Income Tax Code, 2009Income Tax Code, 2009(may came into force on 1(may came into force on 1stst

April, 2011)April, 2011)

ByByCA Abhishek KacholiyaCA Abhishek Kacholiya

0992070418509920704185&&

CA Manish KabraCA Manish Kabra0970249633209702496332

““To accomplish great things we must To accomplish great things we must dream as well as actdream as well as act””

Gross Total IncomeGross Total Income

Income From Income From Ordinary SourceOrdinary Source

i) From Employmenti) From Employment

ii) From House Propertyii) From House Property

iii) From Businessiii) From Business

iv) Capital Gainsiv) Capital Gains

v) From Residuary Sourcev) From Residuary Source

Income from Special Income from Special SourceSource

i) From Lottery,i) From Lottery, Puzzle etc.Puzzle etc.

ii) From Horse Race, Card Gameii) From Horse Race, Card Game

iii) Of Non Resident Sports Man iii) Of Non Resident Sports Man

iv) Of Non Resident Sports Association iv) Of Non Resident Sports Association

v) Investment Income & Royalty Income v) Investment Income & Royalty Income of Non Residentof Non Resident

a)a) For Individual & H.U.F For Individual & H.U.F up to 1,60,000up to 1,60,000 -- Nil*Nil*up to 10,00,000up to 10,00,000 -- 10%10%up to 25,00,000up to 25,00,000 -- 20%20%above 25,00,000above 25,00,000 -- 30%30%

*Basic Exemption Limit For Women is 190000 & For Senior Citizen *Basic Exemption Limit For Women is 190000 & For Senior Citizen is 240000is 240000

b)b) For Un Incorporate BodyFor Un Incorporate Body (Firm, AOP &BOI)(Firm, AOP &BOI) -- 30%30%

c)c) For Domestic & Foreign CompanyFor Domestic & Foreign Company -- 25%25%

d)d) For Non Profit OrganizationFor Non Profit Organization -- 15%15%

e)e) Income form Lottery Puzzle etc.Income form Lottery Puzzle etc. -- 30%30%

Note :Note :-- No Surcharge & Education CessNo Surcharge & Education Cess-- Capital Gain taxable as per normal Tax RateCapital Gain taxable as per normal Tax Rate-- Mutual Funds are Exempted from TaxMutual Funds are Exempted from Tax

Rates of TaxesRates of Taxes

a)a) In case of Banking Co.In case of Banking Co. -- 0.25% of Gross Assets0.25% of Gross Assetsb)b) In case of Any Other Co.In case of Any Other Co. -- 2% of Gross Assets2% of Gross AssetsGross AssetsGross Assets :: Gross Block of Fixed AssetsGross Block of Fixed Assets

Plus :Plus : Capital Work in ProgressCapital Work in ProgressPlus :Plus : Book Value of all other AssetsBook Value of all other AssetsLess :Less : Accumulated DepreciationAccumulated DepreciationLess :Less : Debit Balance of P & L a/c if included in allDebit Balance of P & L a/c if included in all

other assets other assets **MAT replace by Tax on Gross Assets and no credit on it.MAT replace by Tax on Gross Assets and no credit on it.Tax on Dividend Distributed on Domestic Co. Tax on Dividend Distributed on Domestic Co. -- 15%15%Tax on Branch Profit on Foreign Co.Tax on Branch Profit on Foreign Co. -- 15%15%##

So effective Tax Rate for Foreign Companies are 36.25%So effective Tax Rate for Foreign Companies are 36.25%##Earlier it was NilEarlier it was Nil

Tax on Gross AssetTax on Gross Asset**

Wealth TaxWealth TaxApplicability Applicability -- Individual, H.U.F., Private Discretionary TrustIndividual, H.U.F., Private Discretionary TrustRate of TaxRate of Tax -- 0.25% of the Net Wealth exceed Rs. 50 Crore0.25% of the Net Wealth exceed Rs. 50 CroreAssetsAssets** -- Assets means all Assets exceptAssets means all Assets excepti) Property held under Trusti) Property held under Trustii) Interest in coprancy Property of HUFii) Interest in coprancy Property of HUFiii) Any one Building & Jewellery of Ruleriii) Any one Building & Jewellery of Ruleriv) Any one house or part of house or plot acquired or iv) Any one house or part of house or plot acquired or

Constructed on or after 01/04/2000Constructed on or after 01/04/2000v) Assets located Outside India if person is v) Assets located Outside India if person is Either Non Either Non

Resident or not a Citizen of IndiaResident or not a Citizen of India**Specific Definition of Assets replace by Inclusive definitionSpecific Definition of Assets replace by Inclusive definition

Income from Employment will be the Gross Salary as reduced by following deduction –

a) Tax on Employmentb) Conveyance Allowancec) Special Allowance to meet Office Dutiesd) Amount received under VRS*e) Gratuity & Pension*

*If deposited in Retirement Benefit Account with Permitted Saving Intermediaries

Note : i ) HRA, LTC, Leave salary & medical Reimb. are not allowed

ii) All Allowance & Perquisites are Taxableiii) Withdrawn from Retirement Benefit Account is taxable

under the head ‘Income From Residuary Sources,iv) Permitted Saving Intermediaries - Approved Provident &

Superannuation Fund, Life Insurer, New Pension System Trust

Income from HouseIncome from House Property will be,Property will be,GrosGross Rent* as reds Rent* as reduuced byced by following deduction following deduction ––

-- MunicMunicipal taxes actually paipal taxes actually paidid-- ServicService Tax Paide Tax Paid-- 20% o20% of Gross Rent (earlier it wasf Gross Rent (earlier it was 30%)30%)-- AmouAmount of Any Interestnt of Any Interest

**In case of SIn case of Self Occupied house Gross Rent & Interest amount welf Occupied house Gross Rent & Interest amount will be Nilill be Nil

Gross ReGross Rent nt -- Higher of Contractual & PresumptiHigher of Contractual & Presumptive Rentve RentContractContractual Rentual Rent -- Rent Receivable by AssesseeRent Receivable by AssesseePresumpPresumptive Rent tive Rent -- 6% of Ratable Value fixed by6% of Ratable Value fixed by LocalLocalAuthoriAuthorities or 6% of Cost of Construction or Acqties or 6% of Cost of Construction or Acquisition if uisition if Ratable value is not FixedRatable value is not Fixed

Income from Any Business carried on by Assessee shall be computeIncome from Any Business carried on by Assessee shall be computed d under under ““Income from BusinessIncome from Business””

Gross EarningsGross Earnings XXX XXX Less : Operating ExpenditureLess : Operating Expenditure XXXXXXLess : Permitted Finance ChargesLess : Permitted Finance Charges XXXXXXLess : Capital AllowanceLess : Capital Allowance XXXXXXIncome From BusinessIncome From Business XXXXXXSpecial Points Special Points ––a)a) 150% weighted deduction for in150% weighted deduction for in--house scientific R&D house scientific R&D

expenditure extended to all industries.expenditure extended to all industries.b)b) Loss on sale of entire block of assets is ignored Loss on sale of entire block of assets is ignored –– assessee can assessee can

claim Depreciation continue.claim Depreciation continue.c)c) Adjustment for Exchange Fluctuation in Actual Cost of Assets Adjustment for Exchange Fluctuation in Actual Cost of Assets

is not Available.is not Available.d)d) Amount paid for scientific research to a company is not Amount paid for scientific research to a company is not

eligible for deduction.eligible for deduction.e)e) Limits on partners remuneration and on interest abolishedLimits on partners remuneration and on interest abolished**Business includes ProfessionBusiness includes Profession

Income from transfer of any Investment assets shall be Income from transfer of any Investment assets shall be computed under the head Capital Gaincomputed under the head Capital Gain

Capital Gain = Full Value of Consideration Capital Gain = Full Value of Consideration LessLess :: Expenditure on Transfer Expenditure on Transfer Less Less :: Cost of AcquisitionCost of Acquisition**

LessLess :: Cost of ImprovementCost of Improvement**

**If Investment Assets is held for more then 1 Year then Concept oIf Investment Assets is held for more then 1 Year then Concept of if indexationndexation will will be applicable.be applicable.

Indexed CostIndexed Cost ==Cost of Acquisition X CII for the FY in which Assets was TransfeCost of Acquisition X CII for the FY in which Assets was Transferredrred

CII for the AY in which assets was acquired or FY 00CII for the AY in which assets was acquired or FY 00--01 whichever is later01 whichever is later

Note :Note :--

i) Indexation Benefit is now available on Bonds & Debentures i) Indexation Benefit is now available on Bonds & Debentures & also available to Non Residents. & also available to Non Residents.

ii) Cost of Acquisition of Assets deemed to be ii) Cost of Acquisition of Assets deemed to be ‘‘NilNil’’ if not if not determinable determinable

a)a) Investment Assets means any type of Capital Assets Investment Assets means any type of Capital Assets Excluding Excluding ––

i)i) Stock in Trade, Consumable Stores, Raw MaterialStock in Trade, Consumable Stores, Raw Materialii)ii) Self Generated Capital AssetsSelf Generated Capital Assetsiii)iii) Intangible AssetsIntangible Assetsiv)iv) Building, Furniture, Plant & MachineryBuilding, Furniture, Plant & Machineryv)v) Any other Capital Assets connected with or used for the Any other Capital Assets connected with or used for the

purpose of Business of the Assessee.purpose of Business of the Assessee.

b) Transfer of Urban Agricultural Land are also Taxable b) Transfer of Urban Agricultural Land are also Taxable

c) No difference between Short Term & Long Term Investment c) No difference between Short Term & Long Term Investment AssetsAssets

d) Security Transaction Abolished d) Security Transaction Abolished

e) Capital Gains are taxable at Normal Tax Rate*e) Capital Gains are taxable at Normal Tax Rate***Earlier i) STCG on Equity shares are taxed at 15%Earlier i) STCG on Equity shares are taxed at 15%

ii) All other STCG are taxed at Normal Tax Rateii) All other STCG are taxed at Normal Tax Rateiii) LTCG on Equity Shares are Exemptediii) LTCG on Equity Shares are Exemptediv) All other LTCG are taxed at 20% iv) All other LTCG are taxed at 20%

f) Following Deduction under Section 53 are available only to f) Following Deduction under Section 53 are available only to Individual & HUF on fulfillment of Certain Condition Individual & HUF on fulfillment of Certain Condition ––

*If acquired prior to 1 Year before beginning of the Financial Y*If acquired prior to 1 Year before beginning of the Financial Year in whichear in whichthe transfer took place.the transfer took place.

##Withdrawn from scheme in any case will be liable for tax under iWithdrawn from scheme in any case will be liable for tax under income ncome from residuary sources.from residuary sources.

Original Investment Assets*Original Investment Assets* New Investment AssetsNew Investment Assets

Agricultural LandAgricultural Land Agricultural LandAgricultural Land

Any Investment AssetsAny Investment Assets Residential House Residential House

Any Investment AssetsAny Investment Assets Deposit in CG Saving Deposit in CG Saving SchemeScheme##

Any income which is not included in any other head & inAny income which is not included in any other head & inIncome from Special Source will be taxable under Income from Income from Special Source will be taxable under Income from

Residuary SourceResiduary Source

a)a) Amount Withdrawn from any account maintained with Amount Withdrawn from any account maintained with Permitted Saving IntermediariesPermitted Saving Intermediaries** (Double Taxation)(Double Taxation)

b)b) Any sum received under a Life Insurance PolicyAny sum received under a Life Insurance Policy

c)c) Aggregate of any money & the value of any specified Aggregate of any money & the value of any specified property which is received without consideration by property which is received without consideration by Individual & HUF exceeding Rs. 50000/Individual & HUF exceeding Rs. 50000/--

*Accumulated balances in provident fund as on 31*Accumulated balances in provident fund as on 31stst march 2011 and accretion march 2011 and accretion thereof are exempted from tax.thereof are exempted from tax.

a)a) Income under any of the head, except Income Income under any of the head, except Income from Capital Gain now can be clubbed with from Capital Gain now can be clubbed with the income of any other headthe income of any other head

b)b) Losses can be carried forwarded up to Losses can be carried forwarded up to Indefinite periods if return of income is Indefinite periods if return of income is furnished with in due date.furnished with in due date.

Note Note ––i)i) Now Losses of Business can be set off against income from Now Losses of Business can be set off against income from

Salary.Salary.ii)ii) Loss on House Property could be carried forwarded only if Loss on House Property could be carried forwarded only if

return of income is filed with in due date.return of income is filed with in due date.

a)a) Any sum deposited in any account maintained with any Permitted Any sum deposited in any account maintained with any Permitted Saving Intermediaries*Saving Intermediaries*

b)b) Deduction in respect of ChildrenDeduction in respect of Children’’s Education*s Education***Deduction should not exceed 3 lacs in an financial year.Deduction should not exceed 3 lacs in an financial year.

c)c) Deduction to Individual in respect of Interest on Loan taken forDeduction to Individual in respect of Interest on Loan taken forHigher Education.Higher Education.

d)d) Deduction in respect of Health Insurance Premium Deduction in respect of Health Insurance Premium -- 15000 for 15000 for Others & 15000 for Parents.Others & 15000 for Parents.

e)e) Deduction in respect of Medical Treatment Deduction in respect of Medical Treatment –– Rs. 40000/Rs. 40000/--f)f) Deduction in respect of maintenance of a disabled dependent Deduction in respect of maintenance of a disabled dependent –– Rs. Rs.

50000/50000/--g)g) Deduction in respect of Donation to certain Funds Deduction in respect of Donation to certain Funds –– Donation to Donation to

Scientific research Association are Eligible for 125% Scientific research Association are Eligible for 125% h)h) Deduction in respect of Political Contribution Deduction in respect of Political Contribution –– As per Companies As per Companies

ActActi)i) Deduction in respect of Interest Income on BondsDeduction in respect of Interest Income on Bonds

j)j) Deduction in respect of Income of Investor Protection Deduction in respect of Income of Investor Protection FundFund

k) Deduction in respect of Income from House Property k) Deduction in respect of Income from House Property & Income from & Income from OtherOther Sources of Trade UnionSources of Trade Union

l) Deduction in l) Deduction in respect of Royaltyrespect of Royalty Income of Authors of Income of Authors of Certain BooksCertain Books

m) Deduction in respect of Royalty on Patentsm) Deduction in respect of Royalty on Patents

n) Deduction in case of Person with Disability n) Deduction in case of Person with Disability –– 50000/50000/--

o) Deduction in respect of Income of Coo) Deduction in respect of Income of Co--operative operative Society from BankingSociety from Banking ActivityActivity

p) Deduction in respect of Income of Primary Cop) Deduction in respect of Income of Primary Co--operative Societies operative Societies

q) Expenditure for promoting family planning & q) Expenditure for promoting family planning & preventing HIVpreventing HIV--aidsaids

i) Deduction for payment of Housing Loan shall i) Deduction for payment of Housing Loan shall not be allowed.not be allowed.

ii) Deduction for purchase of NSC not available.ii) Deduction for purchase of NSC not available.

iii) Deduction for Term Deposit with any iii) Deduction for Term Deposit with any scheduled bank & for subscription to notified scheduled bank & for subscription to notified bond of NABARD not availablebond of NABARD not available

iv) Deduction for Rent paid not available.iv) Deduction for Rent paid not available.

v) Deduction under series 80I shall not be v) Deduction under series 80I shall not be allowed.allowed.

vi) Instead of Series 80I Schedule 11, 12 & 13 vi) Instead of Series 80I Schedule 11, 12 & 13 introducedintroduced

Applicability Applicability -- Certain Specified Business*Certain Specified Business** i) Business of Generation, Transmission or Distribution of Pow* i) Business of Generation, Transmission or Distribution of Powererii) Business of Developing, or Operating and Maintaining any ii) Business of Developing, or Operating and Maintaining any

Infrastructure FacilityInfrastructure Facilityiii) Business of Operating and Maintaining a Hospitaliii) Business of Operating and Maintaining a Hospitaliv) Business of Processing, Preservation & Packaging of Fruits &iv) Business of Processing, Preservation & Packaging of Fruits &

Vegetables.Vegetables.v) Business of Laying & Operating a Cross Country Natural Gas orv) Business of Laying & Operating a Cross Country Natural Gas or

Crude or Petroleum Oil Pipeline Network for distributionCrude or Petroleum Oil Pipeline Network for distributionvi) Business of Setting up & Operating a Cold Chain Facilityvi) Business of Setting up & Operating a Cold Chain Facilityvii) Business of Setting up & Operating a Warehousing Facility fvii) Business of Setting up & Operating a Warehousing Facility for or

storage of Agricultural Produce.storage of Agricultural Produce.viii) Business of Developing a Special Economic Zoneviii) Business of Developing a Special Economic Zoneix) Business of Mineral Oil & Natural Gas ix) Business of Mineral Oil & Natural Gas

Calculation of Profit of the Specified Business Calculation of Profit of the Specified Business Gross IncomeGross Income XXX XXX Less : Operating ExpensesLess : Operating Expenses XXXXXXLess : Permitted Finance ChargesLess : Permitted Finance Charges XXXXXXLess : Capital Expenditure incurredLess : Capital Expenditure incurred XXXXXXLess : Expenditure on LicenseLess : Expenditure on License XXXXXXLess : Expenditure Incurred before Less : Expenditure Incurred before XXXXXXCommencement of BusinessCommencement of BusinessLess : Amount of Negative Profit for Less : Amount of Negative Profit for XXXXXXPreceding Financial YearsPreceding Financial Years**

Profits of the BusinessProfits of the Business XXX XXX **Deduction for Negative Profits of the predecessor shall also be Deduction for Negative Profits of the predecessor shall also be

allowed to Successor in Business Reorganization. allowed to Successor in Business Reorganization.

BusinessBusiness AAmount of Incomemount of Income ConditionConditionPlying, Leasing & Plying, Leasing & Hiring of Hiring of Heavy Goods VeHeavy Goods Vehiclehicle

RRs. 5000 Per Month s. 5000 Per Month Per VehiclePer Vehicle

No. of Vehicles owNo. of Vehicles owned ned should be <=10should be <=10

Plying, Leasing Plying, Leasing & Hiring of & Hiring of Light Goods VehLight Goods Vehicleicle

4500 Per Month Per 4500 Per Month Per VehicleVehicle

No. of VehiclNo. of Vehicle owned e owned should be <should be <=10=10

Any Other BusinessAny Other Business 8% 8% of Total of Total Turnover / Turnover / GrossGross ReceiptReceipt

Turnover / Turnover / Gross Receipt Gross Receipt should be <= should be <= 1 Crore*1 Crore*

* Earlier it was Rs. 40 Lacs* Earlier it was Rs. 40 Lacs

a) Due date of Return Filing a) Due date of Return Filing ––

(i) 30th June (i) 30th June –– If the Person is not a Company & does not derive any Income If the Person is not a Company & does not derive any Income from Businessfrom Business

(ii) 31st August (ii) 31st August –– In all Other CaseIn all Other Case

b) Residential Status of Foreign companies b) Residential Status of Foreign companies -- It is resident in India only if It is resident in India only if wholly wholly or partlyor partly managed and controlled from India at any time during the managed and controlled from India at any time during the year year

c) Income of political party form House Property, Capital Gain ac) Income of political party form House Property, Capital Gain and nd Residuary Sources are exempted from Tax.Residuary Sources are exempted from Tax.

d) Any Allowances received by MP or MLA are exempted from taxd) Any Allowances received by MP or MLA are exempted from tax

Miscellaneous Miscellaneous