Direct Tax Ready Reckoner 2023 with Tax planning

Description

CONTENTS
DIVISION 1 Compact Referencer
CR-1 Amendments brought in the Income-Tax Act by The Finance Bill, 2023 …………………………………………………………………………………………………………… 1
CR-2 Rates of Taxation …………………………………………………………………………………………………………………….. 70
CR-3 Direct Tax Rates for Last Ten Assessment Years …………………………………………………………………………. 90
CR-4 Cost Inflation Index & Exemptions Available in Computation of Capital Gain …………………………………………………………………………………………………….. 98
CR-5 Deductions to be made in Computing Total Income ……………………………………………………………………. 103
CR-6 Salient Features of Assessment of a Firm including LLP ……………………………………………………………… 110
CR-7 Tax Deduction/Collection at Source (TDS) ……………………………………………………………………………….. 116
CR-8 Special rates of Income Tax applicable to Non-Residents ……………………………………………………………. 132
CR-9 Withholding Tax Rates Applicable in the Treaties that India has entered into with Various Countries ………………………………………………………………………………………………………………………………. 137
CR-10 Tax rates as per IT Act vis a vis Tax Treaties …………………………………………………………………………….. 147
CR-11 Time Limit, Form & Fees for Filing an Appeal ………………………………………………………………………….. 155
CR-12 Investment Planner …………………………………………………………………………………………………………………. 156
CR-13 Interest Accrued on Certain Certificates ……………………………………………………………………………………. 170
CR-14 Calendar of Direct Tax Obligations ………………………………………………………………………………………….. 173
CR-15 Limitations ……………………………………………………………………………………………………………………………. 177
CR-16 Prescribed Audit Reports under the Income-tax Rules/Act …………………………………………………………… 198
CR-17 Prescribed Reports/Certificates from an Accountant under section 288(2), Explanation …………………………………………………………………………………………….. 199
CR-18 Depreciation Table …………………………………………………………………………………………………………………. 201
CR-19 Depreciation Table …………………………………………………………………………………………………………………. 208
CR-20 Rates of Depreciation under Companies Act, 2013 ……………………………………………………………………… 210
CR-21 Gold & Silver Rates Since 1-4-2001 …………………………………………………………………………………………. 216
CR-22 State Bank of India: Interest Rates w.e.f. 01.04.2022 for the purpose of computing perquisite valuation ……………………………………………………………………………………………………………………………….. 218
CR-23 Penalties & Prosecution ………………………………………………………………………………………………………….. 229
DIVISION 2 Part A: Income Tax
Chapter 1 Introduction [Sections 1 to 4] …………………………………………………………………………………… 241
1.1 Income Tax Law ……………………………………………………………………………………………………………………. 241
1.2 Scheme of Taxation ………………………………………………………………………………………………………………… 243
1.3 Important Concepts ………………………………………………………………………………………………………………… 243
1.3a Person [Section 2(31)]: ……………………………………………………………………………………………….. 243
1.3b Assessment year [Section 2(9)] ……………………………………………………………………………………. 243
1.3c Previous year [Sections 3] …………………………………………………………………………………………… 243
1.3d Assessee [Section 2(7)] ………………………………………………………………………………………………. 244
1.3e Charge of income-tax [Section 4] …………………………………………………………………………………. 245
1.3f Total Income ……………………………………………………………………………………………………………… 245
1.3g Rounding off of Total Income [Section 288A] ……………………………………………………………….. 248
1.3h How to compute tax liability on Total Income ……………………………………………………………….. 248
1.3-i Rounding off of tax, etc. [Section 288B] ……………………………………………………………………….. 248
Chapter 2 Scope of Total Income & Residential Status [Sections 5 to 9B] ………………………………….. 249
2.1 Scope of Total Income/Incidence of tax [Section 5] ……………………………………………………………………. 249
2.1a In the case of Resident in India (resident and ordinarily resident in case of individual or HUF) [Section 5(1)]……………………………………………………………………………………………………. 249
viii Contents
2.1b In the case of a Resident but not Ordinarily Resident in India (In the case of individuals and HUF only) (including an individual who is deemed to be resident in India) [Section 5(1) and its proviso] ……………………………………………………………………………………………………. 249
2.1c In the case of Non-Resident [Section 5(2)] …………………………………………………………………….. 249
2.2 Need to determine Residential Status? ………………………………………………………………………………………. 250
2.3 Basic rules for determining residential status of an assessee …………………………………………………………. 251
2.4 Rules for determining the residential status of an individual [Sections 6(1) & 6(1A)] ………………………. 251
2.4a When an individual is said to be resident in India? …………………………………………………………. 252
2.4b Citizen of India shall be deemed to be resident in India in certain cases [Section 6(1A) w.e.f. A.Y. 2021-22] …………………………………………………………………………………………………… 253
2.4c When an individual is said to be resident but not ordinarily resident in India? [Section 6(6)] …………………………………………………………………………………………………………………………. 254
2.4d When an individual is said to be resident and ordinarily resident in India? …………………………. 254
2.4e When an individual is said to be non-resident in India [Section 2(30)] ………………………………. 255
2.5 Residential Status of Hindu Undivided Family (HUF) [Section 6(2)]…………………………………………….. 257
2.5a When is HUF said to be a resident in India? …………………………………………………………………… 257
2.5b When is HUF said to be a Non-Resident? ……………………………………………………………………… 257
2.5c When is HUF said to be a resident and ordinarily resident in India? ………………………………….. 257
2.5d When is HUF said to be resident but not ordinarily resident in India? [Section 6(6)(b)] ……….. 257
2.6 Residential Status of Firm, Association of Persons (AOP), Body of Individuals (BOI) and of other persons (except companies) [Sections 6(2) and 6(4)] …………………………………………………………… 257
2.6a When is a Firm, AOP, BOI, etc., said to be resident in India? …………………………………………… 258
2.6b When is a Firm, AOP, BOI, etc., said to be Non-Resident in India? ………………………………….. 258
2.7 Residential Status of a Company [Section 6(3)] ………………………………………………………………………….. 258
2.7a When is a company said to be resident in India? …………………………………………………………….. 258
2.7b When is a company said to be Non-resident in India? ……………………………………………………… 258
2.8 Incomes received or deemed to be received in India [Section 7] …………………………………………………… 258
2.9 Incomes which accrue or arise in India or are deemed to accrue or arise in India [Section 9] ……………. 259
2.10 Fund management activities not to constitute business connection in India [Section 9A] …………………. 262
2.11 Income on receipt of capital asset or stock in trade by specific person from specified entity. [Section 9B] ………………………………………………………………………………………………………………………….. 263
2.12 The provisions regarding incidence of tax above may be summarised in the following table: ……………. 263
2.13 Tax Planning for Residential Status ………………………………………………………………………………………….. 264
Chapter 3 Incomes which do not form part of Total Income [Sections 10, 10AA and 11 to 13A] ….. 266
3.1 Agricultural Income [Section 10(1)] …………………………………………………………………………………………. 266
3.2 Sum received by a Member from HUF [Section 10(2)] ……………………………………………………………….. 266
3.3 Share of Profit of a Partner from a Firm [Section 10(2A)] ……………………………………………………………. 266
3.4 Interest on Non-resident (External) Account [Section 10(4)] ………………………………………………………… 266
3.5 Exemption of certain income received by a specified fund [Section 10(4D)] ………………………………….. 266
3.6 Exemption of income of a non-resident as a result of transfer of non-deliverable forward contracts etc., entered into with an offshore banking unit of International Financial Services Centre [Section 10(4E)] …………………………………………………………………………………………………………………….. 267
3.7 Exemption of income of a non-resident by way of royalty or interest on account of lease of an aircraft paid by a unit of an International Financial Services Centre [Section 10(4F)] ………………………. 267
3.8 Certain incomes received by a non-resident to be exempt [Section 10(4G) inserted w.e.f. AY 2023-24] ……………………………………………………………………………………………………………………………….. 268
3.9 Travel concession or assistance received by an individual from his employer [Section 10(5)] …………… 269
3.10 Remuneration to persons who are not citizens of India [Section 10(6)] ………………………………………….. 269
3.11 Allowances or perquisites outside India [Section 10(7)] ………………………………………………………………. 269
3.12 Remuneration under Co-operative Technical Assistance Programmes [Section 10(8)] …………………….. 269
3.13 Remuneration or fee received by consultants [Section 10(8A) and Rule 16B] ………………………………… 269
3.14 Remuneration received by foreign employee of the consultant [Section 10(8B) and Rule 16B] ………… 270
3.15 Income of the member of the family of an individual referred to in section 10(8), 10(8A) or 10(8B) [Section 10(9)] ……………………………………………………………………………………………………………. 270
3.16 Death-cum-retirement gratuity received by an employee [Section 10(10)]: For detailed discussion see Chapter on ‘Salaries’. …………………………………………………………………………………………………………. 270
Contents ix
3.17 Payment in commutation of pension received by the employees [Section 10(10A)]: For detailed discussion see Chapter on ‘Salaries’. ………………………………………………………………………………………….. 270
3.18 Leave Encashment [Section 10(10AA)]: For detailed discussion see Chapter on ‘Salaries’. ………………. 270
3.19 Compensation on retrenchment [Section 10(10B)]: For detailed discussion see Chapter on ‘Salaries’………………………………………………………………………………………………………………………………… 270
3.20 Payments under Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 [Section 10(10BB)] ……. 271
3.21 Exemption for compensation received or receivable on account of any disaster [Section 10(10BC)] …………………………………………………………………………………………………………………………….. 271
3.22 Amount received on voluntary retirement [Section 10(10C)]: For detailed discussion see Chapter on ‘Salaries’. …………………………………………………………………………………………………………………………… 271
3.23 Tax on non-monetary perquisites paid by employer [Section 10(10CC)] ……………………………………….. 271
3.24 Amount received under a life insurance policy [Section 10(10D)] ………………………………………………… 271
3.25 Provident Fund [Section 10(11)] ………………………………………………………………………………………………. 273
3.26 Interest and withdrawals from Sukanya Samriddhi Account [Section 10(11A)] ………………………………. 273
3.27 Payments from Recognised Provident Fund [Section 10(12)] ……………………………………………………….. 274
3.28 Amount payable at the time of closure or opting out of National Pension Scheme to be exempt to the extent of 60% of the total amount payable [Section 10(12A)] …………………………………………………. 274
3.29 Tax-exemption to partial withdrawal from National Pension System (NPS) by an employee [Section 10(12B)] …………………………………………………………………………………………………………………… 274
3.30 Any payment from an approved Superannuation Fund [Section 10(13)] ………………………………………… 274
3.31 House rent allowance [Section 10(13A)] …………………………………………………………………………………… 275
3.32 Notified special allowance [Section 10(14)] ………………………………………………………………………………. 275
3.33 Interest, premium or bonus on specified investments [Section 10(15)] …………………………………………… 275
3.34 Scholarships granted to meet the cost of education [Section 10(16)] ……………………………………………… 275
3.35 Daily and constituency allowance, etc., received by MPs and MLAs [Section 10(17)] …………………….. 275
3.36 Award or Reward [Section 10(17A)] ………………………………………………………………………………………… 275
3.37 Pension received by certain awardees/any member of their family [Section 10(18)] ………………………… 276
3.38 Exemption of the family pension received by the family members of armed forces (including para-military forces) personnel killed in action in certain circumstances [Section 10(19)] ………………… 276
3.39 Annual value of one palace of the ex-ruler [Section 10(19A)] ………………………………………………………. 276
3.40 Income of a local authority [Section 10(20)] ………………………………………………………………………………. 276
3.41 Income of an approved research association [Section 10(21)] ………………………………………………………. 276
3.42 Income of specified news agency [Section 10(22B)] …………………………………………………………………… 276
3.43 Income of certain funds of national importance [Section 10(23C)] ……………………………………………….. 276
3.44 Income of notified mutual funds [Section 10(23D)]…………………………………………………………………….. 277
3.45 Distributed income received by a unit holder from the business trust [Section 10(23FD)] ………………… 277
3.46 Exemption in respect of certain income of wholly owned subsidiary of Abu Dhabi Investment Authority and of Sovereign Wealth Fund [Section 10(23FE)] ………………………………………………………. 277
3.47 Income of trade union [Section 10(24)]……………………………………………………………………………………… 278
3.48 Income of a member of Scheduled Tribe residing in certain specified areas [Section 10(26)] ……………. 278
3.49 Income of an individual being a Sikkimese [Section 10(26AAA) inserted by the Finance Act, 2008 w.r.e.f. 1-4-1990] ……………………………………………………………………………………………………………. 278
3.50 Income of minor clubbed in the hands of a parent [Section 10(32)]……………………………………………….. 279
3.51 Income arising to a shareholder on account of buy back of shares [Section 10(34A)] ………………………. 280
3.52 Income received from securitisation trust [Section 10(35A)] ………………………………………………………… 280
3.53 Exemption of capital gains on compensation received on compulsory acquisition of agricultural land situated within specified urban limits [Section 10(37)] …………………………………………………………. 280
3.54 Exemption of specified income from international sporting event held in India [Section 10(39)] ………. 280
3.55 Exemption of amount received by an individual as loan under reverse mortgage scheme [Section 10(43)] ………………………………………………………………………………………………………………………………….. 280
3.56 Exemption of income of New Pension Scheme Trust [Section 10(44)] ………………………………………….. 281
3.57 Specified income arising to a notified body/authority/board/trust/ commission [Section 10(46)]……….. 281
3.58 Exemption in respect of income received by certain foreign companies [Section 10(48)] …………………. 282
3.59 Exemption in respect of income a foreign company on account of storage of crude oil in a facility in India and sale of crude oil therefrom [Section 10(48A) & 10(48B)] …………………………………………… 282
3.60 Exemption in respect of certain income of Indian Strategic Petroleum Reserves Limited [Section 10(48C)] ……………………………………………………………………………………………………………………………….. 283
x Contents
3.61 Income of a notified institution established for financing infrastructure and development to be exempt [Section 10(48D)] ……………………………………………………………………………………………………….. 283
3.62 Income of a Developmental Financing Institution to be exempt [Section 10(48E)] ………………………….. 283
3.63 Exemption in respect of income chargeable to equalization levy [Section 10(50)] …………………………… 283
3.64 Deduction allowed to newly established Units in Special Economic Zones ……………………………………. 283
3.65 Incomes which are exempt [Section 13A] ………………………………………………………………………………….. 286
3.66 Income of an Electoral Trust shall be exempt [Section 13B] ………………………………………………………… 287
Chapter 4 Heads of Income[Sections 14, 14A, 288A and 288B] Income under the Head “Salaries” [Sections 15 to 17] …………………………………………………………………………………………………… 288
4.1 Heads of Income [Section 14] ………………………………………………………………………………………………….. 289
4.2 No deduction for expenditure incurred in respect of exempt income against taxable income [Section 14A] ………………………………………………………………………………………………………………………… 289
4.3 Basis of Charge [Section 15] ……………………………………………………………………………………………………. 290
4.3a Arrears of Salary ………………………………………………………………………………………………………… 290
4.4 Meaning of Salary ………………………………………………………………………………………………………………….. 290
4.5 Wages …………………………………………………………………………………………………………………………………… 291
4.6 Annuity ………………………………………………………………………………………………………………………………… 291
4.7 Retirement benefits ………………………………………………………………………………………………………………… 291
4.8 Treatment of Bonus ………………………………………………………………………………………………………………… 291
4.9 Salary in lieu of notice period ………………………………………………………………………………………………….. 291
4.10 Fee and Commission ………………………………………………………………………………………………………………. 292
4.11 Overtime Payments ………………………………………………………………………………………………………………… 292
4.12 Meaning and Type of Allowances …………………………………………………………………………………………….. 293
4.13 House Rent Allowance [Section 10(13A) and Rule 2A] (Exemption under section 10(13A) shall not be allowed, if the employee opts to be taxed under section 115BAC) ………………………………………. 293
4.14 Prescribed allowances which are exempt to a certain extent [Section 10(14)] …………………………………. 294
4.14a Special allowances which are exempt to the extent of actual amount received or the amount spent for the performance of the duties of an office or employment of profit, whichever is less ………………………………………………………………………………………………………… 294
4.14b Allowances to meet personal expenses ………………………………………………………………………….. 294
4.15 Treatment of Entertainment Allowance …………………………………………………………………………………….. 297
4.16 Allowances which are exempt in case of certain persons ……………………………………………………………… 298
4.17 Allowances which are fully taxable…………………………………………………………………………………………… 298
4.18 Definition of ‘Perquisite’ as per section 17(2) ……………………………………………………………………………… 298
4.19 Perquisites which are taxable in the hands of all categories of employees ………………………………………. 300
4.20 Perquisites which are taxable only in the case of specified employees …………………………………………… 301
4.20a Who is a specified employee [Section 17(2)(iii)] ……………………………………………………………. 302
4.21 Rent free accommodation or accommodation provided at concessional rate …………………………………… 302
4.21a The above rules shall not apply in certain cases ……………………………………………………………… 305
4.22 Valuation of monetary obligation of the employee discharged by the employer………………………………. 306
4.23 Valuation of Life Insurance premium/deferred annuity premium paid/payable by the employer ……….. 306
4.24 Fringe benefits or amenities which shall be taxable perquisite in the hands of all employees ……………. 307
4.24a Treatment of any other benefit, amenity, etc. provided by the employer [Rule 3(7)(ix)] ………. 310
4.25 Valuation of motor car/other vehicles [Rule 3(2)] ……………………………………………………………………….. 310
4.26 Provision by the employer of services of a sweeper, a gardener, a watchman or personal attendant [Rule 3(3)] …………………………………………………………………………………………………………………………….. 314
4.27 Value of benefit to the employee resulting from the supply of gas, electric energy or water for household consumption [Rule 3(4)] ………………………………………………………………………………………….. 314
4.28 Valuation in respect of free or concessional educational facilities to any member of employees’ household [Rule 3(5)] ……………………………………………………………………………………………………………… 314
4.29 Free or concessional journey given to the transport employees and their family members [Rule 3(6)]……………………………………………………………………………………………………………………………………… 315
4.30 Value of any specified security or sweat equity shares ………………………………………………………………… 315
4.31 Contribution made by the employer in a recognised provident fund, in the scheme referred to in section 80CCD(1); and in an approved superannuation fund exceeding ₹7,50,000 [Section 17(2)(vii)] ……………………………………………………………………………………………………………………………… 316
4.32 Tax-free Perquisites (for all employees) ……………………………………………………………………………………. 317
Contents xi
4.33 Treatment of medical facilities [Proviso to section 17(2)] ……………………………………………………………. 318
4.34 Treatment of Leave Travel Concession or Assistance (LTC/LTA) [Section 10(5)] [Exemption will not be available if the employee opts to be taxed under section 115BAC] ……………………………….. 319
4.35 Profits in lieu of salary [Section 17(3)] ……………………………………………………………………………………… 321
4.36 Gratuity ………………………………………………………………………………………………………………………………… 322
4.37 Treatment of Pension [Section 17(1)(ii)] ……………………………………………………………………………………. 323
4.38 Treatment of Leave Salary ………………………………………………………………………………………………………. 324
4.38a Exemption of leave encashment at the time of retirement u/s 10(10AA) ……………………………. 324
4.39 Retrenchment Compensation [Section 10(10B)] …………………………………………………………………………. 325
4.40 Compensation received on Voluntary Retirement [Section 10(10C)] …………………………………………….. 326
4.41 Contribution by the employer to recognised provident fund …………………………………………………………. 327
4.42 Interest credited to recognised provident fund ……………………………………………………………………………. 327
4.43 Amount comprised in the transferred balance …………………………………………………………………………….. 327
4.44 Standard deduction [Section 16(ia)] ………………………………………………………………………………………….. 328
4.45 Entertainment Allowance [Section 16(ii)] ………………………………………………………………………………….. 328
4.46 Tax on Employment (Professional Tax) [Section 16(iii)] …………………………………………………………….. 328
4.47 Treatment of Provident Fund for Income-tax Purposes ………………………………………………………………… 328
4.47a Annual accretion to the contribution which have been included in the total income as per section 17(2)(viia) ……………………………………………………………………………………………………… 330
4.47b Transferred balance of Unrecognised Provident Fund (URPF) when it is converted into recognised provident fund …………………………………………………………………………………………… 330
4.48 Approved superannuation fund ………………………………………………………………………………………………… 331
4.49 Relief when salary is paid in arrears or in advance, etc. [Section 89/Rule 21A] ………………………………. 332
4.50 Deduction from gross total income …………………………………………………………………………………………… 333
Chapter 5 Income under the Head “Income from House Property” [Sections 22 to 27] ………………. 334
5.1 Chargeability [Section 22]……………………………………………………………………………………………………….. 334
5.2 Basis of Charge ……………………………………………………………………………………………………………………… 334
5.3 Essential conditions for taxing income under this head ………………………………………………………………… 335
5.4 What is Annual Value? …………………………………………………………………………………………………………… 336
5.5 Computation of annual value of a property [Section 23(1)] ………………………………………………………….. 336
5.6 Treatment of unrealised rent [Explanation to section 23(1)] …………………………………………………………. 339
5.7 Deductions from income from house property [Section 24] ………………………………………………………….. 340
5.8 Computation of Income of a property which is self-occupied for residential purposes or which could not actually be self occupied owing to employment [Section 23(2), (3) & (4)] ……………………….. 341
5.8a Where the annual value of such house shall be nil [Section 23(2)(a) & (b)] ……………………….. 341
5.8b Where the annual value of such house shall not be nil [Section 23(3)] ………………………………. 341
5.8c Where assessee has more than two houses for self-occupation [Section 23(4)] …………………… 341
5.8d Deduction in respect of one or two self-occupied houses where annual value is nil …………….. 342
5.9 Computation of income of house property which is partly let and partly self occupied …………………….. 344
5.10 No notional income for house property held as stock-in-trade for a period upto two years [Section 23(5)] ……………………………………………………………………………………………………………………………………. 344
5.11 Interest when not deductible from “Income from House Property” [Section 25] ……………………………… 344
5.12 Special provision for arrears of rent and unrealised rent received subsequently [Section 25A] ………….. 344
5.13 Property owned by Co-owners [Section 26] ……………………………………………………………………………….. 345
5.14 Can Annual Value (Net Annual Value) be negative? …………………………………………………………………… 345
5.15 Can there be any loss under the head income from house property? ………………………………………………. 345
Chapter 6 Income under the Head “Profits and Gains of Business or Profession” [Sections 28 to 44D] ……………………………………………………………………………………………………………………….. 346
6.1 Chargeability/scope of income under the head ‘Profits and gains of business or profession’ [Section 28] …………………………………………………………………………………………………………………………… 346
6.2 Rationalisation of provision relating to conversion of inventory into Capital Asset [Section 28(via)] 348
6.3 Income from business or profession — how to be computed ………………………………………………………… 349
6.4 Method of Accounting [Section 145] ………………………………………………………………………………………… 349
6.4a Income Computation and Disclosure Standards ……………………………………………………………… 349
6.5 Expenses which are expressly allowed as a deduction [Sections 30 to 37] ……………………………………… 350
6.6 Rent, rates, taxes, repairs and insurance for buildings [Section 30] ……………………………………………….. 350
xii Contents
6.6a Deductions ………………………………………………………………………………………………………………… 350
6.7 Repairs and insurance of machinery, plant and furniture [Section 31] ……………………………………………. 350
6.8 Depreciation [Section 32] ………………………………………………………………………………………………………… 350
6.8a What is ‘block of assets’ ………………………………………………………………………………………………. 352
6.8b Written down value for charging depreciation [Section 43(6)] …………………………………………. 355
6.8c Written down value of the block of intangible asset which included goodwill of a business or profession before AY 2021-22 …………………………………………………………………….. 356
6.8d Actual cost [Section 43(1)] ………………………………………………………………………………………….. 356
6.8e Notional Actual Cost [Explanations to section 43(1)] ……………………………………………………… 357
6.8f Computation of depreciation ……………………………………………………………………………………….. 360
6.8g Steps for computing depreciation: ………………………………………………………………………………… 360
6.8h Depreciation on asset in the previous year of acquisition if the asset is put to use for less than 180 days during that previous year ………………………………………………………………………… 360
6.8-i Cases where WDV of a block at the end of the year shall be reduced to Nil and hence no depreciation ………………………………………………………………………………………………………………. 362
6.9 Special provisions for depreciation in certain cases …………………………………………………………………….. 362
6.9a Special provisions for depreciation in case of assets of an undertaking engaged in generation or generation and distribution of power [Section 32(1)(i) and Rule 5(1A)] …………. 362
6.9b Proportionate depreciation allowed in certain cases [Fifth Proviso to section 32] ………………… 364
6.9c Additional depreciation on new machinery or plant [Section 32(1)(iia)]…………………………….. 364
6.9d Is it mandatory to claim depreciation [Explanation to section 32] ……………………………………… 365
6.10 Carry forward and set off of unabsorbed depreciation [Section 32(2)] …………………………………………… 365
6.11 Expenditure on Scientific Research [Section 35] ………………………………………………………………………… 365
6.11a In-house Scientific Research ……………………………………………………………………………………….. 365
6.11b Sale of an asset used for scientific research ……………………………………………………………………. 366
6.11c Unabsorbed capital expenditure on scientific research …………………………………………………….. 367
6.11d Payment to outside agencies ………………………………………………………………………………………… 367
6.11e Deduction on in house research and development to a company assessee in certain cases [Section 35(2AB)] ……………………………………………………………………………………………………… 368
6.12 Expenditure for obtaining licence to operate telecommunication services and amortisation of spectrum fee for purchase of spectrum ………………………………………………………………………………………. 369
6.13 Deduction in respect of expenditure on specified business [Section 35AD] ……………………………………. 372
6.14 Expenditure by way of payments to associations and institutions for carrying out Rural Development Programmes [Section 35CCA] ……………………………………………………………………………… 374
6.15 Deduction for expenditure incurred on agricultural extension project [Section 35CCC] …………………… 374
6.16 Deduction for expenditure incurred by a company on skill development project [Section 35CCD] ……. 375
6.17 Amortisation of certain preliminary expenses [Section 35D and Rule 6AB] …………………………………… 375
6.18 Amortisation of expenditure in case of amalgamation or demerger [Section 35DD] ………………………… 376
6.19 Amortisation of expenditure incurred under voluntary retirement scheme [Section 35DDA] ……………. 376
6.20 Deduction for expenditure on prospecting, etc., for certain minerals [Section 35E and Rule 6AB] …….. 376
6.21 Other deductions [Section 36] ………………………………………………………………………………………………….. 377
6.21a Insurance premium of stocks [Section 36(1)(i)] ……………………………………………………………… 377
6.21b Insurance premium of cattle [Section 36(1)(ia)] ……………………………………………………………… 377
6.21c Insurance on health of employees [Section 36(1)(ib)] ……………………………………………………… 377
6.21d Bonus or Commission to employees [Section 36(1)(ii)] …………………………………………………… 377
6.21e Interest on borrowed capital [Section 36(1)(iii)] …………………………………………………………….. 377
6.21f Discount on issue of zero coupon bonds to be allowed as deduction on pro rata basis [Section 36(1)(iiia)] ……………………………………………………………………………………………………. 378
6.21g Employer’s Contribution to a recognised Provident Fund or Approved Superannuation Fund [Section 36(1)(iv)] ……………………………………………………………………………………………… 378
6.21h Employers’ contribution towards a pension scheme [Section 36(1)(iva)] ……………………………. 378
6.21-i Employer’s contribution to an approved gratuity fund [Section 36(1)(v)] …………………………… 378
6.21j Sums received from employees towards certain welfare schemes if credited to their accounts before the due date [Section 36(1)(va)] ……………………………………………………………. 379
6.21k Allowance in respect of dead or permanently useless animals [Section 36(1)(vi)] ……………….. 379
6.21-l Bad debts [Section 36(1)(vii)] ……………………………………………………………………………………… 379
6.21m Expenditure on promoting family planning amongst the employees [Section 36(1)(ix)] ………. 380
Contents xiii
6.21n Securities Transaction Tax paid to be allowed as deduction [Section 36(1)(xv)] …………………. 380
6.21-o Commodities Transaction Tax to be allowed as a deduction [Section 36(xvi)] ……………………. 380
6.21p Marked to market loss or other expected loss to be allowed [Clause (xviii) inserted in section 36(1)] …………………………………………………………………………………………………………….. 380
6.22 General Deductions [Section 37(1)] ………………………………………………………………………………………….. 381
6.22a Conditions for allowance under section 37(1) ………………………………………………………………… 381
6.22b Examples of expenditure allowable as a deduction u/s 37(1) ……………………………………………. 382
6.22c Examples of expenditure not allowable as deduction under section 37(1) ………………………….. 383
6.23 Advertisement to political parties [Section 37(2B)] …………………………………………………………………….. 383
6.24 Building, plant and machinery or furniture not exclusively used for the purpose of business or profession [Section 38] ……………………………………………………………………………………………………………. 383
6.25 Amounts not deductible [Section 40] ………………………………………………………………………………………… 384
6.26 Expenses or payments not deductible in certain circumstances: [Section 40A] ……………………………….. 386
6.26a Expenses or payments not deductible where such payments are made to relatives [Section 40A(2)] ………………………………………………………………………………………………………… 386
6.26b Disallowance of 100% of expenditure if payment is made by any mode other than account payee cheque or draft [Section 40A(3)(a)] …………………………………………………………. 387
6.26c Disallowance in respect of provision for gratuity [Section 40A(7)] …………………………………… 390
6.27 Disallowance in respect of contributions to non-statutory funds [Section 40A(9)] …………………………… 391
6.28 Marked to market loss or other expected loss not to be allowed except provided in section 36(1)(xviii) [Section 40A(13)] …………………………………………………………………………………………………. 391
6.29 Certain deductions to be allowed only on actual payment [Section 43B]………………………………………… 391
6.30 Special provision for full value of consideration for transfer of assets other than capital assets in certain cases [Section 43CA] …………………………………………………………………………………………………… 394
6.31 Computation of income from construction and service contracts [Section 43CB] ……………………………. 395
6.32 Deemed profits chargeable to tax ……………………………………………………………………………………………… 395
6.33 Maintenance of accounts by certain persons carrying on profession or business [Section 44AA and Rule 6F] ………………………………………………………………………………………………………………………….. 398
6.33a Person carrying on certain professions [Section 44AA(1)]……………………………………………….. 398
6.33b Person carrying on a non-specified profession or carrying on business [Section 44AA(2)] …… 399
6.33c When maintenance of books of account is not necessary …………………………………………………. 400
6.33d Consequences of failure to keep accounts, etc. ……………………………………………………………….. 400
6.34 Compulsory audit of accounts [Section 44AB] …………………………………………………………………………… 400
6.34a Is tax audit under section 44AB compulsory even if the accounts are audited under any other law or any other provisions of Income-tax Act……………………………………………………….. 402
6.34b Report of Audit of Accounts [Rule 6G] …………………………………………………………………………. 403
6.35 Special provisions for computing profits and gains of any business (excluding the business covered under section 44AE) [Section 44AD] ……………………………………………………………………………. 403
6.36 Special provision for computing profits and gains of profession on presumptive basis [Section 44ADA] ………………………………………………………………………………………………………………………………… 405
6.37 Special provisions for computing profits and gains of business of plying, hiring or leasing goods carriages [Section 44AE]…………………………………………………………………………………………………………. 406
6.38 Special provisions for computing profits and gains [Sections 44B, 44BB, 44BBA and 44BBB] ……….. 408
6.39 Specific Management Decisions ………………………………………………………………………………………………. 411
Chapter 7 Income under the Head “Capital Gains” [Sections 45 to 55A] …………………………………… 416
7.1 Basis of Charge [Section 45(1)] ……………………………………………………………………………………………….. 416
7.2 There must be a capital asset ……………………………………………………………………………………………………. 417
7.2a What is a capital asset [Section 2(14)]: ………………………………………………………………………….. 417
7.2b Types of capital assets ………………………………………………………………………………………………… 419
7.3 Capital asset must have been transferred ……………………………………………………………………………………. 422
7.3a What is transfer [Section 2(47)]……………………………………………………………………………………. 422
7.3b Transactions not regarded as transfer [Sections 46 and 47] ………………………………………………. 423
7.4 Capital gain should arise in the previous year in which transfer took place …………………………………….. 428
7.5 Computation of capital gains [Section 48] …………………………………………………………………………………. 428
7.6 Full value of consideration ………………………………………………………………………………………………………. 431
7.7 Expenses on transfer……………………………………………………………………………………………………………….. 432
7.8 Cost of acquisition [Section 55(2)] ……………………………………………………………………………………………. 432
xiv Contents
7.8a Deemed cost of acquisition ………………………………………………………………………………………….. 432
7.8b Cost of acquisition of assets acquired before 1.4.2001 [Section 55(2)(b)] ………………………….. 436
7.8c Cost of acquisition of goodwill of a business or profession or a trade mark or brand name associated with business or profession [or any other intangible asset] or right to manufacture, produce or process any article or things or right to carry on any business or profession, tenancy rights, stage carriage permits or loom hours [or any other right][Section 55(2)(a)] ………………………………………………………………………………………………. 437
7.8d Cost of acquisition of right shares [Section 55(2)(aa)] …………………………………………………….. 438
7.8e Cost of acquisition of bonus shares or any other financial asset allotted without payment [Section 55(2)(aa)(iiia)] ………………………………………………………………………………………………. 438
7.8f Cost of acquisition for purpose of computing long-term capital gain under section 112A [Section 55(2)(ac)] ……………………………………………………………………………………………………… 439
7.8g Cost of acquisition of depreciable assets [Section 50] ……………………………………………………… 439
7.9 Treatment of advance money received [Section 56(2)(ix), w.e.f. A.Y. 2015-16] ……………………………… 440
7.10 Cost of improvement [Section 55(1)(b)] ……………………………………………………………………………………. 440
7.11 Indexed cost of acquisition (Explanation (iii) to section 48) …………………………………………………………. 440
7.11a Computation of indexed cost of acquisition …………………………………………………………………… 441
7.11b Indexation of cost not allowed in certain cases ……………………………………………………………….. 443
7.12 Indexed cost of improvement [Explanation (iv) to section 48] ……………………………………………………… 444
7.13 Computation of capital gain in certain cases ………………………………………………………………………………. 444
7.13a Taxation of zero coupon bonds …………………………………………………………………………………….. 444
7.13b Capital gain in case of amount received from an insurer on account of damage or destruction of any capital asset [Section 45(1A)] ……………………………………………………………. 445
7.13c Profits or gains arising from receipt of the amount on maturity of high premium unit linked insurance policy chargeable to tax under the head Capital gains [Section 45(1B)]: ……. 445
7.13d Capital gain on conversion of capital asset into stock-in-trade or stock-in-trade into capital asset ……………………………………………………………………………………………………………….. 446
7.13e Capital gain on transfer of capital asset by a partner/member to a firm/AOP/BOI as capital contribution [Section 45(3)] ………………………………………………………………………………. 446
7.13f Capital Gain at the time of dissolution or reconstitution of specified entity ………………………… 447
7.13g Capital gain on transfer by way of compulsory acquisition of an asset [Section 45(5)] ………… 450
7.13h Special provisions for computation of capital gains in case of joint development agreement [Section 45(5A)] ………………………………………………………………………………………… 452
7.13-i Capital gain on conversion of debentures into shares [Section 47(x), 49(2A) and rule 8AA] ………………………………………………………………………………………………………………………… 454
7.13j Conversion of preference shares into equity shares [Section 47(xb), 49(2AE), Explanation 1 to section 2(42A)] ………………………………………………………………………………….. 454
7.13k Capital gains on distribution of assets by companies in liquidation [Section 46] …………………. 454
7.13-l Capital gain on sale of goodwill of a business/trademark or brand name/tenancy rights/route permits or loom hours, right to manufacture or right to carry on any business……. 455
7.13m Capital gain on transfer of depreciable assets [Section 50]……………………………………………….. 456
7.13n Cost of acquisition and capital gain in case of depreciable assets of electricity companies [Section 50A] ……………………………………………………………………………………………………………. 457
7.13-o Special provisions for computation of capital gains in case of slump sale [Section 50B] ……… 458
7.13p Computation of capital gains in real estate transactions [Section 50C] ………………………………. 460
7.13q Fair market value to be full value of consideration for transfer of share other than quoted shares [Section 50CA] ………………………………………………………………………………………………… 461
7.13r Fair Market Value to be full value of consideration in certain cases [Section 50D] ……………… 462
7.13s Capital gains on purchase by company of its own shares or other specified securities [Section 46A] ……………………………………………………………………………………………………………. 462
7.13t Capital gain on sale of land and building to be computed separately in case of building constructed by the assessee ………………………………………………………………………………………….. 463
7.13u Capital gain on transfer of units of consolidated scheme of mutual fund on merger of similar schemes of mutual funds ………………………………………………………………………………….. 464
7.13v Consolidation of mutual fund ‘plans’ within a ‘scheme’ of mutual fund [Section 47(xix)] ……… 464
7.14 Capital gain in the case of transfer of shares/debentures by non-residents (Proviso 1 to section 48 and rule 115A)……………………………………………………………………………………………………………………….. 464
Contents xv
7.14a Exemption of long-term capital gains arising to non-resident Indian on transfer of ‘foreign exchange asset’ [Section 115F] …………………………………………………………………………. 466
7.14b Option not to avail of the provisions of section 115F [Section 115-I] ………………………………… 467
7.15 Types of exemption of capital gains ………………………………………………………………………………………….. 467
7.16 Profit on transfer of house property used for residence [Section 54]………………………………………………. 468
7.17 Capital Gain on transfer of land used for agricultural purposes [Section 54B] ………………………………… 471
7.18 Capital Gain on compulsory acquisition of land and buildings forming part of an industrial undertaking [Section 54D] ………………………………………………………………………………………………………. 473
7.19 Capital gain on transfer of long-term capital assets being land or building or both not to be charged on investment in certain bonds [Section 54EC] ………………………………………………………………. 474
7.20 Capital gain not to be charged on investment in units of a specified fund [Section 54EE] (This section has no significance as no long-term specified asset has been notified till date) …………………….. 475
7.21 Capital Gain on transfer of asset, other than a residential house [Section 54F] ………………………………… 475
7.22 Capital gain on transfer of assets in cases of shifting of industrial undertakings from urban areas [Section 54G] ………………………………………………………………………………………………………………………… 479
7.23 Exemption of capital gain on transfer of assets of shifting of industrial undertaking from urban area to any Special Economic Zone [Section 54GA] …………………………………………………………………… 480
7.24 Exemption of long-term capital gains tax on transfer of residential property if invested in a new manufacturing SME company [Section 54GB] …………………………………………………………………………… 481
7.25 Extension of time limit for acquiring new asset or depositing or investing amount of capital gain, in case of compulsory acquisition [Section 54H] ………………………………………………………………………… 483
7.26 Tax on short-term capital gains in case of equity shares and units of equity oriented fund [Section 111A] …………………………………………………………………………………………………………………………………… 485
7.27 Computation of tax on long-term capital gains other than referred to in section 112A [Section 112] ……………………………………………………………………………………………………………………………………… 485
7.28 Rate of tax on long-term capital gain (other than referred to in section 112A) in certain cases ………….. 488
7.29 Tax on long-term capital gains in certain cases [Section 112A] …………………………………………………….. 488
Chapter 8 Income under the Head “Income from Other Sources” ………………………. [Sections 56 to 59] ………………………………………………………………………………………………………………………………. 495
8.1 Chargeability …………………………………………………………………………………………………………………………. 495
8.2 Method of Accounting ……………………………………………………………………………………………………………. 495
8.3 Specific incomes included under ‘Income from Other Sources’ [Section 56(2)] ………………………………. 495
8.4 Other incomes which are normally included under the head ‘Income from Other Sources’ ……………….. 496
8.5 Taxability of Dividend [Section 56(2)(i)]…………………………………………………………………………………… 497
8.5a Deductions for expenses from dividend income [Section 57(i) and 57(iii)] ………………………… 497
8.6 Winnings from Lotteries, Crossword Puzzles, Horse Races and Card Games [Section 56(2)(ib)] ……… 498
8.6a Special rate of Income-tax in case of winnings from lotteries, crossword puzzles, races, etc. [Section 115BB]…………………………………………………………………………………………………… 498
8.6b Grossing up of lottery income, etc. ……………………………………………………………………………….. 498
8.7 Interest on Securities [Section 56(2)(id)] …………………………………………………………………………………… 499
8.7a Chargeability of Interest on Securities …………………………………………………………………………… 499
8.7b Accrual of Interest ……………………………………………………………………………………………………… 499
8.7c Grossing up of Interest ……………………………………………………………………………………………….. 499
8.7d Deductions for expenses from Interest on Securities [Section 57(i) and (iii)] ……………………… 500
8.8 Income from letting out of machinery, plant or furniture [Section 56(2)(ii)] …………………………………… 500
8.8a Income from composite letting of machinery, plant or furniture and buildings [Section 56(2)(iii)] ………………………………………………………………………………………………………………….. 500
8.8b Deductions permissible from letting out of machinery, plant or furniture and buildings [Section 57(ii) and (iii)] ………………………………………………………………………………………………. 500
8.9 Income of any person to include not only gift of money from any person(s) but also the gift of property (whether movable or immovable) or property acquired for inadequate consideration [Section 56(2)(x)] …………………………………………………………………………………………………………………… 501
8.10 Share premium in excess of the fair market value to be treated as income in the hands of closely held company [Section 56(2)(viib)] …………………………………………………………………………………………… 508
8.11 Interest on compensation or enhanced compensation [Section 56(2)(viii)] ……………………………………… 509
8.12 Forfeiture of advance received for transfer of a capital asset to be taxed under the head “income from other sources” [Section 56(2)(ix)] ……………………………………………………………………………………… 510
xvi Contents
8.13 Family pension payments received by the legal heirs of a deceased employee ………………………………… 511
8.14 Contribution of the employee towards his welfare fund, deducted/received by the employer [Section 56(2)(ic)] ………………………………………………………………………………………………………………….. 512
8.15 Any other income taxable under this head …………………………………………………………………………………. 512
8.16 Amounts not deductible in computing the income under the head ‘Income from Other Sources’ [Section 58] …………………………………………………………………………………………………………………………… 512
8.17 Deemed income chargeable to tax [Section 59] ………………………………………………………………………….. 513
Chapter 9 Income of Other Persons Included in Assessee’s Total Income (Clubbing of Income) [Sections 60 to 65] …………………………………………………………………………………………………… 514
9.1 Transfer of income where there is no transfer of assets [Section 60] ……………………………………………… 514
9.2 Revocable transfer of assets [Section 61] …………………………………………………………………………………… 514
9.2a When a transfer is revocable [Section 63] ……………………………………………………………………… 514
9.2b Section 61 not applicable, if the transfer is irrevocable for a specified period [Section 62] …… 514
9.3 Income of an individual to include income of spouse, minor child, etc. [Section 64] ……………………….. 515
9.3a Remuneration of spouse from a concern in which the other spouse has substantial interest [Section 64(1)(ii)] …………………………………………………………………………………………… 515
9.3b Income from assets transferred to the spouse [Section 64(1)(iv)] ………………………………………. 516
9.3c Income from assets transferred to son’s wife [Section 64(1)(vi)] ………………………………………. 517
9.3d Income from assets transferred to any person for the benefit of the spouse of the transferor [Section 64(1)(vii)] ………………………………………………………………………………………. 517
9.3e Income from assets transferred to any person for the benefit of son’s wife [Section 64(1)(viii)] ………………………………………………………………………………………………………………… 517
9.4 Clubbing of income of a minor child [Section 64(1A)] ………………………………………………………………… 517
9.5 Income from self-acquired property converted to joint family property [Section 64(2)]……………………. 518
9.6 Under which head of income will the clubbed income be assessed ……………………………………………….. 519
9.7 Liability of person i.e. the transferee in respect of income included in the income of another person i.e. transferor [Section 65] …………………………………………………………………………………………….. 519
Chapter 10 Unexplained Cash Credits, Investments, Money, etc. [Sections 68 to 69D] …………………. 520
10.1 Cash credits [Section 68] …………………………………………………………………………………………………………. 520
10.2 Unexplained investments [Section 69] ………………………………………………………………………………………. 527
10.3 Unexplained money, etc. [Section 69A] …………………………………………………………………………………….. 528
10.4 Amount of investments, not fully disclosed in books of account [Section 69B] ………………………………. 528
10.5 Unexplained expenditure, etc. [Section 69C] ……………………………………………………………………………… 529
10.6 Amount borrowed or repaid on hundi [Section 69D] …………………………………………………………………… 530
10.7 Taxation of cash credits, unexplained money, unexplained investments, etc., covered under sections 68, 69, 69A, 69B, 69C & 69D [Section 115BBE] …………………………………………………………… 530
Chapter 11 Set off or Carry Forward and Set off of Losses [Sections 70 to 80] …………………………….. 532
11.1 Set off of loss from one source against income from another source under the same head of income [Section 70] ……………………………………………………………………………………………………………….. 532
11.2 Set off of loss from one head against income from another head (Inter-head adjustment) [Section 71] ……………………………………………………………………………………………………………………………………….. 534
11.3 Carry forward and set off of losses ……………………………………………………………………………………………. 537
11.3a Compulsory filing of loss returns [Section 80] ……………………………………………………………….. 537
11.4 Carry forward and set off of loss from house property [Section 71B] …………………………………………….. 537
11.5 Carry forward and set off of business losses [Section 72] …………………………………………………………….. 538
11.6 Set off and Carry forward and Set off of Speculation Loss [Section 73] …………………………………………. 540
11.7 Set off and carry forward and set off of loss of a specified business referred to in section 35AD [Section 73A] ………………………………………………………………………………………………………………………… 540
11.8 Carry forward of losses under the head ‘capital gains’ [Section 74] ……………………………………………….. 541
11.9 Set off and carry forward and set off of loss from activity of owning and maintaining race horses [Section 74A] ………………………………………………………………………………………………………………………… 541
11.10 Brought forward losses must be set off in the immediately succeeding year/years …………………………… 541
11.11 Special provisions of set off of losses in case of an individual or HUF who has opted to be taxed as per provisions of section 115BAC ………………………………………………………………………………………… 541
11.12 Carry forward and set off of the accumulated business losses and unabsorbed depreciation allowance in amalgamation or demerger, etc. [Section 72A] ………………………………………………………… 543
11.12(A) Carry forward of business loss and unabsorbed depreciation as per section 72A: ………………. 543
Contents xvii
11.12(A)(i) Carry forward and set off of accumulated business loss and unabsorbed depreciation in case of amalgamation [Section 72A(1), (2) and (3)]: …………………………………………………… 543
11.12(A)(ii) Carry forward of and set off of accumulated losses and unabsorbed depreciation in case of demerger [Section 72A(4) and (5)]: ……………………………………………………………………. 544
11.12(A)(iii) Carry forward and set off of accumulated losses and unabsorbed depreciation in case of reorganisation of business [Section 72A(6) & (6A)]: ……………………………………………. 544
11.12(B) Carry forward and set off of accumulated loss and unabsorbed depreciation allowance in scheme of amalgamation of banking company in certain cases [Section 72AA] ……………… 544
11.12(C) Provisions relating to carry forward and set off of accumulated losses and unabsorbed depreciation allowance in business reorganization of co-operative banks [Section 72AB] ……. 545
11.13 Losses of firms ………………………………………………………………………………………………………………………. 546
11.14 Carry forward and set off of losses on succession of any person [Section 78(2)] …………………………….. 546
11.15 Carry forward and set off of losses in case of certain companies [Section 79]…………………………………. 546
11.16 No set off of losses consequent to search & seizure or survey or requisition proceedings [Section 79A] …………………………………………………………………………………………………………………………………….. 548
Chapter 12 Deductions to be made in Computing Total Income [Sections 80A to 80U (Chapter VIA)] ………………………………………………………………………………………………………………………………. 550
12.1 Basic rules of deductions [Sections 80A/80AB/80AC] ………………………………………………………………… 550
12.2 Deduction in respect of Life Insurance Premium, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc. [Section 80C] ………………………………….. 551
12.3 Deduction in respect of contribution to certain pension funds [Section 80CCC] ……………………………… 556
12.4 Deduction in respect of contribution to pension scheme of Central Government by Central Government or any other employer [Section 80CCD] …………………………………………………………………. 556
12.5 Limit on deductions under sections 80C, 80CCC and 80CCD [Section 80CCE] ……………………………… 558
12.6 Deduction in respect of Medical Insurance premia [Section 80D] …………………………………………………. 559
12.7 Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability [Section 80DD] …………………………………………………………………………………………………. 561
12.8 Deduction in respect of medical treatment, etc. [Section 80DDB] …………………………………………………. 562
12.9 Deduction for interest paid on loan taken for pursuing higher education [Section 80E] ……………………. 563
12.10 Deduction in respect of interest on loan taken for residential house property [Section 80EE] ……………. 564
12.11 Deduction in respect of interest on loan taken for certain house property [Section 80EEA] ………………. 564
12.12 Deduction in respect of purchase of electric vehicle [Section 80EEB] …………………………………………… 565
12.13 Deduction in respect of donations to certain funds, charitable institutions, etc. [Section 80G] …………… 566
12.14 Deductions in respect of rent paid [Section 80GG] ……………………………………………………………………… 568
12.15 Deduction in respect of certain donations for scientific research or rural development [Section 80GGA] ………………………………………………………………………………………………………………………………… 569
12.16 Deduction in respect of contributions given by companies to political parties [Section 80GGB] ……….. 570
12.17 Deduction in respect of contribution given by any person to political parties [Section 80GGC] ………… 570
12.18 Deduction in respect of profits and gains from undertakings or enterprises engaged in infrastructure development, etc. [Section 80-IA] [Only relevant sub-sections have been discussed] …… 570
12.19 Deduction in respect of profits and gains by an undertaking or an enterprise engaged in development of Special Economic Zone [Section 80-IAB]…………………………………………………………… 573
12.20 Special provision in respect of eligible business of eligible start up [Section 80-IAC] ……………………… 573
12.21 Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings [Section 80-IB] [Only relevant sub-sections have been discussed] ……………………………………………………………………………………………………………………………… 575
12.22 Deduction in respect of profits and gains from housing projects [Section 80-IBA] ………………………….. 577
12.23 Special provisions in respect of certain undertakings in North Eastern States [Section 80-IE] …………… 579
12.24 Deduction in respect of profits and gains from business of collecting and processing of bio-degradable waste [Section 80JJA] …………………………………………………………………………………………….. 580
12.25 Deduction in respect of employment of new employees [Section 80JJAA] …………………………………….. 580
12.26 Deduction in respect of certain incomes of Offshore Banking Units and International Financial Services Centre [Section 80LA] ……………………………………………………………………………………………….. 582
12.27 Deduction in respect of certain inter-corporate dividends [New section 80M] ………………………………… 583
12.28 Deduction in respect of income of Co-operative Societies [Section 80P] ……………………………………….. 584
12.29 Deduction in respect of income of Farm Producer Companies [Section 80PA] ……………………………….. 586
xviii Contents
12.30 Deduction in respect of royalty income, etc., of authors of certain books other than text books [Section 80QQB] ……………………………………………………………………………………………………………………. 586
12.31 Deduction in respect of royalty on patents [Section 80RRB] ………………………………………………………… 587
12.32 Deduction in respect of interest on deposits in savings accounts to the maximum extent of ₹10,000 [Section 80TTA]………………………………………………………………………………………………………… 588
12.33 Deduction in respect of interest on deposits in case of senior citizens [Section 80TTB] …………………… 588
12.34 Deduction in case of a person with disability [Section 80U] …………………………………………………………. 589
Chapter 13 Agricultural Income & its Tax Treatment [Sections 2(1A) and 10(1)] ………………………… 591
13.1 Summarised definition of Agricultural Income [Section 2(1A)] ……………………………………………………. 591
13.2 What does agriculture include? ………………………………………………………………………………………………… 591
13.3 Income which is partially agricultural and partially from business ………………………………………………… 591
13.4 Tax on non-agricultural income if the assessee earns agricultural income also………………………………… 592
Chapter 14 Computation of Tax Liability of Various Categories of Persons ………………………………… 595
14.1 Assessment of an individual …………………………………………………………………………………………………….. 595
14.2 An individual is liable to pay tax in respect of the following incomes ……………………………………………. 595
14.2a Incomes received from firm/AOP/HUF which are exempt in the hands of an individual ……… 595
14.3 Computation of total income and tax liability …………………………………………………………………………….. 596
14.4 Tax on income of an individual/HUF [Section 115BAC] [W.e.f. A.Y. 2021-22] …………………………….. 596
14.5 Rebate of maximum ₹12,500 for resident individuals having total income up to ₹5,00,000 [Section 87A] ………………………………………………………………………………………………………………………… 602
14.6 Alternate Minimum Tax (AMT) on all persons other than companies [Section 115JC to 115JF] ……….. 603
14.7 Assessment of Hindu Undivided Family ……………………………………………………………………………………. 605
14.8 Computation of Total Income of HUF ………………………………………………………………………………………. 605
14.9 Partition of HUF …………………………………………………………………………………………………………………….. 606
14.10 Procedure to effect partition and consequences after such partition [Section 171] …………………………… 607
14.10a Effect of partial partition [Section 171(9)] ………………………………………………………………………. 608
14.11 Alternate Minimum Tax (AMT) on all persons other than companies [Section 115JC to 115JF Chapter XII-BA] ……………………………………………………………………………………………………………………. 609
14.12 Assessment of Firms (including LLP) ……………………………………………………………………………………….. 609
14.13 Assessment of firm …………………………………………………………………………………………………………………. 610
14.14 Essential conditions to be satisfied by a firm to be assessed as firm and to be eligible for deduction of interest, salary, etc., to the partners [Section 184] …………………………………………………….. 610
14.15 Deduction allowable on account of remuneration and interest to the partners of the firm (including Limited Liability Partnership) …………………………………………………………………………………… 610
14.16 Computation of Book Profit [Explanation 3 to section 40(b)] ……………………………………………………….. 611
14.17 Provisions regarding set off and carry forward of losses of firms ………………………………………………….. 612
14.17a Carry forward and Set off of losses under any head in case of change in constitution of firm [Section 78]………………………………………………………………………………………………………… 612
14.18 Computation of Total Income of Firm (including Limited Liability Partnership) …………………………….. 613
14.19 Alternate Minimum Tax (AMT) on all persons other than companies [Sections 115JC to 115JF Chapter XII-BA] ……………………………………………………………………………………………………………………. 613
14.20 Treatment of share of profit, interest and remuneration received by a partner from a firm (including Limited Liability Partnership) …………………………………………………………………………………… 613
14.21 Assessment of Association of Persons ………………………………………………………………………………………. 614
14.22 Assessment of Association of Persons (AOPs)/Body of Individuals (BOIs) ……………………………………. 614
14.23 Method of computing a member’s share in income of AOP/BOI where the shares of the members are determinate and known [Section 67A] …………………………………………………………………………………. 616
14.24 Alternate Minimum Tax (AMT) on all persons other than companies [Sections 115JC to 115JF Chapter XII-BA] ……………………………………………………………………………………………………………………. 617
14.25 Assessment of Companies ……………………………………………………………………………………………………….. 617
14.25a Definitions ………………………………………………………………………………………………………………… 617
14.26 Residence of a Company [Section 6(3)] …………………………………………………………………………………….. 618
14.26a Special Provisions Relating to Foreign Company said to be resident in India [Section 115JH] ……………………………………………………………………………………………………………………… 619
14.27 Computation of Total Income ………………………………………………………………………………………………….. 619
14.28 Special provisions applicable to a company in which public are not substantially interested …………….. 620
14.29 Assessment of Companies ……………………………………………………………………………………………………….. 622
Contents xix
14.29a Tax on total income of a company ………………………………………………………………………………… 622
14.29b Tax on income of certain manufacturing domestic companies [Section 115BA] …………………. 624
14.29c Special provisions of tax on income of certain domestic companies referred to in section 115BAA …………………………………………………………………………………………………………………… 625
14.29d Special provisions relating to tax on income of certain new manufacturing domestic companies referred to in section 115BAB ……………………………………………………………………… 628
14.30 Provisions of MAT for payment of tax by certain companies [Section 115JB(1)] ……………………………. 633
14.30a MAT rate to be 9% instead of 15% in case of a unit located in an International Financial Services Center [Section 115JB(7)] ………………………………………………………………………………. 634
14.30b Provisions of section 115JB not to apply in certain cases …………………………………………………. 634
14.31 Allowing tax credit in respect of tax paid on deemed income under MAT provisions against tax liability in subsequent years [Section 115JAA] …………………………………………………………………………… 635
14.32 Statement of profit and loss of the company to be prepared as per provisions of the Companies Act [Section 115JB(2)] ……………………………………………………………………………………………………………. 636
14.32a Statement of profit and loss prepared for section 115JB(2) and annual accounts including statement of profit and loss prepared and placed before AGM should have same accounting policies, standards, etc. [First and second provisos to section 115JB(2)] ……………. 636
14.32b How to compute book-profits [Explanation 1 to section 115JB(1) and (2)] ………………………… 636
14.32c How much brought forward loss/unabsorbed depreciation are deductible from book profits ………………………………………………………………………………………………………………………. 640
14.33 Furnishing of Report of an Accountant [Section 115JB(4) and Rule 40B] ……………………………………… 641
14.34 Unabsorbed depreciation or losses which can be carried forward [Section 115JB(3)] ………………………. 641
14.35 Other provisions of the Act shall continue to apply to such companies [Section 115JB(5)] ………………. 641
14.36 Special provisions relating to tax on distributed income of domestic company for buy back of shares [Section 115QA to section 115QC] …………………………………………………………………………………. 641
Chapter 15 Assessment of Trusts [Sections 11 to 13] …………………………………………………………………… 643
15.1 Exemption under sections 11 to 13 …………………………………………………………………………………………… 643
15.1a Conditions to be satisfied for claiming exemption under section 11 ………………………………….. 643
15.2 Which income will be exempt under section 11 ………………………………………………………………………….. 645
15.2a Income though exempt under various clauses of section 10 [other than 10(1), i.e., agricultural income or section 10(23C) or 10(46)] to be treated as income from the property held under a trust and will have to be applied to claim exemption under section 11 [Section 11(7)] ………………………………………………………………………………………………………. 647
15.2b Income applied during the previous year includes the following……………………………………….. 647
15.2c Provisions of section 40(a)(ia) and section 40A(3) & (3A) to apply mutatis mutandis to certain exempt entities covered under section 11 [Explanation 3 under section 11(1)] …………. 650
15.2d Voluntary contribution to form part of corpus if received by trust or institution for the purpose of renovation or repair of its notified temple, mosque, gurdwara, church or other place [Explanation 3A] ……………………………………………………………………………………………….. 651
15.2e Consequences if conditions prescribed in Explanation 3A are violated [Explanation 3B] …….. 651
15.2f Application out of corpus and application from loans and borrowings not to be treated as application of the relevant previous year but can be treated as application of the subsequent year(s) subject to certain conditions [Explanation 4 to section 11(1) (a) or (b)] …………………………………………………………………………………………………………………………… 651
15.2g Sum payable by any trust or institution to be considered as application of income in the previous year in which such sum is actually paid [Explanation to section 11] …………………….. 652
15.3 Accumulation of income in excess of 15% of the income earned [Section 11(2) and Rule 17] ………….. 652
15.3a Conditions to be satisfied ……………………………………………………………………………………………. 652
15.3b Exemption under section 11(2) not to be allowed unless the statement mentioned in section 11(2)(a) and the return of income of the trust is furnished before the due date of filing the return specified under section 139(1) [Section 13(9)] ………………………………………… 653
15.3c Donation to other institution out of accumulated income not to be treated as application of income for charitable/religious purpose [Explanation to section 11(2)] ………………………….. 654
15.3d Consequences if accumulated income in excess of 15% is not applied/invested in the prescribed manner [Section 11(3)] ……………………………………………………………………………….. 654
15.3e Circumstances where the accumulated income in excess of 15% can be utilized for a purpose other than that for which it was accumulated [Section 11(3A)] …………………………….. 655
xx Contents
15.4 Certain points for consideration ……………………………………………………………………………………………….. 655
15.5 Treatment of business income of a trust …………………………………………………………………………………….. 658
15.6 Conditions for applicability of sections 11 and 12 ………………………………………………………………………. 659
15.7 Commissioner empowered to cancel registration of charitable and religious trusts [Section 12AB(4) & (5)] (w.e.f. 1.4.2021) ……………………………………………………………………………………………… 670
15.8 Section 11 not to apply in certain cases [Section 13] …………………………………………………………………… 672
15.8a Persons referred to in section 13(3) ………………………………………………………………………………. 674
15.8b Meaning of substantial interest [Explanation 3 to section 13] …………………………………………… 674
15.8c Meaning of relative [Explanation 1 to section 13] …………………………………………………………… 674
15.8d When an income or property is deemed to have been used or applied for the benefit of a person referred to in section 13(3) [Section 13(2)] ………………………………………………………….. 674
15.9 Income of certain funds of national importance, educational institutions and medical institutions [Section 10(23C) and Rules 2C and 2CA] …………………………………………………………………………………. 675
15.9a Substantially financed by the Government [Explanation under section 10(23C)(iiiac)] ………… 677
15.9b Conditions for claiming exemption ………………………………………………………………………………. 677
15.9c Other conditions/points for considerations for claiming exemption …………………………………… 683
15.10 Levy of tax where the charitable institution ceases to exist or converts into a non-charitable organization [Sections 115TD to 115TF] …………………………………………………………………………………… 693
15.11 Taxability of the income of the charitable or religious trust [Section 164(2)] ………………………………….. 696
15.11a Assessment of charitable organization in case commercial receipts exceed the specified threshold of 20% of the total receipts [Section 13(8)] ……………………………………………………… 697
15.11b Computation of income in case of non-compliance by charitable or religious trust ……………… 697
15.12 Taxability of specified income of certain institutions [Section 115BBI]:………………………………………… 698
Chapter 16 Return of Income and Procedure of Assessment [Sections 139 to 154] ……………………….. 699
16.1 Submission of return of income [Section 139(1)] ……………………………………………………………………….. 699
16.1a Resident person to file return of income in certain cases even though not required otherwise ………………………………………………………………………………………………………………….. 700
16.1b Due date of furnishing return of income ………………………………………………………………………… 701
16.1c Central Government empowered to exempt any person from the requirement of furnishing a return of income [Section 139(1C)] …………………………………………………………….. 701
16.2 Submission of returns through Tax Return Preparers [Section 139B] …………………………………………….. 701
16.3 Mandatory to file return before due date if certain losses are to be carried forward [Section 139(3)] ………………………………………………………………………………………………………………………………….. 702
16.3a Power to condone delay in filing a return of loss [Circular No. 9/2015, dated 9.6.2015] ………. 703
16.4 Belated return [Section 139(4)] ………………………………………………………………………………………………… 703
16.5 Return of income of charitable trust and institutions [Section 139(4A)] …………………………………………. 703
16.5a Due date of filing return of charitable trust…………………………………………………………………….. 704
16.6 Return of income of political party [Section 139(4B)] …………………………………………………………………. 704
16.7 Return of income of certain associations and institutions [Section 139(4C)] …………………………………… 704
16.8 Certain university or college, etc. to file return of income/loss [Section 139(4D)] …………………………… 705
16.9 Business trusts will also be required to file return of income [Section 139(4E)] ………………………………. 705
16.10 Investment fund referred to in section 115UB mandatorily required to furnish return of income [Section 139(4F)] …………………………………………………………………………………………………………………… 705
16.11 Form and manner of furnishing return of income [Rule 12]………………………………………………………….. 705
16.12 Preparation of return by authorised representative [Rule 12A] ……………………………………………………… 709
16.13 Revised return [Section 139(5)] ……………………………………………………………………………………………….. 710
16.13a Completion of assessment …………………………………………………………………………………………… 710
16.13b Can a belated return under section 139(4) be revised ………………………………………………………. 710
16.13c Can revised return be further revised …………………………………………………………………………….. 710
16.13d Revised return substitutes the original return …………………………………………………………………. 710
16.14 Updated return [Section 139(8A) and Section 140B] …………………………………………………………………… 710
16.15 Defective return [Section 139(9)] ……………………………………………………………………………………………… 715
16.16 Power of Board to dispense with furnishing documents, etc. with the return [Section 139C] …………….. 715
16.17 Filing of return in electronic form [Section 139D] ………………………………………………………………………. 716
16.18 Return by whom to be verified [Section 140] …………………………………………………………………………….. 716
16.19 Self-assessment [Section 140A] ……………………………………………………………………………………………….. 717
16.20 Inquiry before assessment [Section 142] ……………………………………………………………………………………. 718
Contents xxi
16.21 Estimates by Valuation Officer in certain cases [Section 142A] ……………………………………………………. 722
16.22 Faceless inquiry, direction for special audit and valuation [Section 142B] ……………………………………… 723
16.23 Processing of return [Section 143(1)] ………………………………………………………………………………………… 724
16.23a Scheme for centralized processing [Section 143(1B)] ……………………………………………………… 725
16.24 Regular/Scrutiny Assessment — On the basis of return of income and after hearing additional evidence [Section 143(3)] ……………………………………………………………………………………………………….. 726
16.24a Compulsory Service of Notice [Section 143(2)] ……………………………………………………………… 726
16.24b Section 282A relating to authentication notices and other documents ………………………………… 726
16.24c Notice deemed to be valid in certain circumstances [Section 292BB]………………………………… 726
16.24d Consequences of failure to comply with notice under section 143(2) ………………………………… 727
16.25 Assessment after evidence [Section 143(3)] ……………………………………………………………………………….. 727
16.25a Deduction not to be allowed if claim is not made in the return of income ………………………….. 727
16.25b Assessment of certain institutions without giving exemption available under section 10 [First and second proviso to section 143(3)] …………………………………………………………………… 727
16.25c Assessment of university, college, etc., on withdrawal of exemption notification issued under section 35(1)(ii) and (iii) [Third proviso to section 143(3)] ……………………………………… 728
16.25d New scheme for scrutiny assessment [Section 143(3A)/(3B)/(3C)] …………………………………… 728
16.26 Best Judgment Assessment [Section 144] ………………………………………………………………………………….. 729
16.26a Opportunity must be given to the assessee …………………………………………………………………….. 729
16.26b Assessment on rejection of accounts …………………………………………………………………………….. 729
16.27 Power of Joint Commissioner to issue directions in certain cases [Section 144A] ……………………………. 729
16.28 Faceless assessment [Section 144B]………………………………………………………………………………………….. 730
16.29 Income escaping assessment and search assessments [Sections 147, section 148, section 148A, section 149, section 151 and section 151A] ……………………………………………………………………………….. 737
16.29a Income escaping assessment [Section 147] ……………………………………………………………………. 737
16.29b Issue of notice where income has escaped assessment [Section 148] …………………………………. 737
16.29c Conducting inquiry, providing opportunity before issue of notice under section 148 [Section 148A]…………………………………………………………………………………………………………… 738
16.29d Prior approval for assessment, reassessment or recomputation in certain cases [Section 148B] ……………………………………………………………………………………………………………………….. 739
16.29e Time limit for issue of notice under section 148 [Section 149] …………………………………………. 739
16.29f Specified authority whose sanction is required for issue of notice [Section 151] …………………. 741
16.29g Provision for cases where assessment is in pursuance of an order on appeal, etc. [Section 150]………………………………………………………………………………………………………………………….. 742
16.30 Faceless assessment of income escapting assessment [Section 151A] ……………………………………………. 743
16.31 Time limit for completion of all assessments and reassessment [Section 153] ………………………………… 743
16.31a Period of limitation to exclude certain period [Explanation 1 to section 153] ……………………… 747
16.32 Rectification of mistakes [Section 154] ……………………………………………………………………………………… 749
16.33 Re-computation of income/amendment of order of the past years in certain cases [Section 155] See also section 157A below ……………………………………………………………………………………………………. 752
16.34 Notice of demand [Section 156] ……………………………………………………………………………………………….. 755
16.35 Modification and revision of notice of demand subsequent to business reorganization orders of the competent authority [Section 156A] …………………………………………………………………………………….. 756
16.36 Faceless rectification, amendments and issuance of notice or intimation [Section 157A] …………………. 756
Chapter 17 Permanent account number and Aadhaar Number [Sections 139A and 139AA] ………… 758
17.1 Permanent account number [Section 139A] ……………………………………………………………………………….. 758
17.1a Power delegated to the Central Government to notify class or classes of persons for whom it will be obligatory to apply for permanent account number (PAN) [Section 139A(1A) & (1B)] ……………………………………………………………………………………………………… 759
17.1b PAN to be quoted in certain cases [Section 139A(5)] ……………………………………………………… 759
17.1c Transactions where quoting of PAN made compulsory [Section 139A(5)(c) and Rule 114B] ……………………………………………………………………………………………………………………….. 759
17.1d Intimation of PAN in certain cases and obligation of the person to whom the PAN is intimated …………………………………………………………………………………………………………………… 762
17.1e Duty of the person receiving any document relating to the transactions where quoting of PAN is compulsory [Section 139A(6)] ………………………………………………………………………….. 763
xxii Contents
17.1f Quoting and authentication of PAN in the documents pertaining to prescribed transactions [Section 139A(6A), W.e.f. 1.9.2019] …………………………………………………………… 763
17.1g Person receiving the document pertaining to prescribed transactions to ensure PAN or Aadhaar number has been duly quoted and authenticated [Section 139A(6B), w.e.f. 1.9.2019] …………………………………………………………………………………………………………………… 763
17.2 Quoting of Aadhaar number [Section 139AA] ……………………………………………………………………………. 763
Chapter 18 Search, Seizure & Survey and Special Procedure for Assessment of Search Cases [Sections 132, 132A, 132B, 133A, 153A to 153D] ………………………………………………………. 765
18.1 Search and seizure [Section 132] ……………………………………………………………………………………………… 765
18.2 Power to requisition books of account, etc. [Section 132A] ………………………………………………………….. 771
18.3 Application of seized or requisitioned assets [Section 132B] ………………………………………………………… 772
18.4 Procedure for assessment of search cases …………………………………………………………………………………… 773
18.5 Survey [Section 133A] ……………………………………………………………………………………………………………. 774
18.5a Specific survey of business premises or any place, at which the activity of charitable purpose is carried on (see amendment below) [Section 133A(1) to (4)] ……………………………… 774
18.5b Survey in connection with any function, etc. [Section 133A(5)] ……………………………………….. 777
18.5c Consequences if facilities not provided [Section 133A(6)] ………………………………………………. 777
Chapter 19 Deduction and Collection of Tax at Source [Sections 190 to 206AA] ………………………….. 779
19.1 Deduction at source and advance payment [Section 190] …………………………………………………………….. 779
19.2 Direct payment [Section 191] …………………………………………………………………………………………………… 779
19.3 Deduction of tax from salary [Section 192] ……………………………………………………………………………….. 780
19.3a Tax to be deducted at average of income-tax [Section 192(1)]………………………………………….. 780
19.3b Employer to obtain evidence/proof regarding deductions, exemptions or allowances claimed by the employee [Section 192(2D)] ………………………………………………………………….. 780
19.3c Furnishing of evidence of claims by employee for deduction of tax under section 192 [Rule 26C] [Applicable only if the employee does not opt for the concessional rate of tax under section 115BAC] ………………………………………………………………………………………………. 780
19.3d When does the liability to deduct tax at source arise ……………………………………………………….. 781
19.3e Tax on non-monetary perquisites can be paid by employer ………………………………………………. 781
19.3f Salary from more than one employer…………………………………………………………………………….. 781
19.3g Relief under section 89 [Section 192(2A)] …………………………………………………………………….. 781
19.3h Details of other incomes [Section 192(2B)] …………………………………………………………………… 781
19.3-i Employer to furnish a statement to employee [Section 192(2C)] ………………………………………. 782
19.3j Employer to obtain evidence/proof regarding deductions, exemptions or allowances claimed by the employee while estimating the income of the employee for the purpose of deduction of tax under section 192 [Section 192(2D)] …………………………………………………….. 782
19.3k Adjustment in the amount of tax to be deducted [Section 192(3)] ……………………………………… 782
19.3-l Deduction at source of tax payable on accumulated balance of recognised provident fund [Section 192(4)] …………………………………………………………………………………………………………. 782
19.3m Deduction of tax on contributions paid to an employee out of Approved superannuation fund [Section 192(5)]………………………………………………………………………………………………….. 782
19.3n CBDT rules to be followed for deduction of tax at source ……………………………………………….. 783
19.3-o Where no tax is to be deducted from salary or tax is to be deducted at lower rate ……………….. 783
19.4 Deduction of tax from accumulated balance of the recognized provident fund withdrawn by the employee [Section 192A] ………………………………………………………………………………………………………… 783
19.5 Deduction of Tax from Interest on Securities [Section 193] …………………………………………………………. 784
19.5a Who is liable to deduct tax ………………………………………………………………………………………….. 784
19.5b When does liability to deduct tax at source arise …………………………………………………………….. 784
19.5c Exemption from tax deduction …………………………………………………………………………………….. 784
19.5d Where no tax is to be deducted or tax is to be deducted at a lower rate ………………………………. 785
19.6 Deduction of tax from dividends [Section 194]…………………………………………………………………………… 786
19.6a Who is liable to deduct tax ………………………………………………………………………………………….. 786
19.6b When TDS to be deducted …………………………………………………………………………………………… 786
19.6c Rate of TDS — @ 10% ………………………………………………………………………………………………. 786
19.6d Where no tax is to be deducted or tax is to be deducted at lower rate ………………………………… 786
19.7 Interest other than interest on securities [Section 194A] ………………………………………………………………. 787
19.7a Who is liable to deduct tax ………………………………………………………………………………………….. 787
Contents xxiii
19.7b When TDS is to be deducted ……………………………………………………………………………………….. 787
19.7c Where no tax is to be deducted at source ……………………………………………………………………….. 787
19.7d Tax to be deducted from interest on employee’s contribution to Provident fund exceeding ₹ 2,50,000/₹5,00,000, as the case may be ……………………………………………………….. 791
19.7e Rates of TDS for the financial year 2022-23 and 2023-24 ……………………………………………….. 791
19.8 Winnings from lottery, crossword puzzle, [etc.] [Section 194B] …………………………………………………… 791
19.8a Who is liable to deduct tax ………………………………………………………………………………………….. 791
19.8b When TDS is to be deducted ……………………………………………………………………………………….. 791
19.8c Rate of TDS ………………………………………………………………………………………………………………. 791
19.9 Winnings from horse races [Section 194BB] ……………………………………………………………………………… 793
19.9a Who is liable to deduct tax ………………………………………………………………………………………….. 793
19.9b Rate of TDS ………………………………………………………………………………………………………………. 793
19.9c When TDS is to be deducted: ………………………………………………………………………………………. 793
19.10 Payment to resident contractor [Section 194C] …………………………………………………………………………… 793
19.11 Insurance Commission [Section 194D] ……………………………………………………………………………………… 795
19.11a Who is required to make TDS ……………………………………………………………………………………… 795
19.11b When tax to be deducted …………………………………………………………………………………………….. 795
19.11c Condition for deduction ………………………………………………………………………………………………. 795
19.11d Rate of TDS for financial year 2022-23 and 2023-24 ………………………………………………………. 795
19.12 TDS from non-exempt payments made under life insurance policy [Section 194DA]………………………. 796
19.13 Payments to non-resident sportsmen or foreign entertainer or sports associations [Section 194E] ……… 797
19.13a When the tax is to be deducted …………………………………………………………………………………….. 797
19.14 Payments in respect of deposit under National Savings Scheme, etc. [Section 194EE] …………………….. 797
19.14a Who is liable to deduct tax ………………………………………………………………………………………….. 797
19.14b Rate of TDS ………………………………………………………………………………………………………………. 797
19.14c When tax is to be deducted ………………………………………………………………………………………….. 797
19.15 Commission, etc. on sale of lottery tickets [Section 194G] …………………………………………………………… 798
19.15a Who is liable to deduct tax ………………………………………………………………………………………….. 798
19.15b When tax is to be deducted ………………………………………………………………………………………….. 798
19.15c Rate of TDS ………………………………………………………………………………………………………………. 798
19.15d Where no tax is to be deducted or tax is to be deducted at a lower rate [Section 194G(2) & (3)] ……………………………………………………………………………………………………………………….. 798
19.16 Commission and Brokerage [Section 194H] ………………………………………………………………………………. 798
19.16a Who is liable to deduct tax ………………………………………………………………………………………….. 798
19.16b When TDS is to be deducted ……………………………………………………………………………………….. 799
19.16c Rate of TDS ………………………………………………………………………………………………………………. 799
19.16d Where no tax is to be deducted or tax is to be deducted at lower rate ………………………………… 799
19.17 Rent [Section 194-I] ……………………………………………………………………………………………………………….. 799
19.17a Who is liable to deduct tax ………………………………………………………………………………………….. 799
19.17b Rate of TDS on Rent for financial year 2022-23 …………………………………………………………….. 800
19.17c When TDS is to be deducted ……………………………………………………………………………………….. 800
19.18 Tax Deduction at Source (TDS) on transfer of certain immovable properties (other than agricultural land) [Section 194-IA] …………………………………………………………………………………………… 801
19.18a Who is liable to deduct tax at source under section 194-IA? …………………………………………….. 801
19.18b Meaning of consideration for transfer of any immovable property [Explanation (aa) inserted w.e.f. 1.9.2019] ……………………………………………………………………………………………… 801
19.18c Meaning of immovable property ………………………………………………………………………………….. 802
19.18d When is the tax to be deducted under section 194-IA? …………………………………………………….. 802
19.18e Rate of TDS for financial year 2022-23 ………………………………………………………………………… 802
19.18f Tax not to be deducted in certain cases …………………………………………………………………………. 802
19.18g Procedure of deposit of tax deducted at source ……………………………………………………………….. 802
19.18h Form, time limit and procedure for issue of TDS certificate of deduction of tax under section 194-IA …………………………………………………………………………………………………………… 802
19.18-i Quarterly statement ……………………………………………………………………………………………………. 803
19.19 TDS from payment of rent by certain Individuals or HUF [Section 194-IB] …………………………………… 803
19.19a Who is liable to deduct tax ………………………………………………………………………………………….. 803
19.19b When tax is to be deducted [Section 194-IB(2)] ……………………………………………………………… 803
xxiv Contents
19.19c Where no tax is to be deducted at source ……………………………………………………………………….. 803
19.19d Rate of TDS ………………………………………………………………………………………………………………. 803
19.19e No requirement for obtaining TAN by the deductor [Section 194-IB(3)]……………………………. 804
19.19f Amount to be deducted when PAN is not provided by the recipient of the rent [Section 194-IB(4)] …………………………………………………………………………………………………………………. 804
19.20 TDS from payment under specified agreement referred to in section 45(5A) [Section 194-IC] …………. 804
19.20a Who is liable to deduct tax ………………………………………………………………………………………….. 804
19.20b When tax is to be deducted ………………………………………………………………………………………….. 804
19.20c Rate of TDS ………………………………………………………………………………………………………………. 804
19.21 Fees for professional or technical services [Section 194J] ……………………………………………………………. 804
19.21a Who is liable to deduct tax ………………………………………………………………………………………….. 804
19.21b Rate of TDS ………………………………………………………………………………………………………………. 805
19.21c When tax is to be deducted ………………………………………………………………………………………….. 805
19.21d Where no tax is to be deducted or tax is to be deducted at a lower rate [Section 197] ………….. 805
19.21e Meaning of professional services …………………………………………………………………………………. 805
19.21f Meaning of fees for technical services …………………………………………………………………………… 806
19.22 Income in respect of units [Section 194K] …………………………………………………………………………………. 806
19.22a Who is liable to deduct tax ………………………………………………………………………………………….. 806
19.22b When tax is to be deducted ………………………………………………………………………………………….. 806
19.22c Rate of TDS for financial year 2022-23 – 10% ………………………………………………………………. 806
19.22d Where no tax is to be deducted at source ……………………………………………………………………….. 806
19.22e No tax is deductible at source, where a self declaration under Form No. 15G/15H is furnished by a particular person [Section 197A(1A), (1B) and (1C)] …………………………………. 806
19.22f Where the taxes is either not to be deducted or to be deducted at lower rate [Section 197 and Rules 28 and 28AA] …………………………………………………………………………………………….. 807
19.23 Payment of compensation on acquisition of certain immovable property [Section 194LA] ………………. 807
19.23a Who is liable to deduct tax ………………………………………………………………………………………….. 807
19.23b Rate of TDS ………………………………………………………………………………………………………………. 807
19.23c When TDS is to be deducted ……………………………………………………………………………………….. 808
19.23d When no tax is to be deducted ……………………………………………………………………………………… 808
19.23A TDS from income by way of interest from Indian company or a business trust [Section 194LC] ……….. 808
19.23A(a) Who is liable to deduct tax ………………………………………………………………………………………. 808
19.23A(b) When TDS is to be deducted …………………………………………………………………………………….. 809
19.23A(c) Rate of TDS …………………………………………………………………………………………………………… 809
19.24 Payment of certain sums by certain individuals or Hindu undivided family [Section 194M] …………….. 809
19.24a Who is liable to deduct tax ………………………………………………………………………………………….. 809
19.24b When tax is to be deducted [Section 194M(1)] ………………………………………………………………. 810
19.24c Where no tax is to be deducted at source ……………………………………………………………………….. 810
19.24d Rate of TDS ………………………………………………………………………………………………………………. 810
19.24e Where the tax is either not to be deducted or to be deducted at lower rate [Section 197 and Rules 28 and 28AA] …………………………………………………………………………………………….. 810
19.24f No requirement for obtaining TAN by the deductor [Section 194M(2)] …………………………….. 811
19.25 Payment of certain amounts in cash [Section 194N] ……………………………………………………………………. 811
19.25a Who is liable to deduct tax ………………………………………………………………………………………….. 811
19.25b When tax is to be deducted ………………………………………………………………………………………….. 811
19.25c Rate of TDS ………………………………………………………………………………………………………………. 811
19.25d Where the taxes is either not to be deducted or to be deducted at lower rate [Section 197 and Rules 28 and 28AA] …………………………………………………………………………………………….. 812
19.25e Where no tax is to be deducted at source ……………………………………………………………………….. 812
19.26 TDS from Payment of Certain Sums by E-commerce Operator to E-commerce Participant [Section 194-O] ……………………………………………………………………………………………………………………… 814
19.26a Who is liable to deduct tax ………………………………………………………………………………………….. 814
19.26b When tax is to be deducted ………………………………………………………………………………………….. 814
19.26c Rate of TDS ………………………………………………………………………………………………………………. 814
19.26d Where no tax is to be deducted at source [Section 194-O(2)] ……………………………………………. 814
19.26e Deduction not to be made under any other provisions if tax is deducted under this section [section 194-O(3)] ……………………………………………………………………………………………………… 814
Contents xxv
19.27 Deduction of tax in case of specified senior citizen. [Section 194P] ………………………………………………. 815
19.28 Deduction of tax at source on payment of certain sum for purchase of goods [Section 194Q] …………… 815
19.29 TDS on benefit or perquisite in respect of business or profession [Section 194R] ……………………………. 819
19.29a Who is liable to deduct tax ………………………………………………………………………………………….. 819
19.29b When tax is to be deducted ………………………………………………………………………………………….. 820
19.29c Rate of TDS w.e.f. 1.7.2022 ………………………………………………………………………………………… 820
19.29d Where no tax is to be deducted at source [Second & third provisos to section 194R(1)] ………… 820
19.30 TDS on Payment on Transfer of Virtual Digital Asset [Section 194S] …………………………………………… 830
19.30a Who is liable to deduct tax ………………………………………………………………………………………….. 830
19.30b When tax is to be deducted ………………………………………………………………………………………….. 830
19.30c Rate of TDS w.e.f. 1.7.2022 ………………………………………………………………………………………… 830
19.30d Where no tax is to be deducted at source [section 194S(3)] ……………………………………………… 830
19.30e Tax to be deducted under section 194S(1) even if Section 194-O is also applicable [Section 194S(4)] ……………………………………………………………………………………………………….. 831
19.31 Other sums [Section 195] ………………………………………………………………………………………………………… 831
19.31a TDS on income of non-resident ……………………………………………………………………………………. 831
19.31b When the tax is to be deducted …………………………………………………………………………………….. 831
19.31c Payee of the amount may make application for deduction of tax on the “income” comprised in the payment [Section 195(2)] ……………………………………………………………………. 831
19.31d Where no tax is to be deducted at source [Section 195(3)] ……………………………………………….. 832
19.31e Furnishing of information [Section 195(6)] ……………………………………………………………………. 832
19.31f Board may by general or specified order authorize Assessing Officer to determine the appropriate proportion of such chargeable on which tax is to be deducted………………………….. 834
19.32 Income payable ‘Net of Tax’ [Section 195A] ………………………………………………………………………………. 834
19.33 Interest or dividends or other sums payable to Government, Reserve Bank or certain corporations [Section 196] …………………………………………………………………………………………………………………………. 834
19.34 Income in respect of units of non-residents [Section 196A] ………………………………………………………….. 835
19.34a Who is responsible for deducting tax at source [Section 196A(1)] …………………………………….. 835
19.34b Rate of TDS — 20% …………………………………………………………………………………………………… 835
19.34c When the tax is not to be deducted at source [Section 196A(2)] ……………………………………….. 835
19.35 Income from units to Offshore Fund [Section 196B] …………………………………………………………………… 835
19.36 Income from foreign currency bonds or Global Depository Receipts of Indian company [Section 196C]……………………………………………………………………………………………………………………………………. 835
19.37 Income of Foreign Institutional Investors from securities [Section 196D] ………………………………………. 836
19.38 General provisions …………………………………………………………………………………………………………………. 836
19.39 No deduction to be made in certain cases [Section 197A] ……………………………………………………………. 837
19.39a Declaration not allowed if aggregate of income under sections 192A, 193, 194A, 194D, 194DA, 194EE, 194-I and 194K exceeds the maximum amount not chargeable to income-tax [Section 197A(1B)]……………………………………………………………………………………. 837
19.39b Senior/very senior citizens can furnish declaration even if such income exceeds the maximum amount not chargeable to income-tax [Section 197A(1C)]………………………………… 838
19.39c No deduction of tax on interest paid by the Offshore Banking Unit to certain persons [Section 197A(1D)] ……………………………………………………………………………………………………. 838
19.39d No deduction of tax on any payment made to New Pension Scheme Trust [Section 197A(1E)] …………………………………………………………………………………………………………………. 838
19.39e No deduction of tax on specified payment to notified institution/association/body, etc. [Section 197A(1F)] …………………………………………………………………………………………………….. 838
19.40 Tax deducted is income received [Section 198] ………………………………………………………………………….. 838
19.41 Credit for tax deducted [Section 199 read with rule 37BA] ………………………………………………………….. 839
19.42 Tax deduction and collection account number [Section 203A and Rule 114A] ……………………………….. 840
19.43 Furnishing of quarterly returns regarding the details of non-deduction of tax by banks, co-operative societies, etc. [Section 206A] …………………………………………………………………………………….. 840
19.44 Miscellaneous provisions ………………………………………………………………………………………………………… 841
19.45 Requirement to furnish permanent account number [Section 206AA] ……………………………………………. 850
19.46 Special provision for deduction of tax at source for non-filers of income-tax return [Section 206AB] …………………………………………………………………………………………………………………………………. 851
xxvi Contents
19.47 Profit and Gains from the Business of trading in Alcoholic Liquor, Forest Produce, Scrap, etc. [Section 206C] ………………………………………………………………………………………………………………………. 852
19.47a Meaning of “seller” …………………………………………………………………………………………………….. 853
19.47b Meaning of “buyer” ……………………………………………………………………………………………………. 853
19.47c No TCS if declaration is furnished in Form No. 29C by the buyer to the effect that such goods are to be utilised for the purposes of manufacturing, processing or producing articles or things, etc. ………………………………………………………………………………………………….. 853
19.48 Tax to be collected at source in case of Parking Lot, Toll Plaza or Mining and Quarrying [Section 206C(1C)] …………………………………………………………………………………………………………………………….. 854
19.49 TCS on remittance out of India and on overseas tour programme package [Section 206C(1G)] ………… 854
19.50 Seller to collect TCS from consideration received from buyer [Section 206C(1H)] …………………………. 856
19.51 Higher rate of TCS if PAN is not furnished by collectee [Section 206CC] ……………………………………… 856
19.52 Special provision for collection of tax at source for non-filers of income-tax return [Section 206CCA] ………………………………………………………………………………………………………………………………. 857
19.53 Time and mode of payment to Government account of tax collected at source under section 206C [Section 206C(3) and Rule 37CA] ……………………………………………………………………………………………. 858
19.54 Issue of TCS certificate [Section 206C(5) & rule 37D] ……………………………………………………………….. 861
Chapter 20 Advance Payment of Tax [Sections 207-211, 217 & 219] ……………………………………………. 862
20.1 Liability for payment of Advance Tax [Section 207] …………………………………………………………………… 862
20.2 Senior citizen not required to pay advance tax [Section 207(2)] ……………………………………………………. 862
20.3 Conditions of Liability to pay Advance Tax [Section 208] …………………………………………………………… 862
20.4 Computation and Payment of Advance Tax where the calculation is made by the assessee himself [Section 209(1)(a) & (d)] ………………………………………………………………………………………………………… 862
20.5 What constitutes Current Income? ……………………………………………………………………………………………. 863
20.6 Payment of advance tax …………………………………………………………………………………………………………… 863
20.7 Instalments of advance tax and due dates [Section 211] ………………………………………………………………. 864
20.8 Payment of advance tax in case of capital gains/casual income [Proviso to section 234C] ………………… 865
20.9 Assessee Deemed to be in Default [Section 218] ………………………………………………………………………… 866
20.10 Credit for Advance Tax [Section 219] ………………………………………………………………………………………. 866
Chapter 21 Interest and Fee Payable [Sections 201(1A), 220(2), 234A, 234B, 234C, 234D, 234E, 234F, 234G,234H & 244A] ……………………………………………………………………………… 867
21.1 Interest for default in furnishing return of income under section 139(1) or (4) or in response to a notice under section 142(1) [Section 234A(1)] …………………………………………………………………………… 867
21.2 Interest for defaults in furnishing the return of income required by a notice under section 148 [Section 234A(3)] …………………………………………………………………………………………………………………… 870
21.3 Increase/decrease in the interest on certain orders [Section 234A(4)] …………………………………………….. 871
21.4 Interest payable for defaults in payment of advance tax [Section 234B(1)] …………………………………….. 871
21.5 Interest payable for defaults in payment of advance tax [Section 234B(3)] …………………………………….. 875
21.6 Increase/decrease in the interest on certain orders [Section 234B(4)] …………………………………………….. 876
21.7 Interest for deferment of advance tax [Section 234C] ………………………………………………………………….. 876
21.8 Interest on excess refund granted at the time of summary assessment [Section 234D] ……………………… 880
21.9 Fee for delay in furnishing of TDS/TCS Statement [Section 234E] ……………………………………………….. 881
21.10 Fee for default in furnishing return of income [Section 234F] ………………………………………………………. 881
21.11 Fee for default relating to statement of certificate [Section 234G] …………………………………………………. 881
21.12 Fee for default relating to intimation of Aadhaar number [Section 234H] ………………………………………. 882
21.13 Interest for late payment of demand of tax, interest, penalty, etc. [Section 220(2)] ………………………….. 882
21.13a Can interest payable under section 220(2) be increased or decreased [First proviso to section 220(2)] …………………………………………………………………………………………………………… 882
21.13b For charging interest under section 220(2), the amount specified in the notice of demand issued under section 156 shall be deemed to be valid till the disposal of appeal by the last appellate authority or disposal of proceedings [Section 220(1A)] ……………………………………… 883
21.13c Reduction or waiver of interest payable under section 220(2) [Section 220(2A)] ………………… 883
21.13d Interest under section 220(2) not leviable if charged under section 201(1A) read with section 200A(1) [Section 220(2B)] ……………………………………………………………………………….. 883
21.13e Interest under section 220(2) not leviable if charged under section 206C(7) read with section 206CB(1) [Section 220(2C)] …………………………………………………………………………….. 883
21.14 Failure to deduct and pay tax at source [Section 201(1A)]……………………………………………………………. 883
Contents xxvii
21.15 Waiver of interest …………………………………………………………………………………………………………………… 884
21.16 Interest payable to assessee [Section 244A] ……………………………………………………………………………….. 885
Chapter 22 Refunds [Sections 237 to 241 & 245] ………………………………………………………………………… 889
22.1 Who should claim refund? ………………………………………………………………………………………………………. 889
22.2 Who is entitled to refund? [Section 237] ……………………………………………………………………………………. 889
22.3 Can a person other than the assessee claim refund? [Section 238] …………………………………………………. 889
22.4 Form for claim for refund and period within which claim for refund should be made [Section 239 and Rule 41] ………………………………………………………………………………………………………………………….. 889
22.5 Refund on appeal, etc. [Section 240] …………………………………………………………………………………………. 890
22.6 Withholding of refund in certain cases [Section 241A] ………………………………………………………………… 890
22.7 Correctness of assessment not to be questioned [Section 242] ………………………………………………………. 891
22.8 Interest payable to assessee [Section 244A] ……………………………………………………………………………….. 891
22.9 Set off of refund against tax/demand outstanding [Section 245] ……………………………………………………. 891
22.10 Procedure for filing a delayed refund claim ……………………………………………………………………………….. 892
Chapter 23 Penalties and Prosecutions ………………………………………………………………………………………. 894
23.1 Penalties ……………………………………………………………………………………………………………………………….. 894
23.2 Certain penalties discussed in detail ………………………………………………………………………………………….. 904
23.3 Penalty for under-reporting and misreporting of income [Section 270A] ……………………………………….. 908
23.4 Immunity from imposition of penalty and initiation of proceedings under section 276C or 276CC [Section 270AA] ……………………………………………………………………………………………………………………. 913
23.5 Power to reduce or waive penalty, etc., in certain cases [Section 273A] …………………………………………. 914
23.6 Power of Principal Commissioner or Commissioner to grant immunity from penalty [Section 273AA] ………………………………………………………………………………………………………………………………… 916
23.7 Penalty not to be imposed in certain cases [Section 273B] …………………………………………………………… 916
23.8 Procedure for imposing penalty [Section 274] ……………………………………………………………………………. 917
23.9 Bar of limitation for imposing penalties [Section 275] ………………………………………………………………… 918
23.10 Prosecution for offences committed under various provisions of Act …………………………………………….. 921
23.11 Power of Principal Commissioner or Commissioner to grant immunity from prosecution [Section 278AB] …………………………………………………………………………………………………………………………………. 926
Chapter 24 Appeals and Revision [Sections 246 to 264] ………………………………………………………………. 927
24.1 Remedy available against the order of the Commissioner (Appeals)/ Revision orders of CIT …………… 927
24.2 Remedy against orders of Appellate Tribunal …………………………………………………………………………….. 928
24.3 Appeal against order of High Court to Supreme Court ………………………………………………………………… 928
24.4 First appeal ……………………………………………………………………………………………………………………………. 929
24.4a Appealable orders before Commissioner (Appeals) [Section 246A] ………………………………….. 930
24.4b Appeal by person denying liability to deduct tax [Section 248] ………………………………………… 931
24.4c Form of appeal and limitation [Section 249 and Rules 45 and 46] …………………………………….. 932
24.4d Procedure in hearing appeal [Section 250] …………………………………………………………………….. 933
24.4e Powers of [the Joint Commissioner or] the Commissioner (Appeals) [Section 251] …………….. 944
24.5 Appeals to the Appellate Tribunal [Section 253(1) and (2)] …………………………………………………………. 945
24.5a Procedure for filing appeal to Appellate Tribunal [Section 253(3), (3A) (4), (5) and (6)]……… 947
24.6 Orders of Appellate Tribunal [Section 254] ……………………………………………………………………………….. 948
24.6a Rectification of Mistake by the Tribunal [Section 254(2)] ……………………………………………….. 949
24.7 Remedy against the order of Appellate Tribunal …………………………………………………………………………. 949
24.7a Direct Appeal to High Court [Section 260A] …………………………………………………………………. 949
24.8 Appeal to the Supreme Court [Section 261] ……………………………………………………………………………….. 950
24.9 Revision by the Principal Commissioner or Commissioner ………………………………………………………….. 950
24.9a Revision of orders prejudicial to Revenue [Section 263]………………………………………………….. 950
24.9b Power of revision involves 4 steps to be taken under section 263 ……………………………………… 951
24.9c Revision of orders in favour of assessee [Section 264] ……………………………………………………. 951
24.10 Faceless revision of orders [Section 264A] ………………………………………………………………………………… 952
24.11 Special provision for avoiding repetitive appeals by the assessee [Section 158A and Rule 16] ………….. 953
24.12 Procedure where an identical question of law is pending before High Courts or Supreme Court [Section 158AB ] ……………………………………………………………………………………………………………………. 954
Chapter 25 Miscellaneous Provisions …………………………………………………………………………………………. 956
25.1 Mode of taking or accepting certain loans, deposits and specified sum [Section 269SS] ………………….. 956
25.1a Section 269SS not to apply in the following cases [Provisos 1 and 2 to section 269SS] ……….. 956
xxviii Contents
25.2 Mode of repayment of certain loans or deposits and specified advance received [Section 269T] ……….. 957
25.2a Section 269T not applicable even for repayment of loan or deposit or specified advance exceeding ₹20,000 by any mode other than account payee cheque/draft if made to certain persons ……………………………………………………………………………………………………………………… 958
25.2b Consequence of contravention of the provisions of section 269T [Section 271E] ………………… 959
25.3 Mode of undertaking transactions [Section 269ST] …………………………………………………………………….. 959
25.3a Penalty for failure to comply with provisions of section 269ST [Section 271DA] ……………….. 960
25.4 Mandating acceptance of payments through prescribed electronic modes [Sections 269SU, 271DB] …………………………………………………………………………………………………………………………………. 960
25.4a Penalty for failure to comply with provisions of section 269SU [Section 271DB] ………………. 960
25.5 Charge or parting of asset to avoid tax or other sum payable to be void …………………………………………. 960
25.6 Provisional attachment to protect revenue in certain cases [Section 281B]……………………………………… 961
25.7 Mode of service of notice or summon or requisition or order or any other communication under the Income Tax Act ………………………………………………………………………………………………………………… 962
25.8 Service of notice when family is disrupted or firm, etc., is dissolved [Section 283] …………………………. 964
25.9 Service of notice in the case of discontinued business [Section 284] ……………………………………………… 964
25.10 Authentication of notices and other documents [Section 282A] ……………………………………………………. 964
25.11 Return of income, assessment, etc., not to be invalid on certain grounds [Section 292B] ………………….. 965
25.12 Provisions specified in section 285BA relating to statement of financial transaction or reportable account? ……………………………………………………………………………………………………………………………….. 965
25.13 Annual information statement [Section 285BB] …………………………………………………………………………. 972
25.14 Condonation of delay in obtaining approval [Section 293B] ………………………………………………………… 973
25.15 Power to withdraw approval [Section 293C] ………………………………………………………………………………. 973
25.16 Faceless approval or registration [Section 293D] ………………………………………………………………………… 973
25.17 Taxation Regime for Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (Invit) [Section 115UA] ………………………………………………………………………………………………………….. 974
25.18 Special provisions relating to tax on income of investment funds and income received from such funds [Section 115UB, w.e.f. A.Y. 2016-17] ……………………………………………………………………………… 978
25.18a Consequences if income of the investment fund is taxable in the hands of the unit-holder under section 115UB(1) ………………………………………………………………………………………………. 981
25.18b Certain income of the investment fund is taxable in the hands of the investment funds ………… 982
25.18c Examples of special provisions relating to tax on income of investment funds and income received from such funds …………………………………………………………………………………. 982
25.19 Tax on income from virtual digital assets [Section 115BBH]: ………………………………………………………. 983
25.19a TDS on Payment on transfer of virtual digital asset [Section 194S inserted w.e.f. 1-7-2022]………………………………………………………………………………………………………………………… 984
25.19b Explanation to section 56(2)(x) amended [w.e.f. AY 2023-24] …………………………………………… 985
25.19c The term ―virtual digital asset defined [Section 2(47A) inserted w.e.f. AY2023-24] ……………… 986
Chapter 26 Equalisation Levy [Chapter VIII of the Finance Act, 2016] ………………………………………. 988
26.1 Extent, commencement and application [Section 163] …………………………………………………………………. 988
26.2 Charge of Equalisation Levy [Section 165 and section 165A] ………………………………………………………. 988
26.3 Collection and recovery of equalization levy [Section 166 and section 166A] ………………………………… 991
26.4 Furnishing of statement [Section 167] ……………………………………………………………………………………….. 992
26.5 Processing of statement [Section 168] ……………………………………………………………………………………….. 993
26.6 Rectification of mistake [Section 169] ………………………………………………………………………………………. 993
26.7 Interest on delayed payment of equalisation levy [Section 170] ……………………………………………………. 994
26.8 Penalty for failure to deduct or pay equalisation levy [Section 171] ………………………………………………. 994
26.9 Penalty for failure to furnish statement [Section 172] ………………………………………………………………….. 995
26.10 Penalty not to be imposed in certain cases [Section 173] ……………………………………………………………… 995
26.11 Amounts not deductible [Section 40(a)(ib) of the Income Tax Act, 1961] ……………………………………… 995
DIVISION 3 Tables
Table 1 As per new Regime
Tax Deduction at source from monthly taxable salary during the financial year 2023-2024 …………. 997
Table 1A Tax Deduction at source from monthly taxable salary during the financial year 2023-2024 if the individual has opted for old regime …………………………………………………………………………….. 1001
Contents xxix
Table 2A As per New regime (View Important Notes) Income Tax payable* For A.Y. 2023-2024
(i.e. the assessee has opted to pay tax as per section 115BAC)
Applicable only for †Individual & HUF
Taxable income between ₹2,50,000 AND ₹2,79,000 …………………………………………………………….. 1006
Taxable income between ₹2,79,000 and ₹3,68,000 ……………………………………………………………….. 1007
Taxable income between ₹3,68,000 and ₹5,00,000 ……………………………………………………………….. 1008
Taxable income between ₹5,00,010 and ₹6,20,000 ……………………………………………………………….. 1009
Taxable income between ₹6,20,000 and ₹7,50,000 ……………………………………………………………….. 1010
Taxable income between ₹7,50,010 and ₹10,00,000 ……………………………………………………………… 1011
Taxable income between ₹10,00,010 and ₹12,50,000 ……………………………………………………………. 1012
Taxable income between ₹12, 50,010 and ₹15,00,000 …………………………………………………………… 1013
Taxable income between ₹15,00,010 and ₹27,50,000 ……………………………………………………………. 1014
Table 2B As per old regime (View Important Notes) Income Tax payable* For A.Y. 2023-2024
(i.e. total income has been computed after claiming all available exemptions and deductions)
†Individual; HUF; AOP; BOI and Artificial Juridicial Persons
Taxable income between ₹2,50,000 AND ₹2,79,000 …………………………………………………………….. 1015
Taxable income between ₹2,79,000 and ₹3,68,000 ……………………………………………………………….. 1016
Taxable income between ₹3,68,000 and ₹5,00,000 ……………………………………………………………….. 1017
Taxable income between ₹5,00,010 and ₹6,20,000 ……………………………………………………………….. 1018
Taxable income between ₹6,20,000 and ₹7,50,000 ……………………………………………………………….. 1019
Taxable income between ₹7,50,010 and ₹10,00,000 ……………………………………………………………… 1020
Taxable income between ₹10,00,010 and ₹12,50,000 ……………………………………………………………. 1021
Taxable income between ₹12, 50,010 and ₹15,00,000 …………………………………………………………… 1022
Taxable income between ₹15,00,010 and ₹27,50,000 ……………………………………………………………. 1023
Table 3A As per New regime (View Important Notes)
Advance tax* For A.Y. 2024-2025
(i.e. the assessee by default has to pay tax as per section 115BAC)
Applicable for Individual, HUF, AOP or BOI & AJP
Taxable income between ₹3,00,000 AND ₹3,30,000 …………………………………………………………….. 1024
Taxable income between ₹3,31,000 and ₹4,20,000 ……………………………………………………………….. 1025
Taxable income between ₹4,22,000 and ₹ 6,00,000 ………………………………………………………………. 1026
Taxable income between ₹6,05,000 and ₹ 9,00,000 ………………………………………………………………. 1027
Taxable income between ₹9,05,000 and ₹12,00,000 ……………………………………………………………… 1028
Taxable income between ₹12,05,010 and ₹15,00,000 ……………………………………………………………. 1029
Taxable income between ₹15,00,010 and ₹27,50,000 ……………………………………………………………. 1030
Table 3B As per old regime (View Important Notes)
Advance tax * For A.Y. 2024-2025
(i.e. total income has been computed after claiming all available exemptions and deductions)
†Individual; HUF; AOP; BOI and Artificial Juridicial Persons
Taxable income between ₹2,50,000 AND ₹2,79,000 …………………………………………………………….. 1031
Taxable income between ₹2,79,000 and ₹3,68,000 ……………………………………………………………….. 1032
Taxable income between ₹3,68,000 and ₹5,00,000 ……………………………………………………………….. 1033
Taxable income between ₹5,00,010 and ₹6,20,000 ……………………………………………………………….. 1034
Taxable income between ₹6,20,000 and ₹7,50,000 ……………………………………………………………….. 1035
Taxable income between ₹7,50,010 and ₹10,00,000 ……………………………………………………………… 1036
Taxable income between ₹10,00,010 and ₹12,50,000 ……………………………………………………………. 1037
Taxable income between ₹12, 50,010 and ₹15,00,000 …………………………………………………………. 1038
Taxable income between ₹15,00,010 and ₹27,50,000 ……………………………………………………………. 1039
Table 4 As per old regime
Advance Tax & Income Tax Payable* for A.Ys. 2023-2024 &2024-2025
ADVANCE TAX & INCOME TAX PAYABLE* FOR A.Ys. 2023-2024 &2024-2025
RESIDENT INDIVIDUAL of the age of 60 years or more but less than 80 years at any time during the previous year
Taxable income between ₹5,00,010 and ₹10,00,000 ……………………………………………………………… 1040
Taxable income between ₹10,00,010 and ₹27,50,000 ……………………………………………………………. 1041
TABLE 5 As per old regime
Advance Tax & Income Tax Payable* For A.Ys. 2023-2024 & 2024-2025
xxx Contents
Resident Individual of the age of 80 years or more at any time during the previous year
Taxable income between ₹5,00,000 and ₹10,00,000 ……………………………………………………………… 1042
Taxable income between ₹10,00,010 and ₹27,50,000 ……………………………………………………………. 1043
Table 6A As per normal provisions (View Important Notes)
Advance Tax & Income Tax Payable* For A.Ys. 2023-2024 &2024-2025
Domestic Companies* having total turnover or gross receipts of the PY 2020-21 (for A.Y. 2023-2024) & PY 2021-2022 ( for A.Y. 2024-2025) not exceeding Rs. 400 Crores
Taxable income between ₹10,000 and ₹50,00,000 ………………………………………………………………… 1046
Table 6B As per provisions U/S 115BAA (View Important Notes)
Advance Tax & Income Tax Payable* For A.Ys. 2023-24 & 2024-2025
Domestic Companies
Taxable income between ₹10,000 and ₹50,00,000 ………………………………………………………………… 1047
Table 6A As per normal provisions (View Important Notes)
Advance Tax & Income Tax Payable* For A.Ys. 2023-2024 & 2024-2025
Domestic Companies* having total turnover or gross receipts of the PY 2020-21 (for A.Y. 2023-2024) & PY 2021-2022 ( for A.Y.2024-2025) not exceeding Rs. 400 Crores
Taxable income between ₹50,00,000 and ₹1,00,00,000 …………………………………………………………. 1048
Table 6B As per provisions U/S 115BAA (View Important Notes)
Advance Tax & Income Tax Payable* For A.Ys. 2023-2024 & 2024-2025
Domestic Companies
Taxable income between ₹50,00,000 and ₹1,00,00,000 …………………………………………………………. 1049
Table 6A As per normal provisions (View Important Notes)
Advance Tax & Income Tax Payable* For A.Ys. 2023-2024 & 2024-2025
Domestic Companies* having total turnover or gross receipts of the PY 2020-21 (for A.Y.2023-2024) & PY 2021-2022 (for A.Y. 2023-2024) not exceeding Rs. 400 Crores
The Amount of Surcharge is calculated on the provisions of Marginal Relief in the Tax Table here below
Taxable income between ₹1,00,00,010 and ₹1,02,38,910 ………………………………………………………. 1050
Table 6B As per provisions U/S 115BAA (View Important Notes)
Advance Tax & Income Tax Payable* For A.Ys. 2023-2024 & 2024-2025
Domestic Companies Marginal Relief not applicable
Taxable income between ₹1,00,00,010 and ₹1,02,38,910 ………………………………………………………. 1051
Table 6A As per normal provisions (View Important Notes)
Advance Tax & Income Tax Payable* For A.Ys. 2023-2024 & 2024-2025
Domestic Companies* having total turnover or gross receipts of the PY 2020-21 (for A.Y. 2023-2024) & PY 2021-2022 (for A.Y. 2024-2025) not exceeding Rs. 400 Crores
Taxable income between ₹1,02,38,910 and ₹1,94,00,000 ………………………………………………………. 1052
Table 6B As per provisions U/S 115BAA (View Important Notes)
Advance Tax & Income Tax Payable* For A.Ys. 2023-2024 & 2024-2025
Domestic Companies
Taxable income between ₹1,02,38,910 and ₹1,94,00,000 ……………………………………………………… 1053
Table 7A As per normal provisions (View Important Notes)
Advance Tax & Income Tax Payable* For A.Ys. 2023-2024 & 2024-2025
FIRM (including LLP) and Domestic Companies having total turnover or gross receipts of the PY 2020-21 (for A.Y. 2023-2024) & PY 2021-2022 (for A.Y. 2024-2025) exceeding Rs. 400 Crores
Taxable income between ₹10,000 and ₹50,00,000 ………………………………………………………………… 1054
Taxable income between ₹50,00,000 and ₹1,00,00,000 …………………………………………………………. 1055
Taxable income between ₹1,00,00,010 and ₹1,03,09,280 ………………………………………………………. 1056
Taxable income between ₹1,03,09,290 and ₹1,94,00,000 ………………………………………………………. 1057
Table 7B As per provisions U/S 115BAB (View Important Notes)
Advance Tax & Income Tax Payable* For A.Ys. 2023-2024 & 2024-2025
Domestic Companies Also applicable for a Co-Operative Society covered under newly inserted section 115BAE w.e.f. A.Y. 2024-25
Taxable income between ₹10,000 and ₹50,00,000 ………………………………………………………………… 1058
Taxable income between ₹50,00,000 and ₹1,00,00,000 …………………………………………………………. 1059
Taxable income between ₹1,00,00,010 and ₹1,03,09,280 ………………………………………………………. 1060
Contents xxxi
Taxable income between ₹1,03,09,290 and ₹1,94,00,000 ………………………………………………………. 1061
Table 8A As per old regime (View Important Notes)
Advance tax & Income Tax Payable* for A.Ys. 2023-2024 & 2024-2025
Applicable to: Co-operative Society
Taxable income between ₹10 and ₹30,000…………………………………………………………………………… 1062
Table 8B As per provision under section 115BAD (View Important Notes)
Advance tax & Income Tax Payable* for A.Ys. 2023-2024 & 2024-2025
Applicable to: Co-operative Society
Taxable income between ₹10 and ₹30,000…………………………………………………………………………… 1063
Table 8A As per old regime (View Important Notes)
Advance tax & Income Tax Payable* for A.Ys. 2023-2024 & 2024-2025
Applicable to: Co-operative Society
Taxable income between ₹30,000 and ₹4,80,000 ………………………………………………………………….. 1064
Table 8B As per provision under section 115BAD
Advance tax & Income Tax Payable* for A.Ys. 2023-2024 & 2024-2025
Applicable to: Co-operative Society
For Tax Payable w.e.f. A.Y. 2024-25 under newly inserted section 115BAE, see Table 7B
Taxable income between ₹30,000 and ₹4,80,000 ………………………………………………………………….. 1065
Section Finding List ………………………………………………………………………………………………………………………….. 1066

Additional information