Income Tax Law of India

INCOME TAX LA
O! INDIA
"# $ DR. T.%. &AIN A!TER'C(OOL ce)tre for soc*al e)tre+re)e,rsh*+ s*-aka., -eter*)ar# hos+*tal roa/ "*ka)er 001001 ra2astha)3 *)/*a !OR 4 565'E 5ARTICI5ANT' .o"*le $ 9179111100890
5 DECEMBER 09 www.afterschool.tk 1
M# wor/s ....
O,rs *s a ;reat co,)tr# w*th *..e)se e)tre+re)e,r*al +ote)t*al. (owe-er3 o,r le;al s#ste. a)/ ta<at*o) s#ste. *s so c,."erso.e that o,r creat*-*t# a)/ tale)t *s waste/ = ,))ecessar*l# /*-erte/ *) these sectors. I w*sh that these are s*.+l*f*e/ so that a) or/*)ar# e)tre+re)e,r ca) ,)/ersta)/ these w*tho,t hel+ fro. a)# e<+ert. I w*sh that .ore +eo+le sho,l/ "eco.e e)tre+re)e,rs3 rather tha) "eco.*); a) e<+ert *) a-o*/*); ta<at*o). Let ,s w*sh that so.e l*ke.*)/e/ +erso) *s a"le to reach +ol*c# .ak*); le-el a)/ *s a"le to cha);e these. I ha-e tr*e/ to s*.+l*f# I)/*a) le;al s#ste. a)/ ta<at*o) s#ste. for I)/*a) e)tre+re)e,rs 4 ",t *t *s so co.+l*cate/ that e-e) *f #o, s*.+l*f# *t3 *t w*ll re.a*) co.+l*cate/. A) or/*)ar# I)/*a) e)tre+re)e,r w*shes to re.a*) a) ho)est e)tre+re)e,r a)/ co)tr*",te to the /e-elo+.e)t of )at*o)3 ",t o,r s#ste.s a)/ +rocesses force h*. to a/o+t ,)fa*r .ea)s ..
5 DECEMBER 09 www.afterschool.tk :
!or who. > > >
5r*.ar*l# for those who ha-e "as*c ,)/ersta)/*); of acco,)t*);3 "ookkee+*);3 I)/*a) le;al s#ste.3 a)/ I)co.e ta< Act. e "el*e-e that th*s /oc,.e)t w*ll hel+ o,r f,t,re e)tre+ree,rs ?565'E +art*c*+a)ts@ to ;a*) "as*c ,)/ersta)/*); of I)co.e ta< law *) I)/*a.
L*)ks for "as*c ,)/ersta)/*);
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(O I' A 5ER'ON >
'ec. : ?01@ $ +erso) *)cl,/es *)/*-*/,al3 (C!3 local a,thor*t#3 f*r.3 co.+a)#3 art*f*c*al +erso) etc. !or /eter.*)*); the ta< l*a"*l*t#3 we ha-e to see *ts locat*o) = res*/e)t*al stat,s
ho *s assessee>
'ec. :?8@ $ a +erso) "# who. a)# ta< *s +a#a"le
5 DECEMBER 09
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hat *s #ear>
Assess.e)t #ear as +er sec. :?9@ $ the #ear *) wh*ch *)o.e *s "e*); assesse/ for ta< 4 *t *s of 1: .o)ths. 5re-*o,s #ear as +er sec. 0 $ the #ear for wh*ch *)o.e *s "e*); assesse/ for ta< 4 *t *s the #ear 2,st "efore assess.e)t #ear.
hat *s *)co.e >

'ec. :?:1@ $ a)# +rof*t3 /*-*/e)/3 salar#3 +rof*t *) l*e, of salar#3 +erD,*s*tes3 "e)ef*ts3 -ol,)tar# co)tr*",t*o)s rece*-e/ "# tr,sts3 cash "e)ef*ts ,)/er -ar*o,s +ro-*s*o)s of sec :A3 ca+*tal ;a*) etc. ?*t *s a -er# w*/e /ef*)*t*o) a)/ *)cl,/es *)co.e fro. all the so,rces *)cl,/*); *)co.e fro. lotter#3 s+ec,lat*-e ",s*)ess etc. @
5 DECEMBER 09 www.afterschool.tk A
I)co.e hea/s
There are 5 hea/s of *)co.e $ salar# ho,se +ro+ert# ca+*tal ;a*) ",s*)ess a)/ +rofess*o) other *)co.e
Res*/e)t*al stat,s of *)/*-*/,al
There 0 +oss*"*l*t*es $ res*/e)t a)/ or/*)ar# res*/e)t res*/e)t a)/ )ot or/*)ar# res*/e)t )o)Bres*/e)t
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: "as*c Co)/*t*o)s for Res*/e)ts

1. at least 1A: /a#s of sta# *) I)/*a /,r*); +re-*o,s #ear OR :. at least 90 /a#s of sta# *) I)/*a /,r*); +re-*o,s #ear 7 095 /a#s of sta# *) 1 #ears +recee/*); the +re-*o,s #ear
: a//*t*o)al co)/*t*o)s for or/*)ar# res*/e)ts
1. res*/e)t *) at least : o,t of +re-*o,s 10 #ears AND :. sta# of at least 800 /a#s /,r*); last 8 #ears "efore the +re-*o,s #ear.
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(O TO DETERMINE RE'IDENTIAL 'TATC' O! ARTI!ICIAL 5ER'ON'

!or co.+a)*es a)/ other art*f*c*al +erso)s3 #o, ha-e to see where the*r .a)a;e.e)t a)/ co)trol *s locate/. Res*/e)t*al stat,s /e+e)/s o) the*r .a)a;e.e)t a)/ co)trol at the t*.e of *)co.e .
hat *s ta<a"le o,t of the follow*); $

1. *)co.e acr,e/ a)/ rece*-e/ *) I)/*a $ ta<a"le for all :. *)co.e ear)e/ a)/ rece*-e/ o,t of I)/*a $ ta<a"le o)l# *)case of ROR ?res*/e)t a)/ or/*)ar# res*/e)t@ 0. I)co.e acr,e/ = rece*-e/ o,t of I)/*a fro. a ",s*)ess co)trolle/ *) I)/*a $ )ot ta<a"le for NR o)l#
E*-ek has "ee) *) I)/*a as ,)/er $

:001 $ :0 /a#s :00:$ 00 /a#s :000 $ 10 /a#s :001 $ 50 /a#s a)/ so o) t*ll :009. a)swer $ he *s a res*/e)t "eca,se he re.a*)e/ for 100 /a#s /,r*); :009 a)/ for F095 /a#s /,r*); +ast 1 #ears3 ",t he w*ll )ot "e ROR as he sta#e/ for less tha) 800 /a#s *) 8 #ears.
Roh*t has "ee) *) I)/*a as ,)/er $

:009 $ :0 /a#s :00A$ 00 /a#s :008 $ 10 /a#s :009 $ 50 /a#s a)/ so o) . a)swer $ he *s a )o)Bres*/e)t "eca,se he re.a*)e/ for o)l# :0 /a#s /,r*); :009
'+ec*al c*rc,.sta)ces re;ar/*); "as*c co)/*t*o)s

If a) *)/*-*/,al lea-es I)/*a for e.+lo#.e)t or as a .e."er of crew B the) *)stea/ of 90 we ha-e to take 1A: /a#s. A +erso) of I)/*a) or*;*) settle/ a"roa/ a)/ co.es to I)/*a for a -*s*t o)l# 4 *) that case also take 1A: /a#s *)stea/ of 90 /a#s.
Roh*tGs fr*e)/ &e)*fer *s fro. I)/*a) or*;*). 'he co.es to -*s*t I)/*a fro. 1 March to 01 Octo"er3 /eter.*)e her res*/e)t*al stat,s
!ro. 1=0 to 01=10 4 we ha-e $ :15 /a#s3 th,s she *s res*/e)t ",t )ot or/*)ar# res*/e)t
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h*ch of these are ta<a"le >

1. a.o,)t rece*-e/ ,)/er ke#.a) *)s,ra)ce +ol*c# a)/ ,)/er 'ec. A0 DD :. Bo),s rece*-e/ fro. )ot*f*e/ ;o-t. 'ec,r*t*es 0. e/,cat*o)al scholarsh*+ 1. /a*l# allowa)ce rece*-e/ "# M5
'ol,t*o)
No)e *s ta<a"le the are ta< free ,)/er sec. 10D3 10?15@3 10?19@3 10?18@ res+ect*-el#
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E*-ek o+e)s a tra/e ,)*o) a)/ has lots of ear)*); *) that ,)*o). Is the *)co.e ta<a"le >
No 4 *t *s ta< free as +er sec. 10?:1@
5 DECEMBER 09
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E*-ek sets ,+ a )ew ",s*)ess o) Ma# 153 :00A. hat *s the +re-*o,s #ear for the assess.e)t #ear :009B10.
The +re-*o,s #ear w*ll "e 15 Ma# :00A to 01 March :009
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hat are *)cl,/e/ *) salar# >

'alar# *)cl,/e all +a#3 allowa)ces3 "o),s3 +erD,*s*tes ?fac*l*t*es +ro-*/e/ to e.+lo#ees3 wh*ch ca) "e e-al,ate/ *) .o)e#@3 co..*ss*o)3 etc. B# what e-er )a.e calle/. I) salar# hea/3 we a// the follow*); to salar# $ e.+lo#erGs co)tr*",t*o) to 5!3 ta<a"le +erD,*s*tes ,)/er sec. 18?:@ 3 E'O5s3 DA3 other allowa)ces
5 DECEMBER 09 www.afterschool.tk :0
hat *s ta<a"le (RA>

(RA *s e<e.+t to the e<te)t of the least of the follow*); $ 1.Re)t +a*/ B 10H of salar# ?"as*c7DA7co..*ss*o)@ :. 10H salar# ?50H *) case of 1 Metros@ 0. Act,al allowa)ce rece*-e/
Is 5! ta<a"le >
There are 0 t#+es of 5! $ 1. stat,tor# ?;o-t.@ :. reco;)*se/ 0. ,)reco;)*se/ stat,tor# 5! *s f,ll# e<e.+t e.+lo#erGs co)tr*",t*o) *) reco;)*se/ 5! *s ta< free to the e<te)t of 1:H3 rest are e<e.+t. C)reco;)*se/ 5! *s ta<e/ o)l# whe) the e.+lo#ee collects +a#.e)t ?e.+lo#eeGs co)tr*",t*o) *s e<e.+t3 ",t *)terest *s take) *) *)co.e fro. other so,rces@
',+era)),at*o) f,)/
Ta< free ,)/er sec. 10?10@
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Ra-* works *) a )o)B;o-t. Off*ce. (e ret*res o) 01 March after 15 #ears of ser-*ce . (*s salar# *) &a) 4 March was :1000 +.3 ",t "efore that *t was :0000 +.. (e ;ets Rs. : lakhs as lea-e e)cash.e)t. (ow .,ch *s ta<free>
1. a-era;e for 10 .o)ths $ ?:1I0 7 :0I8@ J :13:00 for 10 .o)ths $ :1:000 :. for 1.o)th for each #ear of ser-*ce 15I:1:00J 01A000 0. Rs. 0 lakhs. 1. act,al a.o,)t : lakh 'o the least of a"o-e Rs. : lakhs *s ta<free.
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Ar,) 2o*)e/ o) 1=1=A53 ",t f*<at*o) was /o)e o) 1=8=09 K :9900 *) +a#scale of :5000B A00B00000. (e ret*res o) 1=1:=9. (e was +a*/ 0.0 lakhs as ;rat,*t#. Deter.*)e ta<a"*l*t#.
A-era;e for 10 .o)ths $ ?5 I :5A00 7 5I:9900@=10 J:9:00 The least of follow*); *s ta<free $ 1. 15=:9I ::I:9:00 J 00:50A :. Rs. 0.5 lakhs 0. act,al a.o,)t $ 0.0 lakhs th,s Rs. 0.0 *s ta<free ?*f ;rat,*t# act was )ot a++l*ca"le 4 the 1st a.o,)t w*ll "e 1=:I:1I:9:00 J:851003 wh*ch w*ll "e ta<free 4 here we w*ll take :1 #ears3 as o)l# co.+lete/ #ears w*ll "e co,)te/.@
5 DECEMBER 09 www.afterschool.tk :A
Retre)ch.e)t co.+e)sat*o)
It *s +a*/ at the t*.e of retre)ch.e)t ?lea-*); the e.+lo#ee@ follow*); *s ta< free ?least of the follow*); @ $ 1. 5 lakhs :. 15 /a#sGs wa;es for ),."er of #ears worke/ ?ro,)/ of to ;reater a.o,)t3 *f .ore tha) 9 .o)ths. @
E.R.'. 5ALMENT'
LEA'T O! T(E !OLLO IN6 I' EXEM5T $ 1. 5 LA%(' :. Last salar# I 0 I ),."er of co.+lete/ #ears of ser-*ce ?sec. 10?10c@
Ear)e/ Lea-e
As ,s,al free for ;o-t. E.+lo#ees for others least of the follow*); $ 1. 0 lakhs :. 10 .o)thGs salar# 0. $ M00 /a#s cre/*t for each #ear of ser-*ce ?salar# J a-era;e for the last 10 .o)th 4 salar# J salar#7DA7co..*ss*o)@
5e)s*o)
C)co..,te/ $ .o)thl# +a#.e)ts 4 *t *s ta<a"le for all co..,te/ $ B l,.+ s,. +a#.e)t As ,s,al free for ;o-t. E.+lo#ees for others $ co..,te/ +e)s*o) *s ta<free to the follow*); le-els $ r/ 1=0 *f ;rat,*t# *s +a*/ N *f ;rat,*t# *s )ot +a*/
5 DECEMBER 09 www.afterschool.tk 0:
6rat,*t# >
It *s a l,.+s,. +a#.e)t at the t*.e of ret*re.e)t a)/ *t *s ta<free for ;o-t. E.+lo#ee. !or others *t *s ta<free to the least of the follow*); $ 1. 0.5 lakhs ?th*s has *)crease )ow3 checko,t@ :. 15=:9 for each #ear of ser-*ce
(ow to -al,e f,r)*she/ acco..o/at*o) >
If *t *s ow)e/ "# e.+lo#er3 B 10H of cost of f,r)*sh*); *f *t *s h*re/ 4 the act,al e<+e)ses +a*/ "# e.+lo#er as re)tal char;es
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(ow to -al,e /o.est*c ser-a)t fac*l*t# $>
If the e.+lo#er has +ro-*/e/ /o.est*c ser-a)t fac*l*t# to e.+lo#ee3 the act,al a.o,)t s+e)t "# e.+lo#er *s +erD,*s*te of e.+lo#ee.
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(ow to -al,e e/,cat*o)al fac*l*t# >

Act,al .o)e# s+e)t "# e.+lo#er *s take) as +erD,*s*te 4 whe) the e.+lo#er *s +ro-*/*); e/,cat*o) to the ch*l/re) of the e.+lo#ees. If the e/,cat*o)al *)st*t,*to) *s "e*); .a)a;e/ "# e.+lo#er3 the) *t *s take) as NIL ?+ro-*/e/ the e<+e)/*t,re "# e.+lo#er *s ,+to Rs. 1000 +er .o)th +er ch*l/ @.
I)terest free loa)s

he) e.+lo#er +ro-*/es *)terest free loa) 4 the +erD,*s*te *s take) at s+ec*f*e/ rates. If *t *s co)cess*o)al rate 4 the /*ffere)ce of rates *s take) as +erD,*s*te. The rates are $ +erso)al loa) $ 1:.85H3 car loa) 8.5H3 ho,s*); loa) $ AH ?these rates are re;,larl# ,+/ate/ 4 #o, ha-e to k)ow the latest sla"s@.
Me/*cal fac*l*t#
A))a,l re*.",rse.e)t of .e/*cal "*lls ,+to Rs. 15000 *s ta< free. !ree .e/*cal fac*l*t# *) e.+lo#erGs hos+*tal *s ta< free. Treat.e)t a"roa/ for e.+lo#ee = h*s fa.*l# *s ta<free ,+to Rs. : lakhs. ?these l*.*ts are re-*se/ "# ;o-t3 so check the latest l*.*ts@.
5 DECEMBER 09 www.afterschool.tk 0A
!ree l,)ch >

It *s ta<free 4 +ro-*/e/ the -al,e of l,)ch *s )ot .ore tha) Rs. 50 s*.*larl# tea3 refresh.e)ts etc. 5ro-*/e/ free to e.+lo#ee are ta< free. Mo)e# s+e)t "# e.+lo#er o) tra*)*); of e.+lo#ee *s also ta< free.
5rofess*o)al ta< > >
Mo)e# s+e)t "# e.+lo#er as +rofess*o)al ta< *s o)ce a//e/ a)/ the) *ts /e/,ct*o) ca) "e cla*.e/. 'o o)ce a// *t as +erD,*s*te a)/ the) cla*.*ts /e/,ct*o) ,)/er sec. 19 ?***@
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ho *s s+ec*f*e/ e.+lo#ee>
ho *s /*rector or who has :0H -ot*); +ower *) co.+a)# or who ;ets salar# ?*)cl,/*); +erD,*s*tes @ of Rs. 50000 or .ore +er a)),.. Car3 ;as3 a)/ other fac*l*t*es are ta<a"le o)l# o) '+ec*f*e/ E.+lo#ees.
De/,ct*o) for $ E)terta*).e)t allowa)ce ?sec. 19?**@

It *s e<e.+t for ;o-t. E.+lo#ees to the least of follow*); $ 1. 5000 :. 1=5th of salar# 0. act,al allowa)ce
5 DECEMBER 09
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Roh*t o+e)s a -e)t,re ca+*tal f,)/ to +ro.ote e)tre+re)e,rs a)/ has lots of ear)*); *) that f,)/. Is the *)co.e ta<a"le >
No ?sec. 10?:0f"@
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6a,ta. sets ,+ a ,)*t *) No*/a e<+ort +rocess*); Oo)e. Is the *)co.e ta<a"le>
No ?sec. 10A @
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E*-ek la,)ches a .,t,al f,)/ a)/ ;et *t re;*stere/ w*th RBI a)/ AM!I. Is the *)co.e of .,t,al f,)/ ta<a"le >
No ?sec. 10 ?:0D@
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Bothra a)/ ',ra)a Car+ets *s a 100H e<+ort or*e)te/ ,)*t. Is the *)co.e ta<a"le >
No ?s,"2ect to so.e co)/*t*o)s@ 'ec. 10 B
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Roh*t la,)ches Bachao 5ol*t*cal 5art# a)/ ear)s h,;e .o)e# "# wa# of /o)at*o)s fro. +eo+le a)/ "# re)t*); o,t off*ce +re.*ses. Is the *)co.e ta<a"le >
No ?sec. 10A@
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hat *s a;r*c,lt,re *)co.e>

As +er sec. :?1a@ $ a)# *)co.e fro. la)/ ,se/ for a;r*c,lt,re +,r+ose *)cl,/*); *)co.e fro. far. ho,se. Calc,late total *)co.e of a +erso) *)cl,/*); a;r*c,lt,re *)co.e a)/ the) re/,ce the a.o,)t of ta< "# the a.o,)t of ta< wh*ch *s worke/ o,t o)l# o) a;r*c,lt,re *)co.e.
E<a.+le $ Roh*tGs *)co.e fro. a;r*c,lt,re *s : lakhs a)/ other *)co.e *s 0900003 what *s h*s ta< l*a"*l*t#>
!*rst a// these $ J 590000 ',++ose Ta< o) th*s a.o,)t *s Rs. 10000 )ow calc,late ta< o) o)l# a;r*c,lt,re *)co.e ? : lakh 7 13903000 4 as .*)*.,. "ase ta< free *)co.e@ $ s,++ose ta< o) th*s *s Rs. 9000 so Roh*t w*ll ha-e to +a# $ 10000B9000 J 1000 so A;r*c,lt,re *)co.e *s the "est .ea)s to a-o*/ ta<.
Ashok ret*res fro. ;o-er).e)t ser-*ce. (e ;ets follow*); $

6rat,*t# 5e)s*o) ER' co.+e)sat*o) (RA ',+er a)),at*o) f,)/ LTC wh*ch of these are ta<a"le >
'ol,t*o)
All these are ta< free s,"2ect to so.e l*.*tat*o)s 4 rea/ sec. 1053 10?10@3 10?10A3 a)/ 10AA3 10A@ for /eta*ls.
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hat *s a ;rat,*t# >

he) a) e.+lo#ee ret*res3 he rece*-es ;rat,*t# fro. h*s e.+lo#er. If he has worke/ for .*)*.,. 5 #ears3 he .a# ;et ;rat,*t#. The a.o,)t of ;rat,*t# *s e<e.+t to the least of the follow*); $ 1. Rs. 050000 :. 15=:9 I ),."er of #ears worke/ 0. act,al ;rat,*t# for ;o-er).e)t e.+lo#ee the ;rat,*t# *s ta< free.
hat *s 5a#.e)t of 6rat,*t# Act 198:

It *s the .a*) law re;ar/*); +a#.e)t of ;rat,*t#. If a) e.+lo#ee *s )ot work*); *) ;o-t. De+art.e)t3 the) +a#.e)t of ;rat,*t# sho,l/ "e as +er th*s act. (owe-er3 *) so.e cases th*s law *s )ot a++l*ca"le a)/ *) that case 4 the calc,lat*o) of ta< free ;rat,*t# *s l*ttle "*t /*ffere)t ?*)stea/ of 15=:93 we ha-e to take half .o)th salar#@.
!or the assess.e)t #ear :008BA3 E*-ek has a;r*c,lt,re *)co.e of Rs. 5A000 a)/ )o)Ba;r*c,lt,re *)co.e of 1:0000 what *s h*s ta< l*a"*l*t#>
!*rst calc,late *)co.e ta< o) ?1:075A@ J 18A000 f*rst 1 lakhs J free )e<t 50000 J 10H so 50003 :A000 I :0H 5900 )ow calc,late o) 5A000 a// 1 lakh3 ?free l*.*t@ $ 15A000 ta< o) 50000J 50003 :0H o) A000 J 1900 )et ta< l*a"*l*t# $ ?500075900B5000B1900@J 1000 a)swer
h*le ret*r*); Ma) Moha) ;ets Rs. 1 lakhs as ear)e/ lea-e. (e worke/ for :5 #ears. (*s a-era;e salar# /,r*); last 10 .o)th J :0000.
Ta< free ?sec. 10?10AA@ $ least of the follow*); $ 1. :0000I10 J : lakhs ?10 .o)ths@ :. 0 lakhs 0. 00 /a#s for each #ear worke/ $ :5I:0000 J 5 lakh the .*)*.,. *s : lakh3 so *t w*ll "e ta<free.
'har,kh %ha) ret*re/ fro. 'BI o) ER'. (e ;ot Rs. 10 lakhs. (*s salar# J :00003 DA J :0000. (e worke/ for :0 #ears w*th 'BI (e ha/ :0 .ore #ears of ser-*ce left.
M*). Of the follow*); *s ta<free ?sec. 10?10c@@ 1. 0.o)ths for ),."er of #ears $ :0I0I10 J :100000 :. 5 lakhs 0. No. Of .o)thGs salar# $ :0 I 10000 J A lakh 1. act,al a.o,)t J 10 lakh th,s o)l# 5 lakh w*ll "e ta<free.
Na)/a) N*leka)* ;ets (RA of : lakhs +er .o)th *) Delh*3 h*s .o)thl# salar# *s Rs. :0 lakhs. (e +a#s Rs. 1 lakh as .o)thl# ho,se re)t. !*)/ ta<a"*l*t#>
Least of the follow*); *s ta<free $ ?sec. 10?10A@ r,le :A@ 1. re)t +a*/ 4 10H salar# J 1 4 : lakh J Oero :. 50H of salar# J 10 Lakhs I 1: 0. act,al allowa)ce $ : Lakhs +er .o)th. 'o Pero *s ta< free 4 all *s ta<a"le.
I)co.e fro. (o,se 5ro+ert#

Calc,late the follow*); *) the sa.e seD,e)ce $ 1. Act,al re)t = rece*-a"le re)t ?A@ :. M,)*c*+al -al,e ?"@ 0. fa*r re)t ?c@ 1. sta)/ar/ re)t ?/@3 co.+are " w*th c a)/ take h*;her a.o,)t a)/ let ,s call *t E. Now co.+are E w*th D3 take the lower a.o,)t. Th*s *s ERR ?e<+ecte/ reaso)a"le re)t@. Let ,s call *t !. Co.+are *t w*th act,al re)t3 take h*;her a.o,)t. De/,ct .,)*c*+al ta<3 ;et ;ross a)),al -al,e3 /e/,ct *)terest +a*/ a)/ other /e/,ct*o)3 ;et )et a)),al -al,e.
M,)*c*+al -al,e 103 fa*r re)t 103 sta)/ar/ re)t 103 re)t rece*-e/ A03 what *s ;ross a)),al -al,e.
(*;her of .,)*c*+al -al,e a)/ fa*r re)t J 10 lower of sta)/ar/ re)t a)/ 10 J 10 co.+are 10 w*th act,al re)t a)/ take h*;her J A0 th*s *s the a)swer.
5 DECEMBER 09
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59
ME J 993 !R J A03 'R J A:3 AR J 893 (AT I' 6RO'' EALCE

(*;her of ME Q !R J 99 Lower of th*s a)/ 'R J A:3 h*;her of th*s a)/ AR J A: a)swer J A: a)swer
ME J 993 !R J 9A3 'R J 983 AR J 98.53 (AT I' 6RO'' EALCE
(*;her of ME Q !R J 9A3 lower of th*s a)/ 'R J 983 h*;her of th*s a)/ AR J 98.5 a)swer
5 DECEMBER 09
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91
ME J A13 !R J A03 'R J 903 AR J 893 (AT I' 6RO'' EALCE
(*;her of ME a)/ !R J A1 lower of th*s a)/ 'R J 90 h*;her of th*s a)/ AR J 89 a)swer
5 DECEMBER 09
www.afterschool.tk
9:
hat are the /e/,ct*o)s fro. 6ross -al,e *) ho,se +ro+ert#>

!*rst of all /e/,ct .,)*c*+al ta<es3 to f*)/ NAE. The) /e/,ct stat,tor# /e/,ct*o) K00H *)terest o) "orrowe/ ca+*tal. I)terest o) +r*or +er*o/ ?+er*o/ "efore co)str,ct*o) of +ro+ert#@ *s also allowe/ *) 5 *)stal.e)ts. These /e/,ct*o)s are ;*-e) *) sec. :1. ?a Q "@
I)a/.*ss*"le /e/,ct*o)s
!ollow*); /e/,ct*o)s are )ot +er.*tte/ $ 1. ,)real*se/ re)t 4 real*se/ later. ',++ose #o, /*/)t real*se re)t of Rs. 5000 *) #ear :0003 )ow #o, real*se *t3 th*s a.o,)t w*ll "e a//e/ "ack th*s #ear *) ho,se *)co.e. ?"eca,se *t was allowe/ as /e/,ct*o) earl*er@. :.
A.*ta"h has : ho,ses3 o)e *s 'O( a)/ the other *s re)te/. (e ;ets Rs. :0000 +... As re)t. ME J : lak3 !R J0 'RJ1 .,)*c*+al ta< J 100003 (e ;ot AR for 10 .o)ths3 *)terest +a*/ $ 500003 total +reco)str,ct*o) *)terest Rs. 1 lakh.
(*;her of ME Q !R J 03 co.+are th*s w*th 'R J 03 co.+are w*th AR J 0 Less .,)*c*+al ta< J 10000 A)),al -al,e J :3903000 less stat,tor# /e/,ct*o) ?:1a@ A8000 *)terest /e/,ct*o) ?:1"@ 500007A0000 J1.0 ?th*s *s allowe/ ,+to Rs. 1.5 lakhs@ )et -al,e J 80000 a)swer
Ca) ho,s*); *)co.e ha-e )e;at*-e -al,e >

Les3 "eca,se e<e.+t*o) *) *)terest *s ;ra)te/. ',++ose #o,r (o,se *)co.e *s :00003 ",t *)terest /e/,ct*o) allowe/ ?sec. :1@ *s Rs. 100003 so *t w*ll "e )e;at*-e . B,t *t ca)t "e )e;at*-e /,e to stat,tor# /e/,ct*o) or /e/,ct*o) /,e to re+a*rs of ho,se +ro+ert#.
B&5 ;*-es *ts ",*l/*); o) re)t. Ca) co);ress ask B&5 to ;*-e ta< o) ho,s*); *)co.e>
No 4 *t *s e<a.+t for +ol*t*cal +art*es3 *t *s ta< free.
5 DECEMBER 09
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98
Ca) a) assessee cla*. re"ate for re+a*rs3 colo,r*); of ",*l/*);>

No J 'ec. :1 +ro-*/es for re"ates. Th*s *s a) e<ha,st*-e l*st 4 o)l# two re"ates are +er.*tte/ $ 1. sta)/ar/ /e/,ct*o) ?00H@ :. I)terest for loa)s No other re"ate *s allowe/ 4 howe-er3 *f the ;o-er).e)t allows other re"ate 4 *t w*ll "e +er.*tte/.
Roh*t has 0 */e)t*cal ",*l/*);s. 1. for res*/e)ce :. for ",s*)ess 0. for re)t ?res*/e)t*al@. Total fa*r re)t 900003 total re)t rece*-e/ Rs. 00000Total .,)*c*+al ta< 1A000 4 ",t o)l# 9000 +a*/. Total *)terest o) ho,s*); loa) $ 9000
!R J :0000 ?o)l# for let o,t ",*l/*);@ AR J 00000 h*;her of !R Q AR J 00000 less .,)*c*+al ta< J 0000 less sec :1 /e/. A100 *)terest J :000 )et J 19900 a)swer
I)co.e fro. ",s*)ess a)/ +rofess*o)

1 co)/*t*o)s $ 1. ",s*)ess .,st "e carr*e/ o,t "# assesee :. ",s*)ess .,st "e carr*e/ o,t /,r*); +re-*o,s #ear 0. +rof*t has to "e calc,late/ as +er acco,)t*); s#ste. ?.erca)t*le or cash@ 1. all the +rof*ts fro. all the ,)*ts to "e co."*)e/ to arr*-e at *)co.e fro. ",s*)ess
hat *s ",s*)ess >
Eer# w*/e .ea)*); 4 *)cl,/es all +rofess*o)s3 tra/e3 .a),fact,re3 ser-*ces3 -ocat*o) etc.
5 DECEMBER 09
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81
Is *lle;al ",s*)ess ta<a"le here>
Les B *) the sa.e wa# as a le;al ",s*)ess
5 DECEMBER 09
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8:
If ",s*)ess *s )ot carr*e/ o,t *) the +re-*o,s #ear the) ....

It *s esse)t*al co)/*t*o) that ",s*)ess sho,l/ "e carr*e/ o,t /,r*); +re-*o,s #ear 4 e-e) *f for 1 /a#. 'o.e e<ce+t*o)s are l*ke $ reco-er# of ol/ "a/ /e"ts. Etc.
h*ch *s )ot allowe/ e<+e)/*t,re = /e/,ct*o) >

Ca+*tal e<+e)/*t,re +a#.e)ts o,t of I)/*a = co)s,lta)c# fees = *)terest = co..*ss*o) etc. 4 wh*ch has "ee) .a/e w*tho,t .ak*); TD' e<+e)/*t,re )ot relate/ to ",s*)ess cash +a#.e)ts a"o-e Rs. :0000 ?other tha) "a)ks a)/ s+ec*f*e/ ;o-t *)st*t,t*o)s@ rea/ sec. 10 A a)/ 10 B for /eta*ls
Lo, ha-e to +a# Rs. 5000 as e<c*se /,t#3 ",t #o, ha-e )ot #et +a*/ *t3 ca) #o, cla*. /e/,ct*o)>
No 4 for s,ch e<+e)ses ?;o-t. D,es etc. @ o)l# after +a#.e)t #o, ca) cla*. *t ?e-e) *f #o, are follow*); .erca)t*le s#ste. 4 "ase/ o) accr,el@
5 DECEMBER 09
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85
Lo, ha-e +a*/ Rs. 50 lakh for ",#*); a +ate)t3 ca) *t "e cla*.e/ as /e/,ct*o)>
No 4 *t *s ca+*tal e<+e)/*t,re #o, ca) cla*. /e+rec*at*o) o) th*s.
5 DECEMBER 09
www.afterschool.tk
89
Lo, +,rchase/ a Ea) of Rs 0 lakhs to +ro.ote fa.*l# welfare of e.+lo#ees3 *s *t allowe/ as /e/,ct*o)>
It *s a;a*) ca+*tal e<+e)/*t,re as +er sec. 09?1@*<@ 4 *t *s allowe/ *) 5 *)stal.e)ts 4 so 90000 each #ear *s allowe/
5 DECEMBER 09
www.afterschool.tk
88
I) or/er to +a# *)co.e ta< #o, take loa) a)/ +a# *)terest of Rs. 10003 *s *t allowe/ as /e/,ct*o)>
No
5 DECEMBER 09
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8A
Lo, s+e)/ Rs. 0000 for *ss,e of /e"e)t,res3 *s *t allowe/ >
Les 4 *t *s relate/ to ",s*)ess
5 DECEMBER 09
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89
Lo, s+e)/ Rs. 1 lakh as ER' co.+e)sat*o) to /*rector3 *s *t allowe/>
Les B *t *s relate/ to ",s*)ess howe-er as +er sec. 05DD3 *t *s allowe/ *) 5 eD,al *)stal.e)ts
5 DECEMBER 09
www.afterschool.tk
A0
Lo, sol/ o,t #o,r *.+ort l*ce)ce *) .arket3 *s th*s a *)co.e ,)/er ",s*)ess >
Les
5 DECEMBER 09
www.afterschool.tk
A1
Lo, take a ",*l/*); o) re)t a)/ for that +a# sta.+ /,t# a)/ re;*strat*o) char;es3 *s *t allowe/>
Les B *t *s relate/ to ",s*)ess
5 DECEMBER 09
www.afterschool.tk
A:
Lo, +a# h,;e a.o,)t of .o)e# as e)terta*).e)t e<+e)/*t,re a)/ tra-el e<+e)/*t,re 4 *s *t allowe/>
Les 4 *f *t *s for ",s*)ess there *s )o l*.*t
5 DECEMBER 09
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A0
Lo, rece*-e Rs. 0 lakhs as /,t# /raw"ack 4 whe) #o, e<+ort3 *s *t ta<a"le >
Les 4 *t *s re-e),e rece*+t as +er I)co.e ta< act.
5 DECEMBER 09
www.afterschool.tk
A1
A .a)a;er /*e/. The co.+a)# rece*-e/ Rs. 5 lakh ,)/er ke#.a) *)s,ra)ce +ol*c#. Is *t a re-e),e of co.+a)#>
Les 4 *t *s treate/ as re-e),e.
5 DECEMBER 09
www.afterschool.tk
A5
Lo, s+e)/ Rs. : lakhs to /efe)/ a case relat*); to +rotect*o) of #o,r tra/e.ark. Is *t allowe/>
Les
5 DECEMBER 09
www.afterschool.tk
A9
A cash*er e."eOOles Rs. 5 lakhs. Is *t allowe/ as /e/,ct*o)>
Les 4 *t *s a ",s*)ess relate/ loss
5 DECEMBER 09
www.afterschool.tk
A8
A CA f*r. +a#s Rs. 10000 as +rofess*o)al ta<. Is *t allowe/ as /e/,ct*o)>
Les
5 DECEMBER 09
www.afterschool.tk
AA
Lo, .ake a +ro-*s*o) of Rs. 5 lakh for ;rat,*t# +a#.e)t ?*t *s )o)Breco;)*se/ ;rat,*t# f,)/@
No 4 *t w*ll )ot "e allowe/ as /e/,ct*o)
5 DECEMBER 09
www.afterschool.tk
A9
Lo, +a# D*wal* "o),s to e.+lo#ees3 *s *t allowe/>
Les
5 DECEMBER 09
www.afterschool.tk
90
Lo, +a# "o),s as +er +a#.e)t of "o),s act3 *s *t allowe/>
Les
5 DECEMBER 09
www.afterschool.tk
91
Lo, ;*-e Rs. 5 lakhs as a/-ert*se.e)t for +a.+lets +,"l*she/ "# a +ol*t*cal +art#. Is *t allowe/>
No ",t *f #o, ;*-e #o,r ow) a/-ert*se.e)ts3 *t *s allowe/ w*tho,t l*.*t.
5 DECEMBER 09
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9:
Lo,r co.+a)# .a*)ta*)s a ;,est ho,se for EI5s. The e<+e)/*t,re of Rs. 5 lakhs ha-e "ee) .a/e. Is *t allowe/>
Les 4 w*tho,t l*.*t.
5 DECEMBER 09
www.afterschool.tk
90
Lo, .ake cash +a#.e)t of 8 lakhs 4 *) a -*lla;e 4 where there *s )o "a)k. Is *t allowe/>
6e)erall# cash +a#.e)ts a"o-e Rs. :0000 are )ot allowe/. B,t e<ce+t*o)s are +ro-*/e/ 4 as +er r,le 9DD3 cash +a#.e)t *s allowe/ *f there *s )o "a)k *) that +lace or "a)ks are close/ /,e to str*kes etc.
Lo, +a# Rs. 0 lakhs for "reach of co)tract. Is *t allowe/ >
No *f *t *s relate/ to ca+*tal assets = ",*l/*); etc. If *t *s relate/ to ;oo/s that #o, ",# or /a# to /a# ",s*)ess3 *t *s allowe/
5 DECEMBER 09
www.afterschool.tk
95
Lo, +a# Rs. 1000 for le;al fees whe) #o, /*s.*ss a worker3 *s *t allowe/>
Les
5 DECEMBER 09
www.afterschool.tk
99
Lo, sh*ft #o,r ",s*)ess +lace a)/ +a# Rs. 10 lakhs. Is *t allowe/
It *s a ca+*tal e<+e)/*t,re B )ot a re-e),e e<+e)/*t,re 4 so )ot allowe/
5 DECEMBER 09
www.afterschool.tk
98
E<+e)ses *) )ew *ss,e of share = r*;hts *ss,e = "o),s *ss,e of shares>
These are all ca+*tal e<+e)ses 4 he)ce )ot allowe/
5 DECEMBER 09
www.afterschool.tk
9A
E<+e)ses o) +re+arat*o) of +ro2ect re+ort for a )ew +ro/,ct la,)ch>
Not 4 ca+*tal e<+e)ses 4 ,)less *t *s 2,st a) e<te)s*o) of #o,r e<*st*); +ro/,ct
5 DECEMBER 09
www.afterschool.tk
99
Lo, *)crease a,thor*se/ ca+*tal a)/ for that +a# rs. 5 lakhs as fees etc.
Not allowe/ 4 as *t *s ca+*tal e<+e)/*t,re
5 DECEMBER 09
www.afterschool.tk
100
Lo, s+e)/ Rs. 1 lakhs o) +erso)al tra-el. Is *t allowe/>
No 4 )ot relate/ to ",s*)ess
5 DECEMBER 09
www.afterschool.tk
101
Lo, s+e)/ Rs. 10 lakhs 5 #ears "ack ",t cla*. for that )ow>
Not allowe/ 4 as e<+e)/*t,re sho,l/ ha-e "ee) *)c,rre/ *) the +re-*o,s #ear ?s,"2ect to so.e e<ce+t*o)s@
5 DECEMBER 09
www.afterschool.tk
10:
Lo, +a# Rs. 0000 as .,)*c*+al ta<es o) #o,r off*ce ",*l/*);>
Les
5 DECEMBER 09
www.afterschool.tk
100
Lo, +a# *)s,ra)ce +re.*,. o) ;oo/s3 *s *t allowe/>
Les
5 DECEMBER 09
www.afterschool.tk
101
Lo, +ro-*/e for De+rec*at*o) of Rs. 10 lakhs3 *s *t allowe/

Les 4 ",t /e+rec*at*o) has to "e calc,late/ as +er the +ro-*s*o)s *) 'ec. 0: of I)co.e ta< act. 'o the a.o,)t allowe/ .a# /*ffer 4 the /e+rec*at*o) rates ha-e to "e the sa.e as +ro-*/e/ *) *)co.e ta< act.
Ca) #o, char;e /e+rec*at*o) o) stra*;ht l*)e .etho/ >
No 4 as +er I)co.e ta< act 4 o)l# allowe/
DE *s
5 DECEMBER 09
www.afterschool.tk
109
hat are the "locks of assets>

As +er sec. :?11@ there are 1 "locks $ 1. ",*l/*);s :. +la)t 0. f,r)*t,re 1. *)ta);*"le assets. A;a*) each of these ca) "e of -ar*o,s s,"B "locks 4 for e<a.+le rate of /e+rec*at*o) *s /*ffere)t for res*/e)t*al ",*l/*); fro. off*ce ",*l/*);
www.afterschool.tk
5 DECEMBER 09
108
B,*l/*);s $ >
There are 5 t#+es of ",*l/*);s $ a. res*/e)ce 5H " off*ce 10H c. hotels $ :0H / New off*ce ",*l/*);s et.c 10H e te.+orar# $ 100H
5la)ts
It *s of 9 t#+es $ ;e)eral :5H cars :0H ",s 10H co)ta*)ers 50H co.+,ter 90H +oll,t*o) co)trol $ 100H
!,r)*t,re
It *s of : t#+es $ off*ce 15H others 10H
5 DECEMBER 09
www.afterschool.tk
110
I)ta);*le assets
Rate of /e+rec*at*o) $ :5H
5 DECEMBER 09
www.afterschool.tk
111
Lo, +a# Rs. :0000 +e)alt# /,e to #o,r fa*l,re to /e/,ct TD' fro. salar# of e.+lo#ee>
It *s also )ot allowe/
5 DECEMBER 09
www.afterschool.tk
11:
Lo, s+e)/ Rs. 5000 o) l*t*;at*o) e<+e)ses 4 for a) o,tsta)/*); loa) 4 wh*ch *s )ot relate/ to #o,r re;,lar ",s*)ess>
No 4 )ot allowe/
5 DECEMBER 09
www.afterschool.tk
110
Lo, s+e)/ Rs. :000 to /efe)/ e.+lo#ee *) a cr*.*)al case relate/ to #o,r ",s*)ess>
Les *t *s allowe/
5 DECEMBER 09
www.afterschool.tk
111
Lo, s+e)/ *)terest for "orrow*); .o)e# to ",# shares *) a)other co.+a)# >
Les *t *s allowe/
5 DECEMBER 09
www.afterschool.tk
115
Lo, /ela# ta< +a#.e)t a)/ +a# *)terest o) the +a#.e)t3 *s *t allowe/>
Les
5 DECEMBER 09
www.afterschool.tk
119
5 DECEMBER 09
www.afterschool.tk
118
5 DECEMBER 09
www.afterschool.tk
11A
5 DECEMBER 09
www.afterschool.tk
119
Lo, +a# Rs. 0000 as *)co.e ta< +e)alt#3 *s *t allowe/>
Not allowe/
5 DECEMBER 09
www.afterschool.tk
1:0
hat *s the rate of /e+rec*at*o) o) the follow*); $

Co.+,ters ,se/ *) off*ce B,s for e.+lo#ees off*ce f,r)*t,re !actor# Mach*)e (o,se of MD 6,est (o,se 5ate)t
5 DECEMBER 09 www.afterschool.tk 1:1
'ol,t*o)
Co.+,ters ,se/ *) off*ce 90H B,s for e.+lo#ees :0H off*ce f,r)*t,re 10H !actor# Mach*)e 15H (o,se of MD 5H 6,est (o,se 10H 5ate)t :5H
5 DECEMBER 09 www.afterschool.tk 1::
Ca+*tal ;a*)
A++rec*at*o) *) -al,e of assets co.e as ca+*tal ;a*). 'ec. 15 $ *t *s of : t#+es $ short ter. a)/ lo); ter. short ter. $ ,+to 0 #ears lo); ter. $ B .ore tha) 0 #ears ?e<ce+t shares3 sec,r*t*es etc. B where *t *s 1: .o)ths@
hat *s ca+*tal assets>

All assets3 e<cl,/*); the follow*); $ 1. stock :. .o-a"le +ro+ert# e<cl,/*); 2eweller# 0. a;r*c,lt,re la)/ )ot locate/ *) .,)*c*+al*t# 1. ;ol/ "o)/ = s+ec*al "earer "o)/ = ;ol/ /e+os*t sche.e
(ow to co.+,te ca+*tal ;a*)>

1. f*)/ sale +r*ce ?tra)sfer +r*ce@ /ate of tra)sfer a)/ /ate of acD,*s*t*o) ?/ate w*ll "e the /ate of re;*strat*o) = /el*-er# = +ossess*o) as +er Tra)sfer of +ro+ert# act = rele-a)t law@ :. f*)/ cost of acD,*s*t*o)3 cost of *.+ro-e.e)t a)/ cost of tra)sfer3 ,)/ertake )ecessar# *)/e<at*o) 0. f*)/ )et "e)ef*t
hat *s )ot*o)al cost of acD,*s*t*o) >

If so.eo)e has ;*fte/ #o, a car3 what *s #o,r cost of acD,*s*t*o)3 ?)*l@ 4 ",t we w*ll take here )ot*o)al cost of acD,*s*t*o). The cost *)c,rre/ "# the +erso) who ;*fte/ #o, w*ll "eco.e #o,r cost of acD,*s*t*o).
hat *s *)/e<e/ cost of acD,*s*t*o) >

Roh*t "o,;ht a ho,se *) 19A1 *) 1 lakhs a)/ sol/ *t *) :001 *) 5 lakhs3 what *s the ca+*tal ;a*)> I)/e< *) 19A1 was 1:5 a)/ *) :001 *t was 1A0 so ,se the follow*); for.,la to f*)/ *)/e<e/ cost $ 1A0=1:5 I 1lakhJ 0.A lakh3 ca+*tal ;a*) J 5B0.A J 1.: lakhs.
(ow to f*)/ *)/e< factor >
It *s calle/ cost of *)flat*o) *)/e<. Its "ase *s 19A1BA: #o, ca) f*)/ *t $ htt+$==*)co.eta<.*)/law.co.=/*s+la#.as+<>89110AD so f*)/ *t o,t for the #ear of +,rchase a)/ for the #ear of sale. !or.,la $ *)/e< *) #ear of sale = *)/e< *) #ear of +,rchase
5 DECEMBER 09 www.afterschool.tk 1:A
De/,ct*o)s fro. ca+*tal ;a*) >

'ec. 51 $ *f #o, sale a res*/e)t*al ho,se a)/ ha-e ca+*tal ;a*)3 #o,r ca+*tal ;a*) w*ll "e ta<free *f #o, ",# a)othe res*/e)t*al ho,se w*th*) : #ears after or 1 #ear "efore the sale or co)str,ct a )ew ho,se *) 0 #ears after /ate of sale of eD,*-ale)t a.o,)t ?otherw*se *t w*ll "e +ro+ort*o)atel#@.
hat *s ca+*tal ;a*)s acco,)t sche.e 19AA>
If #o, ha-e #et to /ec*/e a"o,t wh*ch ho,se to ",#3 the) #o, ca) /e+os*t #o,r sale +rocee/s *) a ca+*tal ;a*)s acco,)t sche.e so that #o, .a# a-o*/ +a#.e)t of ca+*tal ;a*).
5 DECEMBER 09
www.afterschool.tk
100
A;r*c,lt,re la)/ 'ec. 51B
If #o, sale a) a;r*c,lt,re la)/ a)/ ",# a)other a;r*c,lt,re la)/ *) a +er*o/ of : #ears3 #o,r ca+*tal ;a*) *s ta<free. ?a-a*la"le o)l# to *)/*-*/,al@
5 DECEMBER 09
www.afterschool.tk
101
'ec. 51EC $ *)-est *)s+ec*f*e/ "o)/s

If #o, ",# s+ec*f*e/ *)-est.e)ts 4 #o, ca) a-o*/ ca+*tal ;a*). It *s for lo); ter. ca+*tal ;a*) the *)-est.e)ts .,st "e .a/e for a .*)*.,. +er*o/ of 0 #ears. The l*st of sec,r*t*es = *)-est.e)ts are +rescr*"e/ ?for e<a.+le "o)/s *ss,e/ "# NABARD@ .
A co)str,cte/ ho,se *) 01Dece."er :009. he took loa) of Rs. 0 lakh K 1:H o) 1=9=5 a)/ Rs. : lakh o) 1=1=9 K 11H. M,)*c*+al -al,e of ho,se 1 lakh. M. Ta<. 1:000. he res*/es *) that ho,se Eal,e of the ho,se $ N*l ?*t *s self occ,+*e/@ /e/,ct*o) ?for *)terest @ +reco)str,ct*o) +er*o/ $ ?19 .o)th *)terest o) 0 K1:H$ J58000 9 .o)th *)terest o) : K11H J:1000@ J 8A000 I 1=5J 15900 Now $ 090007:A000 J 91000 total $ 89900 th*s w*ll "e a/2,ste/ w*th *)co.e fro. other hea/ or w*th *)co.e of th*s hea/ )e<t #ears.
E<+la)at*o)
5re co)str,ct*o) +er*o/ *)terest *s /*-*/e/ *) 5 *)stal.e)ts a)/ s+rea/ o,t *) 5 #ears. The +reco)str,ct*o) *)terest *) the +re-*o,s case was 8A000 wh*ch we w*ll allow *) 5 #ears eD,ll#. The *)co.e *) the hea/ *)co.e fro. ho,se +ro+ert# *s )e;at*-e here.
't/. Re)t 093 !a*r re)t 153 .,)*c*+al -al,e 003 act,al re)t :0 what w*ll #o, take a 6ross a)),al -al,e >
(*;her of ME a)/ !R J 15 lower of th*s a)/ 'R J 09 (*;her of th*s a)/ AR J 09 so 6ross a)),al -al,e J 09 a)swer
Ra-* Borrowe/ Rs. 5 lakh K 10H o) 1=1=99 a)/ co)str,ct*o) of ho,se was /o)e o) 1=1=1. what *s the *)terest /e/,ct*o) allowa"le )ow>
5reco)str,ct*o) +er*o/ $ : #ears $ *)terest *s 100003 wh*ch wo,l/ "e allowe/ fro. :001B: to :005B9 ?Rs. :0000 each #ear@ 'o )ow *t w*ll )ot "e allowe/. I)terest for :00AB9 $ 50000 +er a)),. w*ll "e a-a*la"le.
hat are the +o+,lar /e/,ct*o)s >

I)-est.e)t A0C Me/*ca) *)s,ra)ce sec A0D 5! = 5e)s*o) f,)/s 'ec. A0 CCC Me/*cal +a#.e)ts $ A0DD Q DDB re+a#.e)t of loa) A0E /o)at*o) A06 Re)t +a*/ A066 'c*e)t*f*c research assoc*at*o) A066A
hat *s A0C
If #o, *)-est *) LIC +re.*,. = a++ro-e/ *)s,ra)ce +re.*,.s = .,t,al f,)/s = *)frastr,ct,re "o)/s etc. Lo, ;et /e/,ct*o)s ,+to Rs. 1 lakhs ?*) so.e cases .ore tha) Rs. 1 lakhs also for e<a.+le *)frastr,ct,re "o)/s@. 'ee the l*st of s+ec*f*e/ sec,r*t*es = *)-est.e)ts for th*s. The +r*.ar# +,r+ose *s to e)co,ra;e *)/*-*/,al = (C! to sa-e .o)e# a)/ *)-est.
(ow .,ch ca) #o, cla*. o) .e/*cal e<+e)ses as /e/,ct*o)>

If #o, s+e)/ .o)e# o) a +erso) /+ee)/e)t o) #o, a)/ that +erso) has /*sa"*l*t# $ fro. Rs. 50000 to 85000 *s a-a*la"le /e+e)/*); o) /*a"*l*t# ?sec. A0DD@ *f #o, s+e)/ o) #o,r ow) treat.e)t ,+to Rs. 90000 *s a-a*la"le as /e/,ct*o) ?sec. A0DDB@
Ca) loa) for h*;her e/,cat*o) hel+ #o, *) ta< /e/,ct*o)>
Les $ 'ec. A0E $ ,+to 10000 *s allowe/ or loa) for h*;her e/,cat*o) *) A *)stal.e)ts.
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(ow /oes A0C hel+ *) e)co,ra;*); +eo+le to *)-est>

As +er th*s sect*o)3 #o, ca) cla*. ,+to Rs. 1 lakh ?*) so.e cases .ore tha) Rs. 1 lakh@ *f #o, *)-est *) LIC +re.*,. = *)s,ra)ce +re.*,.3 .,t,al f,)/s = fresh *ss,es = s+ec*f*e/ sec,r*t*es 4 th,s th*s sect*o) *s +r*.ar*l# to e)co,ra;e +eo+le to *)-est.
(ow /oes *)co.e ta< e)co,ra;e +eo+le to ;o for .e/*cal *)s,ra)ce>

I) I)/*a .ost +eo+le /o)t ;o for .e/*cal *)s,ra)ce ?,)l*ke west@3 so *) or/er to e)co,ra;e +eo+le to ;o for *t3 there *s A0D3 wh*ch ;*-es /e/,ct*o) of Rs. 10000=15000 for .e/*cal *)s,ra)ce +re.*,.s.
(ow /oes *)co.e ta< e)co,ra;e +r*-ate +e)s*o) sche.es>

There *s )o +e)s*o) sche.e *) +r*-ate sector a)/ ;o-t. Is also )ow w*th/raw*); +e)s*o) sche.es. Th,s *) or/er to e)co,ra;e +eo+le to +la) for f,t,re = ol/ a;e3 there *s A0ccc B *f #o, *)-est *) +e)s*o) +la) of a)# *)s,ra)ce co.+a)#3 #o, ;et /e/,ct*o) ,+to Rs. 10000.
(ow /oes *)co.e ta< e)co,ra;e +eo+le to co)tr*",te to )at*o)al rel*ef a)/ reha"*l*tat*o)>
There *s sec. A063 wh*ch ;*-es a l*st of *)st*t,t*o)s where #o, ca) /o)ate a)/ a-a*l ,+to 100H /e/,ct*o)s. I) th*s l*st Nat*o)al /efe)ce f,)/ a)/ 5MGs )at*o)al rel*ef f,)/ are also there3 th,s *f #o, /o)ate .o)e# there3 #o, ca) cla*. ,+to100H /e/,ct*o)s for the /o)ate/ a.o,)t.
Ca) #o, cla*. /e/,ct*o) for ho,se re)t +a*/ >

Les 4 sec. A066 B the .*)*.,. of the follow*); *s /e/,ct*"le $ 1. re)t +a*/ 4 10H total *)co.e :. :5H of a/2,ste/ total *)co.e 0. Rs. :000 +er .o)th.
(ow /oes *)co.e ta< e)co,ra;e #o, to ;o for r,ral /e-elo+.e)t = sc*e)ce>
If #o, set ,+ a r,ral /e-elo+.e)t or;a)*sat*o) = sc*e)ce research or;a)*sat*o)3 the) all the /o)at*o)s ;*-e) to #o,r or;a)*sat*o) w*ll "e el*;*"le as /e/,ct*o)s *) the ha)/ of /o)or as +er 'ec. A066A
(ow /oes *)co.e ta< e)co,ra;e ,)*ts to ;o for s,sta*)a"le /e-elo+.e)t

If #o, set ,+ a ,)*t to +rocess "*o/e;ra/a"le wastes 4 th*s ,)*t w*ll "e a"le to e)2o# 100H *)co.e ta< "e)ef*ts as +er sec. A0&&A. 'o 100H +rof*ts are ta< free.
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I)co.e ta< as e)co,ra;*); e.+lo#.e)ts>
Co.+a)*es ca) cla*. 00H /e/,ct*o)s for wa;es +a*/ for )ew e.+lo#ees h*re/ /,r*); the #ear. 'ec. A0&&AA
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11A
',++ort to +h#s*call# challe);e/
De/,ct*o) ,+to Rs. 85000 *s a-a*la"le to +h#s*call# challe);e/ +erso)s ?sec. A0C@
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(ow /oes *)co.e ta< act e)co,ra;e *)frastr,ct,re sector>
100H ta< free +rof*ts for 10 #ears 4 *f #o, set ,+ a) *)frastr,ct,re /e-elo+.e)t ,)*t 4 l*ke for +ower ;e)erat*o)3 teleco.3 *)/,str*al +ark etc.
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(ow /oes sec. A0IB hel+ e)tre+re)e,rs >

There are s+ec*al /e/,ct*o)s a-a*la"le for -ar*o,s ,)*ts $ 100H ta< free +rof*t for 5 #ears *) "ackwar/ area 4 a)# ,)*t ?a//*t*o)al /e/,ct*o)s also a-a*la"le@. Ta< free 00H +rof*t for sh*+ o+erat*o) co.+a)# for 10 #ears ta<free 50H=00H for hotels for 10 #ears 50H +rof*t for .,lt*+le<= co)-e)t*o) ce)tres for 5 #ears 100H +rof*t for ho,s*); +ro2ects etc.
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(ow /oes *)co.e ta< +ro.ote health care >

There are .a)# /e/,ct*o)s = fac*l*t*es a-a*lal"e $ 'ec. A0IB $ 100H ta<free +rof*t for 5 #ears *f #o, set ,+ a 100 "e/ ?or .ore@ hos+*tal *) r,ral areas.
(ow /oes *)co.e ta< e)co,ra;e foo/ +rocess*); *)/,str#>
100H ta<free +rof*t for 5 #ears a)/ :5=00 H ta<free +rof*t for )e<t 5 #ears *f #o, set ,+ foo/ +rocess*); = fr,*t +ack*); ,)*t ?sec. A0IB@
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Ra2*-Gs salar# *s Rs. 1.A lakhs. (e /e+os*ts Rs. 00000 *) .e/*cal *)s,ra)ce3 a)/ takes LIC 2eewa) s,raksha +ol*c# for Rs. 10000. D*sc,ss h*s ta< l*a"*l*t#. (e also s+e)/s Rs. 00000 o) .e/*cal treat.e)t of h*s w*fe>
(e w*ll ;et /e/,ct*o)s for all these $ 10000 for .e/*cal *)s,ra)ce ?sec. A0D@ 00000 for .e/*cal e<+e)ses ?sec. A0DD@ 10000 for l*c &ewa) s,raksha ?'ec. A0CCC@
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hat are r,les re;ar/*); TD'>

It *s the res+o)s*"*l*t# of e-er# co.+a)# = f*r. to collect TD'. !ollow*); +a#.e)ts ca) "e .a/e o)l# after TD'$ 1 salar# :. *)terest 0 *)s,ra)ce co..*ss*o) 1. +rofess*o)al fees 5. *)co.e of lotter# = ;a.es etc.
'alar# +a#.e)t
As +er sec. 19: 4 e.+lo#er has to collect TD' "efore +a#.e)t of salar#. If the e.+lo#ee ;*-es for. )o. 10 4 the) salar# ca) "e +a*/ w*tho,t TD'. If salar# +a#.e)t *s less tha) the .a<*.,. a.o,)t )ot char;ea"le to ta<3 the) )o TD' *s reD,*re/.
R,les re;ar/*); (RA
E.+lo#er sho,l/ collect ho,rse re)t rece*+ts *f ho,se re)t *s .ore tha) Rs. 0000 ?check o,t the latest r,les@.
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Do)at*o)s "# e.+lo#ees...
If e.+lo#ee has .a/e /o)at*o)s to a++ro-e/ f,)/s ,)/er A06 ?l*ke 5MGs )at*o)al rel*ef f,)/@3 the) the e.+lo#er has to kee+ that *) .*)/ wh*le .ak*); /e/,ct*o)s.
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15A
Ro,/*); off of salar#
The total salar# )ee/ to "e ro,)/e/ off to .,lt*+le of 10. for e<a.+le :00::: w*ll "e :00::0
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Other *)co.e of e.+lo#ee
As +er sec. 19: ?:"@ e.+lo#ee .a# "e aske/ to ;*-e /eta*ls of h*s other *)co.e3 wh*ch shall also "e take) *)to acco,)t wh*le collect*); TD'. ?r,le :9B@
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I)co.e fro. *)terest

E-er# "a)k = co.+a)# = *)st,t*to)s w*ll collect TD' at s+ec*f*e/ rates wh*le .ak*); +a#.e)t of *)terest ?sec. 190@ TD' rate *s 10H for l*ste/ /e"e)t,res :0H for )o)Bl*ste/ /e"e)t,res etc. Or collect for. )o 10 ?for )*l TD'@
he) ca) #o, .ake +a#.e)t w*tho,t TD'>
If the other +erso) s,".*ts the follow*); $ for. )o. 10 for. No. 156
5 DECEMBER 09
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19:
I)terest +a#.e)t l*.*ts w*tho,t TD'
As +er sec. 191A3 *)terest +a#.e)t "# a)# +erso) a"o-e Rs. 5000 a)/ Rs. 10000 ?*) case of "a)ks@ a)),all# w*ll reD,*re TD' = for. )o. 10= for. )o. 156
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Is TD' reD,*re/ o) ;o-t. Bo)/s also>
Th*s *s where o,r law *s lo+s*/e/. No TD' *s reD,*re/ *) case of Nat*o)al Defe)ce "o)/s 3 N'C3 6ol/ Bo)/s etc. ?.ost of the ;o-t. 'ec,r*t*es@.
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TD' o) *)s,ra)ce +re.*,. >
'ec. 191D reD,*res TD' K 10H = :0H or for. )o. 10 *f there *s *)s,ra)ce +re.*,. +a#.e)t a"o-e Rs. 5000. :0H *)case of co.+a)*es
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TD' for re)t..
As +er sec. 191I 4 *f re)t +a#.e)t a)),all# *s .ore tha) Rs. 1.: lakhs3 the) TD' K15H *s reD,*re/ ?check o,t the latest rates@. I) case of co.+a)*es3 the rate *s :0H. or for.. NO. 10 *s reD,*re/
TD' o) "rokera;e
A)# a.o,)t of "rokera;e a"o-e :500 reD,*res TD' K 10H ?sec. 191(@
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TD' o) .,t,al f,)/s
If *)-estor sells "ack h*s ,)*ts3 there *s TD' ?sec. 191f@
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19A
Nat*o)al sa-*);s sche.e
If +a#.e)t *) N'' *s .ore tha) :5003 TD' K:0H has to "e collecte/
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5a#.e)t to s+orts assoc*at*o)s etc. ReD,*res TD'
'ec. 191E $ #o, ha-e to collect TD' wh*le .ak*); +a#.e)ts to )o)Bres*/e)t s+orts assoc*at*o)s etc.
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hat *s +e)alt# *f TD' *s )ot collecte/>
I)terest K1H +er .o)th 7 ta< as reD,*re/. ?sec. :01 @
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!or.s to "e f*lle/ ,+
!or. )o. :1 = :9 has to "e f*lle/ as o)l*)e ta< acco,)t*); s#ste. 4 ;*-*); /eta*ls of TD' collecte/. Th*s has to "e /o)e D,arterl#. 5e)alt# for /ela# $ Rs. 100 +er /a#.
5 DECEMBER 09
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5e)alt*es ... relat*); to TD'

I.+r*so).e)t ,+to 8 #ears 7 f*)e ?sec. :89B@ 100 +er /a# f*)e ?'ec. :8:A ?:@@ Rs. 10000 4 *f TAN *s )ot o"ta*)e/ ?sec. :8:BB@ 100 +er /a# *f TD' cert*f*cate *s )ot *ss,e/ ?sec. :8:A?:@@
'er-*ce ta<..
'er-*ce ta< was *)tro/,ce/ *) 1991 o) the reco..e)/at*o) of Dr. Ra2a C. Chell*ah co..*ttee re+ort. I)*t*all# the rate was 5H3 ",t )ow *t *s .ore tha) 10H .ore a)/ .ore ser-*ces are +,t *) the a."*t of ser-*ce ta< e-er# #ear. E<c*se De+art.e)t a/.*)*sters th*s ta<.
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ADEANCE TAX B co.+a)*es
C+to 15H B 15 2,)e ,+to 15H B 15 se+te."er ,+to 85H B 15 Dec. C+to 100H B 15 March
A/-a)ce ta<B)o)Bcor+orates
N*l B 15 2,)e ,+to 00H B 15 se+te."er ,+to 90H B 15 Dec. C+to 100H B 15 March
!a*l,re to +a# a/-a)ce ta<
If assessee /oes)t +a# a/-a)ce ta< or the a/-a)ce ta< +a*/ *s less tha) 90H of assesse/ ta<3 the assessee w*ll ha-e to +a# *)terest as +er 'ec. :01A3B3C. B wh*ch *s 1H +er .o)th.
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18A
hat ha++e)s *f there *s e<cess +a#.e)t of a/-a)ce ta<>
There w*ll "e ref,)/. If there *s e<cess ref,)/3 there *s a +ro-*s*o) of *)terest K.5H +... o) th*s e<cess a.oo,)t. Rea/ sec. :01D a)/ 110?1@ for /eta*ls
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189
h*ch are the *.+orta)t ta< a,thor*t*es>

'ec. 119 $ CBDT D*rectors = co..*ss*o)ers of I)co.e ta< a//*t*o)al /*rector = 2o*)t /*rectors= /e+,t# /*rect*or = asst. D*rector ITO reco-er# off*cers
5 DECEMBER 09 www.afterschool.tk 1A0
5owers of *)co.e ta< off*cers
As +er sect*o) 10:3 the# ca) search /oc,.e)ts a)/ se*Oe the. for a +er*o/ ,+to 00 /a#s ?so.et*.es e-e) .ore tha) 00 /a#s@. The# ca) call for a//*t*o)al *)for.at*o) ?sec. 100@ the# ca) carr# o,t /eta*le/ *)-est*;at*o) a)/ these w*ll "e eD,al to 2,/*c*al +rocee/*);s ?sec. 109@
hat *s the last /ate for f*l*); *)co.e ta< ret,r) >
!or co.+a)*es = +art)ers of a f*r. = a) *)/*-*/,al whose acco,)ts ha-e to "e a,/*te/ 4 00 Octo"er for others ?*)/*-*/,als@ $ 01 &,l# .
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1A:
ho sho,l/ s*;) the *)co.e ta< ret,r) >
I) case of *)/*-*/,al 4 h*.self *) case of co.+a)*es 4 MD *) case of other "o/*es $ the +r*)c*+al off*cer res+o)s*"le for th*s.
5 DECEMBER 09
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1A0
hat *s assess.e)t
The *)co.e ta< /e+art.e)t ca) ,)/ertake assess.e)t after e<a.*)at*o) of /oc,.e)ts = e)D,*r# as +er sec. 11: or the# ca) .ake assess.e)t as +er sec. 110 or the# ca) .ake "est 2,/;e.e)t asses.e)t as +er sec. 111 4 *f assesee has fa*le/ to f,r)*sh ret,r).
hat *s the rate of ta< o) +art)ersh*+>

00H 7 s,rchar;e as a++l*ca"le for ca+*tal ;a*) $ :0H 7s,rchar;e there .,st "e a +art)ersh*+ /ee/ a)/ the +art)ersh*+ sho,l/ act,all# "e there to ;et the stat,s of +art)ersh*+ *) *)co.e ta< act.
hat are r,les re;ar/*); +art)ersh*+ ta<at*o)>

Lo, ha-e to follow +art)ersh*+ r,les3 wh*ch are l*ttle "*t /*ffere)t fro. +art)ersh*+ act. !or e<a.+le $ there *s a .a<*.,. l*.*t to the re.,)erat*o) that #o, ca) +a# to a +art)er as +er I)co.e ta< act. Th*s a.o,)t *s s+ec*f*e/*) 'ec. 11A. There *s also a .a<*.,. rate of *)terest o) ca+*tal that ca) "e +a*/ to +art)ers. ?1:H@
hat *s .a<*.,. re.,)erat*o) for +art)ersh*+ *) +rofess*o)>
!or f*rst 1 lakh of +rof*t 4 Rs. 50000 or 90H of +rof*t ?wh*che-er *s .ore@ for )e<t 1 lakh$ 90H for re.a*)*); +rof*t $ 10H.
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1A8
hat *s .a<*.,. re.,)erat*o) for +art)ersh*+ *) ",s*)ess 4 other tha) +rofess*o)>

!or f*rst 85000 of +rof*t 4 Rs. 50000 or 90H of +rof*t ?wh*che-er *s .ore@ for )e<t 85000 lakh$ 90H for re.a*)*); +rof*t $ 10H.
5 DECEMBER 09
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1AA
Ta<at*o) of co.+a)*es ....
Co.+a)# ?sec. :?18@ has w*/e .ea)*); here a)/ *)cl,/es fore*;) co.+a)*es ?sec. :?:0A@ a)/ +,"l*c co.+a)*es ?:?1A@ also.
5 DECEMBER 09
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1A9
hat *s a +,"l*cl# hel/ co.+a)#
It *s /ef*)e/ *) sec. :?1A@ $R at least 50H ca+*tal *s /*str*",te/ to co..o) +,"l*c or *t *s re;*stere/ ,)/er sec. :5 of co.+a)*es act.
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hat *s a.al;a.at*o) a)/ /e.er;er >

A.al;a.at*o) ?sec. :?1"@ *s .er;er of two co.+a)*es 4 after .er;er3 at least 85H sharehol/ers sho,l/ "eco.e hol/er of )ew co.+a)# /e.er;er *s the s*t,at*o) whe) a co.+a)# s+l*ts *)to two.?sec. :?19AA@
hat *s MAT
M*)*.,. alter)ate ta< 4 whe) a co.+a)# *s )ot l*a"le to +a# ta<3 *t has to +a# MAT at least as +er r,les rate of MAT *s 8.5H sec. 115&" $ whe) 8.5H of "ook +rof*t e<cee/s ta<3 the) ta< w*ll "e 8.5H of these "ook +rof*ts.
(ow to co.+,te "ook +rof*t

A/2,st the follow*); *) +rof*t $ a// these "ack 1. *)co.e ta< :. /*-*/e)/ 0. reser-es 1. +ro-*s*o) for loss of s,"s*/*ar# re/,ce these $ 1. losses "ro,;ht forwar/ :. a.o,)t w*th/raw) fro. reser-es a)/ +ro-*s*o)s
Is fore*;) co.+a)# also l*a"le to +a# MAT >

Les 4 the# ha-e to .a*)ta*) acco,)ts as +er sec. 591 ?I)/*a) co.+a)# has to .a*)ta*) as +er sec. :09@ . o)l# co.+a)*es fro. Netherla)/s /o)t ha-e to +a# MAT.
(AT ABOCT EXCE'' MAT>
If e<cess MAT *s +a*/3 the co.+a)# ;ets cre/*t for th*s a)/ *t ca) carr# forwar/ s,ch cre/*t for 5 #ears.
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h*ch losses ca))ot "e a/2,ste/ w*th other hea/s of *)co.e>
Loss fro. s+ec,lat*o) ",s*)ess = race horses lo); ter. ca+*tal loss
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hat *s l*.*tat*o) re;ar/*); *)terhea/ loss a/2,st.e)t ?sec. 81@>

Loss fro. ",s*)ess a)/ +rofess*o) ca)t "e a/2,ste/ w*th salar# these ca)t "e a/2,ste/ w*th other hea/ $ Loss fro. s+ec,lat*o) ",s*)ess = race horses lo); ter. ca+*tal loss
hat loss ca) #o, carr# forwar/ *)f*)*tel# >

Loss of "a)k*); co.+a)# ?8:aa@ or of a f*r. s,ccee/e/ "# a co.+a)# ?sec. 8:A9@ a)/ of /e.er;e/ co.+a)# or of ,)a"sor"e/ /e+rec*at*o) of a.al;a.ate/ co.+a)# other losses ca) ;e)erall# "e carr# forwar/ for A #ears.
Loss fro. s+ec,lat*o) ",s*)ess a)/ race horses
These losses ca)t "e a/2,ste/ w*th other +rof*ts the# ca) "e carr*e/ forwar/ for 1 #ears o)l#.
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199
hat are /ee.e/ *)co.e>

Cash cre/*ts ?sec. 9A@ ,)e<+la*)e/ *)-est.e)ts ?sec. 99@ ,)e<+la*)e/ 2eweller#3 e<+e)/*t,re3 .o)e#3 etc. I)-est.e)t )ot f,ll# /*sclose/ a.o,)t "orrowe/ = re+a*/ o) h,)/*.
5res,.+t*-e *)co.e
If the ",s*)ess *s s.all3 *)co.e ta< /e+art.e)t takes +res,.+t*-e *)co.e ?*t ass,.es that ",s*)ess has so.e H of total rece*+t as +rof*t@. !or e<a.+le $ c*-*l co)str,ct*o) work ?sec 11AD@ $ AH *)co.e fro. total rece*+t Tra)s+ort -eh*cles for re)t ?sec 11AE@ $ 0500 5er .o)th +er hea-# -eh*cle = 0150 for l*;ht -ech*cle reta*l store ?sec 11A!@ $ 5H fro. total rece*+t
(ow to carr# forwar/ losses fro. ho,se +ro+ert#
Lo, ca) carr# forwar/ *t for A #ears a)/ a/2,st *t w*th *)co.e *) th*s hea/. ?81"@
5 DECEMBER 09
www.afterschool.tk
:0:
Loss fro. s+ec,lat*o) ",s*)ess 4 carr# forwar/
Carr# forwar/ *t a)/ a/2,st w*th *)co.e fro. th*s hea/ *) A #ears.
5 DECEMBER 09
www.afterschool.tk
:00
Loss fro. or/*)ar# ",s*)ess
C)a"sor"e/ /e+rec*at*o) 4 *t ca) "e carr*e/ forwar/ *)f*)*tel# B there *s )o t*.e l*.*t other ",s*)ess loss 4 A #ears
5 DECEMBER 09
www.afterschool.tk
:01
Loss fro. ca+*tal ;a*) B carr# forwar/

Carr# forwar/ *t for A#ears short ter. ca) "e a/2,ste/ w*th short ter. = lo); ter. ",t $ lo); ter. ca+*tal loss ca) "e a/2,ste/ o)l# w*th lo); ter. ca+*tal ;a*)
Loss fro. race horses
'ec. 81A $ carr# forwar/ a)/ a/2,st *) )e<t 1 #ears w*th ;a*) fro. th*s hea/
5 DECEMBER 09
www.afterschool.tk
:09
!ORM NO 0A30B30D
These are for.s of a,/*t state.e)ts to "e s,"*.tte/ a,/*t "# a Chartere/ Acco,)ta)t fa*l,re 4 +e)alt# Rs. 1 lakh = .5H of t,r)o-er a,/*t for. has to "e s,".*tte/ "# 01 octo"er
hat are s+ec*f*e/ +rofess*o)s >

Me/*c*)e ?/octor@3 law#er3 chartere/ acco,)ta)ts etc. Are s+ec*f*e/ +rofess*o)s. The# alsoha-e to .a*)ta*) acco,)ts as +er sec. 11AA so.e of the esse)t*al /oc,.e)ts reD,*re/ are $ cash "ook3 le/;er3 2o,r)al3 -o,chers3 "*lls3 rece*+ts3
5 DECEMBER 09 www.afterschool.tk :0A
hat ca) "e .etho/ of acco,)t*); as +er I)co.e ta< law >
E*ther cash s#ste. or .erca)t*le ?accr,el@ s#ste. 'ec. 115 cla,se 11
5 DECEMBER 09
www.afterschool.tk
:09
(ow to -al,e $ clos*); stock
A// all e<c*se a)/ other ;o-t. D,es that ha-e "ee) +a*/.
5 DECEMBER 09
www.afterschool.tk
:10
De+rec*at*o) ....
Char;e /e+rec*at*o) as +er *)co.e ta< r,les. 6*-e +ro+er /*sclos,res cla,se $ 11
5 DECEMBER 09
www.afterschool.tk
:11
Cre/*ts *) 5 Q L acco,)ts...
B,s*)ess a)/ +rofess*o) *)co.e *)cl,/es follow*); cre/*ts $ 1. /,t# /raw"ack :. sale of *.+ort l*ce)ce 0. cash ass*sta)ce rece*-e/ fro. ;o-t. All these *)co.es are char;ea"le to ta<. The# ha-e to "e a//e/ to *)co.e fro. ",s*)ess a)/ +rofess*o) ?sec. :A3 cla,se 10 @
5 DECEMBER 09 www.afterschool.tk :1:
Tea = coffee = r,""er

Rea/ sec.00AB $ B there *s a tea = coffee = r,""er /e-elo+.e)t acco,)t 4 to "e o+e)e/ w*th NABARD. 10H t,ro-er or act,al a.o,)t /e+os*te/ *) that acco,)t *s allowe/ as /e/,ct*o) ?wh*che-er *s less@. Lo,r tea t,r)o-er *s 00 cr #o, /e+os*t Rs. 0 lakh *) /e+os*t acco,)t3 how .,ch /e/,ct*o) ,)/er 00AB $ Rs. 0 lakhs ?lower of 0 lakh = 1: crore@.
5etrole,. = )at,ral ;as e<+lorat*o)
'ec. 00ABA $ :0H of t,r)o-er = .o)e# /e+os*te/ *) /e-elo+.e)t acco,)t ?as +er sche.e of ;o-er).e)t of I)/*a@ 4 *s allowe/ as /e/,ct*o).
5 DECEMBER 09
www.afterschool.tk
:11
5ro.ot*o) of sc*e)t*f*c research

'ec. 05 $ .o)e# s+e)t o) research as +er th*s sect*o) 4 150H *s allowe/ as /e/,ct*o). It *s for "oth ca+*tal a)/ re-e),e e<+e)/*t,re *f *)stea/ of carr#*); o,t research3 the assessee ;*-es /o)at*o) to a )at*o)al research or;a)*sat*o) = la"orator# 4 1:5H of e<+e)/*t,re *s allowe/ as /e/,ct*o).
'oc*al = r,ral /e-elo+.e)t +ro.ot*o) "# *)co.e ta< law...

'ec. 05AC $ .o)e# s+e)t thro,;h 5'C for +,"l*c /e-elo+.e)t allowe/ as /e/,ct*o) 'ec. 05CCA $ .o)e# s+e)t thro,;h )at*o)al f,)/ for r,ral /e-elo+.e)t = +o-ert# re.o-alB allowe/ as /e/,ct*o)
5rel*.*)ar# e<+e)ses ...

he) #o, start a )ew +ro2ect3 #o, ha-e to +re+are feas*"*l*t# re+ort a)/ carr# o,t .arket research = s,r-e#. Lo, also ha-e to +re+are MOA a)/ AOA a)/ other /oc,.e)ts to start the co.+a)#. These co.e *) +rel*.*)ar# e<+e)ses. The# are allowe/ *) 5 *)stal.e)t. It ca) "e ,+to 5H of the +ro2ect cost = ca+*tal e.+lo#e/ 4 wh*che-er *s h*;her ?sec. 05D@
E<+lorat*o) of .*)erals
Mo)e# s+e)t o) e<+lorat*o) of .*)erals ?,+to 1 #ears "efore co..erc*al o+erat*o)s@ *s allowe/ 4 *) 10 eD,al *)stal.e)ts as +er sec. 05E.
5 DECEMBER 09
www.afterschool.tk
:1A
EX5EN'E' NOT ALLO ED ......?fro. ",s*)ess a)/ +rofess*o)@

5erso)al e<+eses ca+*tal e<+e)ses e<+e)ses o) +a.+lets = "roch,res etc. 5e)alt*es = f*)e e<+e)ses o) cl,"s ?see /eta*ls@
E<+e)ses allowe/ ONLL *f act,all# s+e)t ?e-e) *f acr,el s#ste. followe/@

Lea-e e)cash.e)t ;rat,*t# = s,+era)),at*o) f,)/ co)tr*",t*o) "o),s = co..*ss*o) +a*/ *)terest o) loa) take) fro. f*)a)c*al *)st*t,t*o)s a)# ta< = /,t# = cess = char;e = ;o-t. Le-# etc. ?sec. 10B cla,se :1@
5 DECEMBER 09 www.afterschool.tk ::0
A,/*tor to ;*-e /eta*ls of follow*); $

Bro,;ht forwar/ losses ?cl. :5@ TD' ?cl. :8@ cost a,/*t re+ort ?sec. :00 B of co.+a)# act3 cl.00@ 65 = N5 to t,r)o-er rat*os 3 stock t,ro)-er rat*o3 .ater*al co)s,.e/ = f*)*she/ ;oo/s ?cl.0:@
5 DECEMBER 09
www.afterschool.tk
:::
6lo"al reach ...

O+e) off*ces *) all *.+orta)t c*t*es a)/ s+rea/ soc*al e)tre+re)e,rsh*+ across the co,)tr# ... s+rea/ lo-e for h,.a)*t# a)/ or;a)*se -ol,)tar# ;ro,+s all o-er the co,)tr# w*th o,r s,++ort. &o*) ,s3 we ca) cha);e the worl/ thro,;h o,r co)str,ct*-e efforts.
T(AN%'....
6IEE LOCR 'C66E'TION' AND &OIN A!TER'C(OOOL NET OR% = 'TART A!TER'C(OOOL 'OCIAL ENTRE5RENECR'(I5 NET OR% IN LOCR CITL A!TER'C(OOOLKIN.COM 565'E 4 ORLDG' MO'T COM5RE(EN'IEE 5RO6RAMME IN 'OCIAL ENTRE5RENECR'(I5

Income Tax Law of India

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Income Tax Law of India

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INCOME TAX LA

!or who. > > >

L*)ks for "as*c ,)/ersta)/*);

htt+$==www.scr*"/.co.=/oc=119:905A=I)co.eBTa<BL htt+$==www.scr*"/.co.=/oc=:1555010=Bas*csBofBAc htt+$==www.scr*"/.co.=/oc=119:90A0=!actor*esBAct htt+$==www.scr*"/.co.=/oc=119:9:A0=!,)/sB!lowB' htt+$==www.scr*"/.co.=/oc=1195099A=TheBE.+lo#e

(O I' A 5ER'ON >

'ec. :?8@ $ a +erso) "# who. a)# ta< *s +a#a"le

hat *s *)co.e >

Res*/e)t*al stat,s of *)/*-*/,al

: "as*c Co)/*t*o)s for Res*/e)ts

: a//*t*o)al co)/*t*o)s for or/*)ar# res*/e)ts

(O TO DETERMINE RE'IDENTIAL 'TATC' O! ARTI!ICIAL 5ER'ON'

hat *s ta<a"le o,t of the follow*); $

E*-ek has "ee) *) I)/*a as ,)/er $

Roh*t has "ee) *) I)/*a as ,)/er $

'+ec*al c*rc,.sta)ces re;ar/*); "as*c co)/*t*o)s

h*ch of these are ta<a"le >

No 4 *t *s ta< free as +er sec. 10?:1@

hat are *)cl,/e/ *) salar# >

hat *s ta<a"le (RA>

Ta< free ,)/er sec. 10?10@

(ow to -al,e f,r)*she/ acco..o/at*o) >

(ow to -al,e /o.est*c ser-a)t fac*l*t# $>

(ow to -al,e e/,cat*o)al fac*l*t# >

I)terest free loa)s

!ree l,)ch >

5rofess*o)al ta< > >

De/,ct*o) for $ E)terta*).e)t allowa)ce ?sec. 19?**@

No ?s,"2ect to so.e co)/*t*o)s@ 'ec. 10 B

hat *s a;r*c,lt,re *)co.e>

Ashok ret*res fro. ;o-er).e)t ser-*ce. (e ;ets follow*); $

hat *s a ;rat,*t# >

hat *s 5a#.e)t of 6rat,*t# Act 198:

I)co.e fro. (o,se 5ro+ert#

ME J 993 !R J A03 'R J A:3 AR J 893 (AT I' 6RO'' EALCE

ME J 993 !R J 9A3 'R J 983 AR J 98.53 (AT I' 6RO'' EALCE

ME J A13 !R J A03 'R J 903 AR J 893 (AT I' 6RO'' EALCE

hat are the /e/,ct*o)s fro. 6ross -al,e *) ho,se +ro+ert#>

Ca) ho,s*); *)co.e ha-e )e;at*-e -al,e >

No 4 *t *s e<a.+t for +ol*t*cal +art*es3 *t *s ta< free.

Ca) a) assessee cla*. re"ate for re+a*rs3 colo,r*); of ",*l/*);>

I)co.e fro. ",s*)ess a)/ +rofess*o)

hat *s ",s*)ess >

Is *lle;al ",s*)ess ta<a"le here>

Les B *) the sa.e wa# as a le;al ",s*)ess

If ",s*)ess *s )ot carr*e/ o,t *) the +re-*o,s #ear the) ....

h*ch *s )ot allowe/ e<+e)/*t,re = /e/,ct*o) >

No 4 *t *s ca+*tal e<+e)/*t,re #o, ca) cla*. /e+rec*at*o) o) th*s.

Lo, s+e)/ Rs. 0000 for *ss,e of /e"e)t,res3 *s *t allowe/ >

Les 4 *t *s relate/ to ",s*)ess

Lo, s+e)/ Rs. 1 lakh as ER' co.+e)sat*o) to /*rector3 *s *t allowe/>

Les B *t *s relate/ to ",s*)ess

Les 4 *f *t *s for ",s*)ess there *s )o l*.*t

Les 4 *t *s re-e),e rece*+t as +er I)co.e ta< act.

Les 4 *t *s treate/ as re-e),e.

A cash*er e."eOOles Rs. 5 lakhs. Is *t allowe/ as /e/,ct*o)>

Les 4 *t *s a ",s*)ess relate/ loss

A CA f*r. +a#s Rs. 10000 as +rofess*o)al ta<. Is *t allowe/ as /e/,ct*o)>

No 4 *t w*ll )ot "e allowe/ as /e/,ct*o)

Lo, +a# D*wal* "o),s to e.+lo#ees3 *s *t allowe/>

Lo, +a# "o),s as +er +a#.e)t of "o),s act3 *s *t allowe/>

Les 4 w*tho,t l*.*t.

Lo, +a# Rs. 0 lakhs for "reach of co)tract. Is *t allowe/ >

It *s a ca+*tal e<+e)/*t,re B )ot a re-e),e e<+e)/*t,re 4 so )ot allowe/

E<+e)ses *) )ew *ss,e of share = r*;hts *ss,e = "o),s *ss,e of shares>

L)ks for "asc ,)/ersta)/*);

htt+$==www.scr"/.co.=/oc=119:905A=I)co.eBTa<BL htt+$==www.scr"/.co.=/oc=:1555010=BascsBofBAc htt+$==www.scr"/.co.=/oc=119:90A0=!actoresBAct htt+$==www.scr"/.co.=/oc=119:9:A0=!,)/sB!lowB' htt+$==www.scr*"/.co.=/oc=1195099A=TheBE.+lo#e

hat s )co.e >

Res/e)tal stat,s of )/-*/,al

: "asc Co)/to)s for Res/e)ts

: a//to)al co)/to)s for or/)ar# res/e)ts

hat s ta<a"le o,t of the follow); $

E-ek has "ee) ) I)/*a as ,)/er $

Roht has "ee) ) I)/*a as ,)/er $

'+ecal crc,.sta)ces re;ar/); "asc co)/to)s

No 4 t s ta< free as +er sec. 10?:1@

hat are )cl,/e/ ) salar# >

(ow to -al,e f,r)she/ acco..o/ato) >

(ow to -al,e /o.estc ser-a)t facl*t# $>

(ow to -al,e e/,cato)al facl*t# >

De/,cto) for $ E)terta).e)t allowa)ce ?sec. 19?**@

No ?s,"2ect to so.e co)/to)s@ 'ec. 10 B

hat s a;rc,lt,re *)co.e>

Ashok retres fro. ;o-er).e)t ser-ce. (e ;ets follow*); $

hat s a ;rat,t# >

hat s 5a#.e)t of 6rat,t# Act 198:

hat are the /e/,cto)s fro. 6ross -al,e ) ho,se +ro+ert#>

Ca) ho,s); )co.e ha-e )e;at*-e -al,e >

No 4 t s e<a.+t for +oltcal +artes3 t *s ta< free.

Ca) a) assessee cla. re"ate for re+ars3 colo,r); of ",l/*);>

I)co.e fro. ",s)ess a)/ +rofesso)

hat s ",s)ess >

Is lle;al ",s)ess ta<a"le here>

Les B ) the sa.e wa# as a le;al ",s)ess

If ",s)ess s )ot carre/ o,t ) the +re-*o,s #ear the) ....

hch s )ot allowe/ e<+e)/t,re = /e/,cto) >

No 4 t s ca+tal e<+e)/t,re #o, ca) cla. /e+recato) o) ths.

Lo, s+e)/ Rs. 0000 for ss,e of /e"e)t,res3 s *t allowe/ >

Les 4 t s relate/ to ",s*)ess

Lo, s+e)/ Rs. 1 lakh as ER' co.+e)sato) to /rector3 s t allowe/>

Les B t s relate/ to ",s*)ess

Les 4 f t s for ",s)ess there s )o l.*t

Les 4 t s re-e),e rece*+t as +er I)co.e ta< act.

Les 4 t s treate/ as re-e),e.

A casher e."eOOles Rs. 5 lakhs. Is t allowe/ as /e/,ct*o)>

Les 4 t s a ",s*)ess relate/ loss

A CA fr. +a#s Rs. 10000 as +rofesso)al ta<. Is t allowe/ as /e/,cto)>

No 4 t wll )ot "e allowe/ as /e/,ct*o)

Lo, +a# Dwal "o),s to e.+lo#ees3 s t allowe/>

Lo, +a# "o),s as +er +a#.e)t of "o),s act3 s t allowe/>

Les 4 wtho,t l.*t.

It s a ca+tal e<+e)/t,re B )ot a re-e),e e<+e)/t,re 4 so )ot allowe/

E<+e)ses ) )ew ss,e of share = r;hts ss,e = "o),s *ss,e of shares>

Not 4 ca+tal e<+e)ses 4 ,)less t s 2,st a) e<te)so) of #o,r e<st); +ro/,ct

Not allowe/ 4 as t s ca+tal e<+e)/t,re

Lo, +a# Rs. 0000 as .,)c+al ta<es o) #o,r offce ",l/*);>

Lo, +a# )s,ra)ce +re.,. o) ;oo/s3 s t allowe/>

Lo, +ro-/e for De+recato) of Rs. 10 lakhs3 s *t allowe/

Ca) #o, char;e /e+recato) o) stra;ht l)e .etho/ >

It s of : t#+es $ offce 15H others 10H

Rate of /e+recato) $ :5H

Lo, +a# Rs. 0000 as )co.e ta< +e)alt#3 s *t allowe/>

hat s the rate of /e+recato) o) the follow); $

hat s ca+tal assets>

(ow to co.+,te ca+tal ;a)>

hat s )oto)al cost of acD,st*o) >

hat s )/e<e/ cost of acD,st*o) >

(ow to f)/ )/e< factor >

De/,cto)s fro. ca+tal ;a*) >

hat s ca+tal ;a*)s acco,)t sche.e 19AA>

'ec. 51EC $ )-est )s+ecfe/ "o)/s

(ow .,ch ca) #o, cla. o) .e/cal e<+e)ses as /e/,ct*o)>

Ca) loa) for h;her e/,cato) hel+ #o, ) ta< /e/,cto)>

(ow /oes A0C hel+ ) e)co,ra;); +eo+le to *)-est>

(ow /oes )co.e ta< e)co,ra;e +eo+le to ;o for .e/cal *)s,ra)ce>

(ow /oes )co.e ta< e)co,ra;e +r-ate +e)s*o) sche.es>

Ca) #o, cla. /e/,cto) for ho,se re)t +a*/ >

(ow /oes )co.e ta< e)co,ra;e ,)ts to ;o for s,sta*)a"le /e-elo+.e)t

(ow /oes )co.e ta< act e)co,ra;e )frastr,ct,re sector>

(ow /oes )co.e ta< e)co,ra;e foo/ +rocess); *)/,str#>

I)terest +a#.e)t l.ts w*tho,t TD'

TD' o) )s,ra)ce +re.,. >

If )-estor sells "ack hs ,)ts3 there s TD' ?sec. 191f@

Nato)al sa-);s sche.e

5a#.e)t to s+orts assocato)s etc. ReD,*res TD'