INCOME TAX CHART BOOK BY CA PRANAV CHANDAK VIDEOS AVAILABLE ON YOUTUBE PCA
1. BASIC CONCEPTS OF INCOME TAX
COMPONENTS OF INCOME TAX LAWS PERSON [SECTION 2(31)]
Income Tax Act, 1961 1. Individual : → A Natural Human Being (Male/Female/Minor/Unsound Mind).
◾ Income of Minor & unsound Mind person → Assessed in hands of Manager/Guardian
▪ 1st April, 1962 ◾ 298 sections ◾ XIV schedules
▪ Proviso → Gives Exceptions to the provision contained in the respective section. 2. HUF: Status in HUF is received by birth & not by operation of law.
▪ Explanation → Gives clarification related to the provision contained in the section ▪ HUF is not defined under IT Act. However, as per Hindu Law, it consists of all males
lineally descended from a common ancestor & includes their wives & unmarried
Annual Finance Act: Gives applicable rates of tax. daughters. Even a single male member can have HUF (w.e.f 6/9/2005).
Income Tax Rules: issued by CBDT for proper administration of the Act. ▪ Only Co-parceners have the right to Partition.
▪ All Co-parceners are Members but all members need not be co-parceners.
Notifications: subordinate legislation issued by CG.
▪ Coparceners → HUF may contain many members, but only members within 4
▪ CBDT is also empowered to make & amend rules by issuing notifications. degrees including KARTA are called co-parceners (including daughters).
▪ Binding on everyone. [Assessee + Income Tax department] [Note: wife/daughter-in-law cannot be co-parceners; but they can be members]
Circulars: They deal with certain specific problems. 3. Company [Sec 2(17)] - It means:
▪ Issued by CBDT to clarify doubts regarding scope & meaning of provisions. ▪ Any Indian Company defined in section 2(26);
▪ Binding on the department but not on the assessee. ▪ Any Body Corporate incorporated under the foreign laws [Foreign company];
▪ However assessee can take advantage of beneficial circulars. ▪ Any institution, association or body (incorporated/not) whether Indian or non-
Indian, declared by general or special order of CBDT to be a company.
Case Laws (Judicial Decisions)
4. Firm (registered/not) (including LLP) [Sec 2(23)] : Same Tax Treatment for both
▪ Supreme Court Decisions becomes Judicial Precedent (Law) & are binding on all
the courts, Appellate Tribunal, Income Tax Authorities & on Assessees. 5. Association of Persons (AOP)/Body of Individuals (BOI)
▪ Decision of a High Court cannot bind other High Court. 6. Local Authority (LA)
7. Every Other AJP (not falling in above categories): Ex: Idol/deity
Assessee - [Sec 2(7)] : It includes – Person having SUBSTANTIAL INTEREST in the Company [Sec 2(32)]
(a) Tax Payable: Every Person by whom any tax or any other sum of money is payable
◾ Any beneficial owner of shares carrying at least 20% of voting power.
under this Act (with/without any proceeding).
(b) Proceeding started: Any Person against whom any proceeding has started
(whether or not any tax, interest or penalty is payable by him). 𝐈𝐧𝐜𝐨𝐦𝐞 𝐓𝐚𝐱 𝐨𝐧 𝐓𝐨𝐭𝐚𝐥 𝐈𝐧𝐜𝐨𝐦𝐞 𝐮𝐬𝐢𝐧𝐠 𝐚𝐩𝐩𝐥𝐢𝐜𝐚𝐛𝐥𝐞 𝐬𝐥𝐚𝐛 𝐫𝐚𝐭𝐞
Average Rate [SEC 2(10)]:
(c) Deemed Assessee: A person assessable for income of some other persons. 𝐓𝐨𝐭𝐚𝐥 𝐈𝐧𝐜𝐨𝐦𝐞
(d) Assessee in default: Any person who Maximum Marginal Rate [SEC 2(29C)]:
(i) does not deduct tax or (ii) fails to pay advance tax ◾ Highest Slab Rate of Tax (including SC) applicable to Individual or AOP/BOI
(iii) after deducting tax, fails to pay tax deducted to the government or
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,INCOME TAX CHART BOOK BY CA PRANAV CHANDAK VIDEOS AVAILABLE ON YOUTUBE PCA
INCOME & ITS CONSTITUENTS [SECTION 2(24)] FINANCIAL YEAR, PREVIOUS YEAR & ASSESSMENT YEAR
Illegal/tainted income → Illegal Income is also taxed. ➢ FY - Year starting on 1st April & ending on 31st March.
➢ PY [Sec 3] - FY in which the income is earned.
Disputed Income → Taxable to recipient till the dispute is settled.
➢ AY [Sec 2(9)] - FY in which income is assessed to tax.
Contingent Income → A contingent income is not income & thus not taxed.
Dual Role of a FY: Each FY is both PY as well as AY.
Pin Money → Income × [Any property acquired using such money/savings → Capital
Asset] First PY for Newly Set-up Business/Profession during FY
1st PY = From date of setting up of business & ending on last day of that FY (31 st
Income must come from Outside: A person cannot earn income from himself. Mar).
Relevance of Method of Accounting followed by the Assessee: 1st PY of newly set-up business/profession will be either 12 months or < 12 months.
(i) Salary; (ii) HP; (iii) Capital Gains → Method of accounting is irrelevant. It cannot exceed 12 months. [Same provision is applicable for New Source of
(i) PGBP; (ii) IFOS → Method of accounting followed by the assessee is relevant. Income]
Capital Receipt Vs Revenue Receipt: Uniform PY: All Assessees are required to follow FY as PY uniformly for every year.
Capital Receipts: Not Taxable unless expressly provided. CASES WHERE INCOME OF THE PREVIOUS YEAR IS ASSESSED IN PY ITSELF
Revenue Receipts: Always Taxable unless expressly exempt. 1. Shipping business of non-residents [Sec 172]
▪ Ship of NR is allowed to leave the port only when tax has been paid or
Liquidated damages → Capital receipt. Amount received towards compensation for satisfactory arrangement has been made for payment thereof.
sterilization of profit earning source is not in ordinary course of business. ▪ Income = 7.5% of freight paid/payable whether in India or o/s India.
Compensation on Termination of Agency → Capital receipt. Receipt of compensation 2. Person Leaving India [Sec 174]
on termination of the agency business being the only source of income by the assessee. ▪ If a person is leaving India & he has no present intention of returning to India,
But if the assessee has several agencies and one of them is terminated & compensation is ▪ Income from the expiry of last PY upto the probable date of his departure from
received, the receipt would be revenue receipt since taking agencies & exploiting the India is taxable in that PY itself.
same for earning income is the ordinary course of business & loss of one agency would 3. AOP/BOI/AJP formed for a particular event/purpose [Sec 174A]
be made good by taking another. ▪ If AO think that AOP/BOI is likely to be dissolved in same year or in next year,
Compensation received from the employer or from any person for premature ▪ he will assess income upto date of dissolution in the relevant PY itself.
termination of the service contract is a capital receipt but is taxable as profit in lieu of 4. Persons likely to transfer property to avoid tax [Sec 175]
salary u/s 17(3) or IFOS u/s 56(2)(xi), respectively. ▪ Total income of such person for the period from the expiry of PY to the date
Compensation received or receivable in connection with termination/modification when AO commences proceedings is taxable in that PY.
of T & Cs of any contract relating to its business shall be taxable as business income.
5. Discontinued Business [Sec 176]
Application of Income Diversion of Income ▪ Income from the end of last PY upto the date of such discontinuance may, at
▪ If assessee applies (uses) his income to ▪ If there is overriding charge on the the discretion of AO may be charged to tax in that PY itself.
discharge his obligation source of such income which diverts
Note: Section 176 is a Discretionary power. AO may choose not to apply it & wait
▪ after the income reaches the assessee, the income before it reaches the
till the end of PY.
▪ it is application of income assessee, it is diversion of Income.
▪ Such Income is taxable to the assessee. ▪ Such Income cannot be treated as
income & thus Not Taxable.
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PREVIOUS YEAR FOR UNDISCLOSED SOURCES OF INCOME TAX RATE FOR DIFFERENT PERSONS [Sec 2 of FA, 2018]
1. Cash Credits [Sec 68] TI → Total Income after all deductions except Incomes Taxable at Specified Rates.
▪ Where any sum is found credited in books of the assessee & assessee Individual/HUF/AOP/BOI/AJP [R/NR]
offers no/unsatisfactory explanation about nature & source, TI Upto 2,50,000 [BEL] 2.5 L – 5 L 5L – 10 L > 10 L
▪ sum so credited may be charged as income of the assessee of that PY. Rate Nil 5% 20 % 30 %
2. Unexplained Investments [Sec 69] (i) For Resident Senior Citizen (Age: 60 years or more but < 80 years) → BEL = 3 Lacs.
▪ If in any FY assessee has made investments which are not recorded in (ii) For Resident Super Senior Citizen (Age: 80 years or more) → BEL = 5 Lacs
books of A/c & Assessee offers no/unsatisfactory explanation about Surcharge: [Check for Marginal Relief u/s 89]
nature & source of investment, Income > 50 Lacs but ≤ 1 Cr 10% of IT
▪ Value of investments are taxed as income of assessee of such FY. Income > 1 Cr 15% of IT
3. Unexplained Money/Bullion/Jewellery [Sec 69A] Marginal Relief (Sec 89): If SC is applicable on TI, Marginal relief is available.
▪ Where in any FY, assessee is found to be owner of any money, bullion, Steps to calculate Marginal Relief:
jewellery etc. & 1. Calculate Tax (including surcharge) on Total Income of the Assessee.
▪ Such asset is not recorded in books of A/c & assessee offers 2. Tax payable on Rs. 50 Lacs/ 1 Cr/ 10 Cr as the case may be. [Depends on levy of SC]
no/unsatisfactory explanation about nature & source, 3. Calculate “Extra Tax Payable” because of Income above 50 Lacs/1 Cr/10 Cr. [1-2]
▪ Money & Value of bullion etc. will be deemed to be income of the 4. Marginal Relief = Extra Tax Payable – Income above Rs. 50 Lacs/ 1 Cr/ 10 Cr.
assessee for such FY. PC NOTE: If Extra Tax > Extra Income, Difference between them is Marginal Relief.
▪ Ownership is important & mere possession is not enough. Rebate u/s 87A
4. Amount of Investments not fully disclosed in books [Sec 69B] Assessee Resident Individuals whose Total Income ≤ Rs. 3,50,000
▪ Where in any FY, assessee has made investments or is found to be the Rebate Lower of (i) Income Tax payable on Total Income OR (ii) Rs. 2,500
owner of any bullion, jewellery or other valuable article &
Note: Rebate u/s 87A shall be before adding 4% of HEC.
▪ AO finds that Amount spent on making such investments > Amount
Note: Rebate u/s 87A is not available in respect of tax payable @ 10% on LTCG u/s 112A.
recorded in books of A/c of the assessee & assessee offers
no/unsatisfactory explanation for the difference,
▪ Such excess may be deemed as income of the assessee for such FY. Firms/LLP/LA Whole Income is taxable @ Flat 30% without any BEL.
5. Unexplained Expenditure [Sec 69C] Co-operative Total Income Upto 10,000 10,001 - 20,000 > 20,000
▪ Where in any FY, Assessee has incurred any expenditure & he offers Societies Rate 10% 20% 30%
no/unsatisfactory explanation about the source of such expenditure, Company Domestic If Turnover/GR in PY 2016-17 ≤ 250 Cr 25%
▪ AO may treat such unexplained expenditure as income of the assessee. In other case 30%
6. Amount borrowed or repaid on Hundi [Sec 69D] Foreign (Companies other than Domestic Company) 40%
▪ Where any amount is borrowed on hundi or is repaid (thereon) other
SURCHARGE
than through A/c Payee Cheque,
Rate of Surcharge if Total Income ↓
▪ Amount so borrowed or repaid shall be deemed to be income of the Assessee
>1 Cr but ≤ 10 Cr > 10 Cr
borrower or repaying of PY in which amount was borrowed/repaid.
▪ Amount repaid shall include interest paid on amount borrowed. 1. Firms/LLP/Co-operative society/LA 12 % of IT
Note: But if any amount borrowed on hundi has been taxed as income of 2. Domestic Companies 7 % of IT 12 % of IT
the person, he will not be taxed again on repayment of such amount. 3. Foreign Companies 2 % of IT 5 % of IT
Rate u/s 68 & 69 [SEC 115BBE] = 60% + SC @ 25% + HEC @ 4% = 78%.
Neither BEL nor set off of any loss shall be allowable against such income. ◆ Health & Education cess → @ 4% is levied on Total Income tax + SC - Rebate u/s 87A.
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, INCOME TAX CHART BOOK BY CA PRANAV CHANDAK VIDEOS AVAILABLE ON YOUTUBE PCA
2. RESIDENTIAL STATUS
1. INDIVIDUAL 2. HUF:
Basic Conditions: [Satisfy ANY ONE → Resident] If Control & Management of HUF is situated wholly/partly in India Resident
(a) Total stay in India during PY ≥ 182 days; OR If Control & Management of HUF is situated wholly outside India NR
(b) (i) Total stay in India during PY ≥ 60 days &
Note: C&M is situated at a place where the head & brain is situated.
(ii) Total stay in India during last 4 PYs ≥ 365 days.
Determination of status of ROR/RNOR
ADDITIONAL CONDITIONS: [Satisfy BOTH → ROR] Status of Karta will determine whether HUF is ROR/RNOR.
(i) Total stay in India in last 7 years ≥ 730 days AND ▪ If KARTA is ROR → HUF is ROR &
(ii) Resident in Any 2 PY out of last 10 PYs. ▪ If KARTA is RNOR → HUF is RNOR.
Exceptions: Following Individuals → Residents only if Period of Stay during PY ≥ 182 days 3. FIRMS/AOP/LA/AJP
[i.e 2nd Condition → Not Applicable in their cases]
If Control & Management of HUF is situated wholly/partly in India Resident
(i) Indian Citizens who leaves India during PY as a member of crew of Indian ship;
If Control & Management of HUF is situated wholly outside India NR
(ii) Indian Citizens who leave India for employment outside India;
(iii) Indian Citizen or Person of Indian Origin who comes on visit to India in PY. (Such 4. COMPANY
person must be engaged in employment/business/profession outside India).
A Company shall be Resident in India if:
Person of Indian Origin: If the person or his parents or his grandparents were born in (i) It is an Indian company; OR
UNDIVIDED INDIA. Grandparents include both maternal & paternal grandparents. (ii) POEM of the company is in India in that PY.
Rule 126: Individual who is Citizen of India & member of crew of Foreign going ship,
Period of Stay in India shall not include the following period: POEM: A Place where key management & commercial decisions necessary for the
Period Commencing from Ending on conduct of the business of an entity as a whole are substantially made.
Date entered into CDC for joining ship Date entered into CDC for signing off
Date of Arrival & Departure → Considered in India for counting no. of days in India.
Individual can be resident in more than 1 country, but he can be citizen in Only 1 Country.
Circular: NR Seafarer receiving Remuneration (salary) in NRE (Non-Resident External) A/c maintained with Indian Bank for services rendered outside India on a foreign
going ship (with Indian flag or foreign flag) → Not taxable in India.
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1. BASIC CONCEPTS OF INCOME TAX
COMPONENTS OF INCOME TAX LAWS PERSON [SECTION 2(31)]
Income Tax Act, 1961 1. Individual : → A Natural Human Being (Male/Female/Minor/Unsound Mind).
◾ Income of Minor & unsound Mind person → Assessed in hands of Manager/Guardian
▪ 1st April, 1962 ◾ 298 sections ◾ XIV schedules
▪ Proviso → Gives Exceptions to the provision contained in the respective section. 2. HUF: Status in HUF is received by birth & not by operation of law.
▪ Explanation → Gives clarification related to the provision contained in the section ▪ HUF is not defined under IT Act. However, as per Hindu Law, it consists of all males
lineally descended from a common ancestor & includes their wives & unmarried
Annual Finance Act: Gives applicable rates of tax. daughters. Even a single male member can have HUF (w.e.f 6/9/2005).
Income Tax Rules: issued by CBDT for proper administration of the Act. ▪ Only Co-parceners have the right to Partition.
▪ All Co-parceners are Members but all members need not be co-parceners.
Notifications: subordinate legislation issued by CG.
▪ Coparceners → HUF may contain many members, but only members within 4
▪ CBDT is also empowered to make & amend rules by issuing notifications. degrees including KARTA are called co-parceners (including daughters).
▪ Binding on everyone. [Assessee + Income Tax department] [Note: wife/daughter-in-law cannot be co-parceners; but they can be members]
Circulars: They deal with certain specific problems. 3. Company [Sec 2(17)] - It means:
▪ Issued by CBDT to clarify doubts regarding scope & meaning of provisions. ▪ Any Indian Company defined in section 2(26);
▪ Binding on the department but not on the assessee. ▪ Any Body Corporate incorporated under the foreign laws [Foreign company];
▪ However assessee can take advantage of beneficial circulars. ▪ Any institution, association or body (incorporated/not) whether Indian or non-
Indian, declared by general or special order of CBDT to be a company.
Case Laws (Judicial Decisions)
4. Firm (registered/not) (including LLP) [Sec 2(23)] : Same Tax Treatment for both
▪ Supreme Court Decisions becomes Judicial Precedent (Law) & are binding on all
the courts, Appellate Tribunal, Income Tax Authorities & on Assessees. 5. Association of Persons (AOP)/Body of Individuals (BOI)
▪ Decision of a High Court cannot bind other High Court. 6. Local Authority (LA)
7. Every Other AJP (not falling in above categories): Ex: Idol/deity
Assessee - [Sec 2(7)] : It includes – Person having SUBSTANTIAL INTEREST in the Company [Sec 2(32)]
(a) Tax Payable: Every Person by whom any tax or any other sum of money is payable
◾ Any beneficial owner of shares carrying at least 20% of voting power.
under this Act (with/without any proceeding).
(b) Proceeding started: Any Person against whom any proceeding has started
(whether or not any tax, interest or penalty is payable by him). 𝐈𝐧𝐜𝐨𝐦𝐞 𝐓𝐚𝐱 𝐨𝐧 𝐓𝐨𝐭𝐚𝐥 𝐈𝐧𝐜𝐨𝐦𝐞 𝐮𝐬𝐢𝐧𝐠 𝐚𝐩𝐩𝐥𝐢𝐜𝐚𝐛𝐥𝐞 𝐬𝐥𝐚𝐛 𝐫𝐚𝐭𝐞
Average Rate [SEC 2(10)]:
(c) Deemed Assessee: A person assessable for income of some other persons. 𝐓𝐨𝐭𝐚𝐥 𝐈𝐧𝐜𝐨𝐦𝐞
(d) Assessee in default: Any person who Maximum Marginal Rate [SEC 2(29C)]:
(i) does not deduct tax or (ii) fails to pay advance tax ◾ Highest Slab Rate of Tax (including SC) applicable to Individual or AOP/BOI
(iii) after deducting tax, fails to pay tax deducted to the government or
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,INCOME TAX CHART BOOK BY CA PRANAV CHANDAK VIDEOS AVAILABLE ON YOUTUBE PCA
INCOME & ITS CONSTITUENTS [SECTION 2(24)] FINANCIAL YEAR, PREVIOUS YEAR & ASSESSMENT YEAR
Illegal/tainted income → Illegal Income is also taxed. ➢ FY - Year starting on 1st April & ending on 31st March.
➢ PY [Sec 3] - FY in which the income is earned.
Disputed Income → Taxable to recipient till the dispute is settled.
➢ AY [Sec 2(9)] - FY in which income is assessed to tax.
Contingent Income → A contingent income is not income & thus not taxed.
Dual Role of a FY: Each FY is both PY as well as AY.
Pin Money → Income × [Any property acquired using such money/savings → Capital
Asset] First PY for Newly Set-up Business/Profession during FY
1st PY = From date of setting up of business & ending on last day of that FY (31 st
Income must come from Outside: A person cannot earn income from himself. Mar).
Relevance of Method of Accounting followed by the Assessee: 1st PY of newly set-up business/profession will be either 12 months or < 12 months.
(i) Salary; (ii) HP; (iii) Capital Gains → Method of accounting is irrelevant. It cannot exceed 12 months. [Same provision is applicable for New Source of
(i) PGBP; (ii) IFOS → Method of accounting followed by the assessee is relevant. Income]
Capital Receipt Vs Revenue Receipt: Uniform PY: All Assessees are required to follow FY as PY uniformly for every year.
Capital Receipts: Not Taxable unless expressly provided. CASES WHERE INCOME OF THE PREVIOUS YEAR IS ASSESSED IN PY ITSELF
Revenue Receipts: Always Taxable unless expressly exempt. 1. Shipping business of non-residents [Sec 172]
▪ Ship of NR is allowed to leave the port only when tax has been paid or
Liquidated damages → Capital receipt. Amount received towards compensation for satisfactory arrangement has been made for payment thereof.
sterilization of profit earning source is not in ordinary course of business. ▪ Income = 7.5% of freight paid/payable whether in India or o/s India.
Compensation on Termination of Agency → Capital receipt. Receipt of compensation 2. Person Leaving India [Sec 174]
on termination of the agency business being the only source of income by the assessee. ▪ If a person is leaving India & he has no present intention of returning to India,
But if the assessee has several agencies and one of them is terminated & compensation is ▪ Income from the expiry of last PY upto the probable date of his departure from
received, the receipt would be revenue receipt since taking agencies & exploiting the India is taxable in that PY itself.
same for earning income is the ordinary course of business & loss of one agency would 3. AOP/BOI/AJP formed for a particular event/purpose [Sec 174A]
be made good by taking another. ▪ If AO think that AOP/BOI is likely to be dissolved in same year or in next year,
Compensation received from the employer or from any person for premature ▪ he will assess income upto date of dissolution in the relevant PY itself.
termination of the service contract is a capital receipt but is taxable as profit in lieu of 4. Persons likely to transfer property to avoid tax [Sec 175]
salary u/s 17(3) or IFOS u/s 56(2)(xi), respectively. ▪ Total income of such person for the period from the expiry of PY to the date
Compensation received or receivable in connection with termination/modification when AO commences proceedings is taxable in that PY.
of T & Cs of any contract relating to its business shall be taxable as business income.
5. Discontinued Business [Sec 176]
Application of Income Diversion of Income ▪ Income from the end of last PY upto the date of such discontinuance may, at
▪ If assessee applies (uses) his income to ▪ If there is overriding charge on the the discretion of AO may be charged to tax in that PY itself.
discharge his obligation source of such income which diverts
Note: Section 176 is a Discretionary power. AO may choose not to apply it & wait
▪ after the income reaches the assessee, the income before it reaches the
till the end of PY.
▪ it is application of income assessee, it is diversion of Income.
▪ Such Income is taxable to the assessee. ▪ Such Income cannot be treated as
income & thus Not Taxable.
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PREVIOUS YEAR FOR UNDISCLOSED SOURCES OF INCOME TAX RATE FOR DIFFERENT PERSONS [Sec 2 of FA, 2018]
1. Cash Credits [Sec 68] TI → Total Income after all deductions except Incomes Taxable at Specified Rates.
▪ Where any sum is found credited in books of the assessee & assessee Individual/HUF/AOP/BOI/AJP [R/NR]
offers no/unsatisfactory explanation about nature & source, TI Upto 2,50,000 [BEL] 2.5 L – 5 L 5L – 10 L > 10 L
▪ sum so credited may be charged as income of the assessee of that PY. Rate Nil 5% 20 % 30 %
2. Unexplained Investments [Sec 69] (i) For Resident Senior Citizen (Age: 60 years or more but < 80 years) → BEL = 3 Lacs.
▪ If in any FY assessee has made investments which are not recorded in (ii) For Resident Super Senior Citizen (Age: 80 years or more) → BEL = 5 Lacs
books of A/c & Assessee offers no/unsatisfactory explanation about Surcharge: [Check for Marginal Relief u/s 89]
nature & source of investment, Income > 50 Lacs but ≤ 1 Cr 10% of IT
▪ Value of investments are taxed as income of assessee of such FY. Income > 1 Cr 15% of IT
3. Unexplained Money/Bullion/Jewellery [Sec 69A] Marginal Relief (Sec 89): If SC is applicable on TI, Marginal relief is available.
▪ Where in any FY, assessee is found to be owner of any money, bullion, Steps to calculate Marginal Relief:
jewellery etc. & 1. Calculate Tax (including surcharge) on Total Income of the Assessee.
▪ Such asset is not recorded in books of A/c & assessee offers 2. Tax payable on Rs. 50 Lacs/ 1 Cr/ 10 Cr as the case may be. [Depends on levy of SC]
no/unsatisfactory explanation about nature & source, 3. Calculate “Extra Tax Payable” because of Income above 50 Lacs/1 Cr/10 Cr. [1-2]
▪ Money & Value of bullion etc. will be deemed to be income of the 4. Marginal Relief = Extra Tax Payable – Income above Rs. 50 Lacs/ 1 Cr/ 10 Cr.
assessee for such FY. PC NOTE: If Extra Tax > Extra Income, Difference between them is Marginal Relief.
▪ Ownership is important & mere possession is not enough. Rebate u/s 87A
4. Amount of Investments not fully disclosed in books [Sec 69B] Assessee Resident Individuals whose Total Income ≤ Rs. 3,50,000
▪ Where in any FY, assessee has made investments or is found to be the Rebate Lower of (i) Income Tax payable on Total Income OR (ii) Rs. 2,500
owner of any bullion, jewellery or other valuable article &
Note: Rebate u/s 87A shall be before adding 4% of HEC.
▪ AO finds that Amount spent on making such investments > Amount
Note: Rebate u/s 87A is not available in respect of tax payable @ 10% on LTCG u/s 112A.
recorded in books of A/c of the assessee & assessee offers
no/unsatisfactory explanation for the difference,
▪ Such excess may be deemed as income of the assessee for such FY. Firms/LLP/LA Whole Income is taxable @ Flat 30% without any BEL.
5. Unexplained Expenditure [Sec 69C] Co-operative Total Income Upto 10,000 10,001 - 20,000 > 20,000
▪ Where in any FY, Assessee has incurred any expenditure & he offers Societies Rate 10% 20% 30%
no/unsatisfactory explanation about the source of such expenditure, Company Domestic If Turnover/GR in PY 2016-17 ≤ 250 Cr 25%
▪ AO may treat such unexplained expenditure as income of the assessee. In other case 30%
6. Amount borrowed or repaid on Hundi [Sec 69D] Foreign (Companies other than Domestic Company) 40%
▪ Where any amount is borrowed on hundi or is repaid (thereon) other
SURCHARGE
than through A/c Payee Cheque,
Rate of Surcharge if Total Income ↓
▪ Amount so borrowed or repaid shall be deemed to be income of the Assessee
>1 Cr but ≤ 10 Cr > 10 Cr
borrower or repaying of PY in which amount was borrowed/repaid.
▪ Amount repaid shall include interest paid on amount borrowed. 1. Firms/LLP/Co-operative society/LA 12 % of IT
Note: But if any amount borrowed on hundi has been taxed as income of 2. Domestic Companies 7 % of IT 12 % of IT
the person, he will not be taxed again on repayment of such amount. 3. Foreign Companies 2 % of IT 5 % of IT
Rate u/s 68 & 69 [SEC 115BBE] = 60% + SC @ 25% + HEC @ 4% = 78%.
Neither BEL nor set off of any loss shall be allowable against such income. ◆ Health & Education cess → @ 4% is levied on Total Income tax + SC - Rebate u/s 87A.
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2. RESIDENTIAL STATUS
1. INDIVIDUAL 2. HUF:
Basic Conditions: [Satisfy ANY ONE → Resident] If Control & Management of HUF is situated wholly/partly in India Resident
(a) Total stay in India during PY ≥ 182 days; OR If Control & Management of HUF is situated wholly outside India NR
(b) (i) Total stay in India during PY ≥ 60 days &
Note: C&M is situated at a place where the head & brain is situated.
(ii) Total stay in India during last 4 PYs ≥ 365 days.
Determination of status of ROR/RNOR
ADDITIONAL CONDITIONS: [Satisfy BOTH → ROR] Status of Karta will determine whether HUF is ROR/RNOR.
(i) Total stay in India in last 7 years ≥ 730 days AND ▪ If KARTA is ROR → HUF is ROR &
(ii) Resident in Any 2 PY out of last 10 PYs. ▪ If KARTA is RNOR → HUF is RNOR.
Exceptions: Following Individuals → Residents only if Period of Stay during PY ≥ 182 days 3. FIRMS/AOP/LA/AJP
[i.e 2nd Condition → Not Applicable in their cases]
If Control & Management of HUF is situated wholly/partly in India Resident
(i) Indian Citizens who leaves India during PY as a member of crew of Indian ship;
If Control & Management of HUF is situated wholly outside India NR
(ii) Indian Citizens who leave India for employment outside India;
(iii) Indian Citizen or Person of Indian Origin who comes on visit to India in PY. (Such 4. COMPANY
person must be engaged in employment/business/profession outside India).
A Company shall be Resident in India if:
Person of Indian Origin: If the person or his parents or his grandparents were born in (i) It is an Indian company; OR
UNDIVIDED INDIA. Grandparents include both maternal & paternal grandparents. (ii) POEM of the company is in India in that PY.
Rule 126: Individual who is Citizen of India & member of crew of Foreign going ship,
Period of Stay in India shall not include the following period: POEM: A Place where key management & commercial decisions necessary for the
Period Commencing from Ending on conduct of the business of an entity as a whole are substantially made.
Date entered into CDC for joining ship Date entered into CDC for signing off
Date of Arrival & Departure → Considered in India for counting no. of days in India.
Individual can be resident in more than 1 country, but he can be citizen in Only 1 Country.
Circular: NR Seafarer receiving Remuneration (salary) in NRE (Non-Resident External) A/c maintained with Indian Bank for services rendered outside India on a foreign
going ship (with Indian flag or foreign flag) → Not taxable in India.
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