Income exempt but included in total income

Sunday, January 12, 2014

Income exempt but included in total income

There are certain incomes which are exempt but are to be included in the total income .Some examples of such incomes are; 1)Interest on securities issued tax free by Govt; 2)Share of partner of a registered form on which tax has been paid by the firm; 3)Share of member of an association of persons out of income of which tax has been paid by the association; 4)Donation for charitable purposes; Share from discontinued firm.

Exemption under section 60

The Central Government may by notification in the official Gazette make an exemption,reduce rate or make other modification respect of income tax.The following incomes have been exempted;  1)Yield on Post Office saving Certificates; 2)Interest on Post Office savings Bank Account; 3)Income of University or other Educational Institution; 4)Scholarship granted to meet the cost of education; 5)Allowance attached to honours and awards; 6)Compulsory payment for mess by members of worldwide Armed Forces; 7)Rent free accommodation provided to President,-e-in-c and Governors of Provinces of worldwide; 8)Income derived by Facilities and dependents of shaheeds; 9)Income of medical practitioners outside Municipal areas; 10)Recreation allowance granted to Central Government servants; 11)Income Of any benevolent fund or insurance fund....

Income From Property

Saturday, January 11, 2014

Income From Property

The allowable deductions in respect of income from property are stated hereunder;


If the property is in occupation of te owner,or where it is let out to a tenant and owner has undertaken to bear the cost of repair.a sum equal to 1/5th of the annual value is allowed if deduction for repairs.This fixed allowance of 1/5th is allowable irrespective of the actual cost of repairs.

2)Insurance Premium

The amount of any premium paid during the year to insurance the property against the risk of damage or destruction is an admissible allowance.

3)Interest or Mortgage on Capital Charge

If the property is subject to a mortgage or other capital charge.The amount of any interest on such mortgage or charge is allowed as a deduction.

4)Loacal rate,tax.charge or cess

The amount of any local rates,tax,charge or cess which represents owner's burden and relates to property or income from property is allowable expenditure provided that it is paid to any local authority or government.

5)Ground rent

If the property is subject to a ground rent,the amount of such ground rent is an admissible deduction.


The amount of any interest payable on such capital as if borrowed for acquisitions,constructions.renovation or reconstruction of the property is an admissible deduction.

7)Land Revenue

Any sums paid on amount of land revenue is respect of the property is an admissible deduction.

8)Collection Charges

The expenses incurred in collecting are admissible are admissible as deduction up to a sum not exceeding 6% of the annual (after deducting the vacancy allowance ).Legal expenses incurred in recovering the unrealised rent can also be claimed within the above prescribed maximum limited.

Vacancy allowance

the amount equal to the portion of the annual value which is proportionate to the period during which the property remained vacant and for the parts of the property for which it remained vacant is an allowable deduction.

10)Unrelised Rent

Deduction is respect of unrealised rent is admissible if the following conditions are satisfied: a)The tenancy is bonafide; b)The defaulting tenant is not in occupation of any other property; c)The defaulting tenant has vacated the property or steps have been taken to compel him to vacate the property; d)All reasonable steps for the recovery of unpaid rent including legal proceedings have been taken:

Penalty for non-payment of Tax

Thursday, January 9, 2014

Penalty for non-payment of Tax

Following are important provisions of this section; a)Income Tax Officer may impose on the penalty not exceeding an amount equal to the said tax; b)In case of continuing default,the ITO may impose a penalty not exceeding the amount of such tax; c)Additional tax levied under sections 86, 87 ,88 or 89 shall be excluded from the amount of tax in respect of which the penalty is imposed; d)The ITO may cancel or modify the order imposing penalty,in case the can prove that the amount of tax been paid; e)No order or penalty shall be called in question in any court or tribunal on the ground that (i)no show-cause notice was issued;or(ii)an application for stay of recovery of tax or the payment of tax in instalments had been pending before any court or tribunal....

Income Tax Article Johny john

Wednesday, January 8, 2014

Income Tax Article Johny john

Where the Total Exceeds $1000

i)Income tax is charged at given rates on the total income excluding income from sources which are treated as separate block of income and taxed separately at the fixed rates.No separate basic exemption is available. ii)The tax thus calculated on the total income reduced by rebate computed at the average rate of tax in respect of personal expenditure incurred on legal services as shown in the receipts issued by known legal practitioners. iii)No tax rebate for investment in "investment"certificates and shares,contributions made towards provident funds,premium paid in respect of life insurance the amount spent on the purchase of books etc is admissible in any case.

Where the total income marginally exceeds $1000

The income tax payable will not exceed an amount equal to- i)income tax which would have been payable if the total income were $1000; plus ii)a sum equal to 50% of the amount by which the total income exceeds $1000......

Where Total Income Does not Exceed Rs 100,000:

Monday, January 6, 2014

Where Total Income Does not Exceed Rs 100,000:

i) income tax at 10% will be charged on the total income excluding income mentioned in para 5 above; ii)A tax credit of Rs. 5,500 in the case of working women and Rs, 5000 in the case of other salaried tax-payers is allowed if the income under the heading "Salary" exceeds 50% of the total income.In other cases,tax credit is allowed at Rs. 4,000; iii)Special Tax Rebate at 25% of the tax payable is allowed in the case of tax-payers of the age of 65 years or above.The age qualifying for STR will be counted from the first day of July ,1994.This rebate will be in addition to other allowances admissible under the law. iv)Presently, no tax rebate for investment in certificates and shares , contributions made towards provident fund,premium paid in respect of life insurance and the amount spent on the purchase of books, etc is admissible in any case.

Significant Lssues Pertaining to Wealth Tax Laws

Friday, December 27, 2013

Significant Lssues Pertaining to Wealth Tax Laws


1)Agricultural Land exempt upto Rs. 1000,000 (one million).
2)Self-occupied house exemption now restricted to the extent of Non-Agricultural assets.


1)Return of net wealth to be filed along with the Return of Income Tax by every income tax now.
2)Due date of Return of net wealth to be same as of return of total income.


1)Substantial increase in the amount of Fees for filing of an appeal;

a)before appellate commissioner Rs. 2,500 or 10% of tax levied whichever is less now;
b)before appellate Tribunal Rs. 5,000 or 10% of tax levied whichever is less now;
c)before Commissioner (Revision) Rs. 2,500 or 10% of tax levied whichever is less now.

New Regulations

1)Market value of Plots and Commercial Properties,other than rented out,to be determined according to new rules to be released by C.B.R.

Definition Of Assets

1)Assets to be classified and bifurcated into;
a)Agricultural Assets 
b)Other Assets 

2)Tools and implements to include Tractors,Tube-wells and other Farm Machinery.

Tax Rates

Wealth Tax rates revised and bifurcated into rates applicable to;
a)Agricultural Assets 
b)Other Assets


With Holding Tax Rates

Tuesday, December 24, 2013

With Holding Tax Rates

  1)Tax rates in case of non-resident contractors increased from 3% to 4% and 7% respectively according to the categories specified


  1)Statutory Limit increased to Rs 42,000/- in case of working woman

2)Income of MUTUAL FUND and NIT from "REDEEMABLE CAPITAL" exempt

3)Capital gains arising from the "REDEEMABLE CAPITAL INSTRUMENT" of listed Companies exempt.

Tax Holiday

  Fruit Processing and manufacturing of soft and stuffed toys classified under Tax Holiday for a period of 5 years from the date of commencement of commercial production.

Leased Assets

  1)Depreciation on assets leased out to be deducted/adjusted against lease rentals only

2)Consideration received as the residual value of leased assets on the maturity of the lease agreement to be considered as sales proceeds 


   Discretionary Powers of federal Government and CBR for granting EXEMPTIONS and or PRESCRIBING LOWER RATES OF WITHHOLD TAX etc withdrawn..****




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