Income Tax Mini Ready Reckoner

Description

Get the “Income Tax Mini Ready Reckoner,” 27th edition (August 2024) by Dr. Girish Ahuja and Dr. Ravi Gupta. This 952-page guide, published by Commercial Law Publishers, offers quick and reliable reference for income tax laws and updates. Available with a flat 37% discount for a limited period and free shipping. Order now using ISBN 9789356039223 to stay informed on the latest tax regulations.

About the Book: A comprehensive guide to Practice and Compliance adherance to direct tax provisions, updated by all the relevant amendments made by the Finance (No. 2)Act, 2024 at the relevant places along with effective dates. The book has an analytical view of the amendments made by the Finance (No. 2) Act, 2024. It also contains frequently required information on the Companies Act. It also contains detailed tax tables for the assessment year 2024-2025 and advance tax tables for financial year 2025-2026. Tax rates for the last 10 years have also been provided. It also facilitates an Investment Planner where in all the major investment schemes as announced have been discussed.

About the Authors

Dr. GIRISH AHUJA did his graduation and postgraduation from Shri Ram College of Commerce, Delhi and was a position holder. He was awarded a Ph.D. degree by Faculty of Management Studies (FMS), Delhi University. He is a Fellow of the Institute of Chartered Accountant of India (ICAI) and was a rank holder of both Intermediate and Final examinations of the Institute. He had been nominated by the Government of India as a member of the Task Force for redrafting the Income-tax Act and New Income-tax Law. He is also on the Board of Directors of many reputed companies and has a vast and rich experience in the field of finance and taxation. He has been nominated by the Government as member of Board of Directors of UNITECH LTD with the approval of the Supreme Court and was also been nominated by the Govt. of India as Independent Director of the Central Board of State Bank of India. Dr. Ahuja is a author of various books on Direct Taxation and he has addressed more than 5000 seminars organized by the ICAI, ICSI, ICWAI, Chambers of Commerce.

Dr. RAVI GUPTA did his graduation and post-graduation from Shri Ram College of Commerce. Thereafter, he did LL.B. from Delhi University and MBA (Finance) from Faculty of Management Studies, Delhi. He has been awarded a Ph.D. degree in International Finance by the Delhi University. He had been a faculty member at Shri Ram College of Commerce (Delhi University). He is an advocate and leading consultant at Delhi NCR and also has vast practical experience in handling tax matters of trade and industry. He had been appointed by the Government of India as a member of the Committee consututed for Simplification of Income Tax Act. He is also a Central Council member of ICAI (Government of India Nominee) and on the Board of various reputed companies. He is a co-author of various books on Income-tax. He has addressed more than 3000 seminars on Direct Taxes organized by ICAI, Chambers of Commerce, Universities, etc

Content

Division 1

Compact Referencer
CR-1 Important amendments brought in the Income-Tax Act by The Finance (No. 2) Act, 2024 … 1
CR-2 Rates of Taxation … 47
CR-3 Direct Tax Rates for Last Ten Assessment Years … 78
CR-4 Cost Inflation Index & Exemptions Available in Computation of Capital Gain (Applicable upto F.Y. 2017-18 (A.Y. 2018-19) as the base financial year has there after been changed from F.Y. 1981-82 to F.Y. 2001-02) … 91
CR-5 Deductions to be made in Computing Total Income … 95
CR-6 Tax Deduction/Collection at Source (TDS) … 107
CR-7 Investment Planner … 130
CR-8 Gold & Silver Rates since 1-4-2001 … 149
CR-9 State Bank of India: Interest Rates w.e.f. 01.04.2024 for the purpose of computing perquisite valuation … 151
DIVISION 2 Part A: Income Tax
Chapter 1 Introduction [Sections 1 to 4] … 153
1.1 Income Tax Law … 163
1.2 Scheme of Taxation … 165
1.3 Important Concepts … 165
1.3-a Person [Section 2(31)]: … 165
1.3-b Assessment year [Section 2(9)] … 165
1.3-c Previous year [Sections 3] … 165
1.3-d Assessee [Section 2(7)] … 166
1.3-e Charge of income-tax [Section 4] … 167
1.3-f Total Income … 168
1.3-g Rounding off of Total Income [Section 288A] … 172
1.3-h How to compute tax liability on Total Income … 172
1.3-i Rounding off of tax, etc. [Section 288B] … 172
Chapter 2 Scope of Total Income & Residential Status [Sections 5 to 9B] … 173
2.1 Scope of Total Income/Incidence of tax [Section 5] … 173
2.1-a In the case of Resident in India (resident and ordinarily resident in case of individual or HUF) [Section 5(1)] … 173
2.1-b 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] … 174
2.1-c In the case of Non-Resident [Section 5(2)] … 174
2.2 Need to determine Residential Status? … 175
2.3 Basic rules for determining residential status of an assessee … 175
2.4 Rules for determining the residential status of an individual [Sections 6(1) & 6(1A)] … 176

2.4-a When an individual is said to be resident in India? … 177
2.4-b Citizen of India shall be deemed to be resident in India in certain cases [Section 6(1A) w.e.f. A.Y. 2021-22] … 179
2.4-c When an individual is said to be resident but “not ordinarily resident in India”? [Section 6(6)] … 180
2.4-d When an individual is said to be resident and ordinarily resident in India? … 180
2.4-e When an individual is said to be non-resident in India [Section 2(30)] … 181
2.5 Residential Status of Hindu Undivided Family (HUF) [Section 6(2)] … 183
2.5-a When is HUF said to be a resident in India? … 183
2.5-b When is HUF said to be a Non-Resident? … 183
2.5-c When is HUF said to be a resident and ordinarily resident in India? … 184
2.5-d When is HUF said to be resident but “not ordinarily resident in India”? [Section 6(6)(b)] … 184
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)] … 184
2.6-a When is a Firm, AOP, BOI, etc., said to be resident in India? … 184
2.6-b When is a Firm, AOP, BOI, etc., said to be Non-Resident in India? … 185
2.7 Residential Status of a Company [Section 6(3)] … 185
2.7-a When is a company said to be resident in India?… 185
2.7-b When is a company said to be Non-resident in India? … 185
2.8 Incomes which accrue or arise in India or are deemed to accrue or arise in India [Section 9] … 185
2.9 Income on receipt of capital asset or stock in trade by specific person from specified entity. [Section 9B] … 187
2.10 The provisions regarding incidence of tax above may be summarised in the following table: … 188
2.11 Tax Planning for Residential Status … 189
Chapter 3 Incomes which do not form part of Total Income [Sections 10, 10AA and 11 to 13A] … 191
3.1 Agricultural Income [Section 10(1)] … 191
3.2 Sum received by a Member from HUF [Section 10(2)] … 191
3.3 Share of Profit of a Partner from a Firm [Section 10(2A)] … 191
3.4 Interest on Non-resident (External) Account [Section 10(4)] … 191
3.5 Exemption of certain income received by a specified fund [Section 10(4D)] … 191
3.6 Travel concession or assistance received by an individual from his employer [Section 10(5)] … 191
3.7 Remuneration to persons who are not citizens of India [Section 10(6)] … 191
3.8 Allowances or perquisites outside India [Section 10(7)] … 192
3.9 Death-cum-retirement gratuity received by an employee [Section 10(10)]: For detailed discussion see Chapter on ‘Salaries’. … 192
3.10 Payment in commutation of pension received by the employees [Section 10(10A)]: For detailed discussion see Chapter on ‘Salaries’. … 192
3.11 Leave Encashment [Section 10(10AA)]: For detailed discussion see Chapter on ‘Salaries’… 192
3.12 Compensation on retrenchment [Section 10(10B)]: For detailed discussion see Chapter on ‘Salaries’. … 192
3.13 Payments under Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 [Section 10(10BB)] … 192
3.14 Exemption for compensation received or receivable on account of any disaster [Section 10(10BC)] … 192
3.15 Amount received on voluntary retirement [Section 10(10C)]: For detailed discussion see Chapter on ‘Salaries’. … 192
3.16 Tax on non-monetary perquisites paid by employer [Section 10(10CC)] … 192
3.17 Amount received under a life insurance policy [Section 10(10D)] … 193
3.18 Provident Fund [Section 10(11)] … 194
3.19 Interest and withdrawals from Sukanya Samriddhi Account [Section 10(11A)] … 194
3.20 Payments from Recognised Provident Fund [Section 10(12)] … 194
3.21 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)] … 195
3.22 Tax-exemption to partial withdrawal from National Pension System (NPS) by an employee [Section 10(12B)] … 195
3.23 Any payment from an approved Superannuation Fund [Section 10(13)] … 195
3.24 House rent allowance [Section 10(13A)] … 196
3.25 Notified special allowance [Section 10(14)] … 196
3.26 Interest, premium or bonus on specified investments [Section 10(15)] … 196
3.27 Scholarships granted to meet the cost of education [Section 10(16)] … 197
3.28 Daily and constituency allowance, etc., received by MPs and MLAs [Section 10(17)] … 197
3.29 Award or Reward [Section 10(17A)] … 197
3.30 Pension received by certain awardees/any member of their family [Section 10(18)] … 197
3.31 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)] … 198
3.32 Annual value of one palace of the ex-ruler [Section 10(19A)] … 198
3.33 Income of a local authority [Section 10(20)] … 198
3.34 Income of an approved research association [Section 10(21)] … 198
3.35 Income of certain funds of national importance, charitable trust etc. [Section 10(23C)] … 198
3.36 Income of notified mutual funds [Section 10(23D)] … 199
3.37 Income of Core Settlement Guarantee Fund (SGF) set up by the recognised Clearing Corporations [Section 10(23EE)] … 199
3.38 Distributed income received by a unit holder from the business trust [Section 10(23FD)] … 199
3.39 Any income of Venture Capital Company or Venture Capital Fund from investment in a Venture Capital Undertaking [Section 10(23FB)] … 199
3.40 Income of trade union [Section 10(24)] … 200
3.41 Income of a member of Scheduled Tribe residing in certain specified areas [Section 10(26)] … 200
3.42 Income of an individual being a Sikkimese [Section 10(26AAA)] … 200
3.43 Income of minor clubbed in the hands of a parent [Section 10(32)] … 201
3.44 Income arising to a shareholder on account of buy back of shares [Section 10(34A)] … 201
3.45 Income received from securitisation trust [Section 10(35A)] … 201
3.46 Exemption of capital gains on compensation received on compulsory acquisition of agricultural land situated within specified urban limits [Section 10(37)] … 201
3.47 Exemption of specified income from international sporting event held in India [Section 10(39)] … 201
3.48 Exemption of amount received by an individual as loan under reverse mortgage scheme [Section 10(43)] … 201
3.49 Exemption of income of New Pension Scheme Trust [Section 10(44)] … 201
3.50 Exemption of specified income arising to a notified body/authority/board/trust/commission [Section 10(46)] … 201
3.51 Exemption in respect of income received by certain foreign companies [Section 10(48)] … 201
3.52 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)] … 201
3.53 Exemption in respect of certain income of Indian Strategic Petroleum Reserves Limited [Section 10(48C)] … 202
3.54 Income of a notified institution established for financing infrastructure and development to be exempt [section 10(48D)] … 202
3.55 Income of a Developmental Financing Institution to be exempt [Section 10(48E)] … 202
3.56 Exemption in respect of income chargeable to equalization levy [Section 10(50)] … 202
Chapter 4 Heads of Income [Section 14] and Income under the Head “Salaries” [Sections 15 to 17] … 203
4.1 Heads of Income [Section 14] … 204
4.2 No deduction for expenditure incurred in respect of exempt income against taxable income [Section 14A] … 204
4.3 Method for allocating expenditure in relation to exempt income [Section 14A(2) and Rule 8D] … 204
4.4 Basis of Charge [Section 15] … 205
4.4-a Arrears of Salary … 206
4.5 Meaning of Salary … 206
4.6 Wages … 207
4.7 Annuity … 207
4.8 Retirement benefits … 207
4.9 Treatment of Bonus … 208
4.10 Salary in lieu of notice period … 208
4.11 Fee and Commission … 208
4.12 Overtime Payments … 208
4.13 Meaning and Type of Allowances … 209
4.14 House Rent Allowance [Section 10(13A) and Rule 2A] … 209
4.15 Prescribed allowances which are exempt to a certain extent [Section 10(14)] … 210
4.15-a 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 … 211
4.15-b Allowances to meet personal expenses … 212
4.16 Treatment of Entertainment Allowance … 214
4.17 Allowances which are exempt in case of certain persons if such person opts to be taxed under the old regime … 215
4.18 Allowances which are fully taxable under both the regimes … 215
4.19 Definition of ‘Perquisite’ as per section 17(2) … 215
4.20 Perquisites which are taxable in the hands of all categories of employees … 217
4.21 Perquisites which are taxable only in the case of specified employees … 218
4.21-a Who is a specified employee [Section 17(2)(iii)] … 219
4.22 Rent free accommodation or accommodation provided at concessional rate … 220
4.22-a The above rules shall not apply in certain cases … 226
4.23 Valuation of monetary obligation of the employee discharged by the employer … 227
4.24 Valuation of Life Insurance premium/deferred annuity premium paid/payable by the employer … 227
4.25 Fringe benefits or amenities which shall be taxable perquisite in the hands of all employees … 228
4.25-a Treatment of any other benefit, amenity, etc. provided by the employer [Rule 3(7)(ix)] … 233
4.26 Valuation of motor car/other vehicles [Rule 3(2)] … 233
4.27 Provision by the employer of services of a sweeper, a gardener, a watchman or personal attendant [Rule 3(3)] … 238
4.28 Value of benefit to the employee resulting from the supply of gas, electric energy or water for household consumption [Rule 3(4)] … 238
4.29 Valuation in respect of free or concessional educational facilities to any member of employees’ household [Rule 3(5)]… 239
4.30 Free or concessional journey given to the transport employees and their family members [Rule 3(6)] … 240
4.31 Value of any specified security or sweat equity shares … 240
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4.32 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)] … 241
4.33 Tax-free Perquisites (for all employees) … 241
4.34 Treatment of medical facilities [Proviso to section 17(2)] … 243
4.35 Treatment of Leave Travel Concession or Assistance (LTC/LTA) [Section 10(5)] … 245
4.36 Profits in lieu of salary [Section 17(3)] … 246
4.37 Gratuity … 248
4.38 Treatment of Pension [Section 17(1)(ii)] … 250
4.39 Treatment of Leave Salary … 251
4.39-a Exemption of leave encashment at the time of retirement u/s 10(10AA) … 251
4.40 Retrenchment Compensation [Section 10(10B)] … 252
4.41 Compensation received on Voluntary Retirement [Section 10(10C)] … 253
4.42 Contribution by the employer to recognised provident fund… 255
4.43 Interest credited to recognised provident fund … 255
4.44 Amount comprised in the transferred balance … 255
4.45 Standard deduction [Section 16(ia)] … 255
4.46 Entertainment Allowance [Section 16(ii)] … 256
4.47 Tax on Employment (Professional Tax) [Section 16(iii)] … 256
4.48 Treatment of Provident Fund for Income-tax Purposes … 256
4.48-a Annual accretion to the contribution which have been included in the total income as per section 17(2)(viia) … 260
4.48-b Transferred balance of Unrecognised Provident Fund (URPF) when it is converted into recognised provident fund … 260
4.49 Approved superannuation fund … 261
4.50 Relief when salary is paid in arrears or in advance, etc. [Section 89/Rule 21A] … 262
4.51 Deduction from gross total income … 264
Chapter 5 Income under the Head “Income from House Property” [Sections 22 to 27] … 265
5.1 Chargeability [Section 22] … 265
5.2 Basis of Charge … 266
5.3 Essential conditions for taxing income under this head … 266
5.4 What is Annual Value? … 267
5.5 Computation of annual value of a property [Section 23(1)] … 268
5.6 Treatment of unrealised rent [Explanation to section 23(1)] … 272
5.7 Deductions from income from house property [Section 24] … 273
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)] … 274
5.8-a Where the annual value of such house shall be nil [Section 23(2)(a) & (b)] … 274
5.8-b Where the annual value of such house shall not be nil [Section 23(3)] … 274
Contents xiii
5.8-c Where assessee has more than two houses for self occupation [Section 23(4)] … 274
5.8-d Deduction in respect of one or two self-occupied houses where annual value is nil … 275
5.9 Computation of income of house property which is partly let and partly self occupied … 276
5.10 No notional income for house property held as stock-in-trade for a period upto two years [Section 23(5)] … 276
5.11 Interest when not deductible from “Income from House Property” [Section 25] … 277
5.12 Special provision for arrears of rent and unrealised rent received subsequently [Section 25A] … 277
5.13 Property owned by Co-owners [Section 26] … 277
5.14 Can Annual Value (Net Annual Value) be negative? … 278
5.15 Can there be any loss under the head income from house property? … 278
Chapter 6 Income under the Head “Profits and Gains of Business or Profession” [Sections 28 to 44D] … 279
6.1 Chargeability/scope of income under the head ‘Profits and gains of business or profession’ [Section 28] … 280
6.2 Rationalisation of provision relating to conversion of inventory into Capital Asset [Section 28(via)] … 283
6.3 Income from business or profession — how to be computed … 283
6.4 Method of Accounting [Section 145]… 283
6.5 Expenses which are expressly allowed as a deduction [Sections 30 to 37]… 284
6.6 Rent, rates, taxes, repairs and insurance for buildings [Section 30] … 284
6.6-a Deductions … 284
6.7 Repairs and insurance of machinery, plant and furniture [Section 31] … 285
6.8 Depreciation [Section 32] … 285
6.8-a What is ‘block of assets’ … 286
6.8-b Written down value for charging depreciation [Section 43(6)] … 290
6.8-c Written down value of the block of intangible assets which included goodwill of a business or profession before AY 2021-22 … 291
6.8-d Actual cost [Section 43(1)] … 292
6.8-e Notional Actual Cost [Explanations to section 43(1)] … 293
6.8-f Computation of depreciation … 296
6.8-g Steps for computing depreciation: … 296
6.8-h 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 … 296
6.8-i Cases where WDV of a block at the end of the year shall be reduced to Nil and hence no depreciation … 297
6.8-j Additional depreciation on new machinery or plant [Section 32(1)(iia)] … 298
6.8-k Is it mandatory to claim depreciation [Explanation to section 32] … 299
6.9 Carry forward and set off of unabsorbed depreciation [Section 32(2)] … 300
6.10 Expenditure on Scientific Research [Section 35] … 300
6.10-a In-house Scientific Research … 300
6.10-b Sale of an asset used for scientific research … 301
6.10-c Unabsorbed capital expenditure on scientific research… 302
6.10-d Payment to outside agencies … 302
6.10-e Deduction on in house research and development to a company assessee in certain cases [Section 35(2AB)] … 304
6.11 Deduction in respect of expenditure on specified business [Section 35AD] … 305
6.12 Amortisation of certain preliminary expenses [Section 35D and Rule 6AB] … 307
6.13 Amortisation of expenditure in case of amalgamation or demerger [Section 35DD] … 309
6.14 Amortisation of expenditure incurred under voluntary retirement scheme [Section 35DDA] … 309
6.15 Other deductions [Section 36] … 309
6.15-a Insurance premium of stocks [Section 36(1)(i)] … 309
6.15-b Insurance premium of cattle [Section 36(1)(ia)] … 309
6.15-c Insurance on health of employees [Section 36(1)(ib)]… 310
6.15-d Bonus or Commission to employees [Section 36(1)(ii)] … 310
6.15-e Interest on borrowed capital [Section 36(1)(iii)] … 310
6.15-f Discount on issue of zero coupon bonds to be allowed as deduction on pro rata basis [Section 36(1)(iiia)] … 310
6.15-g Employer’s Contribution to a recognised Provident Fund or Approved Superannuation Fund [Section 36(1)(iv)] … 311
6.15-h Employers’ contribution towards a pension scheme [Section 36(1)(iva)] … 311
6.15-i Employer’s contribution to an approved gratuity fund [Section 36(1)(v)] … 312
6.15-j Sums received from employees towards certain welfare schemes if credited to their accounts before the due date [Section 36(1)(va)] … 312
6.15-k Allowance in respect of dead or permanently useless animals [Section 36(1)(vi)] … 312
6.15-l Bad debts [Section 36(1)(vii)] … 312
6.15-m Expenditure on promoting family planning amongst the employees [Section 36(1)(ix)] … 313
6.15-n Securities Transaction Tax paid to be allowed as deduction [Section 36(1)(xv)] … 313
6.15-o Commodities Transaction Tax to be allowed as a deduction [Section 36(xvi)] … 314
6.15-p Marked to market loss or other expected loss to be allowed [Clause (xviii) inserted in section 36(1)] … 314
6.16 General Deductions [Section 37(1)] … 314
6.16-a Conditions for allowance under section 37(1) … 315
6.17 Advertisement to political parties [Section 37(2B)] … 316

6.18 Building, plant and machinery or furniture not exclusively used for the purpose of business or profession [Section 38] … 316
6.19 Amounts not deductible [Section 40]… 317
6.20 Expenses or payments not deductible in certain circumstances: [Section 40A] … 320
6.20-a Expenses or payments not deductible where such payments are made to relatives [Section 40A(2)] … 320
6.20-b Disallowance of 100% of expenditure if payment is made by any mode other than account payee cheque or draft [Section 40A(3)(a)] … 321
6.21 Disallowance in respect of provision for gratuity [Section 40A(7)] … 322
6.22 Disallowance in respect of contributions to non-statutory funds [Section 40A(9)] … 323
6.23 Marked to market loss or other expected loss not to be allowed except provided in section 36(1)(xviii) [Section 40A(13)] … 323
6.24 Certain deductions to be allowed only on actual payment [Section 43B] … 323
6.25 Special provision for full value of consideration for transfer of assets other than capital assets in certain cases [Section 43CA] … 326
6.26 Computation of income from construction and service contracts [Section 43CB inserted] … 328
6.27 Special provision in case of income of public financial institutions [Section 43D] … 328
6.27-a Deemed profits chargeable to tax … 330
6.28 Deemed income in the hands of recipient in case of discontinued business or profession [Section 176(3A) and (4)] Maintenance of accounts by certain persons carrying on profession or business [Section 44AA and Rule 6F] … 330
6.28-a Person carrying on certain professions [Section 44AA(1)] … 330
6.28-b Person carrying on a non-specified profession or carrying on business [Section 44AA(2)] … 332
6.28-c When maintenance of books of account is not necessary … 334
6.28-d Consequences of failure to keep accounts, etc. … 334
6.29 Compulsory audit of accounts [Section 44AB] … 334
6.29-a Report of Audit of Accounts [Rule 6G] … 337
6.30 Special provisions for computing profits and gains of any business (excluding the business covered under section 44AE) [Section 44AD] … 337
6.31 Special provision for computing profits and gains of profession on presumptive basis [Section 44ADA] … 340
6.32 Special provisions for computing profits and gains of business of plying, hiring or leasing goods carriages [Section 44AE] … 341
6.33 Special provisions for computing profits and gains [Sections 44B, 44BB, 44BBA and 44BBB] … 344
Chapter 7 Income under the Head “Capital Gains” [Sections 45 to 55A] … 354
7.1 Basis of Charge [Section 45(1)] … 354
7.2 There must be a capital asset … 355
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7.2-a What is a capital asset [Section 2(14)]: … 355
7.2-b Types of capital assets … 357
7.3 Capital asset must have been transferred … 363
7.3-a What is transfer [Section 2(47)] … 363
7.3-b Transactions not regarded as transfer [Sections 46 and 47] … 363
7.4 Capital gain should arise in the previous year in which transfer took place… 367
7.5 Computation of capital gains [Section 48] … 368
7.6 Full value of consideration … 371
7.7 Expenses on transfer … 373
7.8 Cost of acquisition [Section 55(2)] … 373
7.8-a Deemed cost of acquisition … 374
7.8-b Cost of acquisition of assets acquired before 1.4.2001 [Section 55(2)(b)] … 379
7.8-c 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 a 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 hour or any other right [Section 55(2)(a)] … 380
7.8-d Cost of acquisition of right shares [Section 55(2)(aa)] … 381
7.8-e Cost of acquisition of bonus shares or any other financial asset allotted without payment [Section 55(2)(aa)(iiia)] … 381
7.8-f Cost of acquisition for purpose of computing long-term capital gain under section 112A [Section 55(2)(ac)] … 381
7.8-g Cost of acquisition of depreciable assets [Section 50] … 383
7.9 Treatment of advance money received [Section 56(2)(ix)] … 384
7.10 Cost of improvement [Section 55(1)(b)] … 384
7.11 Indexed Indexation of cost of acquisition and cost of improvement to be allowed in case of long-term capital gain[Explanation (iii) to section 48] [Second proviso to Section 48]… 385
7.11-a Computation of indexed cost of acquisition … 387
7.11-b Indexation of cost not allowed in certain cases … 389
7.12 Indexed cost of improvement [Explanation (iv) to Section 48] … 390
7.13 Computation of capital gain in certain cases … 391
7.13-a Taxation of zero coupon bonds … 391
7.13-b Capital gain in case of amount received from an insurer on account of damage or destruction of any capital asset [Section 45(1A)] … 392
7.13-c 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)]: … 392
7.13-d Capital gain on conversion of capital asset into stock-in-trade or stock-in-trade into capital asset … 393
7.13-e Capital gain on transfer of capital asset by a partner/member to a firm/AOP/BOI as capital contribution [Section 45(3)] … 394
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7.13-f Capital Gain at the time of dissolution or reconstitution of specified entity … 394
7.13-g Capital gain on transfer by way of compulsory acquisition of an asset [Section 45(5)] … 400
7.13-h Special provisions for computation of capital gains in case of joint development agreement [Section 45(5A)] … 401
7.13-i Capital gain on conversion of debentures into shares [Section 47(x), 49(2A) and rule 8AA] … 404
7.13-j Conversion of preference shares into equity shares [Section 47(xb), 49(2AE), Explanation 1 to section 2(42A)] … 404
7.13-k Capital gain on sale of goodwill of a business or profession/trademark or brand name/associated with the business or profession or any other intangible asset or a right to manufacture or right to carry on any business or profession/tenancy rights/business route permits or loom hour, or any other right … 405
7.13-l Capital gain on transfer of depreciable assets [Section 50] … 407
7.13-m Cost of acquisition and capital gain in case of depreciable assets of electricity companies [Section 50A] … 407
7.13-n Special provision for taxation of capital gains in case of a unit of a Specified Mutual Fund acquired on or after 1-4-2023 or Market Linked Debentures [Section 50AA] … 408
7.13-o Special provisions for computation of capital gains in case of slump sale [Section 50B] … 409
7.13-p Computation of capital gains in real estate transactions [Section 50C] … 413
7.13-q Special provision for full value of consideration for transfer of share other than quoted share [Section 50CA] … 415
7.13-r Fair Market Value to be full value of consideration in certain cases [Section 50D] … 415
7.13-s Capital gains on purchase by company of its own shares or other specified securities [Section 46A] … 415
7.13-t Computation of capital gain in case of transfer of Electronic Gold Receipt … 417
7.13-u Capital gain on sale of land and building to be computed separately in case of building constructed by the assessee … 418
7.14 Capital gain in the case of transfer of shares/debentures by non-residents [Proviso 1 to section 48 and rule 115A] … 418
7.14-a Exemption of long-term capital gains arising to non-resident Indian on transfer of ‘foreign exchange asset’ [Section 115F] … 420
7.14-b Option not to avail of the provisions of section 115F [Section 115-I] … 421
7.15 Types of exemption of capital gains … 421
7.16 Profit on transfer of house property used for residence [Section 54] … 422
7.17 Capital Gain on transfer of land used for agricultural purposes [Section 54B] … 427
7.18 Capital Gain on compulsory acquisition of land and buildings forming part of an industrial undertaking [Section 54D] … 430
xviii Contents
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] … 431
7.20 Capital Gain on transfer of asset, other than a residential house [Section 54F] … 432
7.21 Capital gain on transfer of assets in cases of shifting of industrial undertakings from urban areas [Section 54G] … 437
7.22 Exemption of capital gain on transfer of assets of shifting of industrial undertaking from urban area to any Special Economic Zone [Section 54GA] … 439
7.23 Extension of time limit for acquiring new asset or depositing or investing amount of capital gain, in case of compulsory acquisition [Section 54H] … 440
7.24 Tax on short-term capital gains in case of equity shares and units of equity-oriented fund [Section 111A] … 441
7.25 Computation of tax on long-term capital gains other than referred to in section 112A [Section 112] … 443
7.26 Rate of tax on long-term capital gain (other than referred to in section 112A) in certain cases … 446
7.27 Tax on long-term capital gains in certain cases [Section 112A] … 447
Chapter 8 Income under the Head “Income from Other Sources” [Sections 56 to 59] … 458
8.1 Chargeability … 458
8.2 Method of Accounting … 458
8.3 Specific incomes included under ‘Income from Other Sources’ [Section 56(2)] … 458
8.4 Other incomes which are normally included under the head ‘Income from Other Sources’ … 460
8.5 Taxability of Dividend [Section 56(2)(i)] … 461
8.5-a Deductions for expenses from dividend income [Section 57(i) and 57(iii)] … 462
8.6 Winnings from Lotteries, Crossword Puzzles, Horse Races and Card Games [Section 56(2)(ib)] … 462
8.6-a Special rate of Income-tax in case of winnings from lotteries, crossword puzzles, races, etc. [Section 115BB] … 463
8.6-b Grossing up of lottery income, etc. … 463
8.7 Special rate of income-tax in case of winnings from online games [Section 115BBJ inserted by the Finance Act, 2023, w.e.f. A.Y. 2024-25] … 464
8.8 Interest on Securities [Section 56(2)(id)] … 464
8.8-a Chargeability of Interest on Securities … 464
8.8-b Accrual of Interest … 465
8.8-c Grossing up of Interest … 465
8.8-d Deductions for expenses from Interest on Securities [Section 57(i) and (iii)] … 466
8.9 Income from letting out of machinery, plant or furniture [Section 56(2)(ii)] … 466
Contents xix
8.9-a Income from composite letting of machinery, plant or furniture and buildings [Section 56(2)(iii)] … 466
8.9-b Deductions permissible from letting out of machinery, plant or furniture and buildings [Section 57(ii) and (iii)] … 466
8.10 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)] … 467
8.11 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)] … 470
8.12 Interest on compensation or enhanced compensation [Section 56(2)(viii)] … 471
8.13 Forfeiture of advance received for transfer of a capital asset to be taxed under the head “income from other sources” [Section 56(2)(ix)] … 471
8.14 Family pension payments received by the legal heirs of a deceased employee … 471
8.15 Contribution of the employee towards his welfare fund, deducted/received by the employer [Section 56(2)(ic)] … 472
8.16 Any other income taxable under this head … 472
8.17 Amounts not deductible in computing the income under the head ‘Income from Other Sources’ [Section 58] … 473
8.18 Deemed income chargeable to tax [Section 59] … 474
Chapter 9 Income of Other Persons Included in Assessee’s Total Income (Clubbing of Income) [Sections 60 to 65] … 475
9.1 Transfer of income where there is no transfer of assets [Section 60] … 475
9.2 Revocable transfer of assets [Section 61] … 475
9.2-a When a transfer is revocable [Section 63] … 475
9.2-b Section 61 not applicable, if the transfer is irrevocable for a specified period [Section 62] … 475
9.3 Income of an individual to include income of spouse, minor child, etc. [Section 64] … 476
9.3-a Remuneration of spouse from a concern in which the other spouse has substantial interest [Section 64(1)(ii)] … 476
9.3-b Income from assets transferred to the spouse [Section 64(1)(iv)] … 478
9.3-c Income from assets transferred to son’s wife [Section 64(1)(vi)] … 479
9.3-d Income from assets transferred to any person for the benefit of the spouse of the transferor [Section 64(1)(vii)] … 479
9.3-e Income from assets transferred to any person for the benefit of son’s wife [Section 64(1)(viii)] … 479
9.4 Clubbing of income of a minor child [Section 64(1A)] … 479
9.5 Income from self-acquired property converted to joint family property [Section 64(2)] … 480
9.6 Under which head of income will the clubbed income be assessed … 480
xx Contents
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] … 481
Chapter 10 Unexplained Cash Credits, Investments, Money, etc [Sections 68 to 69D] … 482
10.1 Cash credits … 482
10.2 Unexplained money, etc. [Section 69A] … 484
10.3 Amount of investments, not fully disclosed in books of account [Section 69B] … 484
10.4 Unexplained expenditure, etc. [Section 69C] … 484
10.5 Amount borrowed or repaid on hundi [Section 69D]… 485
10.6 Taxation of cash credits, unexplained money, unexplained investments, covered under sections 68, 69, 69A, 69B, 69C & 69D [Section 115BBE] … 485
Chapter 11 Set off or Carry Forward and Set off of Losses [Sections 70 to 80] … 487
11.1 Set off of loss from one source against income from another source under the same head of income [Section 70] … 487
11.2 Set off of loss from one head against income from another head (Inter-head adjustment) [Section 71] … 490
11.3 Carry forward and set off of losses … 491
11.3-a Compulsory filing of loss returns [Section 80] … 492
11.4 Carry forward and set off of loss from house property [Section 71B] … 492
11.5 Carry forward and set off of business losses [Section 72] … 493
11.6 Set off and Carry forward and Set off of Speculation Loss [Section 73] 494
11.7 Carry forward of losses under the head ‘capital gains’ [Section 74] … 494
11.8 Set off and carry forward and set off of loss from activity of owning and maintaining race horses [Section 74A] … 494
11.9 Brought forward losses must be set off in the immediately succeeding year/years … 495
11.10 Special provisions of set off of losses in case of an individual or HUF or AOP/BOI or Artificial Juridical Person who is taxable under section 115BAC(1A) … 495
11.11 Carry forward and set off of the accumulated business losses and unabsorbed depreciation allowance in amalgamation or demerger, etc. [Section 72A] … 496
11.12 Losses of firms … 499
11.13 Carry forward and set off of losses on succession of any person [Section 78(2)] … 499
11.14 Carry forward and set off of losses in case of certain companies [Section 79] … 499
11.15 No set off of losses consequent to search & seizure or survey or requisition proceedings [Section 79A] … 501
Chapter 12 Deductions to be made in Computing Total Income [Sections 80A to 80U (Chapter VIA)] … 503
12.1 Basic rules of deductions [Sections 80A/80AB/80AC] … 504
Contents xxi
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] … 505
12.3 Deduction in respect of contribution to certain pension funds [Section 80CCC] … 510
12.4 Deduction in respect of contribution to pension scheme of Central Government by Central Government or any other employer [Section 80CCD] … 511
12.5 Limit on deductions under sections 80C, 80CCC and 80CCD [Section 80CCE] … 513
12.6 Deduction in respect of contribution to Agnipath Scheme [Section 80CCH] … 513
12.7 Deduction in respect of Medical Insurance premia [Section 80D] … 514
12.8 Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability [Section 80DD] … 517
12.9 Deduction in respect of medical treatment, etc. [Section 80DDB] … 519
12.10 Deduction for interest paid on loan taken for pursuing higher education [Section 80E] … 520
12.11 Deduction in respect of interest on loan taken for residential house property [Section 80EE] … 521
12.12 Deduction in respect of interest on loan taken for certain house property [Section 80EEA] … 521
12.13 Deduction in respect of purchase of electric vehicle [Section 80EEB] … 523
12.14 Deduction in respect of donations to certain funds, charitable institutions, etc. [Section 80G] … 524
12.15 Deductions in respect of rent paid [Section 80GG] … 531
12.16 Deduction in respect of certain donations for scientific research or rural development [Section 80GGA] … 532
12.17 Deduction in respect of contributions given by companies to political parties [Section 80GGB] … 533
12.18 Deduction in respect of contribution given by any person to political parties [Section 80GGC] … 533
12.19 Special provision in respect of eligible business of eligible start up [Section 80-IAC] … 534
12.20 Deduction in respect of royalty income, etc., of authors of certain books other than text books [Section 80QQB] … 535
12.21 Deduction in respect of royalty on patents [Section 80RRB] … 537
12.22 Deduction in respect of interest on deposits in savings accounts [Section 80TTA] … 538
12.23 Deduction in respect of interest on deposits in case of senior citizens [Section 80TTB] … 538
12.24 Deduction in case of a person with disability [Section 80U] … 539
Chapter 13 Agricultural Income & its Tax Treatment [Sections 2(1A) and 10(1)] … 541
13.1 Summarised definition of Agricultural Income [Section 2(1A)] … 541
13.2 What does agriculture include? … 541
xxii Contents
13.3 Income which is partially agricultural and partially from business … 542
13.4 Tax on non-agricultural income if the assessee earns agricultural income also … 543
Chapter 14 Computation of Tax Liability of Various Categories of Persons … 545
14.1 Assessment of an individual … 545
14.2 An individual is liable to pay tax in respect of the following incomes … 545
14.2-a Incomes received from firm/AOP/HUF which are exempt in the hands of an individual … 546
14.3 Computation of total income and tax liability … 546
14.4 Tax on income of an Individual/HUF or AOP/BOI or Artificial juridical person [Section 115BAC(1A)] [W.e.f. A.Y. 2024-25] … 547
14.5 Alternate Minimum Tax (AMT) on all persons other than companies [Section 115JC to 115JF] … 555
14.6 Assessment of Hindu Undivided Family … 556
14.7 Computation of Total Income of HUF … 557
Chapter 15 Return of Income and Procedure of Assessment [Sections 139 to 154] … 560
15.1 Submission of return of income [Section 139(1)] … 560
15.1.a Resident person to file return of income in certain cases even though not required otherwise … 562
15.2 Scheme to facilitate submission of returns through Tax Return Preparers [Section 139B] … 564
15.3 Belated return [Section 139(4)] … 565
15.4 Form and manner of furnishing return of income [Rule 12] … 566
15.5 Revised return [Section 139(5)] … 572
15.5a Completion of assessment … 572
15.5b Can a belated return under section 139(4) be revised … 573
15.5c Can revised return be further revised … 573
15.5d Revised return substitutes the original return … 573
15.6 Updated return [Section 139(8A) and Section 140B inserted w.e.f. 2022-23] … 573
15.7 Defective return [Section 139(9)] … 580
15.8 Power of Board to dispense with furnishing documents, etc. with the return [Section 139C] … 580
15.9 Filing of return in electronic form [Section 139D] … 581
15.10 Self-assessment [Section 140A] … 581
15.11 Inquiry before assessment [Section 142] … 583
15.12 Estimates by Valuation Officer in certain cases [Section 142A] … 587
15.13 Faceless inquiry, direction for special audit or inventory valuation and valuation by Valuation Officer [Section 142B] … 588
15.14a Scheme for centralized processing [Section 143(1B)] … 590
15.15 Regular/Scrutiny Assessment — On the basis of return of income and after hearing additional evidence [Section 143(3)] … 590
15.15a Compulsory Service of Notice [Section 143(2)] … 590
15.16 Assessment after evidence [Section 143(3)] … 590
Contents xxiii
15.16a Deduction not to be allowed if claim is not made in the return of income … 591
15.16b New scheme for scrutiny assessment [Section 143(3A)/(3B)/(3C)] … 591
15.17 Best Judgment Assessment [Section 144] … 592
15.17a Opportunity must be given to the assessee … 592
15.18 Faceless assessment [Section 144B] … 592
15.19 Income escaping assessment and search assessments [Section 147, section 148, section 148A, section 148B, section 149, section 150, section 151, section 151A]… 602
15.19a Time limit for completion of assessment and reassessment under section 147 [Section 153(2)]: … 609
15.19b Rate at which income assessed or reassessed to be taxed … 609
15.20 Faceless assessment of income escapting assessment [Section 151A] … 613
15.20 Time limit for completion of all assessments and reassessment [Section 153] … 614
15.21 Rectification of mistakes [Section 154] … 619
15.21 Notice of demand [Section 156] … 622
15.22 Modification and revision of notice of demand subsequent to business reorganization orders of the competent authority [Section 156A] … 622
15.23 Faceless rectification, amendments and issuance of notice or intimation [Section 157A] … 622
Chapter 16 Permanent Account Number and Aadhaar Number [Section 139A and 139AA] … 624
16.1 Permanent account number [Section 139A] … 624
16.1-a Time limit for submitting application for allotment of PAN … 625
16.1-b 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)] … 626
16.1-c PAN to be quoted in certain cases [Section 139A(5)] … 626
16.1-d Transactions where quoting of PAN made compulsory [Section 139A(5)(c) and Rule 114B] … 627
16.1-e Intimation of PAN in certain cases and obligation of the person to whom the PAN is intimated … 630
16.1-f Duty of the person receiving any document relating to the transactions where quoting of PAN is compulsory [Section 139A(6)] … 631
16.1-g Quoting and authentication of PAN in the documents pertaining to prescribed transactions [Section 139A(6A), W.e.f. 1.9.2019] … 632
16.1-h 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] … 632
16.2 Quoting of Aadhaar number [Section 139AA] … 632
xxiv Contents
Chapter 17 Deduction and Collection of Tax at Source [Sections 190 to 206CA] … 635
17.1 Deduction at source and advance payment [Section 190] … 635
17.2 Direct payment [Section 191] … 635
17.3 Deduction of tax from salary [Section 192] … 636
17.3-a Tax to be deducted at average of income-tax [Section 192(1)] … 636
17.4 Furnishing of evidence of claims by employee for deduction of tax under section 192 [Rule 26C] Applicable only if the employee opts for old regime] … 637
17.4-a When does the liability to deduct tax at source arise … 637
17.4-b Tax on non-monetary perquisites can be paid by employer [Section 192(1A) and (1B)]… 637
17.4-c Salary from more than one employer [Section 192(2)] … 638
17.4-d Relief under section 89 [Section 192(2A) and rule 21AA] … 638
17.4-e Details of other incomes [Section 192(2B) and Rule 26B] … 638
17.4-f Employer to furnish a statement to employee [Section 192(2C) and Rule 26A(2)] … 639
17.4-g 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)] … 640
17.4-h Adjustment in the amount of tax to be deducted [Section 192(3)] … 640
17.4-i Deduction at source of tax payable on accumulated balance of recognised provident fund [Section 192(4)] … 640
17.4-j Deduction of tax on contributions paid to an employee out of Approved superannuation fund [Section 192(5)] … 640
17.4-k CBDT Rules to be followed for deduction of tax at source … 641
17.4-l Where the tax is either not to be deducted or to be deducted at lower rate [Section 197 and Rules 28 and 28AA] … 641
17.5 Deduction of tax from accumulated balance of the recognized provident fund withdrawn by the employee [Section 192A] … 641
17.6 Deduction of Tax from Interest on Securities [Section 193] … 642
17.6-a Who is liable to deduct tax … 642
17.6-b When does liability to deduct tax at source arise … 642
17.6-c Exemption from tax deduction … 643
17.6-d Where the tax is either not to be deducted or to be deducted at lower rate [Section 197 Rules 28 and 28AA] … 644
17.7 Deduction of tax from dividends [Section 194] … 644
17.7-a Who is liable to deduct tax … 644
17.7-b When TDS to be deducted … 645
17.8 Interest other than interest on securities [Section 194A]Change Sr No 645
17.8-a Who is liable to deduct tax [Section 194A(1)] … 645
17.8-b Individuals and HUF whose total sales, gross receipts or turnover from the business or profession carried on by him exceed ₹1 crore in case of business or ₹50,00,000 in case of profession during the financial year immediately preceding
Contents xxv
the financial year are also required to deduct tax at source.When TDS is to be deducted … 645
17.8-c 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 … 645
17.8-d Adjustment in the amount of tax to be deducted [Section 194A(4)] … 646
17.8-e Where no tax is to be deducted at source … 646
17.8-f Where the tax is either not to be deducted or to be deducted at lower rate [Section 197, Rules 28 and 28AA] … 650
17.8-g Rate of TDS for financial years 2023-24 and 2024-25 … 650
17.9 Winnings from lottery, crossword puzzle, etc. [Section 194B]17.8a Who is liable to deduct tax … 650
17.9-a When TDS is to be deducted … 651
17.9-b Rate of TDS for financial years 2023-24 and 2024-25: Rate of TDS is 30%. … 651
17.9-c TDS when winnings are wholly in kind or partly in cash and partly in kind [First Proviso to section 194B] … 651
17.10 Winnings from online games [Section 194BA] … 651
17.10-a Who is liable to deduct tax … 651
17.10-b TDS is to be deducted … 651
17.10-c Rate of TDS for financial years 2023-24 and 2024-25 … 652
17.10-d Who is liable to deduct tax … 652
17.10-e Rate of TDS for financial years 2023-24 and 2024-25: The rate of TDS is 30%. … 652
17.10-f When TDS is to be deducted … 652
17.11 Payment to resident contractor [Section 194C] … 652
17.12 Insurance Commission [Section 194D] … 655
17.12-a Who is required to make TDS … 655
17.12-b When tax to be deducted … 656
17.12-c Rate of TDS for financial years 2023-24 and 2024-25 … 656
17.12-d Where the tax is either not to be deducted or to be deducted at lower rate [Section 197 Rules 28 and 28AA] … 656
17.13 Payment in respect of life insurance policy [Section 194DA] … 656
17.13-a Rate of TDS —5% [reduced to 2% w.e.f. 1-10-2024 the Finance (No. 2) Act, 2024] of the income comprised in the sum paid … 657
17.14 Payments to non-resident sportsmen or sports associations or non-resident entertainer [Section 194E] … 658
17.14-a When the tax is to be deducted … 658
17.15 Payments in respect of deposit under National Savings Scheme, etc. [Section 194EE] … 659
17.15-a Who is liable to deduct tax … 659
17.15-b When tax is to be deducted … 659
17.15-c Rate of TDS for financial years 2023-24 and 2024-25 … 659
17.15-d Where tax is not to be deducted at source … 659
17.16 Commission, etc., on sale of lottery tickets [Section 194G] … 659
17.16-a Who is liable to deduct tax … 659
xxvi Contents
17.16-b When tax is to be deducted … 660
17.16-c Rate of TDS for financial years 2023-24 and 2024-25 … 660
17.17 Commission and Brokerage [Section 194H] … 660
17.17-a Who is liable to deduct tax … 660
17.17-b When TDS is to be deducted … 660
17.17-c Rate of TDS for financial years 2023-24 and 2024-25 … 661
17.18 Rent [Section 194-I] … 661
17.18-a Who is liable to deduct tax … 661
17.18-b Rate of TDS for financial years 2023-24 and 2024-25 … 661
17.18-c Meaning of rent [Explanation to section 194-I] … 661
17.18-d Where no tax is to be deducted at source … 662
17.19 Tax Deduction at Source on transfer of certain immovable properties (other than agricultural land) [Section 194-IA] … 663
17.20 TDS from payment of rent by certain Individuals or HUF [Section 194-IB] … 666
17.20-a Who is liable to deduct tax … 666
17.20-b When tax is to be deducted [Section 194-IB(2)] … 667
17.20-c Where no tax is to be deducted at source … 667
17.20-d Rate of TDS for financial years 2023-24 and 2024-25 … 667
17.20-e No requirement for obtaining TAN by the deductor [Section 194-IB(3)] … 667
17.20-f Amount to be deducted when PAN is not provided by the recipient of the rent [Section 194-IB(4)] … 667
17.21 TDS from payment under specified agreement referred to in section 45(5A) [Section 194-IC] … 668
17.21-a Who is liable to deduct tax … 668
17.21-b When tax is to be deducted … 668
17.21-c Rate of TDS … 668
17.22 Fees for professional or technical services, etc. [Section 194J] … 669
17.22-a Who is liable to deduct tax … 669
17.22-b No TDS if fee for professional services is for the personal purposes of the Individual or HUF … 669
17.22-c Rate of TDS for financial years 2023-24 and 2024-25 … 669
17.22-d Where no tax is to be deducted at source … 670
17.22-e Where the tax is either not to be deducted or to be deducted at lower rate [Section 197, Rules 28 and 28AA] … 670
17.23 Income in respect of units [Section 194K] … 670
17.23-a Who is liable to deduct tax … 670
17.23-b When tax is to be deducted … 670
17.23-c Rate of TDS for financial years 2023-24 and 2024-25– 10% … 671
17.23-d Where no tax is to be deducted at source … 671
17.24 Payment of compensation on acquisition of certain immovable property [Section 194LA] … 671
17.23a Who is liable to deduct tax … 671
17.25 TDS from income by way of interest from Indian company or a business trust [Section 194LC] … 672
17.25-a Who is liable to deduct tax … 672
17.25-b When TDS is to be deducted … 672
Contents xxvii
17.25-c Rate of TDS … 672
17.26 Payment of certain sums by certain Individuals or Hindu Undivided Family [Section 194M] … 672
17.26-a Who is liable to deduct tax … 672
17.26-b When tax is to be deducted [Section 194M(1)] … 673
17.26-c Where no tax is to be deducted at source … 673
17.26-d Rate of TDS … 673
17.26-e No requirement for obtaining TAN by the deductor [Section 194M(2)] … 673
17.27 Payment of certain amounts in cash [Section 194N] … 674
17.27-a Who is liable to deduct tax … 674
17.27-b When tax is to be deducted … 674
17.27-c Rate of TDS … 674
17.28 TDS from Payment of Certain Sums by E-commerce Operator to E-commerce Participant [Section 194-O] … 675
17.28-a Who is liable to deduct tax … 675
17.28-b When tax is to be deducted … 675
17.28-c Rate of TDS … 676
17.29 Deduction of tax in case of specified senior citizen. [Section 194P] … 676
17.29-a Who is liable to deduct tax … 676
17.29-b Person whose tax is to be deducted … 676
17.29-c Furnishing of declaration and evidence of claims by specified senior citizen under section 194P. [Rule 26D] … 676
17.29-d When is the tax to be deducted by the specified bank and at what rate … 677
17.29-e Will the specified senior citizen have to file return of income where the tax is deducted under section 194P … 677
17.30 Deduction of tax at source on payment of certain sum for purchase of goods [Section 194Q] … 677
17.31 TDS on benefit or perquisite in respect of business or profession [Section 194R] … 678
17.31-a Who is liable to deduct tax … 678
17.31-b When tax is to be deducted … 679
17.31-c Rate of TDS … 679
17.31-d Where no tax is to be deducted at source [Second & third provisos to section 194R(1)] … 679
17.32 TDS on Payment on Transfer of Virtual Digital Asset [Section 194S] … 679
17.32-a Who is liable to deduct tax … 679
17.32-b When tax is to be deducted … 680
17.32-c Rate of TDS … 680
17.32-d Where no tax is to be deducted at source [section 194S(3)] … 680
17.32-e Tax to be deducted under section 194S(1) even if Section 194-O is also applicable [Section 194S(4)] … 681
17.33 TDS on payment of salary, remuneration, interest, bonus or commission by partnership firm to partners [Section 194T inserted] [w.e.f. 01.04.2025] … 681
17.34 Other sums [Section 195] … 681
xxviii Contents
17.34-a TDS on income of non-resident … 681
17.34-b When the tax is to be deducted … 682
17.34-c Payer of the amount may make application for deduction of tax on the “income” comprised in the payment [Section 195(2)] … 682
17.34-d The person responsible for paying any sum to a non-resident to furnish information in a prescribed manner [Section 195(6)] … 682
17.34-e Board empowered to notify class of persons or cases who shall make an application to Assessing Officer to determine appropriate portion of sum chargeable to tax [Section 195(7)] … 684
17.34-f Income payable ‘Net of Tax’ [Section 195A] … 684
17.35 No TDS in case of sum payable to the Government, RBI, etc. [Section 196] … 684
17.36 Income in respect of units of non-residents [Section 196A] … 685
17.36-a Who is responsible for deducting tax at source [Section 196A(1)] … 685
17.36-b Rate of TDS — 20% … 685
17.36-c When the tax is not to be deducted at source [Section 196A(2)] … 685
17.37 Income from units to Offshore Fund [Section 196B] … 685
17.38 Income from foreign currency bonds or Global Depository Receipts of Indian company [Section 196C] … 685
17.38-a When is tax to be deducted … 686
17.38-b Rate of TDS … 686
17.39 General provisions … 686
17.40 No deduction to be made in certain cases [Section 197A] … 689
17.40-a Declaration not allowed if aggregate of income under sections 192A, 193, 194, 194A, 194D, 194DA, 194-I, 194EE and 194K exceeds the maximum amount not chargeable to income-tax [Section 197A(1B)] … 689
17.40-b Resident individual who is of the age of 60 years or more can furnish declaration even if such income exceeds the maximum amount not chargeable to income-tax [Section 197A(1C)] … 690
17.41 Tax deducted is income received [Section 198]… 690
17.42 Credit for tax deducted [Section 199 read with rule 37BA] … 691
17.43 Duty of person deducting tax [Section 200(1), (2) and (2A)] … 693
17.44 Person deducting tax to file statement [Section 200(3)] … 693
17.45 Processing of statement of tax deducted at source [Section 200A] … 694
17.46 Consequences of failure to deduct or pay tax [Section 201] … 695
17.47 Miscellaneous provisions … 699
17.48 Requirement to furnish permanent account number [Section 206AA] … 712
17.49 Special provision for deduction of tax at source for non-filers of income-tax return [Section 206AB] … 713
17.50 Profits and Gains from the Business of trading in Alcoholic Liquor, Forest Produce, Scrap, etc. [Section 206C] … 715
17.50-a Meaning of “seller” … 716
Contents xxix
17.50-b Meaning of “buyer” … 716
17.51 Tax to be collected at source in case of Parking Lot, Toll Plaza or Mining and Quarrying [Section 206C(1C)] … 717
17.52 TCS on remittance out of India and on overseas tour programme package [Section 206C(1G)] … 717
17.52-a What is the TCS on LRS 2023? … 721
17.53 Seller to collect TCS from consideration received from buyer [Section 206C(1H)] … 721
17.54 Higher rate of TCS if PAN is not furnished by collectee [Section 206CC] … 722
17.55 Special provision for collection of tax at source for non-filers of income-tax return [Section 206CCA] … 723
17.56 Credit for Tax Collected at Source [Section 206C(4)] … 723
17.57 Payment of interest [Section 206C(7)] … 724
Chapter 18 Advance Payment of Tax [Sections 207-211, 217 & 219] … 726
18.1 Liability for payment of Advance Tax [Section 207] … 726
18.2 Senior citizen not required to pay advance tax [Section 207(2)] … 726
18.3 Conditions of Liability to pay Advance Tax [Section 208] … 726
18.4 Computation and Payment of Advance Tax where the calculation is made by the assessee himself [Section 209(1)(a) & (d)] … 726
18.5 What constitutes Current Income? … 727
18.6 Payment of advance tax … 727
18.7 Instalments of advance tax and due dates [Section 211] … 730
18.8 Payment of advance tax in case of capital gains/casual income [Proviso to section 234C] … 731
18.9 Assessee Deemed to be in Default [Section 218] … 731
18.10 Credit for Advance Tax [Section 219] … 731
Chapter 19 Interest and Fee Payable[Sections 201(1A), 220(2), 234A, 234B, 234C, 234D, 234E, 234F, 234G,234H & 244A] … 732
19.1 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)] … 732
19.2 Interest for defaults in furnishing the return of income required by a notice under section 148 [Section 234A(3)] … 735
19.3 Increase/decrease in the interest on certain orders [Section 234A(4)] … 735
19.4 Interest payable for defaults in payment of advance tax [Section 234B(1)] … 736
19.5 Interest payable for defaults in payment of advance tax [Section 234B(3)] … 740
19.6 Increase/decrease in the interest on certain orders [Section 234B(4)] … 740
19.7 Interest for deferment of advance tax [Section 234C] … 741
19.8 Interest on excess refund granted at the time of summary assessment [Section 234D] … 742
19.9 Fee for delay in furnishing of TDS/TCS Statement [Section 234E] … 744
19.10 Fee for default in furnishing return of income [Section 234F] … 744
19.11 Fee for default relating to statement of certificate [Section 234G] … 744
xxx Contents
19.12 Fee for default relating to intimation of Aadhaar number [Section 234H] … 745
19.13 Interest for late payment of demand of tax, interest, penalty, etc. [Section 220(2)] … 745
19.14 Can interest payable under section 220(2) be increased or decreased [First proviso to section 220(2)] … 745
19.15 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)] … 746
19.16 Reduction or waiver of interest payable under section 220(2) [Section 220(2A)] … 746
19.17 Interest under section 220(2) not leviable if charged under section 201(1A) read with section 200A(1) [Section 220(2B)] … 747
19.18 Interest under section 220(2) not leviable if charged under section 206C(7) read with section 206CB(1) [Section 220(2C)] … 747
19.19 Failure to deduct and pay tax at source [Section 201(1A)] … 747
19.20 Waiver of interest … 748
19.21 Interest payable to assessee [Section 244A] … 749
Chapter 20 Refunds [Sections 237 to 241 & 245] … 753
20.1 Who should claim refund? … 753
20.2 Who is entitled to refund? [Section 237] … 753
20.3 Can a person other than the assessee claim refund? [Section 238] … 753
20.4 Form for claim for refund and period within which claim for refund should be made [Section 239 and Rule 41] … 754
20.5 Refund for denying liability to deduct tax in certain cases. [Section 239A] … 754
20.6 Refund on appeal, etc. [Section 240] … 755
20.7 Withholding of refund in certain cases [Section 241A] … 755
20.8 Correctness of assessment not to be questioned [Section 242] … 755
20.9 Interest payable to assessee [Section 244A] … 755
20.10 Set off of refund against tax/demand outstanding [Section 245] … 756
20.11 Procedure for filing a delayed refund claim … 757
Chapter 21 Penalties and Prosecutions … 760
21.1 Penalties … 760
21.2 Certain penalties discussed in detail … 775
21.3 Penalty for under-reporting and misreporting of income [Section 270A] … 780
21.4 Immunity from imposition of penalty and initiation of proceedings under section 276C or 276CC [Section 270AA] … 788
21.5 Power to reduce or waive penalty, etc., in certain cases [Section 273A] … 789
21.6 Power of Principal Commissioner or Commissioner to grant immunity from penalty [Section 273AA] … 792
21.7 Penalty not to be imposed in certain cases [Section 273B] … 793
Contents xxxi
21.8 Amendments in section 276B of the Act for rationalisation of provisions [Section 276B] [w.e.f. 01.10.2024] … 794
Chapter 22 Appeals and Revision [Sections 246 to 264] … 795
22.1 Remedy available against the order of the Joint Commissioner (Appeals) or the Commissioner (Appeals)/ Revision orders of CIT … 795
22.2 Remedy against orders of Appellate Tribunal … 796
22.3 Appeal against order of High Court to Supreme Court … 796
22.4 First appeal … 796
22.4a Appealable orders before Joint Commissioner (Appeals) [Section 246] … 796
22.4b Appealable orders before Commissioner (Appeals) [Section 246A] … 798
22.4c Form of appeal and limitation [Section 249 and Rules 45 and 46] … 800
22.4d Powers of the Joint Commissioner (Appeals) or the Commissioner (Appeals) [Section 251] … 803
22.5 Appeals to the Appellate Tribunal [Section 253(1) and (2)] … 804
22.5a Procedure for filing appeal to Appellate Tribunal [Section 253(3), (3A) (4), (5) and (6)] … 806
22.6 Remedy against the order of Appellate Tribunal … 808
22.6a Direct Appeal to High Court [Section 260A] … 808
22.7 Appeal to the Supreme Court [Section 261] … 809
22.8 Revision by the Principal Commissioner or Commissioner … 810
22.8a Revision of orders prejudicial to Revenue [Section 263] … 810
22.8a Revision of orders in favour of assessee [Section 264] … 811
22.9 Special provision for avoiding repetitive appeals by the assessee [Section 158A and Rule 16] … 812
Chapter 23 Miscellaneous Provisions … 814
23.1 Mode of taking or accepting certain loans, deposits and specified sum [Section 269SS] … 814
23.1a Section 269SS not to apply in the following cases [Provisos 1 and 2 to section 269SS] … 815
23.2 Mode of repayment of certain loans or deposits and specified advance received [Section 269T] … 816
23.2a 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 … 817
23.2b Consequence of contravention of the provisions of section 269T [Section 271E] … 817
23.3 Mode of undertaking transactions [Section 269ST] … 817
23.3a Penalty for failure to comply with provisions of section 269ST [Section 271DA] … 819
23.4 Mandating acceptance of payments through prescribed electronic modes [Sections 269SU, 271DB] … 819
xxxii Contents
23.4a Penalty for failure to comply with provisions of section 269SU [Section 271DB] … 819
23.5 Charge or parting of asset to avoid tax or other sum payable to be void … 820
23.6 Annual information statement [Section 285BB] … 820
23.7 Condonation of delay in obtaining approval [Section 293B] … 821
23.8 Tax on income from virtual digital assets [Section 115BBH] … 822
23.8a TDS on Payment on transfer of virtual digital asset [Section 194S] … 823
23.8b Explanation to section 56(2)(x)] … 825
28.8c The term “virtual digital asset defined [Section 2(47A)] … 825
DIVISION 3 Tables

Table 1 As per new regime… 827

Tax Deduction at source from monthly taxable salary during the financial year 2024-2025… 829

Table 1A Tax Deduction at source from monthly taxable salary during the financial year 2024-2025 If the individual has opted foR old regime… 833

Table 2A As per New regime (View Important Notes) Income Tax payable* For A.Y. 2024-2025

(i.e. the assessee who has not opted to pay tax under the old regime)

Applicable for Individual, HUF, AOP or BOI & AJP

Taxable income between ₹3,00,000 and ₹3,30,000… 839

Taxable income between ₹3,31,000 and ₹4,20,000… 840

Taxable income between ₹4,22,000 and ₹6,00,000… 841

Taxable income between ₹6,05,000 and ₹9,00,000… 843

Taxable income between ₹9,05,000 and ₹12,00,000… 845

Taxable income between ₹12,05,010 and ₹15,00,000… 847

Taxable income between ₹15,00,010 and ₹27,50,000… 849

Table 2B As per old regime (View Important Notes)

Income Tax Payable* for A.Y. 2024-2025

(i.e. total income has been computed after claiming all available exemptions and deductions)

Individual; HUF; AOP; BOI AND AJP

Taxable income between ₹2,50,000 and ₹2,79,000… 850

Taxable income between ₹2,79,000 and ₹3,68,000… 851

Taxable income between ₹3,68,000 and ₹5,00,000… 852

Taxable income between ₹5,00,010 and ₹6,20,000… 854

Taxable income between ₹6,20,000 and ₹7,50,000… 855

Taxable income between ₹7,50,010 and ₹10,00,000… 857

Taxable income between ₹10,00,010 and ₹12,50,000… 858

Taxable income between ₹12, 50,010 and ₹15,00,000… 859

Taxable income between ₹15,00,010 and ₹27,50,000… 860

Table 3A As per New regime (View Important Notes)

Advance tax* For A.Y. 2025-2026

(i.e. the assessee by default has to pay tax as per section 15BAC)

Applicable for Individual, HUF, AOP or BOI & AJP

Taxable income between ₹3,00,000 and ₹3,30,000… 861

Taxable income between ₹3,31,000 and ₹4,20,000… 862

Taxable income between ₹4,22,000 and ₹ 7,00,000… 864

Taxable income between ₹7,05,000 and ₹ 10,00,000… 866

Taxable income between ₹ 10,05,000 and 12,00,000… 868

Taxable income between ₹12,05,010 and ₹15,00,000… 870

Taxable income between ₹15,00,010 and ₹27,50,000… 872

Table 3B As per old regime (View Important Notes)

Advance tax * For A.Y. 2025-2026

(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… 873

Taxable income between ₹2,79,000 and ₹3,68,000… 874

Taxable income between ₹3,68,000 and ₹5,00,000… 875

Taxable income between ₹5,00,010 and ₹6,20,000… 877

Taxable income between ₹6,20,000 and ₹7,50,000… 879

Taxable income between ₹7,50,010 and ₹10,00,000… 881

Taxable income between ₹10,00,010 and ₹12,50,000… 882

Taxable income between ₹12, 50,010 and ₹15,00,000… 883

Taxable income between ₹15,00,010 and ₹27,50,000… 884

Table 4 As per old regime

Advance Tax & Income Tax Payable* for A.Ys. 2024-2025 &2025-2026

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… 885

Taxable income between ₹10,00,010 and ₹27,50,000… 886

Table 5 As per old regime

Advance Tax & Income Tax Payable* for A.Ys. 2024-2025 & 2025-2026

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… 887

Taxable income between ₹10,00,010 and ₹27,50,000… 889

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