :      Accumulation or Setting Apart of the Trust Income for a Specific Purpose 22. [Section 11(4)] : Income from Business Undertaking of Property held under ‘Charitable Trust’ in Excess of the Income Shown in the Account 23. [Section 11(5)] : Forms or Modes of Money Accumulated or Set Apart of Trust Income Invested or Deposited 24. Trust Partly for Charitable or Religious Purpose and Partly for Other Purposes 25. [Section 11(1A)] : Capitai Gains Of The Trust For Charitable Purposes 26. [Section 12] : Income Of Religious Trusts Or Institutions From Voluntary Contributions 27. [Section 12AA] : Procedure For Registration Of A Trust Or Institution 28. [Section 13] : Income Of Charitable Or Religious Trust Does Not Qualify for Exemption u/s 11 or 12 29. Electoral Trusts Scheme, 2013 (Vide Not.No. SO. 309(E), dated 31.01.2013) 30. Functions Of Electoral Trusts - ET [Rule 17CA] [Vide Not.No. SO. 308(E), dated 31.01.20131.] 31. Important Points To Be Consider While Filing The Return Of A Charitable Trust Or Religious Institution: 32. Private Charitable Or Religious Trusts  ( Sections 161, 164 & 166 ) 33. [Section 164(1)]: Where Shares Of The Beneficiaries Of a Private Discretionary Trust Are Indeterminate Or Unknown : 34. Property held under Trust Partly For Religious Purposes And Partly For Other Purposes : 35. ORAL TRUST [Sections 160(1)(v) and 164A ] 36. [Section. 167B] : Association Of Persons (AOP) And Body Of Individuals (BOI) 37. Tax Rates applied on Charitable or Religious Trusts 38. [Section-67A] :  Method Of Computing A Members Share In Income Of Association Of Persons (AOP) Or Body Of Individuals (BOI) 39. Provisions to Securitisation Trusts [As introduced by the Finance Act, 2013] 40. Definition of ‘Securitization Trusts’ as per SARFAESI Act. 41. Definition of ‘Securitization Trusts’ as per the SEBI Regulations 42. Definition of ‘Securitization Trusts’ as per the RBI Guidelines 43. Provisions relating to Tax on Distributed Income by Securitisation Trust 44. BUSINESS TRUSTS – Meaning & Provisions