Extra Cultivation

Income Tax Notes Part - 06 Income from other Sources Income Tax Notes Part - 06 Income from other Sources The following ten incomes are always taxable under the head “Income from other sources”: 1. Dividend income; 2. Income from winnings from lotteries, crossword puzzles, races including horse races, etc.; 3. Any sum received by the assessee from his employees as contributions to any staff welfare schemes, if the same is not taxed as business income; 4. Income by way of interest on securities, if the same is not taxed as business income; 5. Income from letting out machinery, plant or furniture, if the same is not taxed as business income”; 6. Income from letting out of machinery, plant or furniture along with letting out of building and the two lettings are not separable (if the income is not taxed as business income); 7. Any sum received under a Keyman insurance policy (including bonus), if such income is not taxable as salary income or business income; 8. If any sum of mone...

Capital Gains INCOME TAX NOTES PART - 05 CAPITAL GAINS Basis of Charge [Sec. 45] Income is taxable under the head “Capital Gains” if the following conditions are satisfied: 1. There should be a capital asset. 2. The capital asset is transferred by the assessee during the previous year. 3. Any profit or gains arises as a result of such transfer. 4. Such profit or gains is not exempt from tax under section 54, 54B, 54D, 54EC, 54EE, 54F, 54G, 54GA and 54GB. If the aforesaid conditions are satisfied, then capital gain is taxable in the assessment year relevant to the previous year in which the capital asset is transferred. Capital Asset [Sec. 2(14)] “Capital asset” means – 1. Property of any kind held by an assessee (whether or not connected with his business or profession). 2. Any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the SEBI Act. However, “capital asset” does...

PROFITS AND GAINS OF BUSINESS OR PROFESSION - I INCOME TAX NOTES PART - 04 PROFITS AND GAINS OF BUSINESS OR PROFESSION - I Depreciation allowance [Sec. 32] Following conditions should be satisfied by the assessee to avail depreciation: 1. Asset must be owned by the assessee. 2. Asset must be used for the purpose of business or profession. 3. Asset should be used during the relevant previous year: Normal depreciation (i.e., full year’s depreciation) is available if an asset is put to use at least for sometime during the previous year. However, where an asset is acquired during the previous year but put to use for the purpose of business or profession for less than 180 days during that year, in such a case, half of the normal depreciation is allowed. 4. Depreciation is available on tangible assets (Building, machinery, plant or furniture) as well as intangible assets (know-how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of s...

INCOME TAX NOTES PART - 03 HOUSE PROPERTY When income is not taxable under the head “House Property” In the following cases, income is not taxable under the head “Income from house property”: 1. If letting is only incidental and subservient to the main business of the assessee, rental income is not taxable under the head “Income from house property” but is chargeable under the head “Profits and gains of business and profession”. 2. Composite Rent: If apart from recovering rent of the building, in some cases, the owner gets rent of other assets (like furniture, plant and machinery etc.) or he charges for different services provided in the building (for instance, security, charges for lift, air conditioning, electricity, water etc.), the amount so recovered is known as “composite rent”. Following is the tax treatment of “composite rent”: a. Where composite rent includes rent of building and charges for different services: In such situations, composite rent is to be split up and...

INCOME TAX NOTES PART – 02 SALARY MEANING Meaning of salary [Section 17(1)] – Salary includes – a. wages; b. any annuity or pension; c. any gratuity; d. any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages; e. any advance of salary; f. any payment received by an employee in respect of any period of leave not availed by him; g. employer’s contribution towards Recognized Provident Fund (RPF) in excess of 12% of employee’s salary and interest credited to RPF in excess of 9.5% p.a.; h. transferred balance in a recognized provident fund to the extent it is taxable; and i. the contribution made by the Central Government (or any other employer) in the previous year, to the account of an employee under a notified pension scheme referred to in section 80CCD. Profits in lieu of salary [Section 17(3)] – It includes the following – a. the amount of any compensation due to or received by an assessee from his employer (or former employer) at o...