Clarification About "Total Income"

Sunday, December 15, 2013

Clarification About "Total Income"

        In order to remove all ambiguities and doubts about the term"Total Income"it is clarified that by "total income"in this context,is meant "total income as chargeable to tax"This is clarified as under;


1)All income which is tax exempt per se e.q pension,return received under various types public companies,amount paid as zakat for wealth tax,profits received from PLS accounts upto Rs 15,000 in a year,do not form part of the total income chargeable to tax and therefore do not have to be included in the "total income"while coputing tax liability.

2)However , tax relief on account of specified investments e.g.in defence saving certificates,life insurance premia,donations to charitable institutions,purchase of books etc.Which used to be admissible previously as investment allowance,will no longer be admissible.


Example


The Following example will help in understanding the above provisions.There is an individual whose income from various sources for the current year 1988-89 was as follows;


From Salary                                                             Rs. 50,000.00
From Property                                                         Rs. 40,000.00
From pension                                                           Rs.30,000.00 
From Investment (National Saving Schemes)            Rs. 30,000.00
From Dividend (Public Cos)                                     Rs. 30,000.00
From PLS account                                                   Rs. 10,000.00
                       
                                                                                Rs. 190,000.00

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