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SUMMER TRAINNIG REPORT SUBMITTED TOWARDS THE PARTIAL
FULFILLMENT OF
BACHELOR OF BUSINESS ADMINISTRATION
ON
“COMARATIVE STUDY OF PHYSICAL FILLING AND E--FILING OF
RETURNS”
UNDER
SPA CAPITAL SERVICES LTD.
Submitted By:
Jasmeet kaur
01120601710
Batch-2010-2013
Trinity Institute of Professional Studies
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INDEX
S.No Topic
Page No
1 Objective 3 2 Acknowlegement 4 3 Company Profile 5 4 Group companies 8 5 SPA‟s Services 12 6 Vision 15
7 Clients of SPA Group 16
8 Individual heads of income 17
9 Basic information about tax 35
10 Tax Slabs 40
11 Salary 44
12 Income from House Property 48
13 Capital Gain 51
14 Deduction under chap VI A 55
15 Tax rebate and relief 60
16 Permanent Account Number 62
17 Types of Return Filing 64
18 SPA Working 71
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OBJECTIVE
The main objective of my project is to find out that e-filing of return is better than the physical filing of return.
And through this project I have come to the conclusion that e-filing is better than physical filing is better at some cases. In spite of some advantages of physical filing.
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ACKNOWLEDGEMENT
It is in particular that I am acknowledging my sincere feeling towards my mentors who graciously gave me their time and expertise.
They have provided me with the valuable guidance, sustained efforts and friendly approach. It would have been difficult to achieve the results in such a short span of time without their help. I deem it my duty to record my gratitude towards the External project supervisor Mr. Anish
Kumar and Internal project supervisor Mrs. Yogita Manhas who devoted their precious time
to interact, guide and gave me the right approach to accomplish the task and also helped me to enhance my knowledge and understanding of the project.
Name of Student- JASMEET KAUR Enrollment no. 0110601710
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Income Tax Return (ITR) filing
Under SPA GROUP
Objectives of the Study
To discuss the various types of ITR.
To analyze the process of filing ITR in India.
ABOUT THE COMPANY
SPA Group was promoted by a team of finance professionals in 1995 with an objective to provide value added financial services. Initially, the Group focused as a niche financial solutions provider in corporate finance and wealth management to Indian companies and high net worth individuals. In January 2000, the Group expanded its operations and the range of services. Today, SPA provides services for securities broking, merchant banking, wealth management, financial advisory, corporate
finance, risk management and insurance broking.SPA is being managed by its promoters along with a young and dynamic team of over 1000+ professionals with rich experience, in their respective fields. The Group has established itself as one of India‘s leading financial advisory house, offering various financial solutions to its Institutional, corporate and individual clients. Customer centric approach of SPA‘s dedicated professional team has helped carve a niche for itself in financial services arena and won confidence of its clients. Clients of SPA are from a wide spectrum and comprise of Banks and other financial institutions, Mutual funds, Insurance companies, foreign institutional investors, public sector undertakings and government departments, private corporate, trusts and individuals.
Head Office: New Delhi
25, C-Block Community Centre, Janak Puri New Delhi - 110 058
Ph - 011-25517371 / 25515086 Fax - 011-25532644 E-mail - info@spacapital.com
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COMPANY PROFILE
Established in 1995, SPA Group is a long standing and fast growing integrated financial services group, providing a large range of services to a varied set of customers that include large corporations, high net-worth individuals, financial institutions and retail investors. Our service offerings include merchant banking, securities broking, asset management, mutual funds, insurance, fixed deposits, government securities and bonds. Though each of these business entities exists independently, they reflect the group's core ethos and values that are centered on creating value through customer‘s centric approach. SPA Group's customer-centric approach, backed by strong research and passion to excel has helped us achieve a significant position in the Indian financial services sector. More than 1000 highly skilled professionals are continuously and consistently working towards enhancing the value and wealth of our customers, even as we continue to win many awards and accolades for our innovative services and solutions.
MANAGEMENT TEAM
The Core management team of SPA consists of persons having a rich experience in Corporate Finance and Advisory, Investment Banking, Risk Management, Securities Banking and Wealth Management.
Mr. Sanjay Joon, President
MBA, having more than 24 years of experience in marketing of financial products and has a vast experience in information technology and administration. His forte lies in his abilities of
Spa Capital Products and services Merchant banking Securities limited insurance sector Mutual fund Financial management system
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accurately assessing his customers‘ need, meeting them and leading an ever team. He heads Mutual Fund Division of the Group since its inception.
Mr. Sanjay Gupta, Associate Director (Investment Banking)
B.Com (H), Chartered Accountant, Fellow Member of The Institute of Chartered Accountants of India Has close to 20 years of work experience in the field of investment and merchant banking, Fixed Income Securities, Project Fin ancing, Structured & Corporate Finance.
Mr. V K Khattar, Principal Officer
He has to his credit 42 years of rich experience of working with Oriental Insurance Company Limited and retired as the Regional Manager. He is associated with our Group as the Principal Officer of the Insurance arm.
Mr. Vivek Gautam, Associate Director
He is having 30 years of experience in the field of Banking & Merchant Banking including 16 years of exclusive experience in Investment Banking. He has worked for 14 years in PNB till mid 1991 in Managerial positions. Thereafter he was deputed to PNB Capital Services Limited as Senior Vice President and worked as Head Merchant Banking during 1991 - 1996 and was associated in lead managing more than 60 public and rights issues for well known Corporate and Financial Institutions. He was also Head Investment Department dealing in securities for one year. Thereafter he worked as Director - Bajaj Capital Limited and President Merchant Banking for 7 years and also as Head Merchant Banking and Executive Director with Allianz Securities Limited for 1 year. He has wide experience in issue management, private placement of equity and debt, corporate advisory & finance, mergers & takeovers & distribution of financial products. He is with SPA Group since October 2006 and looking after Merchant Banking.
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GROUP COMPANIES
SPA Group of companies is the flagship Company of the Group and is engaged in providing Wealth Management and Financial Advisory services to institutions, corporates, and individuals since 1995. The Company is a leading distributor of Mutual Funds in the country and presently has assets over 4500 crores under its management. The Company has successfully positioned itself as a strategic advisor to its customers for wealth management with its customer centric approach and innovative solutions.
The Company is registered with Reserve Bank of India as a Non Banking Financial Company. Presently the shares of the Company are listed on the Delhi Stock Exchange.
1) SPA CAPITAL SERVICES LTD.
SPA Capital Services Limited is the flagship
Company of the Group and is engaged in providing Wealth Management and Financial Advisory services to institutions, corporates, and individuals since 1995. The Company is a leading distributor of Mutual Funds in the country and presently has assets over Rs.14 , 000 crores under its management. The Company has successfully positioned itself as a strategic advisor to its customers for wealth management
with its customer centric approach and innovative solutions.
The Company is registered with Reserve Bank of India as a Non Banking Finan cial Company. Presently the shares of the Company are listed on the Delhi Stock Exchange.
9 2) SPA MERCHANT BANKERS LTD.
SPA Merchant Bankers Limited offers comprehensive investment banking solutions and highest quality independent financial advice to corporates sector and entrepreneurs. Our service offering covers private placement of debt instruments
and debt syndication for both public and private sector corporates, Capital raising services through private placement of equity, managing capi tal issues (IPO, FPO and Right Issues). Besides, we also cater to the entire spectrum of capital market needs through other services such as Corporate and Infrastructure advisory, Valuations, Managing Takeovers, Buy Back and Delisting. We have team comprising of multi-disciplinary professionals with a vast financial advisory and investment banking experience, who structure various financial products as per
the requirements of the clients.
We have the Category –I Merchant Banking license from Securities and Exchange
Board of India (SEBI), the Indian Securities Market Regulator.
The Company has made notable and considerable progress in a short span in the debt merchant banking activities successful various debt primary issues. This is also reflected through the ranking by Prime Database, which has ranked the Group amongst the top 10 service providers in this segment. The Company was able to achieve above ranks on the basis of its performance in just two financial years
since it commenced investment & merchant banking activities.
Since the commencement of merchant banking services, the Company has syndicated funds for various Public Sector Undertakings (PSUs), Designated Financial Institutions(DFIs), Banks and several State Level Undertakings (SLUs). The Company for its Merchant & Investment Banking activities has found patronage as an Arranger with various central public sector undertakings like HUDCO, NTC, ITI, MECON, IISCO SAIL, REC, KRCL, public sector banks and financial institutions. Also the Company has had privilege to provide its services to various state level undertakings of Andhra Pradesh, Karnataka, Kerela, Tamil Nadu, West Bengal, Punjab, Haryana, Himachal Pradesh, Jammu & Kashmir, Maharashtra, Gujarat and Rajasthan. In the private sector, the Com pany has
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The achievements corroborate our untiring and sincere efforts towards building and preserving mutually rewarding and sustainable relationships with our clients and giving them our value added services with meaningful performance. We have started providing equity capital market related services in the beginning of 2007 and advise Corporates, Banks and Businesses which are seeking to mobilize capital from Investor. We offer following opp ortunities to clients to raise funds through the following:
Private Equity Advisory Initial Public Offering (IPOs) Follow on Public Offering (FPOs)
Qualified Institutional Placements (QIPs) Right Issues
Preferential Allotments and
Foreign Currency convertible bonds (FCCBs).
Our team as Lead Manager/ BRLM has successfully managed/ are managing transactions for client across various industry sectors including:
i. Information technology ii. Telecommunication iii. Infrastructure
iv. Power equipments
v. Steel
vi. Sugar
vii. Textiles
We, for execution of a transaction, combine our various strengths including in depth knowledge of regulatory environment, understanding of industry and market dynamics, distribution capabilities and networking with institution investors of our associate concerns. We built our business on strong relationships, innovative ideas and ethical standards.
11 3) SPA SECURITIES LTD.
SPA Securities Limited is a SEBI registered securities broking Company. The Company is a member of Wholesale Debt Market, Capital Market and Futures and Options Segment of the National Stock Exchange of India Limited. The Company is also a registered member of the Over the Counter Exchange of India.
The Company is focused primarily on providing securities broking services to institutional clients
and is empanelled as an approved securities broker with all the major Nationalized, Private and Co-operative banks, corporate houses, Insurance Companies, Financial Institutions, Asset Management Companies and Provident Fund Trusts. The Company had a turnover of Rs. 25000 crores at NSE-WDM for the financial year ended March 2005.
Equity broking for institutions was commenced in 2004 end. In its first full year of the operations, the Company achieved a turnover of over Rs.1500 crores in calendar year 2005. 4) SPA INSURANCE BROKING SERVICES LIMITED
SPA Insurance Broking Services Limited is the arm of the SPA Group providing entire range of insurance service in insurance right from meeting insurance need of clients to cover its risk spectrum, advisory, claim settlement and also meet requirement of clients if they wish to outsource entire gamut of insurances related functions. The Company is registered with Insurance Regulatory Development Authority as approved Broker. The Company is empanelled with almost all the life and
general insurance companies as a Direct Broker. The Company is functioning as life and general insurance direct broker and risk assessors.
5) SPA COM TRADE LTD.
SPA Comtrade Pvt. Ltd., the commodities broking arm of the group has recently commenced operations. The company is catering to existing customers of the group by providing research based commodity broking services.
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SPA‟S SERVICES
1. MUTUAL FUND
The SPA Group, on strength of its research based customer centric approach and impeccable servicing, is recognized as one of the leading financial advisory service providers in the country.
2. INSURANCE
SPA Insurance Broking Services Ltd is the insurance broking company of the group
providing life and
general insurance
advisory services.
Life Insurance advisory
services are process oriented, which include identification of the
needs of the clients, offering the best product available, resolution of their queries and post sales service. The company has covered over 2000 lives in 18 months of business with sum assured of over Rs. 20 billion and premium collection of over Rs.3.5 billion.
In General Insurance we believe in servicing clients after assessment of their need and the risk involved and cover required and offer the best insurance cover available in the market supported by strong after sales services to the clients. The Company is empanelled with all the general insurance companies operating in the Country enabling it to provide best insurance solutions suitable for the clients. The company has provided insurance coverage across assets classes of over Rs. 200 billion with impeccable claims and other after sales services.
3. EQUITY AND DERIVATIVES Equity Broking
The Company is engaged in equity research and broking for its institutional clients. On strength of its research and
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Company in its first year of operation in equity broking is empanelled with all the major domestic institutional players and has achieved a turnover of over Rs. 1,600 crores.
Commodities Broking
SPA Comtrade Pvt. Ltd., the commodities broking arm of the group has recently commenced operations. The company is catering to existing customers of the group by providing research based commodity broking services.
4. FINANCIAL PLANNING
Even though one of the most significant factors in our life is
the state of our
personal finances, we rarely spend time on managing them since unlike businesses; we
are not accountable to any one for our personal financial goals and results.
We can make a much larger contribution in every area of our life when our personal finances, investments and taxation are properly planned.
The Fundamental corner stones of successful investing
Save regularly, invest regularly Start early
Use tax shelter
Investment returns should exceed the inflation.
5. MERCHANT BANKING SPA Merchant Bankers Limited is engaged in private placement of debt instruments, structuring of
the various financial
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requirements of the borrowers along with various other pre -issue and post issue services.
The Company has made notable and considerable progress in a short span in the debt-oriented merchant banking activities by successful placement of various debt primary issues. This is also reflected through the ranking by Prime Database, which has ranked the Group amongst the top 10 service providers in this segment. The Company was able to achieve above ranks on the basis of its performance in j ust two financial years since it commenced investment & merchant banking activities. Since the commencement of merchant banking services, the Company has syndicated funds for various Public Sector Undertakings (PSUs), Designated Financial Institutions(DFIs), Banks and several State Level Undertakings (SLUs). The Company for its Merchant & Investment Banking activities has found patronage as an Arranger with various central public sector undertakings like HUDCO, NTC, ITI, MECON, IISCO SAIL, REC, KRCL, publi c sector banks and financial institutions. Also the Company has had privilege to provide its services to various state level undertakings of Andhra Pradesh, Karnatka, Kerela, Tamil Nadu, West Bengal, Punjab, Haryana, Himachal Pradesh, Jammu & Kashmir, Maha rashtra, Gujarat and Rajasthan. In the private sector, the Company has provided its services
to various domestic and MNC corporates.
The achievements corroborate our untiring and sincere efforts towards building and preserving mutually rewarding and sustai nable relationships with our clients and
giving them our value added services with meaningful performance.
Now, the Company has started providing Equity Oriented Merchant Banking services to its customers on strength of its research based structuring capab ilities and strong distribution network. Presently, the Company is providing services for private placement of equities, public issues and right issues.
6. SPECIAL TECHNICAL REPORTS Research, undertaken
on a continuing basis, forms foundation for all services provided by them. At SPA we
have focused on
building a strong
research team which
functions with an
exhaustive approach to understand and analyze underlying market dynamics for equities, fixed income, and mutual funds.
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VISION
SPA believes in attaining customer satisfaction, on continuing basis, by providing highest standard of financial services in India. The philosophy at SPA is to provide services to clients after assessment of their profile, needs and risk-appetite. The basic work theme at SPA is:
- Dedicated, competent and honest team of professionals
- Customer centric work environment - Insight of customers‘ perspectives - Strong research base
- Clear understanding of applicable laws - Consistency and passion to excel - Technology savvy
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Clients of spa group
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Individual Heads of Income
Income from Salary
What is Salary?
Income under heads of salary is defined as remuneration received by an individual for services rendered by him to undertake a contract whether it is expressed or implied. According to Income Tax Act there are following conditions where all such remuneration are chargeable to income tax:
When due from the former employer or present employer in the previous year, whether paid or not
When paid or allowed in the previous year, by or on behalf of a former employer or present employer, though not due or before it becomes due.
When arrears of salary is paid in the previous year by or on behalf of a former employer or present employer, if not charged to tax in the period to which it relates.
What Income Comes Under Head of Salary?
Under section 17 of the Income Tax Act, 1961 there are following incomes, which come under head of salary:
Salary (including advance salary)
Wages Fees Commissions Pensions Annuity Perquisite Gratuity
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Annual Bonus
Income From Provident Fund Leave Encashment
Allowance
Awards
What is Leave Encashment?
Leave encashment is the salary received by an individual for leave period. It is a chargeable income whether he is a government employee or not. Under section 10(10A) there is also a provision of exemption in case of leave encashment depending upon whether he
is a government employee or other employees.
What is Gratuity?
It is salary received by an individual paid by the employee at the time of his retirement or by his legal heir in the case of death of the employee.
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What is Allowance?
It is the amount received by an individual paid by his/her employer in addition to salary. Under section 15 of the Income Tax Act, 1961 these allowance are taxable excluding few conditions where they are entitled of deduction/ exemptions. Under Income Tax Act following types of allowance are defined
House Rent Allowance:
Under sections 10(13A) of Income Tax Act, 1961 allowance is defined as an amount received by an employee paid by his/ her employer as a rent of his/her house. It is a taxable income. There is no exemption in tax if he is living in his own house or house for which he is not paying rent. There are following amount which are exempt from tax:
Actual house rent paid by that individual
Rent paid for the accommodation over 10% of the salary
50% of the salary if house is placed at Delhi, Mumbai, Kolkata, Chennai or 40% of the salary in it is placed in any other city
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Entertainment Allowance:
It is the amount paid by employer for availing entertainment services. Under section 16(ii) of Income Tax Act, 1961 it is entitled to deduction in tax from is salary. But in this case deduction is given to his gross salary which also includes entertainment allowance. Deduction in tax against this allowance can be divided into two parts:
In case of Government employee entitled to minimum deduction of Entertainment allowance received
20% of basic salary excluding any other allowance
Rs. 5000 In case of other employee entitled to minimum deduction of (a) Entertainment allowance received
20% of basic salary excluding any other allowance Rs. 7500
Entertainment allowance received during 1954-1955
Other Special Allowances
Children Education Allowance Tribal Area Allowance
Hostel Expenditure Allowance Remote Area Allowance
Compensatory Field Area Allowance Counter Insurgency Allowance Border Area Allowance
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What is Perquisite?
Under section 17(2) of Income Tax Act, 1961 perquisite is defined as:
Amount paid for the rent-free accommodation provided to the assessee by his employer
Any concession in the matter of rent respecting any accommodation provided to the assessee by his employer
Any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases:
1. By a company to an employee, who is a director thereof
2. By a company to an employee being a person who has a substantial interest in the company
3. By any employer to an employee whose income under the head 'Salaries' exceeds Rs.24000 excluding the value of non monetary benefits or amenities
4. Any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee
5. Any sum payable by the employer whether directly or through a fund, other than a recognized provident fund or EPF, to effect an assurance on the life of the assessee or to effect a contract for an annuity
There are following perquisites which are tax free:
Medical facility
Medical reimbursement Refreshments
Subsidized Lunch/ Dinner provided by employer Facilities For Recreation
Telephone Bills
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Insurance premium paid by employer Loans to employees by given by employer Transportation
Training
House without rent
Residence Facility to member of Parliament, judges of High Court/ Supreme Court Conveyance to member of Parliament, judges of High Court/ Supreme Court
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Income from House Property
The annual value of property, consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him, the profits of which are chargeable to income tax, shall be chargeable to income tax under the head "Income from House Property".
Is income from any property covered under this section?
No. Only the income from buildings or part of a building, held by the assessee as the owner and the income from land appurtenant to the buildings is covered under this section. Income from other property such as open land is out of the purview of this section. Income from such land will be taxed under the head, 'income from other sources.'
When the property is used by the owner for his business or profession, the income of which business or profession is chargeable to income tax, the income of that property is not charged in the hands of the owner. Similarly, when a firm carries on business or profession in a building owned by a partner, no income from such property is added to the income of the partner, unless the firm pays the partner any rent for the same. If the assessee is not the owner of the building but is a lessee and he sublets the property, he would be taxed under the head 'Income from other sources'.
'Buildings' Includes
The term 'buildings' includes any building (whether occupied or intended for self-occupation), office building, godown, storehouse, warehouse, factory, halls, shops, stalls, platforms, cinema halls, auditorium etc. Income arising out of the building or a part of the building is covered under this section.
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"Land appurtenant"
Land appurtenant includes land adjoining to or forming a part of the building. It would depend on the nature of the land, whether it is appurtenant to the residential building, factory building, hotel building, club house, theatre etc. and will include courtyards, compound, garages, car parking spaces, cattle shed, stable, drying grounds, playgrounds and gymkhana.
Income arising from vacant land
Any income, arising out of vacant land, is not covered under this section even though it may be received as rent, ground rent or lease rent. Such income would be assessable as income from other sources. Even rent, arising out of open spaces, or quarry rent, is taxed as income from other sources.
When is the income from house property wholly exempt from tax?
In the following cases, income from house property is completely exempt from any tax liability: A. Income from any farmhouse forming part of agricultural income;
B. Annual value of any one palace in the occupation of an ex-ruler; C. Property Income of a local authority;
D. Property Income of an authority, constituted for the purpose of dealing with and satisfying the need for housing accommodation or for the purposes of planning development or improvement of cities, towns and villages or for both. (The Finance Act, 2002, w.e.f. 1.4.2003 shall delete this provision.);
E. Property income of any registered trade union; F. Property income of a member of a Scheduled Tribe;
G. Property income of a statutory corporation or an institution or association financed by the Government for promoting the interests of the members either of the Scheduled Castes or Scheduled tribes or both;
H. Property income of a corporation, established by the Central Govt. or any State Govt. for promoting the interests of members of a minority group;
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I. Property income of a cooperative society, formed for promoting the interests of the members either of the Scheduled Castes or Scheduled tribes or both;
J. Property Income, derived from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities by an authority constituted under any law for the marketing of commodities;
K. Property income of an institution for the development of Khadi and village Industries;' L. Self-occupied house property of an assessee, which has not been rented throughout the
previous year;
M. Income from house property held for any charitable purposes; N. Property Income of any political party.
What are the deductions permitted to be made from Income from house property"?
S 24 lays down that 'income chargeable under the head 'Income from house property' shall be computed after making the following deductions:
1. A sum equal to 30% of the annual value;
2. If the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital. Where such property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, on or after 1st April 2003, the amount of deduction under this clause shall not exceed Rs 1, 50,000.
The amount of deduction shall not exceed Rs 30,000 where the property consists of a house or part of a house, which the owner occupies for his own residence or which cannot be occupied by him because his employment, business or profession is carried on at any other place and he has to reside at that other place in a building which is not his own.
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Income from business or professions
Conditions for an income to fallunder the head of income from profits and gains of business
For charging the income under the head "Profits and Gains of business," the following conditions should be satisfied:
There should be a business or profession.
The business or profession should be carried on by the assessee.
The business or profession should have been carried on by the assessee at any time during the previous year.
Income chargeable to income tax under the head 'Profits and gains of business or profession
The following income would be chargeable under the head "Profits and gains of business or profession":
The profits and gains of any business or profession, which was carried on by the assessee at any time during the previous year;
Any compensation or other payment, due or received by the following:-
A. Any person, by whatever name called, managing the whole or substantially the whole of the affairs of an Indian company, at or in connection with the termination of his management or the modification of the terms and conditions relating thereto;
B. Any person, by whatever name called, managing the whole or substantially the whole
of the affairs in India of any other company, at or in connection with the termination of his office or the modification of the terms and conditions relating thereto;
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C. Any person, by whatever name called, holding an agency in India for any part of the activities relating to the business of any other person, at or in connection with the termination of any agency or the modification of the terms and conditions relating thereto;
D. Any person, for or in connection with the vesting in the Government, or in any corporation owned or controlled by the Government, under any law for the time being in force, of the management of any property or business;
Income, derived by a trade, professional or similar association from specific services performed for its members;
Profits on sale of a license granted under the Imports (Control) Order, 1955, made under the Imports and Exports (Control) Act, 1947;
Cash assistance (by whatever name called), received or receivable by any person against exports under any scheme of the Government of India;
Any duty of customs or excise repaid or repayable as drawback to any person against exports under the Customs and Central Excise Duties Drawback Rules, 1971;
The value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession;
Any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from such firm.
Deductions allowed in computing income from profits and gains of business or profession
S 30: The deductions that are allowed while computing income from 'profits and gains from business or profession' in respect of rent, rates, taxes, repairs and insurance for premises, which are used for the purpose of business or profession while computing income from 'profits and gains from business or profession' are as follows:
Where the premises are occupied by the assessee:
1. As a tenant, the rent paid for such premises; and further if he has undertaken to bear the cost of repairs to the premises, the amount paid on account of such repairs; excluding expenditure in the nature of capital expenditure.
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2. Otherwise than as a tenant, the amount paid by him on account of current repairs to the premises; excluding expenditure in the nature of capital expenditure. Any sums, paid on account of land revenue, local rates or municipal taxes;
The amount of any premium, paid in respect of insurance against risk of damage or destruction of the premises.
What deductions shall be allowed in respect of repairs and insurance of machinery, plant and furniture?
S 31: The following deductions shall be allowed in respect of repairs and insurance of machinery, plant and furniture:
The amount paid on account of current repairs thereto; excluding expenditure in the nature of capital expenditure.
The amount of any premium, paid in respect of insurance against damage or destruction thereof.
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Income from Capital Gains
Capital Assets
S 2(14): Capital asset means property of any kind held by an assessee whether or not connected with his business or profession. It however does not include the following:
1. Any stock-in-trade, consumable stores or
raw materials held for the purpose of his business or profession;
2. Personal effects, i.e., movable property (including wearing apparel and furniture, excluding jewellery), held for personal use by the assessee or any member of his family dependent on him.
3. Agricultural land in India, not being land situated in the following:-
a. In any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and, which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or
b. In any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;
4. 6.5 per cent Gold Bonds, 1977, or 7 per cent Gold Bonds, 1980, or National, Defense Gold Bonds, 1980, issued by the Central Government;
5. Special Bearer Bonds, 1991, issued by the Central Government;
6. Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government.
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The assets, which do not fall within the term "capital assets", and which can give rise to a tax-free surplus
Any stock-in-trade, consumable stores or raw materials, held for the purpose of his business or profession;
Personal effects, i.e., movable property (including wearing apparel and furniture, excluding jewellery), held for personal use by the assessee or any member of his family dependent on him;
Agricultural land in India, not being land situated in the following: -
o In any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or
o In any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;
6.5 per cent Gold Bonds, 1977, or 7 per cent Gold Bonds, 1980, or National, Defense Gold Bonds, 1980, issued by the Central Government;
Special Bearer Bonds, 1991, issued by the Central Government;
Gold Deposit Bonds, issued under the Gold Deposit Scheme, 1999 notified by the Central Government.
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The method of computation of short-term and long-term capital gain, as applicable from the assessment year 1993-94 onwards, is as follows:
Computation of Short-term capital gain Computation of Long-term capital gain
1. Find out the full value of consideration 1. Find out the full value of consideration
2. Deduct the following:
a. Expenditure incurred wholly and
exclusively in connection with such transfer. b. Cost of acquisition. c. Cost of
improvement
2. Deduct the following:
a. Expenditure incurred wholly and
exclusively in connection with such transfer b. Indexed Cost of acquisition
c. Indexed Cost of improvement.
3. From the resulting sum deduct the
exemption provided by section 54B, 54D and 54G.
3. From the resulting sum deduct the
exemption provided by section 54, 54B, 54D, 54EC, 54ED, 54F and 54G.
4. The balancing amount is the short-term capital gain.
4. The balancing amount is the long-term capital gain.
Full value of consideration: Whole price without any deduction whatsoever.
Expenditure incurred wholly and exclusively in connection with such transfer: Expenditure incurred which is necessary to affect such transfer e.g. stamp duty, registration etc.
Cost of acquisition of an asset: Value for which it was acquired. Expenses of capital nature for completing or acquiring the title to the property may be included in the cost of acquisition.
Cost of improvement:
a. In relation to goodwill of a business or a right to manufacture, produce or process any article or thing, the cost of improvement is taken to be nil.
b. In relation to any other capital asset-
1. Where the capital asset became the property of the assessee before April 1, 1981 the cost of improvement includes all expenditure of capital nature incurred in
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making any addition/alteration to the capital asset on or after April 1, 1981 by the owner.
2. In any other case, the cost of improvement refers to all expenditure of a capital nature that is incurred in making any additions or alterations to the capital asset by the assessee or the previous owner.
What is the indexed cost of acquisition?
S 48 defines "indexed cost of acquisition" as the amount, which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year, in which the asset is transferred, bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later.
The Cost Inflation Index, in relation to a previous year, means such Index as the Central Government may, having regard to 75% of average rise in the Consumer Price Index for urban non-manual employees for the immediately preceding previous year to such previous year, by notification in the Official Gazette.
What is the indexed cost of improvement?
S 48 defines indexed cost of improvement as the amount, which bears to the cost of
improvement the same proportion as Cost Inflation Index for the year, in which the asset is transferred, bears to the Cost Inflation Index for the year in which the improvement to the asset takes place.
Cost Inflation Index, in relation to a previous year, means such Index as the Central Government may, having regard to 75% of average rise in the Consumer Price Index for urban non-manual employees for the immediately preceding previous year to such previous year, by notification in the Official Gazette, specify in this behalf.
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Income from other sources
1. Dividend;
2. Any annuity due or commuted value of any annuity paid under section 280D.
3. Any winning from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever.
4. Any sum, received by the assessee from his
employees as contributions to any provident fund or Superannuation fund or any fund set up under the provisions of the Employees State Insurance Act, 1948 (34 of 1948), or any officer fund for the welfare of such employees, if such income is not chargeable to income-tax under the head "Profits and gains of business or profession";
5. Income from machinery, plant or furniture belonging to the assessee and let on hire, if the income is not chargeable to income -- tax under the head "Profits and gains of business or profession";
6. Where an assessee lets on hire machinery, plant or furniture belonging to him and also buildings, and the letting of the buildings is inseparable from the letting of the said machinery, plant or furniture, the income from such letting, if it is not chargeable to income tax under the head "Profits and gains of business or profession."
7. Any sum received under a Key man insurance policy, including the sum allocated by way of bonus on such policy, if such income is not chargeable to income tax under the heads "Profits and gains of business and profession" or under the head "Salaries". (Key man insurance policy means a life insurance policy taken by a person on the life of another person who is/ was the employee of the 1st mentioned person or who is/was connected in any manner whatsoever with the business of the 1st mentioned person.)
So, basically "income from other sources" is the residuary head of income, which takes within its ambit any income, which does not specifically fall under any other head of income.
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Deductions allowed under the head 'Income from other sources‟
The income, chargeable under the head 'income from other sources,' shall be computed after making the following deductions:
In the case of interest on securities, any reasonable sum, paid by way of commission or remuneration to a banker or to any other person for the purpose of realizing such dividend or interest on behalf of the assessee;
In the case of income, received by the assessee from his employees as contributions to any provident fund or Superannuation fund or any fund set up under the provisions of the Employees'' State Insurance Act, 1948, or any other fund for the welfare of such employees, which is chargeable to income tax under the head "Income from other sources" deductions so far, as may be in accordance with provisions of S 36(1) (va). In the case of income from machinery, plant or furniture belonging to the assessee and let
on hire, if the income is not chargeable to income -- tax under the head "Profits and gains of business or profession or where an assessee lets on hire machinery, plant or furniture belonging to him and also buildings, and the letting of the buildings is inseparable from the letting of the said machinery, plant or furniture, the income from such letting, if it is not chargeable to income tax under the head "Profits and gains of business or profession", deductions, so far as may, be in accordance with the provisions of clause (a), clause (3)of Section 30, Section 31, and subsections (1) and (2) of Section 32 and subject to the provisions of S 38.
In the case of income in the nature of family pension, a deduction of a sum equal to thirty three and one third per cent of such income or fifteen thousand rupees, whichever is less. Any other expenditure (not being capital expenditure) laid out or used wholly and
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What is Tax??
Tax is imposition financial charge or other levy upon a taxpayer by a state or other the functionalequivalent of the state.
There are two types of Taxes in India –
1) Direct Taxes are those whose burden falls directly on the Tax payers like Income Tax, Wealth Tax etc 2) Indirect Taxes are those in which the burden is
passed on to a third party like Service Tax, VAT etc.
An income tax is a tax levied on the financial income of persons, corporations, or other legal entities.
Income tax is an annual tax on income. The Indian Income Tax Act (Section 4) provides that in respect of the total income of the previous year of every person, income tax shall be charged for the corresponding assessment year at the rates laid down by the Finance Act for that assessment year. Section 14 of the Income tax Act further provides that for the purpose of charge of income tax and computation of total income all income shall be classified under the following heads of income:
Salaries
Income from house property
Profits and gains of business or profession. Capital gains
Income from other sources.
The total income from all the above heads of income is calculated in accordance with the provisions of the Act as they stand on the first day of April of any assessment year. Previous Year is the Financial Year ending on 31st March every year. Assessment Year is the period of 12
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Months commencing on the 1st day of April immediately after the Previous Year. E.g. for Previous Year/Financial year ending 31.03.2012, the Assessment Year is 2012-13 (01.04.2012-31.03.2013)
Income Tax Return:
After making all possible investments to save tax, it‘s time for Income Tax Return filling, which all about giving details of the income you have earned in that financial year.
Income tax return is a term which is often used when we talk about income tax. It is a way by which we pay this tax. When total
annual income of a person, including all sources, is more than maximum exemption limit (at present it is Rs 180000/- and 190000 for female) then that person is liable for income tax return.
According to Income Tax Act 1961, every person, who is an assesses and whose total income exceeds the maximum exemption limit, shall be chargeable to the income tax at the rate or rates prescribed in the finance act.
The Benefits of Filling Income Tax return:
Standard Income Proof: ITR is Considered Customary income proof not only in India but also globally. if you are looking for higher education or employment abroad, ITR is largely accepted income proof.
Speed your loan application process: Apart from a good Credit history, the fact that you are filling your ITR regularly gives you speedier access to credit.
Power of PAN: Permanent Account Number or PAN issued by the IT authority is not only a pre requisite for filling ITR but is also now mandatory for all financial transactions- from opening a bank account, or purchasing mutual fund to real estate for investment.
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Claim your Tax Refund: Filling ITR is not always about paying Tax, It can be used as a means to reduce your tax liability. e.g Salaried employees for whom TDS has been cut during the financial year can claim refund if the tax outgo has been more than the actual tax payable.
Know how of Income Tax:
Income tax is levied on the ‗total income‘ of assesses.
Income of the ‗previous year‘ is taxed in the ‗assessment year‘.
Income is classified into and computed under five categories called ‗heads of income‘ One must pay his taxes an advance and by the due dates, in the prescribed percentages. Deferment in the payment of advance tax would result in the payment of interest.
The income which are pertaining to the ‗previous year‘ is taxed, but in the ‗assessment year.
Income tax is charged at the rates being fixed for the year by the annual finance act. But the liability to pay the tax is based on the principle „pay as you earn.‘
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FILING OF INCOME TAX RETURN
Section 139(1) of the Income-tax Act, 1961 provides that every person whose total income during the previous year exceeded the maximum amount not chargeable to tax shall furnish a return of income. The return of income can be submitted in the following manner:
a paper form; e-filing
A bar-coded paper return.
Where the return is furnished in paper format, acknowledgement slip attached with the return should be duly filled in. Returns in new forms are not required to be filed in duplicate. Returns can be e-filed through the internet. E-filing of return is mandatory for companies and firms requiring statutory audit u/s 44AB. From A.Y. 2011-12, it is now also mandatory for all business entities (including individuals/HUF) liable to tax audit to e-file their return of income. E-filing can be done with or without digital signatures)
If the returns are filed using digital signature, then no further action is required from the tax payers.
If the returns are filed without using digital signature, then the tax payers have to file ITR-V with the department within 15 days of e-filing.
The tax payer can e-file the returns through an e-intermediary also who will e-file and assist him in filing of ITR-V within 15 days.
Where the return of income is furnished by using bar coded paper return, then the tax payers need to print two copies of Form ITR-V. Both copies should be verified and submitted. The receiving official shall return one copy after affixing the stamp and seal. The Finance Act, 2005 has provided that w.e.f. 01.04.2006 every person shall file a return of income on or before the relevant due date even if his total income without giving effect to the provisions of Chapter VI-A exceeds the maximum amount not chargeable to tax.
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Due Dates for Payment of Advance Tax &
Filing Of Return
Liability for payment of advance tax arises where the amount of tax payable by the assessee for the year is Rs.10, 00,000/- or more. The due dates for various installments of advance tax are given
Below:
Due Date Amount Payable
1) On or before 15th September of the
previous year
Amount not less than 30% of such advance tax payable
2) On or before 15th December Amount not less than 60% of such advance tax payable
3) On or before 15th March of the
previous year
Entire balance amount of such advance tax payable
Also, any amount paid by way of advance tax on or before 31st March is treated as advance tax paid during the financial year. The due date of filing of return of income in case of salaried employees is 31st of July. If the return of income has not been filed within the due date, a belated return may still be furnished before the expiry of one year from the end of the assessment year or completion of assessment, whichever is earlier.
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Rates of Income Tax
Income tax slabs 2011-2012 (for Men) in India: Income Tax Slab (in Rs.) Tax
0 to 1,80,000 No Tax
1,80,001 to 5,00,000 10%
5,00,001 to 8,00,000 20%
Above 8,00,000 30%
Income tax slabs 2011-2012 (for Women) in India: Income Tax Slab (in Rs.) Tax
0 to 1,90,000 No Tax
1,90,001 to 5,00,000 10%
5,00,001 to 8,00,000 20%
Above 8,00,000 30%
Income tax slabs 2011-2012 (for Senior Citizens) in India: Income Tax Slab (in Rs.) Tax
0 to 2,50,000 No Tax
2,50,001 to 5,00,000 10%
5,00,001 to 8,00,000 20%
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Income tax slabs 2011-2012 (for super Senior Citizens Above 80) in India: Income Tax Slab (in Rs.) Tax
0 to 5,00,000 No Tax
5,00,001 to 8,00,000 20%
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FORMS TO BE USED
The forms to be used for filing the return of income from F.Y. 2011-12 onwards are mentioned below:-
Form No. Who It Is For
ITR 1 For Individuals having Income from Salary/ Pension/ family pension) & Interest
ITR 2 For Individuals having Income from dividend profits from mutual funds and shares, rental income etc.
ITR 3 For Individuals who are partners in a partnership firm
ITR 4 For individuals having income from a proprietary business or profession
ITR 5 For Association of Persons (AOP) or Body of Individuals (BOI)
ITR 6 For Companies other than companies claiming exemption under section 11
ITR 7 For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D)
ITR 8 Return for Fringe Benefits
ITR V Where the data of the Return of Income/Fringe Benefits in Form ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-8 transmitted electronically without digital signature
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PROCESS FOR TAX ON-LINE:
1. Log on to www.incometaxindia.gov.in
2. On the left hand side of the page select ―Pay taxes online‖
3. A new page will open up with a list of all the banks through which payment can be made online. Just below this list is a link ―please click here‖. Click on this link.
4. Select Challan No. 280 on the next page.
5. Please fill the Challan that appears. In The two option Box sets on the page, you need to
select “(0021) INCOME-TAX (other than companies)” in one set and “(300) SELF ASSESSMENT TAX” in the other. You need to select Assessment Year 2012-2013.
6. Once you click on ―proceed‖ the system will verify your PAN no in the income tax database.
7. Click on Submit to the bank and complete the transaction with the bank.
TDS (TAX DEDUCTION AT SOURCE): TDS is one of the modes of collection of taxes,
by which a certain percentage of amounts are deducted by a person at the time of making/crediting certain specific nature of payments to the other person and deducted amount is remitted to the govt. account. it is similar to ―pay as you earn‖ scheme. It
includes salary, interest, commission and contract fees, rent, professional fees, etc. This type of deduction is popularly known as TDS. Such tax is subject to certain limits and certain conditions.
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TCS (TAX COLLECTED AT SOURCE):
TCS is the tax collected by the seller from the buyer at the time of debiting of amount payable by buyer or at the time of receipt of amount by way of cash, DD, cheque or any other means whichever is earlier for the sales of prescribed goods under section 206c(1) for business purpose and not for personal use. Tax also collected by person who grants lease or a license in respect of parking lot, toll plaza, mine quarry to another person.
THINGS USED IN FILING INCOME TAX SALARY
Salary is the remuneration received by or accruing to an individual, periodically, for service rendered as a result of an express or implied contract. The actual receipt of salary in the previous year is not material as far as its taxability is concerned.
The existence of employer-employee relationship is the sine-quanon for taxing a particular receipt under the head ―salaries.‖
For instance, the salary received by a partner from his partnership firm carrying on a business is not chargeable as ―Salaries‖ but as ―Profits & Gains from Business or Profession‖. Similarly, salary received by a person as MP or MLA is taxable as ―Income from other sources‖, but if a person received salary as Minister of State/Central Government, the same shall be charged to tax under the head ―Salaries‖. Pension received by an assessee from his former employer is taxable as ―Salaries‖ whereas pension received on his death by members of his family (Family Pension) is taxed as ―Income from other sources‖.
Section 17(1) of the Income tax Act gives an inclusive and not exhaustive definition of ―Salaries‖ including therein
Wages
45 Gratuity
Fees, Commission, perquisites or profits in lieu of salary Advance of Salary
Amount transferred from unrecognized provident fund to recognized provident fund Contribution of employer to a Recognized Provident Fund in excess of the prescribed limit Leave Encashment
Compensation as a result of variation in Service contract etc. Contribution made by the Central
Government to the account of an employee under a notified pension scheme.
DEDUCTION FROM SALARY INCOME
The following deductions from salary income are admissible as per Section 16 of the Income-tax Act.
Professional/Employment tax levied by the State Govt.
Entertainment Allowance- Deduction in respect of this is available to a government employee to the extent of Rs. 5000/- or 20% of his salary or actual amount received, whichever is less.
It is to be noted that no standard deduction is available from salary income w.e.f. 01.04.2006 i.e. A.Y.2006-07 onwards.
PERQUISITES
―Perquisite‖ may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages.
―Perquisite‖ is defined in the section17 (2) of the Income tax Act as including:
1) Value of rent-free/concessional rent accommodation provided by the employer.
2) Any sum paid by employer in respect of an obligation which was actually payable by the assessee.
3) Value of any benefit/amenity granted free or at concessional rate to specified employees etc.
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4) The value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer, or former employer, free of cost or at concessional rate to the assessee.
5) The amount of any contribution to an approved superannuation fund by the exployer in respect of the assessee, to the extent it exceeds one lakh rupees; and
6) The value of any other fringe benefit or amenity as may be prescribed.
PERQUISITES EXEMPT FROM INCOME TAX
Some instances of perquisites exempt from tax are given below:
Provision of medical facilities (Proviso to Sec. 17(2)): Value of medical treatment in any hospital maintained by the Government or any local authority or approved by the Chief Commissioner of Income-tax. Besides, any sum paid by the employer towards medical reimbursement other than as discussed above is exempt up to Rs.15,000/-.
Perquisites allowed outside India by the Government to a citizen of India for rendering services outside India (Sec. 10(7)). Rent free official residence provided to a Judge of High Court or Supreme Court or an Official of Parliament, Union Minister or Leader of Opposition in Parliament. No perquisite shall arise if interest free/concessional loans are made available for medical treatment of specified diseases in Rule 3A or where the loan is petty not exceeding in the aggregate Rs.20,000/-.
No perquisite shall arise in relation to expenses on telephones including a mobile phone incurred on behalf of the employee by the employer.
ALLOWANCES
Allowance is defined as a fixed quantity of money or other substance given regularly in addition to salary for meeting specific requirements of the employees. As a general rule, all allowances are to be included in the total income unless specifically exempted. Exemption in respect of following allowances is allowable to the extent mentioned against each:-
House Rent Allowance:- Provided that expenditure on rent is actually incurred, exemption available shall be the least of the following :
47 a) HRA received.
b) Rent paid less 10% of salary.
c) 40% of Salary (50% in case of Mumbai, Chennai, Kolkata, Delhi) Salary here means Basic + Dearness Allowance, if dearness allowance is provided by the terms of employment.
Leave Travel Allowance: The amount actually incurred on performance of travel on leave to any place in India by the shortest route to that place is exempt. This is subject to a maximum of the air economy fare or AC 1st Class fare (if journey is performed by mode other than air) by such route, provided that the exemption shall be available only in respect of two journeys performed in a block of 4 calendar years.
Certain allowances given by the employer to the employee are exempt u/s 10(14). All these exempt allowance are detailed in Rule 2BB of Income tax Rules and are briefly given below:
For the purpose of Section 10(14) (I), following allowances are exempt, subject to actual expenses incurred:
Allowance granted to meet cost of travel on tour or on transfer.
Allowance granted on tour or journey in connection with transfer to meet the daily charges incurred by the employee.
Allowance granted to meet conveyance expenses incurred in performance of duty, provided no free conveyance is provided.
Allowance granted to meet expenses incurred on a helper engaged for performance of official duty.
Academic, research or training allowance granted in educational or research institutions. Allowance granted to meet expenditure on purchase/maintenance of uniform for
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INCOME FROM HOUSE PROPERTY
Under the Income Tax Act what is taxed under the head ‗Income from House Property‘ is the inherent capacity of the property to earn income called the Annual Value of the property. The above is taxed in the hands of the owner of the property.
COMPUTATION OF ANNUAL VALUE
1. GROSS ANNUAL VALUE (G.A.V.) is the highest of
(a) Rent received or receivable (b) Fair Market Value.
(c) Municipal valuation.
(If however, the Rent Control Act is applicable, the G.A.V. is the standard rent or rent received, whichever is higher).
It may be noted that if the let out property was vacant for whole or any part of the previous year and owing to such vacancy the actual rent received or receivable is less than the sum referred to in clause(a) above, then the amount actually received/receivable shall be taken into account while computing the G.A.V. If any portion of the rent is unrealizable, (conditions of unrealisability of rent are laid down in Rule 4 of I.T. Rules) then the same shall not be included in the actual rent received/receivable while computing the G.A.V.
2. NET VALUE (N.A.V.) is the GAV less the municipal taxes paid by the owner. Provided
that the taxes were paid during the year.
3. ANNUAL VALUE is the N.A.V. less the deductions available u/s 24. DEDUCTIONS U/S 24:-
Are exhaustive and no other deductions are available:-
A sum equal to 30% of the annual value as computed above.
Interest on money borrowed for acquisition/construction/repair/renovation of property is deductible on accrual basis. Interest paid during the pre construction/acquisition period will be allowed in five successive financial years starting with the financial year in which construction/acquisition is completed. This deduction is also available in respect of a self
