Tuesday, May 13, 2014

SECTION 80C TO 80U - INCOME TAX SHORT NOTES


SECTION 80C TO 80U

Deduction in respect of LIC, PF etc. Sec.80C.

Eligible Assessee: Individual/Huf

Investments/contributions to LIC Premium, Deferred Annuity, Unit Linked Insurance plan, PPF, RPF, Superannuation fund.

Subscription to notified security or deposit schemne, N.S.C, Units of Mutual fund or fund setup by UTI, Bond issued by NABARD,5 year post office deposit scheme, Senior citizen savings deposit scheme.

Repayment of Housing loan, Tuition fees for full time education of any 2 children Tution fees for full Time education In India of any Two Children.

Deduction in respect of contribution to certain pension funds. Sec.80CCC. Deduction in respect of contribution to pension scheme of Central Government. Sec.80CCD

  • Eligible Assessee: Individual
  • Contribution made to annuity plan Lic, Maximum Rs.100,000/-
  • For 80CCD an individual has contributed any amount under a pension scheme notified by Cen Govt. Subject to the following limit
  • If individual deriving salary income: 10% of salary
  • If individual deriving other income: 10% Gross total income

Limit on deduction u/s.80C,80CCC,80CCD, ( Sec.80CCE)
Restricted to Maximum of Rs.100,000/-

Deduction in respect of Investment in Equity Savings
Scheme.Sec.80CCG

Eligible Assessee: Resident Individual.

Amount of deduction is to be extent of 50% of the amount invested in listed equity shares accordance with Rajiv Gandhi Equity Savings Scheme 2012 Subject to maximum Rs.25000/- (Investment can go up to 50,000).

Such deduction can be allowed subject to the following conditions:

  • GTI of assessee shall not exceed 10Laks 
  • The assessee is a new retail investor Locking period is 3 Year

Medical Insurance Premium / Central Govt Health Scheme Sec.80D

Eligible Assessee: Individual/Huf


*In case of an Individual any amount paid up to Rs.5000/- towards preventive Health checkups (PHC) of the Assessee or his family
* Mediclaim Premium payment should be made by any other Mode Other than Cash.In case PHC Payment may be made by any mode including Cash.

Medical Treatment of a dependent with disability Sec.80DD
Eligible Assessee: Resident Individual/Huf

Normal deduction at a flat amount of Rs.50, 000/- and if the severe disability deduction shall be Rs.100, 000/-

Medical Treatment for certain disease or ailment Sec.80DDB
Eligible Assessee: Resident Individual/Huf

Deduction shall be the amount of actually paid or Rs.40,000/- whichever is less In case of senior citizen who is aged 60 years or more the deduction shall be the amount of actually paid or 60,000/- whichever is less

Deduction for interest on loan taken for higher education Sec.80E
Eligible Assessee: Individual

Any amount of paid towards interest on loan borrowed from higher education .This deduction is allowed for the initial year and immediately succeeding 7 assessment years or until the interest is paid by the assessee in full ,which ever is earlier.

Deduction to certain fund, Charitable Institutions .Sec.80G
Eligible Assessee: Any Assessee.

1) 50% deduction  with out any limit 

Jawaharlal Nehru Memorial Fund, P.M Draught Relief Fund, National Children Fund , Indira Gandhi Memorial Trust, Rajiv Gandhi Foundation.

2) (a)  100% deduction Restricted*** 

  • Contribution by a company as donation to The Indian Olympic Association or ny Association established for Sports and games 
  • Govt or Local Authority or approved Institution/Association for promotion of family planning

(b) 50% deduction Restricted*** 

  • Renovation of Temple, Mosque, Church etc. 
  • Any approved public trust 
  • Any corporation established for by govt for promoting Interest of schedule caste or Tribe 
  • Any authority set up for providing  for Housing accommodation or town planning 
  • Any govt or local authority set up for promoting family planning. 

***Qualifying Amount

Step 1: Computed adjusted total Income, which is GTI as reduced by:-
Deduction under chapter VI-A
Long Term Capital gain Sec.112
Short Term capital gain Sec.111A

Step 2: 10% of Total Income
Step3: donation is 100% or 50%

3) 100% deduction with out any limit.

Other all Donation in the list like P.M national, P.M.Armenia Earthquake relief fund, National Defense fund, National foundation for communal Harmony

Rent paid Sec.80GG

Eligible Assessee: individual
The assessee should not be in receipt of house rent allowance.
Least of the following:

  1. Rent -10% of Total Income 
  2. 25% of Total income. 
  3. Rs.2000/-P.M 

Donation for Scientific research ,rural development etc. Sec.80GGA
Eligible Assessee: All assessee not having any income chargeable under the head “profit and Gains of Business or Profession”100% of Donation.

Contribution by companies to political Parties Sec.80GGB
Deduction shall be allowed in respect of contribution as referred in Sec.293A of the companies’ act 1956.

Contribution by any Person to political Parties Sec.80GGC
Deduction shall be allowed in respect of contribution made by any person to political party or electoral trust while computing the Total Income.

FILING RETURN OF INCOME


Return in Electronic Form Sec.139 (1B)
  • All company Assessee
  • Assessee who are subjected to audit u/s 44AB
  • Total income Exceed Rs.10 lakhs
Belated Return Sec.139 (4)
  • Any person who has not furnished a return:
  • On or before the time allowed u/s 139(1)
  • Within the time allowed by the notice issued u/s.142 (1)
Revised Return Sec.139 (5).
Any person who has furnished a return u/s.139 (1) or pursuance of notice issued u/s.142(1) can file revised return if the assessee discovers any omission or any wrong statement in the return filed earlier. Such revised return can be furnished at any time before the expiry of one year from the end of relevant assessment year or before completion of assessment which ever is earlier.

ADVANCE TAX

Advance tax shall be payable in every case where amount of such tax payable by the assessee during the year is .Rs.10,000/- or more Sec.208.
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INTEREST

CLUBBING OF INCOME

As per Sec.60 when income alone is transferred without transfer of the asset giving rise to such income, it is deemed to be the income of the transferor. It does not matter whether such transfer is revocable or irrevocable.


Income of Minor Child

In computing the total income of any individual there shall be included all such income as arises or accrues to his minor child

In the case of an assessee to an individual in whose total income the minor child income is to be included u/s 64(1A)exemption is given up to Rs.1500/- in respect of each minor child.

However income of minor child shall not be clubbed if:-

  1. Manual work done by him: or 
  2. Activity involving of his skill, talent or specialized knowledge and experience. 
  3. If the minor child is suffering from any disability of nature specified in Sec.80U . 



Income Tax Slabs and Rates Assessment Year 2014-15
(Financial Year 2013-14)

Individual resident below 60 years of age (i.e. born on or after 1st April 1953) or any NRI / HUF / AOP / BOI / AJP *


* Abbreviations used:

NRI - Non Resident Individual; HUF - Hindu Undivided Family; AOP - Association of Persons; BOI - Body of Individuals; AJP - Artificial Judicial Person

II. Individual resident who is of the age of 60 years or more but below the age of 80 years at any time during the previous year



III. Individual resident who is of the age of 80 years or more at any time during the previous year

IV. Co-operative Society
i. Income-tax:


SURCHARGE
In case of individuals, HUF,BOI, AOP, AOP, Firm, Co Operative Societies, and Local Authority, Surcharge at the rate of 10% shall be leived if the Total Income exceeds Rs.1 Core.

EDUCATION CESS
The amount of Tax and Surcharge computed by applying the above mentioned rates shall be further increased by education cess @ 2 % and Secondary and Higher education cess @1 %

REBATE FROM INCOME TAX TO RESIDENT INDIVIDUAL
An assessee being an Individual Resident in India ,whose Total Income does not Exceeded Rs.500,00 shall be entitled to a deduction of an equal amount to 100 % of Income Tax or an amount of Rs.2000 which ever is less. Rebate shall be calculated before levy of education cess. This Provision does not apply to a resident Individual aged 80 Years and above.

V. Firm /LLP
  • Income-tax: 30% of total income.
  • Education Cess: 3% of the Income 
  • Tax.Surcharge 10 % if Exceed  Core
VII. Domestic Company
  • Income-tax: 30% of total income.
  • Surcharge: 5% of such income tax, provided that the total income exceeds Rs. 1 crore. and 10 % if Exceed 10 Core
  • Education Cess: 3% of the total of Income Tax and Surcharge.
VIII. Company other than a Domestic Company

I. Income-tax:
@ 50% of on so much of the total income as consist of (a) royalties received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1961 but before the 1st day of April, 1976; or (b) fees for rendering technical services received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 29th day of February, 1964 but before the 1st day of April, 1976, and where such agreement has, in either case, been approved by the Central Government.


@ 40% of the balance

ii. Surcharge: 2% of such income tax, provided that the total income exceeds Rs. 1 crore.and 5% if Exceed 10 Cr

iii. Education Cess: 3% of the total of Income Tax and Surcharge.

Income  Exempt  from  Income  Tax

  1. The following Income is exempt from Income tax:-
  2. Agriculture Income [Sec. 10(1)]
  3. Payments received from family income by a member of HUF [Sec. 10(2)] 
  4. Share of profit from a firm [Sec. 10(2A)]
  5. Interest received by a non resident from prescribed securities [Sec. 10(4)]
  6. Interest received by a person who is resident outside India on amounts credited in the non-resident (External) account [Sec. 10(4)]
  7. Leave travel concession provided by as employer to his Indian citizen employee,Sec. 10(5)] 
  8. Remuneration received by foreign diplomats of all categories [Sec. 10(6)]
  9. Salary received by a foreign citizen as an employee of a foreign enterprise provided his stay in India does not exceed 90 days [Sec. 10(6)(vi)]
  10. Salary received by a non-resident foreign citizen as a member of ship’s crew provided his total stay in India does not exceed 90 days [Sec. 10(6)(vii)]
  11. Remuneration received by an employee, being a foreign national, of a foreign government deputed in India for training in a Government establishment or public sector undertaking [Sec. 10(6)(xi)]
  12. Tax paid on behalf of foreign companies [Sec. 10(6A)]
  13. Tax paid by Government or an Indian concern in case of a non-resident / foreign company [Sec.10(6B)]
  14. Income arising to notified foreign companies from services provided in or outside India in project connected with the security of India [Sec. 10(6C)]
  15. Foreign allowance granted by the Government of India to its employees posted abroad [Sec. 10(7)]
  16. Remuneration received from a foreign Government by an individual who is in India in connection with any sponsored co-operative technical assistance programme with a foreign Government and the income of the family members of such employee [Sec. 10(8)and(9)]
  17. Remuneration / fee received by non-received consultants and their foreign employees [Sec. 10(8A),(8B) and (9)]
  18. Death-cum-retirement gratuity [Sec. 10(10)]
  19. Commuted value of pension and any payment received by way of commutation of pension by as individual out of annuity plan of LIC or any other insurer from a fund set up by that corporation or insurer [Sec. 10(10A)]
  20. Leave salary [Sec. 10(10AA)]
  21. Retrenchment compensation [Sec. 10(10B)]
  22. Compensation received by victims of Bhopal gas leak disaster [Sec. 10(10BB)]
  23. Compensation from the Central Government or a state Government or a local authority received by an individual or his legal heir on account of any disaster [Sec. 10(10BC)]
  24. Compensation received from a public sector company at the time of voluntary retirement or separation [Sec. 10(10C)]
  25. Tax on perquisite paid by employer [Sec. 10(10CC) 5. Any sum (including bonus) on life insurance policy (not being a keyman insurance policy) [Sec. 10(10D)]
  26. Any amount from provident fund paid to retiring employee [Sec. 10(11)]
  27. Amount from an approved superannuation fund to legal heirs of the employee [Sec. 10(13)] 
  28. House rent allowance subject to certain limits [Sec. 10(13A)]
  29. Special allowance granted to an employee [Sec. 10(14)] 
  30. Interest from certain exempted securities [Sec. 10(15)]
  31. Payment made by an Indian company, engaged in the business of operation of an aircraft, to acquire an aircraft on lease from a foreign Government or foreign enterprise [Sec. 10(15A)]
  32. Scholarship granted to meet the cost of education [Sec. 10(16)]
  33. Daily allowance of a member of parliament or state Legislature (entire amount is exempt), any other allowance subject to certain conditions [Sec. 10(17)]
  34. Rewards given by the central or state Government for literary, scientific or artistic work or attainment or for service for alleviating 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 [Sec. 10(17A)]
  35. Pension and family pension of gallery award winners [Sec. 10(18)]
  36. Family pension received by family members of armed forces [Sec. 10(19)]
  37. National property income of any one place occupied by a former ruler [Sec. 10(19A)]
  38. Income from local authorities [Sec. 10(20)]
  39. Any income of housing boards constituted in India for planning, development or improvement of cities, town or villages [Sec. 10(20A)]
  40. Any income of an approved scientific research association [Sec. 10(21)] 
  41. Income of specified non- agencies [Sec. 10(22B)]
  42. 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 [Sec. 10(23A)]
  43. 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 the such forces or their dependents [Sec. 10(23AA)]
  44. Income of funds established for the welfare of employees [Sec. 10(23AAA)]
  45. Any income of the pension fund set by LIC or any other insurer approved by the controller of insurance or insurance Regulatory and development authority [Sec. 10(23AAB)]
  46. any income (other than business income) of a trust or a society approved by Khadi and village industries commission [Sec. 10(23B)]
  47. 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 [Sec. 10(23BB)]
  48. Income of the European Economic Community derived in India by way of, interest, dividends or capital gains in certain cases [Section 10(23BBB)]
  49. Any 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 [Section 10(23BBA)]
  50. Income of SAARC Fund for Regional Projects, set up by Colombo Declaration [Section 10(23BBC)]
  51. Any income of Secretariat of Asian Organisation of Supreme Audit Institutions [Section 10(23BBD)]
  52. Any income received by any person on behalf of specified national funds and approved public charitable trust or institution [Section 10(23C)]
  53. Income of Mutual Fund set up by — a public sector bank or a public financial institution [Section 10(23D)]
  54. Any income by way of dividend, or long term capital gains of venture capital funds and venture capital companies [Section 10(23F)]
  55. Income of a member of Scheduled Tribe, living in Nagaland, Manipur, Tripura, Arunachal Pradesh and Mizoram from any source arising by reason of his employment therein and income by way of dividend and interest on securities [Section 10(26)]
  56. Any income accruing or arising to any resident of Ladakh from any source therein or out of India before the assessment year 1989-90, provided that such person was resident in Ladakh in the previous year relevant to the assessment year 1962-63 [Section 10(26A)]
  57. Any income of a statutory Central or State corporation or of a body/institution, financed by the Government formed for promoting the interest of Scheduled Castes/Tribes [Section 10(26B)]
  58. Income of co-operative society formed for promoting interests of members of Scheduled Castes/Scheduled Tribes [Section 10(27)]
  59. Income by way of subsidy from Tea Board for replanting or replacement of tea bushes or for the purpose of rejuvenation or consolidation of areas used for cultivation of tea in India [Section 10(30)]
  60. Subsidy received by planters of Rubber, Coffee, Cardamon [Section 10(31)]
  61. Income of a minor child up to Rs. 1,500 in respect of each minor child whose income is includible under section 64(1A) [Section 10(32)]
  62. Any income by way of Capital gains on transfer of US-64 units [Section 10(33)] 
  63. Dividend on or after April, 2003 from domestic companies [Section 10(34)]
  64. Income on units of Mutual Funds on or after April 1, 2003 [Section 10(35)]
  65. Long term Capital gains on transfer of listed Equity Shares purchased during 1-3-2003 to 29-2-2004 [Section 10(36)]
  66. Capital gain to individual/HUF on compensation received on compulsory acquisition of urban agriculture land [Section 10(37)]
  67. Long term capital gain in some cases [Section 10(38)]
  68. Sum received without consideration from international sporting event held in India [Section 10(39)]
  69. Income of Industrial Units situated in trade-free zones, specified technology parks etc. [Section 10A]
  70. Income from specified 100% export oriented undertakings [Section 10B]
  71. Income from property held for approved charitable or religious purposes [Section 11] 
  72. Specified Income of Registered political parties [Section 13A]

AGRICULTURE INCOME
Agriculture income is exempt under the Indian Income Tax Act. This means that income earned from agricultural operations is not taxed. The reason for exemption of agriculture income from Central Taxation is that the Constitution gives exclusive power to make laws with respect to taxes on agricultural income to the State Legislature. However while computing tax on non-agricultural income agricultural income is also taken into consideration. As per Income Tax Act income earned from any of the under given three sources meant Agricultural Income;

(i) Any rent received from land which is used for agricultural purpose.
(ii) Any income derived from such land by agricultural operations including processing of agricultural produce, raised or received as rent in kind so as to render it fit for the market, or sale of such produce.
(iii) Income attributable to a farm house subject to the condition that building is situated on or in the immediate vicinity of the land and is used as a dwelling house, store house etc.
Now income earned from carrying nursery operations is also considered as agricultural income and hence exempt from income tax.

In order to consider an income as agricultural income certain points have to be kept in mind:

(i) There must me a land.
(ii) The land is being used for agricultural operations.
(iii) Agricultural operation means that efforts have been induced for the crop to sprout out of the land (iv) If any rent is being received from the land then in order to assess that rental income as agricultural income there must be agricultural activities on the land.
(v) In order to assess income of farm house as agricultural income the farm house building must be situated on the land itself only and is used as a store house/dwelling house.

Partly agriculture income
Partly agricultural income consists of both the element of agriculture and business, so non agricultural part of the income is taxed. Some examples for partly agricultural income are given below:


Tax Liability on Agricultural Income


MARGINAL RELIEF

The concept of Marginal Relief is applicable in the following Situations.

I. In the case of non corporate assessee (Individual ,HUF,AOP,BOI, Co Operative Society,Firm,AOP)where the total Income exceeds Rs.1 Core and Surcharge of 10 % becomes leviable;
II. In the Income domestic companies ,where Surcharge is applicable @5% for total Income above Rs.1 crore and @10% if exceeds Rs.10 Crores; and
III. In the case of Foreign Companies, where surcharge is applicable @2% for total Income above Rs.1 Crore and 5% if the it exceeds Rs.10 Cores .

Marginal Relief shall be available only where the tax on account of surcharge exceeds the amount of income exceeding Rs.1 core or Rs.10 Crores,as the case may be .In such a case,tax payble on account of surcharge would be restricted to the amount exceeding Rs.1 core or Rs.10 Crore as the case may be
The Metholodology of Computation of Marginal relief can be better understood by applying the following Steps.


Tax and Surcharge as Computed above shall be increased by education cess @ 3 %.

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