Unit 1: 1. Company (Sec. 2 (17) ) : The Expression Company' Is Defined To Mean

UNIT 1
http://incometaxmanagement.com/Pages/Taxation-Companies/Types-OfCompany.html#2
1. Company [Sec. 2(17)]: The expression company is defined to mean
the following:
a. Any Indian company; or
b. Any body corporate incorporated under the laws of a foreign
country; or
c. Any institution, association or a body which is assessed or was
assessable/assessed as a company for any assessment year
commencing on or before April 1, 1970; or
d. Any institution, association or a body, whether incorporated or not
and whether Indian or non-Indian, which is declared by general or
special order of the Central Board of Direct Taxes to be a company.
2. Indian Company [Sec. 2(26)]:
An Indian company means a
company formed and registered under the Companies Act, 1956.

Besides, it includes the following:
a. A company formed and registered under any law relating to
companies formerly in force in any part of India other than the State
of Jammu and Kashmir and the Union territories;
b. A corporation established by or under a Central, State of Provincial
Act;
c. Any institution, association or body which is declared by the Board
to be a company under section 2(17);
d. A company formed and registered under any law in force in the
State of Jammu and Kashmir;
e. A company formed and registered under any law for the time being
in force in the Union territories of Dadra and Nagar Haveli, (State of)
Goa, Daman and Diu and Pondicherry.
In
the
aforesaid
cases,
company,
corporation,
institution,
association or body will be treated as an Indian company only if its

registered office is in India.
3. Domestic Company:
As per Section 2(22A), "domestic company"
means an Indian company, or any other company which, in respect of

its income liable to tax under this Act, has made the prescribed
arrangements for the declaration and payment, within India, of the
dividends (including dividends on preference shares) payable out of
such income.
4. Foreign Company:
As per Section 2(23A) of the Income Tax Act,
1961, Foreign Company is a company which is not a domestic

company. Thus, all those companies which do not qualify the conditions
to be considered domestic company shall be considered foreign
companies.
5. Industrial Company: It means a company which is mainly engaged
in the business of generation or distribution of electricity or any other
form of power or in the construction of ships or in the manufacture or
processing of goods or in mining.
The following activities are held as manufacture or processing of goods
on the basis of judicial pronouncements:
Book publishing
Mixing different types of tea to arrive at a desired blend
Manufacture and selling of carpets but having major source of
income from sale of import entitlement (generated by export of
carpets)
Production of cinematographic films
Tailoring clothes
Conversion of computer cash vouchers, invoices, etc., into balance
sheet, stock account, etc.

Sorting out, washing, drying and blending wool.
Undergoing a change in a commodity as a result of some operation
(many be manual or mechanical) and as a result a new and distinct
commodity emerges.
6. A Company in which Public are Substantially Interested: As per

Section 2(18), in the following cases a company is regarded as a
company in which the public are interested.
i.
Owned by Government/RBI A company owned by the
Government or the RBI or in which not less than 40% shares (in
terms of value) are held by the Government or the Reserve Bank
ii.
or a corporation owned by the Reserve Bank

Section 25 companies A company registered under section
25 of the Companies Act, 1956, namely companies for promotion
of commerce, art, science, religion, charity and prohibiting the
iii.
payment of any dividends to its members.

A company without share capital - A company having no
share capital and declared by the Central Board of Direct Taxes to
iv.
be a company in which the public are substantially interested.

Nidi or Mutual Benefit Society- A company which carries on,
as its principal business, the business of acceptance of deposits
from its members and which is declared by the Central
Government under section 620A of the Companies Act to be a
v.
Nidhi or Mutual Benefit Society.

Company owned by a Co-operative Society - If it is company
in which shares carrying at least 50% of the voting power have
been allotted unconditionally to or acquired unconditionally by,
and are throughout the relevant previous year beneficially held
vi.
by, one or more cooperative societies; or

Listed Companies - If it is company which is not a private
company as defined in Section 3 of the Companies Act, 1956 and
equity shares of the company were, as on the last day of the
relevant previous year, listed in a recognised stock exchange in
vii.
India;
Public Limited Company owned by Government and/or a
widely-held company - If it is a company which is not a private
company and the shares in the company (other than preference
shares) carrying at least 50% (40% in case of an Industrial
company) of the voting power have been allotted unconditionally
to, or acquired unconditionally by, and were throughout the
3
relevant accounting year beneficially held by (a) Government, or

(b) a corporation establishment by a Central or State or Provincial
Act, or (c) any company in which the public are substantially
interested or a wholly owned subsidiary company.
7. Investment Company: It means a company whose gross total income
consists mainly of income which is chargeable under the heads Income
from House Property, Capital Gains and Income from other sources.
8. Widely-held Company A company in which the public are
substantially interested is known as widely-held company.
9. Closely-held Company - A company in which the public are not
substantially interested is known as a closely-held company.
The distinction between a closely held and widely held company is
significant from the following viewpoints:
(i) Section 2(22)(e) which deems certain payments as dividend is
applicable only to the shareholders of a closely held company; and
(ii) A closely held company is allowed to carry forward its business
losses only if the conditions specified in section 79 are satisfied.
Problems:
1. ADITI Ltd. is a company registered in India under the Companies Act,
1956. All its business activities are conducted outside India during
relevant previous year. Further, all the meetings of the Board of
directors are held outside India. Determine the residential status of
ADITI Ltd. for the AY 2016-17.
Sol.:
Determination of Residential status of AT Ltd. for Previous Year
2015-16 (Assessment Year 2014-15):
ADITI Ltd. is an Indian company as it is registered under the Companies
Act, 1956.
ADITI Ltd. is therefore Resident in India as Indian companies are always
resident in India.
2. ATUL Inc. a company incorporated in USA, is carrying out certain
business activities in India. All its decisions are taken in India except
one decision which has been taken outside India. Determine the
residential status of ATUL Inc. for the AY 2016-17.
Sol.:
Determination of Residential status of AT Inc. for Previous Year
2015-16 (Assessment Year 2016-17):
ATUL Inc. is a foreign company as it is not registered in India. In its case,
residential status depends upon control and management of its business
affairs.
ATUL Inc. is Non-resident in India as control and management of its
business affairs is partly situated in India.
From the assessment year 2016-17, a foreign company will be resident in

India if its place of effective management (POEM) during the relevant
previous year is in India.
For this purpose, the place of effective
management means a place where key management and commercial

decisions that are necessary for the conduct of the business of an entity
as a whole are, in substance made.
For this purpose, a set of guiding
principles to be followed in determination of POEM may be issued by the

Board of for the benefit of the taxpayers and tax administration.
Residential Status of a Company
Tax Incidence
Particulars
Resident in India
Non-resident in
Indian income
Foreign income
Taxable in India
Taxable in India
India
Taxable in India
Not Taxable in India
Indian income is always taxable in India irrespective of the
residential status of the taxpayer.

Foreign income is taxable in the hands of resident in India.
Foreign income is not taxable in the hands of non-resident in
India.
Indian Income: Any of the following three is an Indian income

i.
If income is received or deemed to be received in India during the

previous year and at the same time it accrues or is deemed to
ii.
accrue in India during the previous years.

If income is received or deemed to be received in India during the
previous year but it accrues outside India during the previous
iii.
year.
If income is received outside India during the previous year but it
accrues or is deemed to accrue in India during the previous year.
Foreign Income: If the following two conditions are satisfied, then

such income is foreign income6
a. Income is not received or not deemed to be received in India; and

b. Income does not accrue or does not deemed to accrue in India.
Tax Rates
1. In case of an Individual (resident or non-resident) or HUF or Association of Person or
Body of Individual or any other artificial juridical person
Assessment Year 2016-17
Taxable income
Tax Rate
Up to Rs. 2,50,000
Nil
Rs. 2,50,000 to Rs. 5,00,000
10%
Rs. 5,00,000 to Rs. 10,00,000
20%
Above Rs. 10,00,000
30%
Less: Rebate under Section 87A

Add: Surcharge and Education Cess at 3%
Taxable income
Tax Rate
Up to Rs. 2,50,000
Nil
Rs. 2,50,000 to Rs. 5,00,000
10%
Rs. 5,00,000 to Rs. 10,00,000
20%
Above Rs. 10,00,000
30%

Add: Surcharge and Education Cess
2. In case of a resident senior citizen (who is 60 years or more at any time during the
previous year but less than 80 years on the last day of the previous year)
Taxable income
Tax Rate
Up to Rs. 3,00,000
Nil
Rs. 3,00,000 - Rs. 5,00,000
10%
Rs. 5,00,000 - Rs. 10,00,000
20%
Above Rs. 10,00,000
30%

Taxable income
Tax Rate
Up to Rs. 3,00,000
Nil
Rs. 3,00,000 - Rs. 5,00,000
10%
Rs. 5,00,000 - Rs. 10,00,000
20%
Above Rs. 10,00,000
30%

3. In case of a resident super senior citizen (who is 80 years or more at any time during
the previous year)
Taxable income
Tax Rate
Up to Rs. 5,00,000
Nil
Rs. 5,00,000 - Rs. 10,00,000
20%
Above Rs. 10,00,000
30%

Taxable income
Tax Rate
Up to Rs. 5,00,000
Nil
Rs. 5,00,000 - Rs. 10,00,000
20%
Above Rs. 10,00,000
30%

Note:
a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 12%
of such tax, where total income exceeds one crore rupees. However, the surcharge shall be
subject to marginal relief (where income exceeds one crore rupees, the total amount payable
as income-tax and surcharge shall not exceed total amount payable as income-tax on total
income of one crore rupees by more than the amount of income that exceeds one crore
rupees).
b) Education Cess: The amount of income-tax and the applicable surcharge, shall be further
increased by education cess calculated at the rate of two per cent of such income-tax and
surcharge.
c) Secondary and Higher Education Cess: The amount of income-tax and the applicable
surcharge, shall be further increased by secondary and higher education cess calculated at the
rate of one per cent of such income-tax and surcharge.
d) Rebate under Section 87A: The rebate is available to a resident individual if his total
income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income-tax or
Rs. 2,000, whichever is less.
rupees).
surcharge.
d) Rebate under Section 87A: The rebate is available to a resident individual if his total
income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income-tax or
Rs. 5,000, whichever is less.
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4. Partnership Firm
For the Assessment Year 2016-17 and 2017-18, a partnership firm (including LLP) is taxable
at 30%.
Add:
rupees).
surcharge.
Stevedore
11
5. Local Authority
For the Assessment Year 2016-17 and 2017-18, a local authority is taxable at 30%.
Add:
rupees).
surcharge.
12
6. Domestic Company
For the Assessment Year 2016-17 and 2017-18, a domestic company is taxable at 30%.
However, for Assessment year 2017-18, tax rate is 29% if turnover or gross receipt of the
company does not exceed Rs. 5 crore.
Add:
of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees
and at the rate of 12% of such tax, where total income exceeds ten crore rupees. However, the
surcharge shall be subject to marginal relief, which shall be as under:
(i) Where income exceeds one crore rupees but not exceeding ten crore rupees, the total
amount payable as income-tax and surcharge shall not exceed total amount payable as
income-tax on total income of one crore rupees by more than the amount of income that
exceeds one crore rupees.
(ii) Where income exceeds ten crore rupees, the total amount payable as income-tax and
surcharge shall not exceed total amount payable as income-tax on total income of ten crore
rupees by more than the amount of income that exceeds ten crore rupees.
surcharge.
13
7. Foreign Company
Assessment Year 2016-17 and Assessment Year 2017-18
Nature of Income
Royalty received from Government or an Indian concern in pursuance
Tax Rate
50%
of an agreement made with the Indian concern after March 31, 1961,
but before April 1, 1976, or fees for rendering technical services in
pursuance of an agreement made after February 29, 1964 but before
April 1, 1976 and where such agreement has, in either case, been
approved by the Central Government
Any other income
40%
Add:
of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees
and at the rate of 5% of such tax, where total income exceeds ten crore rupees. However, the
surcharge shall be subject to marginal relief, which shall be as under:
(i) Where income exceeds one crore rupees but not exceeding ten crore rupees, the total
amount payable as income-tax and surcharge shall not exceed total amount payable as
income-tax on total income of one crore rupees by more than the amount of income that
exceeds one crore rupees.
14
(ii) Where income exceeds ten crore rupees, the total amount payable as income-tax and
surcharge shall not exceed total amount payable as income-tax on total income of ten crore
rupees by more than the amount of income that exceeds ten crore rupees.
surcharge.
8. Co-operative Society
Assessment Year 2016-17 and Assessment Year 2017-18
Taxable income
Tax Rate
Up to Rs. 10,000
10%
Rs. 10,000 to Rs. 20,000
20%
Above Rs. 20,000
30%
Add:
rupees).
surcharge.
15
http://taxguru.in/income-tax/income-tax-slab-financial-year-201516.html
Exempted incomes:
Video lecture:
https://www.youtube.com/watch?v=mxtgQUXY0w4
https://www.youtube.com/watch?v=Fx0q6L4U2Hk
Take prints
http://incometaxmanagement.com/Pages/Taxation-System/Exempted-Incomes.html
BASIS FOR
DEDUCTION
COMPARISON
EXEMPTION
Meaning
Deduction means
subtraction i.e. an amount
that is eligible to reduce
taxable income.
Exemption means exclusion,

i.e. if certain income is exempt
from tax then it will not
contribute to the total income
of a person.
What is it?
Concession
Relaxation
Concept
The amount of deduction is

first included in the gross
income and then deducted
from it to arrive at the net
income.
The exempted income is not

considered as a part of total
income, the whole amount is
an exemption for the
taxpayer.
Income is
Tax deductible
Tax free
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BASIS FOR
DEDUCTION
COMPARISON
EXEMPTION
Objective
To promote savings and

investments of the general
public.
To boost that particular

section in which tax is
exempted.
Sections
Section 80 C to 80 U deals
with deduction
Section 10 deals with

exemptions
Allowable to
Specific persons
All the persons
Conditional
Yes
No
Definition of Deduction
Chapter-VI (80C to 80U) of the Income Tax Act, 1961 deals with deductions.
Deduction means the amount that will be subtracted from the gross amount.
As per Income Tax Act, deductions are the payments or investments made by
the assessee through which a specific amount or percentage is reduced from
their gross total income to arrive at total taxable income. If GTI is nil then no
deduction is allowable or the amount of deduction cannot exceed GTI i.e.
deduction is allowable only to the extent of gross total income.
These are allowed to the taxpayer only if he claims deductions for the
investments he has made in specific instruments. In this way, such an income
form part of the gross total income of the taxpayer and then the deductions are
allowed to arrive at total income. Deductions are divided into three categories:
Deduction regarding certain payments: Example: Life insurance

premium paid, medical insurance premium paid, donations to charitable
institutions etc.
Deduction regarding certain incomes: Specific incomes from

cooperative societies, Royalty on patents etc.
Other deductions
Definition of Exemption
17
The exemption is derived from the word exempt which means an amount
which is not liable to something. In income tax, exemption refers to
those incomes which are not considered while calculating the total income.
Hence, such source of incomes excluded from taxable incomes or not
chargeable to tax.
In the list of exempted incomes, certain incomes are completely exempt from
tax like agricultural income. But certain incomes are partly exempt from tax,
in which exemption is given up to the specified limit. The exceeding part of
partly exempted income will be subject to tax and considered while computing
the gross total income.
Key Differences Between Deduction and Exemption

The major differences deduction and exemption are indicated below:
1.
2.
Deduction means subtraction i.e. an amount that is eligible to reduce

taxable income. Exemption means exclusion, i.e. if certain income is
exempt from tax then it will not contribute to the total income of a
person.
The deduction is a concession, but Exemption is relaxation.
3.
The deduction is applicable to tax deductible income, whereas only tax

free income is eligible for tax exemption.
4.
Deduction is allowed to specific persons that qualify the particular

criteria. On the other hand, the exemption is allowed to all the persons.
5.
The deduction is conditional, i.e. it is allowed only to those which

qualify the eligibility criteria. Conversely, the exemption is unconditional.
6.
The objective of providing deduction is to encourage savings and

investments in certain instruments while the exemption is to help the
weaker section of society.
7.
Section 80C to 80U of Income tax Act, 1961 deals with deduction
whereas exemptions are provided in Section 10.
8. Deductions are first added to GTI and then deducted from it. Unlike,
Exemptions do not form part of total income.
Conclusion
18
Deduction are mainly used by the government to promote savings in order to

increase investments in certain areas, for which the income of the assessee is
reduced to that extent. Likewise, exemptions are used to help the weaker
sections of the society to grow and prosper. By providing exemptions, the
government is trying to give an equal opportunity to boost that segment.
Incomes Exempt From Income Tax (Sec.10)
Section
1. Agricultural income
10(1)
2. payments received from family income by a member of a HUF
10(2)
3. Share of profit from a firm
10(2A)
4. Interest received by a non-resident from prescribed securities
10(4)
5. Interest received by a person who is resident outside India on amounts credited in the
Non-resident (External) Account
10(4)
6. In the case of an Indian citizen or a person of Indian origin who is a non-resident, the
interest from notified Central Government Securities [i.e., national Savings Certificates,
VI and VII Issues] if such certificates are subscribed in foreign currency or other foreign 10(4B)
exchange remitted from outside through official channels.
7. Leave travel concession provided by an employer to his Indian citizenemployee

8. Tax paid by employer of non-resident Indian technician
8A. value of concessional passage money received by a foreign national employee from
his employer
9. Remuneration received by foreign diplomats of all categories
10(5)
10(5B)
10(6)(I)
10(6)
10. salary received by a foreign citizen in India as an employee of a foreign

enterprise provided his stay in India does not exceed 90 days
10(6)(VI)
11. Salary received by a non-resident foreign citizen as a member of ship`s

crew provided his stay in India does not exceed 90 days
10(6)(VIII)
12. Remuneration received by a non-resident foreign national, of a foreign Government
10(6)(XI)
19
deputed in India for training in a Government establishment or public sector

undertaking.
13. Tax paid on behalf of foreign companies
10(6A)
14. Tax paid by Government or an Indian concern in the case of a non-resident/foreign

company
10(6B)
15. Income arising to notified foreign companies from services provided in or outside
India in projects connected with the security of India
10(6C)
16. Foreign allowance granted by the Government of India of its employees posted
abroad
10(7)
17. Remuneration received from a foreign Government by an individual who is in India in 10(8) and (9)
connection with any sponsored co-operative technical assistance programme with a
foreign Government and the income of the family members of such employee
18. Remuneration/fees received by non-resident consultants and their employers
10(8A) and (8B)
19. Death-cum-retirement gratuity
10(10)
20. Computed value of pension (See Para 8, point 11 of table) and any payment received
by way of commutation of pension by an individual out of annuity plan of LIC or any
other insurer from a fund set up by that corporation or insurer
10(10A)
21. Leave Salary
10(10AA)
22. Retrenchment compensation
10(10B)
23. Compensation received by victims of Bhopal gas leak disaster.
10(10BB)
24. Compensation from the Central Government or a State Government or a local

10(10BC)
authority received by an individual or his legal heir on account of any disaster, applicable
from the assessment year 2005-06.
25. Compensation received from a public sector company at the time of voluntary
retirement or separation
26. Tax on perquisite paid by employer
27. Any sum (including bonus) on life insurance policy (not being a Keyman insurance
policy)
10(10C)
10(10CC)
10(10D)
28. A Accumulated balance due and becoming payable to an employee from a

recognized provident fund to the extent it is provided.
10(12)
29. Amount from an approved superannuation fund to legal heirs of theemployee
10(13)
20
30. House rent allowance subject to certain limits
10(13A)
31. Special allowance granted to an employee
10(14)
32. Income received by a public financial institution as exchange risk premium in certain
cases
10(14A)
33. Interest from certain exempted Securities
10(15)
34. Payment made by an Indian company, engaged in the business of operation of an

acquire an aircraft on lease from a foreign Government or foreign enterprise.
10(15A)
35. Scholarship granted to meet the cost of education.
10(16)
36. daily allowance of a member of parliament or State Legislature (entire amount is

exempt), and any other allowance subject to certain conditions
10(17)
37. Rewards given by the Central or State Government for literary scientific or artistic
work or attainment or for service for alleviating the distress of the poor, the weak and the
ailing, or for proficiency in sports and games or gallantry awards approved by the
Government
10(17A)
38. pension and family of gallantry award winners
10(18)
38A. Ex gratia payments made by the Central Government consequent on the abolition of
privy purse
10(18a)
39. Family pension received by family members of armed forces
10(19)
40. Notional property income of any one place occupied by a former ruler
10(19A)
41. Income of local authorities
10(20)
42. Any income of housing boards constituted in India for planning, development or
improvement of cities, towns or villages
21
10(20A)
43. any income of an approved research association
10(21)
44. Income of a notified news agency (i.e., PTI for the assessment years 1994-95 to
2002-03 and UNI for the assessment years 1994-95 to 2002-03)
10(22B)
45. Any income (other than interest on securities, income from property, income received
for rendering any specific services and income by way of interest or dividends) of
approved professional bodies
10(23A)
46. Any income received by any person on behalf of any Regimental Fund or non-public
fund established by the armed forces of the Union for the welfare of the past and present
members of such forces or their dependents
10(23AA)
47. Any income of the pension fund set up by LIC or any other insurer approved by the
Controller of Insurance or insurance Regulatory and development Authority
10(23AAB)
48. Income of funds established for the welfare of employees
10(23AAA)
49. Any income (other than business income) of a trust or a society approved by khadi
and Village Industries Commission
10(23B)
50. Income of an authority whether known as Khadi and Village Industries Board or by
any other name for the development of Khadi and Village industries
22
10(23BB)
51. Income arising to anybody or authority established, constituted or appointed under
any enactment for the administration of public, religious or charitable trusts or
endowments or societies for religious or charitable purposes
10(23BBA)
52. Income of the European Economic Community derived in India by way of interest,
dividends or capital gains in certain cases under the European Community International
Institutional Partners Scheme, 1993
10(23BBB)
53. Any income of SAARC fund for Regional projects
10(23BBC)
54. Any income of Secretariat of Asian Organization of Supreme Audit Institutions
10(23BBd)
55. Income of North-Eastern Finance Corporation
10(23BBF)
56. Income of Central Electricity Regulatory Commission
10(23BBG)
57. income received by any person on behalf of specified national funds, approved public
charitable institutions, educational institute and hospital
10(23C)
58. Income of a Mutual Fund set up by a public sector bank or public financial institution
10(23D)
58A. Income of the notified Exchange Risk Administration Fund, (i.e., Exchange Risk
administration fund set up by IDBI, IFCI and ICICI or set up by the Power Finance
Corporation Ltd.)
23
23(23E)
59. Income if investor protection Fund Trust
10(23EA)
60. Income of Credit Guarantee Fund Trust
10(23EB)
61. Income of investor Protection Fund by way of contributions from commodity

exchange and the members thereof
10(23EC)
62. Income by way of dividends and long-term capital gains of venture capital funds
and venture capital companies
10(23F)
63. Income by way of dividend or long-term capital gain of venture capital

fund/undertaking
10(23FA)
64. Income of venture capital fund/venture capital company
10(23FB )
65. Dividend interest, etc. of an infrastructure capital fund
10(23G)
66. Income by way of interest on securities property income and income from other
sources of a registered trade union or an association of registered trade unions
10(24)
67. Any income received by a person on behalf of statutory provident fund,

recognized provident fund, approved superannuation fund, approved gratuity fund and
approved coal-mines provident fund
10(25)
68. Income of employees` State Insurance Fund

69. Income of a member of a scheduled tribe, residing in Nagaland, Manipur, Tripura,
Arunachal Pradesh, Mizoram and Ladakh which accrues/arises to him from any source
in the said area or any income by way of dividend and interest on securities
10(25A)
10(26)
70. Any income accruing or arising to any resident of Ladakh from any source therein or
out of India up to the assessment year 1988-89, provided that such person was resident
in Ladakh in the previous year relevant to the assessment year 1962-63.
10(26A)
70A. Any income of an individual, being a Sikkimese, which accrues or arises from any
source in the State of Sikkim or by way of dividend or interest o securities applicable
from the assessment year 1990-91.
10(26AAA)
70B. Any income of an agricultural produce marketing committee/board constituted

under any law for the purpose of the marketing of a agricultural produce
10(26AAB)
72. Income of National Minorities development and Finance Corporation
10(26BB)
73. Income of ex-serviceman
10(26BBB)
24
74. Income of a co-operative society formed for promoting interest of members of

scheduled castes/tribes
10(27)
75. Income of certain Commodity Boards/Authorities
10(29A)
76. Subsidy from the Tea Board for replanting or replacement of tea bushes or for
rejuvenation or consideration of areas used for cultivation of tea in India
10(30)
77. Subsidy received by planters
10(31)
78. Income of minor child up to Rs. 1, 500 in respect of each minor child whose income is 10(32)
includible under section 64(1A)
79. Capital gains of transfer of US 64 [See Para 50.9]
10(33)
80. Dividend on or after April 1, 2003 from domestic companies
10(34)
81. Interest on units of a Mutual Fund on or after April 1, 2003
10(35)
82. Capital gains on transfer of listed equity shares [See Para 50.9]
10(36)
83. capital gains on compensation received on compulsory acquisition of

urban agricultural land
10(37)
84. Long-term capital gains on transfer of securities not chargeable to tax in cases
covered by transaction tax
10(38)
85. Income of an international sporting event
10(39)
86. Grant by subsidiary company
10(40)
87. Capital gain in the above case
10(41)
88. Income of certain bodies
10(42)
89. Any income received by an individual as a loan, either in lump sum or in installments 10(43)
in a transaction of reserve mortgage, applicable from the assessment year 2008-09
89A. Any income received by any person for, or on behalf of the New Pension System
Trust [clause (44) applicable from the assessment year 2009-10].
10(44)
Notified allowance /perquisites given to the chairman, a retired

Chairman or any other member or retired member of the Union Public
Service Commission [clause (45) applicable from the assessment year
2008-09 onwards].
Any specified income arising to a notified

body/authority/board/trust/commission with the object of
regulating/administration any activity for the benefit of general public
[clause (46) applicable from the assessment year 2012-13].
Any income of an infrastructure debt fund set up in accordance with

notified guidelines [clause (47) applicable from the assessment year
2012-13].
90. Any income of a political party by way of interest on securities, property income,
income from other sources of income by way of political contributions
10(45)
91. Voluntary contribution received by an electoral trust if a few conditions are satisfied
[Sec. 13B, applicable from the assessment year 2010-11]
13B
10(46)
10(47)
13A
25
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26

Unit 1: 1. Company (Sec. 2 (17) ) : The Expression Company' Is Defined To Mean

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Unit 1: 1. Company (Sec. 2 (17) ) : The Expression Company' Is Defined To Mean

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UNIT 1

An Indian company means a

company formed and registered under the Companies Act, 1956.

association or body will be treated as an Indian company only if its

As per Section 2(22A), "domestic company"

means an Indian company, or any other company which, in respect of

As per Section 2(23A) of the Income Tax Act,

1961, Foreign Company is a company which is not a domestic

sheet, stock account, etc.

6. A Company in which Public are Substantially Interested: As per

or a corporation owned by the Reserve Bank

payment of any dividends to its members.

be a company in which the public are substantially interested.

Nidhi or Mutual Benefit Society.

by, one or more cooperative societies; or

relevant accounting year beneficially held by (a) Government, or

From the assessment year 2016-17, a foreign company will be resident in

For this purpose, the place of effective

management means a place where key management and commercial

For this purpose, a set of guiding

principles to be followed in determination of POEM may be issued by the

Indian income is always taxable in India irrespective of the

residential status of the taxpayer.

Indian Income: Any of the following three is an Indian income

If income is received or deemed to be received in India during the

accrue in India during the previous years.

Foreign Income: If the following two conditions are satisfied, then

a. Income is not received or not deemed to be received in India; and

Rs. 2,50,000 to Rs. 5,00,000

Rs. 5,00,000 to Rs. 10,00,000

Above Rs. 10,00,000

Less: Rebate under Section 87A

Rs. 2,50,000 to Rs. 5,00,000

Rs. 5,00,000 to Rs. 10,00,000

Above Rs. 10,00,000

Less: Rebate under Section 87A

Rs. 3,00,000 - Rs. 5,00,000

Rs. 5,00,000 - Rs. 10,00,000

Above Rs. 10,00,000

Less: Rebate under Section 87A

Rs. 3,00,000 - Rs. 5,00,000

Rs. 5,00,000 - Rs. 10,00,000

Above Rs. 10,00,000

Less: Rebate under Section 87A

Rs. 5,00,000 - Rs. 10,00,000

Above Rs. 10,00,000

Add: Surcharge and Education Cess

Rs. 5,00,000 - Rs. 10,00,000

Above Rs. 10,00,000

Add: Surcharge and Education Cess

Rs. 10,000 to Rs. 20,000

Above Rs. 20,000

Exemption means exclusion,

The amount of deduction is

The exempted income is not

To promote savings and

To boost that particular

Section 10 deals with

All the persons

Deduction regarding certain payments: Example: Life insurance

Deduction regarding certain incomes: Specific incomes from

Key Differences Between Deduction and Exemption

Deduction means subtraction i.e. an amount that is eligible to reduce