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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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INTRODUCTION TO INCOME TAX The matter discussed in this
assignment is relevant only for a beginner to income tax. Means for
the one who is studying income tax for the first time. All
provisions discussed
are in brief only just for the sake of giving the student a feel
of what is income tax and what are the various concepts we are
going to study specially at IPCC level.
How we will study:
1. While we will be preparing for the CA IPCC Taxation papers,
we will be covering
Income tax (50 marks), VAT (25 marks ) & Service tax (25
marks).
2. Complete theory provisions and practicals are given in the
assignments. For
solving practical problems, please use Blank portion of
assignments. Please
bring some extra white pages for this purpose.
3. One word, fill in the blanks and true false questions series
shall be going
alongwith.
4. Will also be covering Questions from Scanner, Module and
Practice Manual.
5. After completion of syllabus mock tests shall be taken till
exams.
6. SMS of revision series shall be given on regular basis.
7. In break time, PPT of chapters already covered shall be
shown. I hope this will
help in thorough revision of the concept.
8. Bringing I cards is necessary for issue of study
assignments.
Q 1 : What is tax ? Ans: It is an amount which is payable by a
person to the government so that govt can meet out its certain
expenses for which directly there are no charges.
For example, armed forces, police, govt schools and hospitals,
parks, roads etc.
Tax is an amount payable to government
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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Q 2: What is broader classification of taxation system of India
?
Ans: Indian Govt. collects tax both directly and indirectly.
Income tax & wealth tax are main examples of direct tax.
Service tax, VAT, Excise duty, Customs Duty are the main
examples of indirect tax.
Two classifications of taxation are direct and indirect
taxation
TAX
DIRECT TAX
INDIRECT TAX
Q 3 : What is Income tax ?
Ans: As the name suggests, this is a tax on the income of a
person. Usually the amount received is not fully taxable and the
expenses incurred to receive (earn) that amount is deductible.
The net profit is taxable as income.
Income Tax is tax on the income of a person
INCOME
TAX
WEALTH
TAX
SERVICE
TAX
VAT
EXCISE DUTY
CUSTOMS DUTY
ENTERTAINMENT TAX
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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Q 4 : Whether taxation is on monthly or annual basis ?
Ans: Income tax is an annual tax liability. Income earned in one
financial year is taxable in the next financial year. The financial
year of income is known as PREVIOUS YEAR and financial year of
taxation is known as ASSESSMENT YEAR.
Taxation is on annual basis.
Q 5: How taxable income is computed ?
Ans: Income, for the purpose of taxation is divided in five
heads of income
1. Salary income Sections 15 to 17
It includes income earned from employer employee
relationship.
FINANCIAL YEAR
INCOME TAXATION
PREVIOUS YEAR ASSESSMENT YEAR
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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2. House Property Income Sections 22 to 27
3. It includes rental income from residential & commercial
properties.
4. Business & Profession Income Sections 28 to 44D
Income from trading, manufacturing, providing services etc is
covered.
5. Capital Gains Sections 45 to 55 Income from sale of property,
gold, silver etc is covered.
6. Income from other sources Sections 56 to 59
Income from interest, lotteries, gifts above Rs 50,000 p.a. etc
[Sec 56(2)] is covered.
The total of above five heads of income is known as GROSS TOTAL
INCOME (GTI).
From GTI, deductions given as per Sections 8OC to 80U is
deductible.
The net amount is Taxable income also known as NET INCOME or
total income.
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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SALARY HOUSE
PROPERTY BUSINESS &
PROFESSION CAPITAL GAINS
INCOME FROM OTHER
SOURCES
Sections Sections Sections Sections Sections
15 to 17 22 to 27 28 to 44D 45 to 55 56 to 59
Less:- Deductions U/s 80 C to 80 U
NET INCOME OR TAXABLE INCOME OR TOTAL INCOME
GROSS TOTAL INCOME (GTI)
HUNDREDS OF SOURCES OF INCOME
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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The format of computation:
INCOME FROM SALARIES + INCOME FROM HOUSE PROPERTY + INCOME FROM
BUSINESS AND PROFESSION + INCOME FROM CAPITAL GAINS + INCOME FROM
OTHER SOURCES
-------------------------------------------------------------------
GROSS TOTAL INCOME (GTI) (-) DEDUCTION U/S 80 C TO 80 U
-------------------------------------------------------------------
NET INCOME OR TAXABLE INCOME OR TOTAL INCOME {ROUNDED OFF}
ROUNDING OFF OF NET INCOME - SECTION 288A
As per this section, the total income is rounded off in the
multiples of Rs 10/-.
Upto Rs 4.99 is ignored.
If last figure of net income is Rs 5 or more, than net income is
increased to the nearest multiple of ten.
For example if net income is Rs 2,45,234.99, then tax shall be
calculated on Rs 2,45,230.
Similarly if net income is Rs 3,46,865 or Rs 3,46,868
then in both situations, the tax shall be calculated on Rs
3,46,870.
ROUNDING OFF OF NET TAX PAYABLE - SECTION 288B
Just like net income, tax payable is also rounded off in
multiples of Rs 10.
The total income is rounded off in the multiples of Rs 10 under
Section 288A
The net tax payable is rounded off in the multiples of Rs 10
under Section 288B
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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Q 6 Discuss in brief the deductions given by Section 80C, 80D
& 80G.
Ans:- SECTION 80C - [DEDUCTION FOR SAVINGS]
Deduction is allowed in respect of amount paid during the
previous year as life insurance premium, or contribution to Public
Provident Fund or Tuition fee for children etc. The maximum
deduction allowed is Rs 1,00,000.
SECTION 80D- [DEDUCTION FOR MEDICLAIM POLICY]
Deduction is allowed in respect of amount paid during the
previous year as medical insurance premium the maximum deduction
allowed is Rs 15,000
ROUNDED OFF
INCOME NET TAX
288A 288B
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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SECTION 80G [DEDUCTION FOR DONATIONS]
Deduction is allowed in respect of amount paid during the
previous year AS DONATION to National Defence fund set up by the
Central Govt. @ 100% Prime Ministers National Relief Fund @ 100%
National Childrens Fund @ 50% Etc.
Maximum deduction u/s 80C is Rs 1,00,000
Maximum deduction u/s 80D is Rs 15,000 Deduction u/s 80G is
allowed as per prescribed rates
Q 7 : Give few names of exempted incomes.
Ans: 1. Agricultural Income - Section 10(1)
2. Amount received by a member from HUF Section 10(2)
3. Share of profit of a partner from a firm Section 10(2A)
4. Dividend income from Domestic company is exempt in the hands
of shareholders Section 10(34)
MAXIMUM DEDUCTION
80C 80D
1,00,000 15000
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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5. Income from Units of UTI/ Mutual funds is exempt in the hands
of unit holders Section 10(35)
6. Long term capital gain arising from sale of shares through
recognized stock exchange is exempt as
transactions are subject to Securities transaction tax Section
10(38)
Agricultural income, dividend income and income from units of
UTI is exempt. Q 8 : Compute the net income of Mr. N for the
assessment year 2013-14 with the help of following particulars:
Salary income: Rs 25,000 pm Net income from House Property: Rs
78,000 p.a. Short term Capital Gain on sale of silver : Rs 35,000
Long term Capital Gain on sale of shares subject to Securities
Transaction Tax: Rs 48,000 Gift received during the year : Rs
30,000 Mediclaim insurance premium paid during the year: Rs
8,236
Q 9: Compute the net income of Mr. N for the assessment year
2013-14 with the help of following particulars:
Salary income: Rs 20,000 pm
Net income from House Property: Rs 70,000 p.a.
Short term Capital Gain on sale of Land : Rs 3,35,000
Dividend received from Reliance India Ltd: Rs 45,000
Gift received during the year : Rs 80,000
Mediclaim insurance premium paid during the year: Rs 18,000
Life insurance premium paid during the year: Rs 36,252
GIFT UPTO Rs 50,000 FULLY EXEMPT. ABOVE Rs 50,000 FULLY
TAXABLE
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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Q 10 : Compute the net income of Mr. N for the assessment year
2013-14 with the help of following particulars:
Net Business income (Proprietorship) for the year financial year
Rs 6,80,000
Interest income : Rs 69,245
Share of profit from a partnership firm : Rs 90,000
Agricultural income : Rs 45,000
Tuition fees paid to Bal Bharti Public School : Rs 8,000 per
quarter
Donation to PM National Relief fund: Rs 21,000
Q 11 : Compute the net income of Mr. N for the assessment year
2013-14 with the help of following particulars:
Net income from house property : Rs 4,00,000
Share of profit from HUF : Rs 50,000
Part time business income : Rs 1,90,000
Income from units of HDFC mutual fund : Rs 37,000
Amount deposited in PPF : Rs 40,000
Life insurance premium Paid during the year : Rs 67,000
Amount donated to National Relief fund : Rs 12,000
Q 12 : What are the tax rates for individuals for the assessment
year 2013-14?
Ans: Tax rates for individual (both male and female
taxpayers)
1. Net income upto Rs 2,00,000 Nil
2. Net Income between Rs 2,00,010 5,00,000
Tax = [net income less 2,00,000] x 10%
3. Net income between Rs 5,00,010 10,00,000 Tax = Rs 30,000 + {
[net income less 5,00,000] x 20%}
4. Net income above Rs 10,00,010 Tax = Rs 1,30,000 + { [net
income less 10,00,000] x 30% }
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TAX
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Surcharge: It is the additional tax payable by higher income
group. In some years it is applicable and sometimes not. Surcharge
is not applicable for A/Y 13-14 for individuals. So students can
ignore this.
Education cess: It is 2% in every case of income tax.
Secondary and higher education cess: It is 1% in every case of
income tax.
For practice, students can calculate it at 3% but for
examination purpose, it should be shown separately.
UPTO 2,00,000 0%; BETWEEN 2-5 LACS 10%; BETWEEN 5 10 LACS 20%;
ABOVE 10 LACS 30%
Q 13 Compute the tax payable [as per A/Y 2013-14] in the
following cases assuming the figures given are Net Income:
a) Rs 167,000
b) Rs 2,56,000
c) Rs 4,80,000
d) Rs 5,70,000
e) Rs 8,90,000
f) Rs 10,30,000
g) Rs 20,00,000
Q 14 Compute the taxable income and tax payable based on
following data as per provisions applicable for assessment year
2013-14:
Salary income : Rs 23,000 p.m.
Net House Property income : Rs 2,50,000
Dividend from NGPA Private Limited : Rs 30,000
Long term capital gain on sale of listed shares : Rs 35,000
Mediclaim insurance premium paid : Rs 17,600
Life insurance Premium Paid : Rs 45,675
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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Q 15 : Compute the taxable income and tax payable of Mr. N based
on following data as per provisions applicable for assessment year
2013-14:
Proprietary Business income : Rs 8,90,000
Short term capital gain on sale of gold : Rs 4,00,000
Share of profit from a partnership firm: Rs 2,40,000
Income from units of Reliance Mutual fund: Rs 66,000
Life insurance premium paid : Rs 65,000
PPF deposit : Rs 56,000
Donation to National Defence fund : Rs 11,255
Q 16 : What are special provisions for computation of tax in
case of Senior Citizens ?
Ans: Senior citizens are divided in two categories
1. Senior citizens Age during previous year is 60 Years or more
but less than 80 years
2. Super Senior citizens Age during previous year is 80 years or
more
Tax Provisions:
For senior citizen having age of 60 years or more,
first slab of exemption is Rs 2,50,000 instead of Rs
2,00,000.
Tax rates for individual senior citizens (both male and female
taxpayers)
1. Net income upto Rs 2,50,000 Nil
2. Net Income between Rs 2,50,010 5,00,000
Tax = [net income less 2,50,000] x 10%
3. Net income between 5,00,010 10,00,000 Tax = 25,000 + { [net
income less 5,00,000] x 20%}
4. Net income above 10,00,010 Tax = 1,25,000 + { [net income
less 10,00,000] x 30% }
SENIOR CITIZEN = 60 YEARS OR MORE ONLY CHANGE EXEMPTION UPTO
2,50,000
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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For super senior citizens having age of 80 years or more,
first slab of 10% is fully exempt.
So, for them income upto Rs 5,00,000 is fully exempt and after
that 20% slab is applicable.
Tax rates for individual super senior citizens (both male and
female taxpayers)
1. Net income upto Rs 5,00,000 Nil
2. Net income between 5,00,010 10,00,000
Tax = { [net income less 5,00,000] x 20%}
3. Net income above 10,00,010 Tax = 1,00,000 + { [net income
less 10,00,000] x 30% }
SUPER SENIOR CITIZEN = 80 OR MORE UPTO 5 LACS 0%; 5-10 LACS 20%;
ABOVE 10 LACS 30%
Q 17 - Compute the net income & Tax payable of Mrs. N (age
64 years) for the assessment year 2013-14 with the help of
following particulars:
Net Business income (Proprietorship) for the year financial year
Rs 4,80,000
Interest income : Rs 67,000
Share of profit from HUF : Rs 99,000
Gift received during the year : Rs 45,000
Life insurance premium paid during the year : Rs 30,000
Donation to PM National Relief fund: Rs 31,000
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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Q 18 : Compute the net income and tax payable by Mr N (age 83
years) for the assessment year 2013-14 with the help of following
particulars:
Net house property income : Rs 4,70,000
Short term capital gain on sale of plot of land : Rs
3,70,000
Interest income : Rs 2,50,000
Gift received during the year : Rs 75,000
Dividend received from Indian Company : Rs 35,000
Life Insurance Premium paid during the year : Rs 22,000
Donation paid to National children fund : Rs 8000
Q 19 What are special tax rates for Long term capital gains and
winning from Lotteries etc ?
Ans: While LTCG is taxable at a flat rate of 20%,
winnings from lotteries, crossword puzzles, races etc is taxable
at a flat rate of 30%.
In both cases, education cess and SHEC shall apply at 2% and 1%
as usual.
LTCG TAXABLE @ 20% FLAT. LOTTERY ETC @ 30% FLAT
Q 20 Compute the tax liability of Mr N (age 44 years) with the
help of following data for the assessment year 2013-14:
Net Salary income for the year : 3,60,000
Net income from house property : 2,60,000
Long term capital gain on sale of silver : 45,000
Winning from Lotteries : 20,000
Mediclaim insurance premium paid : 10,000
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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Q 21 Compute the tax liability of Mr N (age 67 years) with the
help of following data for the assessment year 2013-14:
Net house property income for the year : 4,50,000
Amount received as profit share from HUF : 56,000
Short term capital gain on sale of plot of land : 5,70,000
Long term capital gain on sale of listed shares : 38,500
Winning from crossword puzzles : 5,000
Life insurance premium paid : 59,000
Donation to PM National relief fund : 10,000
Q 22 Who is an assessee ?
Ans: In simple terms it means the taxpayer.
Assessee [Section 2(7)] :
Assessee means a person by whom any tax or any other sum of
money (e.g interest or penalty) is payable as per this Act
Assessee is a person by whom any tax or any other sum of money
is payable
Q 23: Explain in brief the concept of Clubbing of income.
Ans: In India, we follow progressive rates of taxation.
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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As we have already studied, tax rates increase from 10% to 20%
and then to 30%, people may try to avoid tax by transferring their
income to relatives specially wife and children.
In order to avoid such practices of tax avoidance, provisions of
clubbing of income is prescribed in Section 60-65 of Income tax
act.
The main theme behind the provisions is that if assessee
transfers his income in favour of wife or children etc. by gifting
the properties etc then income from such properties shall be taxed
in the hands of assessee and not in the hands of wife / children
etc.
Transferred income is taxable in the hands of transferor and not
transferee (like wife or children)
Q 24 : Explain in brief the concept of Set off and Carry forward
of losses.
Ans: Income of assessee is taxable in five heads of income i.e.
salary, house property, PGBP, capital gains and income from other
sources.
It is not necessary that every year, in every head of income
there shall be a profit only. In some sources of income, like
business head or capital gain etc, losses may also be there. Losses
may also be possible in House property income or income from other
sources.
Section 70-80 of income tax act deals with such provisions.
Normally the concept is that as a first step, a loss from a
particular head of income is adjusted against income under the same
head and, then difference loss, if any, is adjusted against the
income in other head of income.
If still, any unadjusted loss is left, then it is adjusted in
the next year or years against the same head of income.
Usually a limit of 4 or 8 years is applicable for carry forward
of losses.
Loss is adjusted in same year from same head other head Loss is
adjusted in next years from same head
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
TAX
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Q 25 : When is the return of income is filed ?
Ans: Return of income is a systematic intimation to Income tax
department about the income earned by assessee during the previous
year. Return is furnished in prescribed format by due date of
filing of return of income. Due date basically means the last date
of filing of return of income. An individual assessee should file
his return of income on or before 31st July of Assessment year. The
due date for corporate assessee is 30th September of Assessment
Year.
INDIVIDUAL RETURN BY JULY 31. CORPORATE BY SEP 30
Q 26 : What is PAN number ?
Ans: It is a ten digit unique identification number. It is alpha
numeric number. The Govt. has made it compulsory to quote pan
number in lot of day to day financial transactions like
sale/purchase of property valued at Rs 5 lacs or more or Fixed
Deposit with a bank exceeding Rs 50,000 etc.
PAN number is an alpha numeric ten digit unique identification
number.
Q 27 : What is the difference between Self Assessment, Scrutiny
Assessment and Best Judgement Assessment ?
Ans: Assessment done by assessee himself is known as Self
assessment [Section 140A].
In some selected cases, income tax officer may issue notice to
assessee and ask for documents to ensure there is no understatement
of income. Such assessment procedure is known as Scrutiny
Assessment Procedure. [Section 143(3)]
If return is not filed or inspite of notice, information is not
submitted then income tax officer assess the income based on
informations available or collected by him. This assessment is
known as Best Judgement Assessment. [Section 144]
RETURN AFTER NOTICE TO ASSESSEE & THOROUGH CHECKING IS KNOWN
AS SCRUTINY ASSESSMENT.
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NEERAJ GUPTA CA IPCC TAX CLASSES BASIC CONCEPTS OF INCOME
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Q 28 : Explain the concept of Advance Tax ?
Ans: As per Sections 207 to 211, if tax payable by assessee
exceeds Rs 10,000, then advance tax is payable by assessee during
the PREVIOUS YEAR itself.
The slabs for advance tax are as follows:
Due dates of installments Amount payable On or before the 15th
September On or before the 15th December On or before the 15th
March
30% of annual tax payable 60% of annual tax payable 100% of
annual tax payable
Obviously, when assessee will pay self assessment tax at the
time of filing of return of income, he will deduct the advance tax
already paid.
TAX PAYABLE IS MORE THEN 10,000 PAY ADVANCE TAX
Q 29: What is the concept of Tax deduction at source ?
Ans: In this concept while making payment, in some specified
cases, mainly based on provisions given in section 190 to 199, tax
is deducted at source by the payer and the amount is deposited by
the payer to Govt and a certificate in this regard is issued to the
payee.
Based on this certificate, the assessee claims deduction from
his tax liability at the time of self assessment.
Q 30 : What if the return is not filed or delayed or not
correctly filed ?
Ans: For later filing of return or late payment of taxes,
interest is payable by Assessee and for effort of tax evasion,
penalties may be imposed.
IF LATE INTEREST ; TAX KI CHORI = PENALTIES
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Q 31 : Is there any appeal against decision of Income tax
officer ?
Ans : Yes, if assessee is not satisfied by assessment order of
ITO he can file an appeal with
Commissioner of Income Tax (Appeals), and then to
ITAT (Income tax Appellate Tribunal) and then to
High Court and finally to
Supreme Court.
APPEAL AGAINST ITO CIT (A) ITAT - HC - SC
Q 32 : Compute tax liability as per assessment year 2013-14 in
following cases:
Facts Mr N (Age 38 years)
Mr X (age 65 years)
Mr Y (age 82 years)
Salary income 3,60,000 Nil Nil House property income
2,60,000 4,70,000 8,90,000
Business income Nil 13,68,000 Nil STCG 1,50,000 2,00,000 50,000
LTCG 40,000 35,000 20,000 Gift 35,000 50,000 60,000 Dividend income
Nil 49,000 Nil LIC premium paid 40,000 1,03,000 80,000 Mediclaim
premium 29,000 9,145 11,000
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QUICK REVISION (SUMMARY) CHAPTER-1 [BASIC CONCEPTS OF INCOME
TAX]
1) Tax is an amount which is payable by a person to the
government so that govt
can meet out its certain expenses for which directly there are
no charges.
2) Indian Govt. collects tax both directly and indirectly.
3) Income tax is a tax on the income of a person & its an
annual tax liability.
4) Income earned in one financial year is taxable in the next
financial year.
5) The financial year of income is known as PREVIOUS YEAR.
6) The financial year of taxation is known as ASSESSMENT
YEAR.
7) Income of assessee is taxable in five heads of income i.e.
salary, house property,
PGBP, capital gains and income from other sources.
8) The total of above five heads of income is known as GROSS
TOTAL INCOME
(GTI).
9) From GTI, deductions given as per Sections 8OC to 80U is
deductible.
10) The net amount is Taxable income also known as NET INCOME OR
TAXABLE
INCOME OR TOTAL INCOME.
11) The total income is rounded off in the multiples of Rs 10 in
Section 288A
12) The net tax payable is rounded off in the multiples of Rs 10
in Section 288B
13) Maximum deduction u/s 80C for savings is Rs 1,00,000
14) Maximum deduction u/s 80D for mediclaim policy is Rs
15,000
15) Deduction u/s 80G for donations in various funds is allowed
as per prescribed
rates
16) Some exempted incomes are- agricultural Income, amount
received by a
member from HUF, share of profit of a partner from a firm,
dividend income from
Domestic company, income from Units of UTI / Mutual funds, long
term capital
gain arising from sale of shares through recognized stock
exchange.
17) Tax rates for individual (both male and female
taxpayers)
Net income Tax upto Rs 2,00,000 Nil
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Rs 2,00,010 5,00,000
[net income less 2,00,000] x 10%
Rs 5,00,010 10,00,000
Rs 30,000 + { [net income less 5,00,000] x 20%}
above Rs
10,00,010
Rs 1,30,000 + { [net income less
10,00,000] x 30% }
18) Surcharge is not applicable for A/Y 13-14 for
individuals.
19) Education cess is 2% of income tax. Secondary and higher
education cess is 1%
of income tax.
20) Senior citizens are divided in two categories Senior
citizens and Super senior
citizens
21) Senior citizens are having age of 60 Years or more but less
than 80 years
22) Super Senior citizens are having age of 80 years or more
23) Tax rates for individual senior citizens (both male and
female taxpayers)
Net income Tax upto Rs 2,50,000 Nil Rs 2,50,010 5,00,000
[net income less 2,50,000] x 10%
Rs 5,00,010 10,00,000
Rs 25,000 + { [net income less 5,00,000] x 20%}
above Rs 10,00,010
Rs 1,25,000 + { [net income less 10,00,000] x 30% }
24) Tax rates for individual super senior citizens (both male
and female taxpayers)
Net income Tax upto Rs 5,00,000 Nil Rs 5,00,010 10,00,000
[net income less 5,00,000] x 20%}
above Rs 10,00,010
Rs 1,00,000 + { [net income less 10,00,000] x 30% }
25) LTCG is taxable at a flat rate of 20% plus education cess
and SHEC @2% and
1%
26) Winnings from lotteries, crossword puzzles, races etc is
taxable at a flat rate of
30% plus education cess and SHEC @2% and 1%
27) Assessee means the taxpayer. By whom tax or any other money
is payable.
28) If assessee transfers his income in favour of wife or
children etc. then it shall be
taxed in the hands of assessee and not in the hands of wife /
children etc.
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29) A loss from a particular head of income is adjusted against
income under the
same head and, then against the income in other head of income,
and, then in
the next year or years against the same head of income.
30) Usually a limit of 4 or 8 years is applicable for carry
forward of losses.
31) An individual assessee should file his return of income on
or before 31st July of
Assessment year. The due date for corporate assessee is 30th
September of
Assessment Year.
32) PAN number is an alpha numeric ten digit unique
identification number. 33) Assessment done by assessee himself is
known as Self assessment [Section
140A]. Assessment after notice and thorough checking is scrutiny
assessment.
34) If tax payable exceeds Rs 10,000, then advance tax is
payable by assessee.
35) For late filing of return or late payment of taxes, interest
is payable by Assessee.
36) For effort of tax evasion, penalties may be imposed.
37) All orders of ITO appealable to CIT (A), then ITAT, then HC,
then SC.
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TEST SERIES CHAPTER 1 (BASIC CONCEPTS OF INCOME TAX)
Q.NO. TYPE QUESTIONS ANSWER
1) T/F Tax is an amount payable by persons to Govt. so that they
can meet expenses on public services like education, security,
health, infrastructure etc.
2) T/F Income tax is an example of Indirect taxes ?
3) OW Service tax and VAT are examples of which type of taxation
Direct or Indirect ?
4) T/F Income tax is a monthly tax liability.
5) FB The financial year of income is known as ..
6) FB The financial year of taxation is known as
7) FB Pension income is taxable as .
8) T/F Rental income from a commercial office is taxable as
Business income.
9) T/F Gift is tax free with no limit.
10) FB Total of five heads of income is known as ..
11) FB Deductions which are deductible from GTI are prescribed
in sections
12) OW Rounding off of net income is given in section ..
13) OW Rounding off of tax payable is given in section ..
14) FB Tax shall be computed on if net income as per provisions
is Rs 4,67,755.
15) OW How much is the limit for various investments like LIC,
PPF etc in Section 80C?
16) OW How much is the limit for deduction u/s 80D for paying
mediclaim insurance premium?
17) OW How much is the deduction u/s 80G for donation to
National Defence fund and PM National relief fund?
18) OW How much is the deduction u/s 80G for donation to
National children Fund ?
19) FB Agricultural income is exempt as per section
..........................
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20) T/F Share of profit received from HUF is taxable as business
income for Karta.
21) T/F Share of profit received by a partner from the
partnership firm is not taxable.
22) T/F Dividend income from Foreign company is exempt from
tax.
23) OW As per which section income from units of UTI/Mutual
funds is exempt from tax.
24) T/F Short term capital gain is exempt from tax on sale of
listed shares.
25) T/F For assessment year 2013-14 tax rates are same for male
and female assessee.
26) OW What is basic exemption limit for taxation for A/Y
2013-14 ?
27) OW What is basic exemption limit for senior citizens for A/Y
2013-14 ?
28) OW What is basic exemption limit for Super Senior citizens
for A/Y 2013-14?
29) OW What is maximum marginal rate of tax for A/Y 13-14 ?
30) OW How much is the surcharge applicable if net income is
above Rs 10 lacs ?
31) OW How much is education cess & SHEC ?
32) OW How much is the tax rate for Short term Capital Gains
?
33) OW How much is the tax rate for Long term capital gains
?
34) OW How much is tax rate for winning from Lotteries, KBC,
crossword puzzles etc ?
35) FB Assessee means a person from whom any tax or any other
some of money e.g.. is payable as per this act ?
36) T/F Any income earned by wife is clubbed with the income of
husband as per income tax provisions
37) T/F If any loss arises, then it can be adjusted against any
income of assessee.
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38) FB Due date for filing of return for individual assessee is
of A/Y.
39) FB Due date for filing of return for Corporate assessee is
..of A/Y
40) FB PAN number is .digit unique identification number.
41) FB Assessment done by assessee himself at the time of filing
of return is known as .as per section 140A
42) FB Assessment done by AO after notice to assessee for
additional informations is known as as per section 143(3).
43) FB Assessment done by AO when no return is filed is known as
..as per section 144.
44) T/F Advance tax is payable if tax liability for the year
exceeds Rs 8,000.
45) T/F TDS provisions are optional.
46) T/F Interest is payable for late filing of return of income
?
47) T/F Assessment order passed by Income tax officer is final
and no appeal is possible
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IMPORTANT SECTIONS DISCUSSED IN THE CHAPTER
Section Details
15 - 17 Income from salaries
22 - 27 Income from house property
28 44D PGBP
45 55 Capital gains
56 59 Income from other sources
80C 80U All deduction from GTI
288A Rounding off of Net Income
288B Net tax payable rounded off
80C Deduction for savings
80D Deduction for Mediclaim Policy
80G Deduction for donations
10(1) Agricultural income
10(2) Income from HUF (share of profit)
10(2A) Income from firm (share of profit)
10(34) Dividend income from Domestic Companies
10(35) Income from units of UTI / Mutual funds
10(38) LTCG on transfer of listed securities
2(7) Definition of Assessee
60 65 Clubbing of income
70 80 Set off and carry forward of losses
140A Self assessment
143(3) Scrutiny assessment
144 Best judgement assessment
207 211 Advance tax 190 199 TDS