Corporate Taxation

Corporate Taxation
Presentation by:
CA. (Dr.) G. S. Grewal
Partner,
Grewal & Singh,
Chartered Accountants
CA. (Dr.) G.S. Grewal
Background
Article 265 of the Constitution of India authorises
the levy of tax.
There are two types of taxes:
Direct Taxes Income Tax and Wealth Tax
Indirect Taxes Excise, Customs, Service Tax,

Central Sales Tax and Value Added Tax
Background
Income Tax is governed by the
Income Tax Act, 1961;

Income Tax Rules, 1962;
Circulars and Notifications; and
Court Decisions
Basis of Charge [Section 4]
Income Tax is charged:

on the total income
of the previous year
of the person
at the prescribed rates.
Person [Section 2(31)]

Person" includes
(i)
an individual,
(ii) a Hindu Undivided Family,
(iii) a Company,
(iv) a firm,
(v) an association of persons or a body of individuals,
whether incorporated or not,
(vi) a local authority, and
(vii) every artificial juridical person, not falling within
any of the above sub-clauses.
Previous Year [Section 3]

Assessment Year [Section 2 (9)]
Previous Year" means the financial year immediately
preceding the assessment year.
Assessment Year" means the period of twelve months
commencing on the 1st day of April every year
Books or Books of Account [Section 2(12A)]

Books or Books of Account includes
ledgers, day-books, cash books, account-books and
other books,
whether kept in the written form or as print-outs of data
stored in a floppy, disc, tape or any other form of electromagnetic data storage device;
Tax Rates for Domestic Company for the

AY 2014 15 and 2015 - 16
Normal Tax Rate @ 30% - for Domestic Companies
@ 40% - for Foreign Companies
MAT Rate @ 18.5%
In addition surcharge is levied:
If income/book profit is more than than Rs. 1 Crore
5% if income/book profit exceeds Rs. 1 Crore but
is less than 10 Crores
10% if income/book profit exceeds Rs. 10 Crores
Education Cess @ 2% on tax
Secondary and Higher Education Cess @ 1% on tax
Residential Status
Income Tax is levied according to the residential status

of a person.
If a person is resident Indian (as per the Income Tax
Act, 1961), his global income is taxable in India.
However, even if a person is not resident in India (as
per the Income Tax Act, 1961), income earned in India
during the previous year is taxable in India. [Section 9].
Double Taxation Avoidance Agreements (DTAA) are
entered with 115 countries.
Residential Status of Company How

Determined?
Residential status of an Indian Company:
Indian Company is always resident in India.
Residential status of a Foreign Company:
A foreign company will be resident in India if
control and management of its business is wholly
in India. It means controlling and directive power
of the company is located in India.
10
Heads of Income [Section 14]

Section 14 of the Act prescribes that income of a person
be computed under the following five heads:
1. Salaries; (Section 15 to 17)
2. Income from House Property; (Section 22 to 27)
3. Profits and Gains from Business or Profession;
(Section 28 to 44DB)
4. Capital Gains (Section 45 to 55A)
5. Income from Other Sources (Section 56 to 59)
The aggregate of income under this heads is termed as
Gross Total Income
Total Income = Gross Total Income minus Deduction u/s
80C to 80U of the Act.
11
Income from Salaries [Section 15 to 17]
Amount earned by a person from employment is

taxed under the head Salaries.
Relationship of employer and employee must
exist for income to be taxed under the head
Salaries
12
Income from House Property [Section 22 to 27]
Chargeability:
Income earned from property consisting of
Building or Land appurtenant there to.
Assessee should be the owner of the property.
Otherwise it would be taxable under the head
Income from Other Sources.
Property should not be used by the assessee
for the purposes of own business or
profession.
13
Profits and Gains of Business or Profession

[Sections 28 to 44DB]
Income is taxable under the head Profit and

Gains from Business or Profession if
the assessee carried on business or profession
in the previous year; and
the assessee earned profit or incurred loss
from business or profession.
14
Income (Other than income assessed under

the head Income from Other Sources) arising
before the commencement of business is
treated as capital receipt not chargeable to tax.
Expenditure that is incurred before the
commencement of business is capital
expenditure not allowed as deduction to
compute taxable income.
15
Following is chargeable to Income Tax under this

head:
Profits and gains of any business or profession
carried on by the assessee at any time during
the previous year.
Any compensation or other payments due or
received by on account of business carried on
by the company.
16
Incentives include
Usage of Import License
Cash Assistance against Exports
Duty Drawback
Focus Product Scheme
Any Profit on the transfer of incentive of
Focus Product Scheme
Value of any benefit or perquisite arising from
business or exercise of profession.
17
Any sum received for not carrying out any

activity in relation to any business or not to
share any know how, patent, copyright or trade
mark.
Any sum received, on account of any capital
asset (other than land or goodwill or financial
instruments) being demolished, destroyed,
discarded or transferred, if the whole of the
expenditure on such capital asset has been
allowed as a deduction under section 35AD
18
Methods of Accounting
Two methods of accounting are recognised:
Mercantile or Accrual Basis of Accounting
Cash Basis of Accounting
For the tax purposes, an assessee has a choice over

method of accounting.
The Companies Act, 2013 requires companies to follow
Mercantile or Accrual Basis of Accounting.
19
Deductions
Rent, rates, taxes, repairs and insurance for building

(Section 30).
However, repairs resulting in increase of useful life
of the asset is a capital expenditure.
Depreciation (Section 32)
The asset should be owned by the assessee.
The asset must have been put to use for the
purpose of business in the relevant previous year.
Block of Assets concept.
Depreciation is allowed at 50 % of the eligible rate,
if put to use for less than 180 days.
20
Deductions Depreciation
Depreciation is allowed in respect of

Building
Plant and machinery
Furniture
Motor Vehicles
Computers
Intangible Assets
21
Investment Allowance [Section 32AC]
It is allowed only to companies engaged in the business

of production or manufacture of an article or thing for
which it acquires and install new plant and machinery.
Deduction u/s 32AC(1) : 15% of investment if
Aggregate cost of investment should exceed Rs.
100 crores.
It should be acquired and installed after March 31,
2013 but before April 1, 2015.
It is available for Assessment Year 2014-15 and
2015-16
22
Investment Allowance [Section 32AC]
Deduction u/s 32AC(1A) : 15% of investment if:

Aggregate cost of new asset acquired and installed in
the previous year exceeds Rs. 25 crores.
No deduction claimed u/s 32AC(1)
It is available for assessment year 2015-16 to 2017-18
NOTE:
New plant and machinery does not includes:
any asset used by any person prior to its installation
any asset installed in any office premises or
residential accommodation including guest house
any office appliances including computers
any vehicle, ship or air craft
23
Expenditure on Scientific Research (Sec 35)

Any Expenditure (other than cost of land) expended on scientific
research related to the business of the assessee.
Contribution to Outsiders
Contribution to
Deduction
Approved Scientific Research Association, University, College

for the purpose of Scientific Research
175%
Approved University, College or other Institution for the

purpose of research in social sciences or statistical research
125%
Approved company to be used for scientific research
125%
National Laboratory, University , Indian Institute of

Technology for purpose of scientific research
200%
24
Deduction in respect of expenditure on specified

business [Section 35AD]
Deduction is allowed only in respect of business as

specified in this section
Amount of deduction is 100% of the capital
expenditure incurred for the specified business. In
some cases it is 150%.
Expenditure incurred on the acquisition of land or
goodwill or financial instrument is not eligible for
deduction.
25
Deduction in respect of Expenditure on Specified

Business [Section 35AD]
Consequences of deduction u/s 35AD:

No further deduction under any other provision of the
Act.
Any amount received in respect of capital asset
destroyed, demolished, discarded or transferred in
respect of which deduction is claimed would be
chargeable to tax.
Loss from specified business would set off from
profits or gains of other specified business, if any.
The asset in respect of which deduction is claimed
shall be used for the specified business for 8 years.
26
Preliminary Expenses ( Section 35D)
Deduction is allowed in 5 equal annual installments

beginning with the previous year in which
the business commences; or
the extension of the industrial undertaking is
completed; or
the new industrial unit commences production or
operation.
27
Other Deduction (Section 36)

Insurance premium paid to cover the risk of damage
or destruction of Stock
Insurance premium on health of employees
Bonus or Commission paid to Employees
Interest on Borrowed Capital
Contribution to Recognised Provident Fund
Contribution to Approved Gratuity Fund
Bad Debts
Expenditure on promotion of Family Planning among
employees
28
General Expenses (Section 37)
Expenses, not specifically covered under sections 30

to 36, are allowable under this section provided:
It is expended wholly and exclusively for the
purposes of business or profession
It is not a Capital Expenditure
It is not a Personal Expenditure
It is not an expenditure for a purpose which is an
offence or prohibited by law
It must have been incurred in the previous year
29
Amount not Deductible [Section 40(a)]

TDS on Payments to Non-Residents
Any interest, royalty, fees for technical services or any
other sum chargeable under the Act, which is payable:
Outside India (to a resident or Non Resident); or
In India to a Non Resident or to a foreign company
on which tax is deductible at source, and
on which tax has not been deducted
or after deduction, has not been paid before the expiry
of the time prescribed (w.e.f AY 2015-16 u/s 139(1))
then above said expense is not allowed as deduction.
It is allowed as deduction in a previous year, in which
tax is deducted and deposited.
30
Amount not Deductible Section 40(a)(ia)
TDS when Payments to Residents

Any sum payable to a resident
on which tax is deductible at source; and
on which tax has not been deducted, or
after deduction, has not been deposited during the
previous year or before due date as specified in
section 139(1)
then 30% of the above said payment is not allowed as
deduction.
It would be allowed as a deduction in a previous year,
in which tax is deducted and deposited.
31
Amount not Deductible Section 40(a)

Securities Transaction Tax
Fringe Benefit Tax
Income Tax
Wealth Tax
Salary paid outside India without deducting TDS
Provident Fund payment without deducting TDS
Tax on Perquisites paid by the employer
32
Recovery of Expenditure & Remission

Cessation of Trading Liability [Sec - 41(1)]
and
If loss or expenditure earlier allowed as deduction is

received, the received amount is taxable in the
previous year in which such amount is received.
If a trading liability ceases to be a liability, the amount
so ceased is taxable in the previous year in which it
ceases to be a trading liability.
33
Expenses Not Deductible (Section 40A)

Payments to Specified Persons not deductible in certain
cases u/s 40A(2)
Expenditure incurred in respect of which payment has
been or is to be made to certain specified persons, the
Assessing Officer may disallow so much amount as he
considers excessive or unreasonable having regard to
the fair market value of goods or services and legitimate
needs of the business.
Specified Persons includes
a director of the company or any relative of such
director, a person having substantial interest in the
business.
34
Expenses Not Deductible [Section 40A(3)]
Payments made otherwise than by Account Payee

Cheque or Account Payee Bank Draft u/s 40A(3) and u/s
40A(3A)
Where the assessee incurs any expenditure in
respect of which a payment or aggregate of payments
made to a person in a day, otherwise than by a
account payee cheque or draft, exceeds Rs. 20,000 /no deduction shall be allowed in respect of such
expenditure.
35
Expenses Not Deductible [Section 40A(7)]
Provision for Gratuityu/s 40A(7)

No deduction shall be allowed in respect of any
provision made by the assessee for the payment of
gratuity to his employees on their retirement or
termination of employment.
However, deduction is allowed on payment of sum as
contribution towards approved gratuity fund.
36
Deduction on Actual Payment Basis (Section 43B)
Following payments are allowed only on payment:

any sum payable by the assessee by way of tax,
duty, cess or fee, or
any sum payable by the assessee as an employer by
way contribution to any approved Provident Fund or
Gratuity Fund or any Other Fund, or
any bonus or commission payable to the employees,
or
any sum payable by the assessee as interest on any
loan or borrowing from any financial institution or
corporation, or
any sum payable by the assessee as interest on any
Loan or Advance from a scheduled bank, or
37
Deduction on Actual Payment Basis (Section 43B)
any sum payable by the assessee as an employer

in lieu of any leave to the credit of his employee.
Exception: If payment for any previous year in respect

of any expense is made within time period specified u/s
139(1). Then it is allowable in the same previous year in
which expense is incurred.
38
Speculation Business
Speculative transactions are transactions without actual

delivery (Section 43(5).
Speculation business is separate from non speculation
business. (Explanation 2 to section 28).
Exceptions to Speculative Transactions are given in Proviso
to Section 43(5).
Speculation loss to be set off against speculation profit.
Speculation loss can be carried forward for 4 assessment
years
As per explanation to Section 73, if a part of the business of
the company consists of purchasing and selling of shares of
other companies, it shall be deemed to be carrying on a
speculation business to that extent
39
Speculation Business
Exceptions: If a company whose gross total income

consists mainly of income which is chargeable under
the heads
Interest on Securities,
Income from House Property,
Capital Gains, and
Income from Other Sources, or
a company the principal business of which is the
business of trading in shares or banking or the
granting of loans and advances
40
Capital Gains [Section 45 to 55A]

Chargeability
Profits or Gains arising from

the transfer of a capital asset
made in a previous year are chargeable to tax
as capital gains under this head.
41
Capital Gains
Incidence of tax on Capital Gains depends upon period for
which the capital asset transferred was held before the
transfer.
A capital asset held for 36 months or less is called a
'Short-Term Capital Asset' and if the period exceeds 36
months, the asset is known as Long Term Capital Asset'.
However, shares of a company, the units of Unit Trust of
India or any specified Mutual Fund or security listed in any
recognized Stock Exchange (other than debt oriented
mutual funds) are short term capital assets if held for 12
months or less and long term capital assets if held for
more than 12 months.
42
Rates of Taxation
Types of Gains
Rate of Tax
Short Term Capital Gains on shares subject to

Securities Transaction Tax (STT)
15 Per cent
Short Term Capital Gain on Other Capital Assets
Normal Rates
Long-Term Capital Gains on Listed Shares or Units

subject to STT
Exempt u/s 10(38)
Long- Term Capital Gain on Listed Shares not

subject to STT
10 Per cent without indexation

or 20 per cent with indexation
whichever is more beneficial.
Long-Term Capital Gains - Bonds and Debentures
20 Per cent without indexation
Long-Term Capital Gains - on unlisted securities and

other capital assets
20 Per cent after indexation
43
Income From Other Sources [Section 56 to 59]
Source of Income which does not fall under any one of

the other four heads of income is taxed under the head
Income from other Sources.
Following are the illustrative list of income chargeable
to tax under this head:
winnings from lotteries,
rental income from hire of plant & machinery,
income from sub-letting of house property
interest income
44
Receipt of Shares [Section 56(2)(viia)]
It applies only to firms and companies.

Companies in which shares are received are not the
companies in which public is substantially interested.
Value of such shares is in excess of Rs. 50,000, if
received without consideration, or
The difference between the FMV exceeds
consideration paid by Rs. 50,000
Shares are to be valued as per Rule 11UA (1)(c)
Section 56(2)(viia) does not apply to property (shares)
received by way of a transaction not regarded as
transfer under section 47(via), 47(vic), 47(vicb), 47(vid)
and 47(vii).
45
Issue of Shares at a Premium [Section 56(2)(viib)]

It applies only to companies which are not the
companies in which public is substantially interested.
Any amount received from a resident as consideration
for issue of shares that exceeds the fair value of such
shares then
the difference between the FMV and fair value of
shares is chargeable to tax
Valuation as per Rule 11UA(2) adopting
(i) Either FMV at Book value; or
(ii) DCF Method
46
Incomes Exempt From Tax [Section 10]

Agriculture Income [Section 10(1)]
Dividend [Section 10 (34)]

Dividend u/s 115-O shall not be included in the total
income of the assessee.
Long Term Capital Gain on Transfer of Securities
[Section 10(38)]
Income from transfer of a long term capital asset
being a equity share in a company or unit of an
Equity Oriented Fund.
Transaction should be chargeable to STT.
47
Deemed Dividend [Section 2(22)(e)]
Any payment by a company not being a company in

which public are substantially interested
of any sum by way of loan or advance
to a beneficial shareholder (i.e. holding 10% or
more) or
to any concern in which such share holder is a partner
or member in which he has substantial interest or
any payment on behalf of or for the individual benefit
of such shareholder
is treated as deemed dividend to the extent of
accumulated profits of the company.
48
Expenditure in Relation to Exempt Incomes

(Section 14A)
Expenditure incurred in relation to income which does
not form part of Total Income, will not be allowed as
deduction.
49
Deductions under Chapter VI-A

Section
Nature of
Payment/Receipt
Applicability
Amount of Deduction
80G
All Companies
1. Donation to Notified
Funds.
2. Other Donations
100% or 50% of Donation

Depends on the fund
80GGA
All Companies
Donations
100% on Eligible
Institutions/Fund u/s
35/35CCA/35AC
80GGB
Indian Company
Donation to Political Party or

Electoral Trust
Actual Amount Donated
80IA
All Eligible
Companies
Profits of Undertaking
engaged in Infrastructural
Facility
100% or 30% or 25% Depends

on nature, place and year of
establishment.
50
Deductions under Chapter VI-A

Section
Nature of
Payment/Receipt
Applicability
Amount of Deduction
80IB
All Eligible
Companies
Profits of Industrial
Undertaking
100% or 50% or 30% or 25%

Depends on nature, place and
year of establishment
80IC
All Eligible
Companies
Profits of Undertakings in
Notified Areas
100% or 30%
On the basis of place and year
of establishment
80IE
All Persons
Profits of Undertaking
carrying on eligible business
in North Eastern States
100% for First Ten Years
80JJA
Indian
Companies
Deduction for Additional

Employment
30% of Additional Wages
51
Set-off of Losses
Set-Off of loss under the same head of Income (Section70)
If net result for any assessment year in respect of any source
under any head of income is a loss, the loss is set-off against
the income from any other source under the same head of
income.
Exceptions
Loss in speculation business can be set-off only against the
profit in a speculation business.
Any loss in respect of specified business referred u/s 35AD
can only be set-off only against profits from specified
business.
Long-Term Capital Loss can be set-off only against LongTerm Capital Gain.
52
Set-off of Losses
Set-off of loss from one head against income
from other head (Section 71)
Where the net result for any assessment year in
respect of any head of income is a loss, the same
can be set-off against the income from other heads.
Exceptions
Loss in a speculation business cannot be set-off
against any other income.
Loss of specified business u/s 35AD can be set-off
only against income from specified business.
53
Set-off of Losses
Loss under the head Capital Gains cannot be set-off
against income under any other Head of Income.
Loss under the Head Profits / Gains from Business or
Profession cannot be set-off against income under the
head Salaries.
Where income from a particular source is exempt from
tax, loss from such source cannot be set-off against
income chargeable to tax.
54
Carry Forward and Set-off of Losses

Loss not set-off in the same assessment year because
of inadequate income, it can be carried forward and setoff against the income under the same head of the
subsequent year or years. Losses can be carried
forward as follows:
Loss under the head Profits / Gains of Business or
Profession (non speculative) for 8 assessment years
Loss under the head Profits / Gains of Business or
Profession (speculative) for 4 assessment years
Loss under the head Capital Gains for 8
assessment years
55
Minimum Alternative Tax [Sec-115JB]

Provisions of the section 115JB apply
i. if the income tax calculated under the Income Tax Act is
less than tax calculated @ 18.5% on Book Profit,
ii. such book profit shall deemed to be the total income of
the assessee and tax payable by the assessee shall be
@ 18.5% on book-profits.
Audit Report : Every company to which the section applies

shall furnish a Chartered Accountants Report in the
prescribed Form No. 29B along with the Return of Income.
56
How To Compute Book Profits

Net Profit as per Profit and Loss Account
XXXX
Amounts to be added back if debited to Profit and Loss Account

Income Tax Paid or payable and the provisions thereof (Tax includes :Tax on Distributed Profits u/s 115O or u/s 115R, any interest charged
under this Act, Surcharge and Cess)
XXXX
Amounts carried to any reserve, by whatever name called
XXXX
Amount(s) set aside to provisions made for meeting liabilities, other than
ascertained liabilities
XXXX
Amount by way of provision for losses of subsidiary companies
XXXX
Amount(s) of dividends paid or proposed
XXXX
Amount of expenditure in relation to any exempt income
XXXX
57

Amount of depreciation
XXXX
Amount of Deferred Tax and the Provision of Deferred Tax
XXXX
Provision for Diminution of the Value of any asset
XXXX
Amount standing in the Revaluation Reserve relating to Revalued Asset

on the retirement or disposal of such asset
XXXX
Amounts to be deducted from net profit

Amount withdrawn from Reserve or Provisions, if any such amount is
credited to the Profit and Loss Account
XXXX
Income exempt from Tax (other than u/s 10(38))
XXXX
58

Depreciation (other than on Revalued Assets) debited to Profit and Loss
Account
XXXX
Amount withdrawn from Revaluation Reserve credited to Profit and Loss

Account to the extent it does not exceed the amount of depreciation on
account of revaluation of assets
XXXX
Amount of loss (before depreciation) brought forward or unabsorbed

depreciation, whichever is less, as per book of account
XXXX
Profits of Sick Industrial Unit
XXXX
The amount of Deferred Tax, if any such amount is credited to the Profit
and Loss Account
XXXX
59
MAT Credit
Steps
Computation of MAT Credit
Amount
Compute the Total Income of the Company (ignoring the

provisions of section 115JB)
XXXX
Determine Book Profit under the provisions of Section 115JB
XXXX
Determine Tax Payable on [A]
XXXX
Determine Tax Payable on [B] i.e. 18.5% of [B]
XXXX
MAT Credit [D-C]
XXXX
60
MAT Credit Entitlement

Steps
Computation of MAT Credit
Amount
Compute Total Income of the Company (ignoring the

provisions of section 115JB)
XXXX
Determine Book Profit under the provisions of Section 115JB
XXXX
Determine Tax Payable on [A]
XXXX
Determine Tax Payable on [B] i.e. 18.5% of [B]
XXXX
MAT Credit Entitlement [C-D]
XXXX
61
Corporate Dividend Tax (Sec 115O)

Applicability:
Domestic Companies
Amount on which Dividend Tax is Payable:
Particulars
Dividend Paid/Distributed
Less:
Dividend Received From Subsidiary Company, where

1. If Subsidiary is a Domestic Co., it has already paid
tax u/s 115-O on such dividend.
2. If subsidiary is a Foreign Co., tax is payable u/s
115BBD on such dividend by domestic Co.
Net Dividend/Amount on which Dividend Tax is to be paid
Amount (Rs.)
XXXX
XXXX
XXXX
XXXX
62
TAX Deducted at Source At Glance

Section
Description
Details
193
TDS on Salary
Deduct at Average rate of Income Tax compute on the

basis of rate in force.
TDS has to be deducted at the time of payment only.
193
TDS on
Securities
This section applies only to residents.

Deductor requires to deduct tax at the time of credit of
such income to the account of payee or suspense
account.
Rate of deduction is 10 per cent.
Exceptions:
(i) Non-Listed: Amount of interest is less than Rs.
5,000/- and payment through account payee cheque.
(ii) Listed: No need to deduct tax in case securities
are in de-mat form ;or SG & CG Security ;or interest
payable to insurance company
63

Section
194
194A
Description
Details
TDS from
Dividends
Dividends are exempt u/s 115-O No TDS

Dividends other than 115-O dividend TDS has to be
deducted.
Principal Officer of the Indian Co. is required to deduct
tax on deemed dividend u/s 2(22)(e) at 10 per cent.
TDS from
interest other
than securities
Rate of TDS 10 per cent

Deductor is required to deducted tax at the time of credit
of such income to the account of the payee or suspense
account or at the time of payment whichever is earlier.
Limit
(i) Rs. 10,000/- for Banks, Co-Op Societies, PostOffices
(ii) Rs. 5,000/- for any other case
64

Section
Description
Details
194C
TDS from
payments to
contractors
1. Tax is to be deducted at source:

On the invoice value excluding the value of material, if such
value is mentioned separately in the invoice; or
On the whole of the invoice value, if the value of the material
is not mentioned separately in the invoice.
2. TDS Rate
1% where payment/credit is to an individual/HUF.
2% where recipient is any other person.
3. If the credit or the payment in pursuance of the single
contract exceed Rs. 30,000/-, no deduction has to be made at
source.
4. If the aggregate of all amounts paid/credited or likely to be
paid/credited exceeds in F.Y Rs. 75,000/- then tax at source is
to be deducted
65

Section
Description
Details
194D
TDS from
Insurance
Commission
Rate of TDS 10%

Threshold Limit More than Rs. 20,000/ Accrual or Payment whichever is earlier
Payment only to residents
194H
TDS from
Brokerage or
Commission
Rate of TDS 10%

Threshold Limit More than Rs. 5,000/ Accrual or Payment whichever is earlier
Directors Commission will cover u/s 192
194I
TDS from
Income by way
of Rent
Rate of TDS
(i) Rent of Plant & Machinery 2%
(ii) Rent of Land, Building, Furniture etc. 10%
Threshold Limit More than Rs. 1,80,000/- p.a
Accrual or Payment whichever is earlier
66

Section
Description
Details
194IA
TDS from
payment on
transfer of
Immovable
Properties (other
than agricultural
land)
Any person (buyer) responsible for paying to a resident

transferor any sum by way of consideration for transfer of
any immovable property, is liable to deduct tax at source.
Rate 1%
Threshold Limit Rs. 50 Lakhs
194J
TDS from Fee

for Professional
or Technical
Services
Rate of TDS 10%

Threshold Limit
(i) Professional Services More Than Rs. 30,000 p.a
(ii) Technical Fees More Than Rs. Rs. 30,000 p.a
(iii) Royalty More Than Rs. 30,000 p.a
(iV) Non-Compete Fees More Than Rs. 30,000 p.a
ACA. (Dr.) G.S. Grewal
67

Section
195
Description
Any Payment
made to NonResident
Details
Person responsible for making any payment to
non-residents which is chargeable to tax in India.
As per Applicable Rates in Force
Reference required with DTAA.
68
Domestic Transfer Pricing [Section 92-BA]

Transfer Pricing provisions apply to Specified Domestic
Transactions w.e.f A.Y 2013-14.
Transfer Pricing provisions apply, if the aggregate of
Specified Domestic Transactions exceeds Rs. 5 Crores
Preparation of Form 3CEB and TP Study Report mandatory
onus of identifying and reporting all covered transactions
on the tax payer.
69
Specified Domestic Transactions

Specified Domestic Transactions means the following
transactions:
Any expenditure in respect of which payment has been made
or is to be made to a person referred to in section 40A(2)(b).
Any transaction referred to in section 80A.
Any transfer of goods or services referred to in section 80IA
(8).
Any business transacted between the assessee and other
persons referred to in section 80-IA (10)
Any transaction, referred to in any other section under Chapter
VIA or section 10AA, to which
provisions of section 80-IA(8) or section 80-IA(10)
are applicable.
CA. (Dr.) G.S.
70 Grewal
Please be free to contact me on:

CA. (Dr.) G. S. Grewal: gsgrewal@cagrewalsingh.com,
cagsgrewal@gmail.com
09811242856 or 09266942856
71

Corporate Taxation

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Corporate Taxation

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Corporate Taxation

Direct Taxes Income Tax and Wealth Tax

Indirect Taxes Excise, Customs, Service Tax,

CA. (Dr.) G.S. Grewal

Income Tax is governed by the

Income Tax Act, 1961;

CA. (Dr.) G.S. Grewal

Basis of Charge [Section 4]

Income Tax is charged:

CA. (Dr.) G.S. Grewal

Person [Section 2(31)]

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Previous Year [Section 3]

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Books or Books of Account [Section 2(12A)]

CA. (Dr.) G.S. Grewal

Tax Rates for Domestic Company for the

Income Tax is levied according to the residential status

CA. (Dr.) G.S. Grewal

Residential Status of Company How

CA. (Dr.) G.S. Grewal

Heads of Income [Section 14]

Income from Salaries [Section 15 to 17]

Amount earned by a person from employment is

CA. (Dr.) G.S. Grewal

Income from House Property [Section 22 to 27]

CA. (Dr.) G.S. Grewal

Profits and Gains of Business or Profession

Income is taxable under the head Profit and

CA. (Dr.) G.S. Grewal

Profits and Gains of Business or Profession

Income (Other than income assessed under

CA. (Dr.) G.S. Grewal

Profits and Gains of Business or Profession

Following is chargeable to Income Tax under this

CA. (Dr.) G.S. Grewal

Profits and Gains of Business or Profession

Profits and Gains of Business or Profession

Any sum received for not carrying out any

Two methods of accounting are recognised:

Mercantile or Accrual Basis of Accounting

Cash Basis of Accounting

For the tax purposes, an assessee has a choice over

CA. (Dr.) G.S. Grewal

Rent, rates, taxes, repairs and insurance for building

Depreciation is allowed in respect of

CA. (Dr.) G.S. Grewal

Investment Allowance [Section 32AC]

It is allowed only to companies engaged in the business

CA. (Dr.) G.S. Grewal

Investment Allowance [Section 32AC]

Deduction u/s 32AC(1A) : 15% of investment if:

Expenditure on Scientific Research (Sec 35)

Approved Scientific Research Association, University, College

Approved University, College or other Institution for the

Approved company to be used for scientific research

National Laboratory, University , Indian Institute of

CA. (Dr.) G.S. Grewal

Deduction in respect of expenditure on specified

Deduction is allowed only in respect of business as

CA. (Dr.) G.S. Grewal

Deduction in respect of Expenditure on Specified

Consequences of deduction u/s 35AD: