Taxation Issues For Entrepreneurs

What is section relating to
Deduction in respect of donations

to certain funds, charitable
institutions?
Section 80G
5 DECEMBER 09 www.afterschool.tk 1
study material of PGPSE / CSE
Deduction for contribution to
pension fund ?
Section 80CCC
Deduction in respect of
contribution to pension scheme of
Central Government ?
Section 80CCD
What is section relating to Deduction in
respect of repayment of loan taken for
higher education ?
Section 80E
Deduction in respect of medical
treatment, etc. ?
Section 80DDB read with Rule 11DD
What is the section relating to
Deduction in respect of medical
insurance premia ?
Section 80D
What is section relating to Deduction in respect of
maintenance including medical treatment of a dependant
who is a person with disability ?
Section 80DD
What is the section relating to
Deduction in respect of rent paid ?
Section 80GG
# Deduction in respect of certain donations for
scientific research or rural development (Section
80GGA)
# Deduction in respect of contributions given by
companies to political parties (Section 80GGB)
# Deduction in respect of contributions given by any
person to political parties (Section 80GGC)
# Deduction in respect of profits and gains from
projects outside India (Section 80HHB)
# Deduction in respect of royalty income, etc., of authors of certain books
other than text books (Section 80QQB)
# Deduction in respect of remuneration from certain foreign sources in the
case of Professors, Teachers etc. (Section 80R)
# Deduction in respect of professional income from certain foreign
sources (Section 80RR)
# Deduction in respect of remuneration received for services rendered
outside India from foreign employer (Section 80RRA)
# Deduction in respect of royalty on patents (Section 80RRB)
# Deduction in case of a person with disability (Section 80U)
# Relief and Rebate in respect of Income-tax and Rates
of Income-tax
# Share of member of an association of persons or body of individuals in
the income of the association or body (Section 86)
# Income from an association of persons or a body of individuals (Section
86)
# Relief when salary is paid in arrears or in advance [Section 89]
Deduction in respect of profits
and gains from housing projects?
Section 80HHBA
What is section relating to Profits
from Exports ?
Section 80HHC
Deduction in respect of certain
incomes of Offshore
Banking Units ?
Section 80LA
Deduction in respect of royalties
etc., from certain foreign
enterprise ?
Section 80-O
Deduction in respect of income of
co-operative societies?
Section 80P
What is section relating to Special
provisions in respect of certain
undertakings or enterprises in
certain special category States?
Section 80-IC
Deduction in respect of profits
and gains from export or transfer
of film software?
Section 80HHF
Deduction in respect of
employment of new workmen?
Section 80-JJAA
Deduction in respect of income by
way of dividends, interest on
securities?
Section 80L
Deduction in respect of earnings
in convertible foreign exchange ?
Section 80HHD
What is section relating to Deduction in respect of profits
and gains from the business of collecting and processing
bio-degradable waste?
Section 80-JJA
What is section relating to Deduction in respect of profits
and gains from certain industrial undertakings other than
infrastructure development undertakings ?
Section 80-IB
What is section relating to Deduction in respect of profit
and gains by an undertaking a enterprise engaged in
development of Special Economic Zone ?
Section80-IAB
What is the section relating to Deduction in respect of
profits from export of computer software?
Section 80HHE
What is the section relating to Deduction in respect of
profits and gains from industrial undertakings or
enterprise engaged in infrastructure development ?
Section 80-IA
When was service tax introduced
in India ?
It was imposed at a uniform rate of 5% in the

Union Budget for 1994-95. The Tax Reforms
Committee headed by Dr. Raja J Chelliah had
recommended imposition of service tax on
select services.
Who is liable to pay service tax?
1. In general Insurance or Life Insurance services, the person
carrying on the business of Insurance is liable and not the insurance
agent.
2. In the case of services received in India from a place or person
outside India, the recipient is liable.
3. In specified cases consignor or consignee who is paying freight
charges is liable to pay service charge for the services received from
a Goods Transport Agency.
4. In case mutual fund services, the mutual fund or asset
management company is liable and not the agent.
5. For sponsorship services, the recipient body corporate or firm is
liable.
What is the periodicity of
payment of service tax ?
The service tax is payable either on monthly

(by the 5th of the next month) or quarterly
basis. The credit that is available at the end of
the month or the quarter can be utilized for
payment of service tax relating to that month or
quarter.
When is e-payment of service tax
mandatory?
e-payment is mandatory for those who paid

Rs. 50 lakh or more in cash during the last
financial year. Interest is payable @13% per
annum per delayed payment of service tax
under Section 75. The payment may be made
either by cheque or cash depositing it through
GAR-7 Challan.
Is registration under service tax
compulsory ?
It is mandatory for every person liable to pay

service tax to get registered with
Superintendent of Central Excise. A person
providing a taxable service is liable to pay
service tax in terms of Section 68.
How should application be made
for registration under service tax?
form (ST-1). within a period of thirty days from the date on which
the service tax is leviable. With the following documents:
— Permanent Account number (PAN);
— An affidavit declaring the commencement of the services;
— Copy of passport/ration card etc., showing proof of residence;
— Passport size photograph of the assessee in case of an
individual. In case of partnership firm, copy of partnership deed duly
certified to be true copy along with registration certificate in case the
firm is registered;
— In case of corporate assessee, copy of memorandum, articles of
association
What will happen if an
entrepreneur sells his business to
another person?
In case of transfer of business by the assessee
to another person, the transferee is required to
obtain a fresh Certificate of Registration from
the Superintendent of Central excise (who
grants a certificate of registration in Form ST-2
with in 7 days of the date of receipt of the
application.). This certificate gives the details
of all the taxable services provided by the
service provider.
What will happen if an entrepreneur closes /
partially closes his business ?
He must surrender his Certificate of

Registration to the Superintendent of Central
Excise. In case of a partial closure, a partial
surrender can be made of the services which
are discontinued. In such case, he can get it
endorsed on the registration certificate.
What is the time limit for filing
service tax returns ?
Return under Service Tax is required to be
filed by every assessee on half yearly basis in
Form ST-3 or Form ST-3A, as the case may
be, along with a copy of the Form TR-6, in
triplicate for the months covered in the half-
yearly return.
th
Time limit = by 25 of the next month
following half year
What are the penalties for delay in
filing returns ?
Delay upto 15 days Rs. 500/-

Delay upto 30 days Rs. 1,000/-
Delay beond 30 days Rs. 1,000 + Rs. 100/- per
day subject to a maximum of Rs. 2,000/-
Rule 7B :a revised return can be filed within 60
days from the date of filing after rectification
of mistakes.
What is the time limit for payment
of service tax collected ?
by the 5th of the next month. If the assessee is
an individual or partnership firm, the service
tax received during any quarter shall be paid
by the 5th of the month after the end of the
quarter.
Where payment is made through internet
banking, such e-payment can be made by 6th
of the month.
what is doctrine of unjust
enrichment
Since service tax is indirect tax, it is

recoverable from customer. If you recover the
amount from customer and again claim refund,
you will get double benefit.
What is Penalty for non-payment
or delayed payment of service
tax?
If service tax is not paid or belatedly paid,

penalty shall be imposed, which will be
minimum Rs. 200 per day during which such
failure continues or @2% per month,
whichever is higher
What is Penalty for contravention
of Act or Rules?
Penalty for contravention of any provision of

the Chapter or Rules (of service tax) can be
upto Rs. 1,000 [Section 77]. The penalty can
be waived under Section 80, if assessee proves
that failure was due to reasonable cause.
What is input service ?
Rule 2(l)(ii) of Cenvat Credit Rules: any service – (i) used by a

provider of taxable service for providing an output service; or (ii)
used by the manufacturer, whether directly or indirectly, in or in
relation to the manufacture of final products and clearance of final
products, upto the place of removal
Is development and supply of content to
telecommunication companies taxable under
service tax ?
Yes Section 65(105)(zzzzd): Content

developed for use in telecommunication,
advertisement and internet or websites are
leviable to service tax presently under
“business support service”
Are design services taxable ?
Yes
conceptualizing, outlining, creating the designs
and preparing patterns for costumes, apparels,
garments, clothing accessories, jewellery or
any other articles intended to be worn by
human beings are leviable to service tax under
fashion designing service
[Section 65(105)(zv)]
Are asset management services
taxable?
Yes
Asset management including portfolio
management, and all forms of fund
management provided by a banking company
or a financial institution including a non-
banking financial company or any other body
corporate or commercial concern is leviable to
service tax under banking and other financial
service [Section 65(105)(zm)]
Are softwares taxable under
service tax?
Yes
w.e.f. 16.5.2008. Information Technology
Software Services and Supply of tangible
goods for use (hire services) are taxable.
What is the current limit for
exemption under service tax?
Exemption limit to small service providers

increased from Rs. 8 lakhs to Rs. 10 lakhs per
annum w.e.f. 1.4.2008
Is rent a cab service taxable ?
Yes, Cab= motor vehicles including those
vehicles capable of carrying more than twelve
passengers for hire or reward. However, motor
vehicle capable of carrying more than twelve
passengers and maxicab, rented to an
educational body, imparting skill or knowledge
or lessons or any subject or field, other than a
commercial training or coaching centre, is
specifically excluded from the scope of the
term “cab”.
A maxicab is used for the students
of university, is it liable to service
tax ?
No
A maxicab is used for the students
of a coaching institution, is it
liable to service tax ?
Yes
What is a financial lease ?
International Accounting Standards

Committee: “lease that transfers substantially
all the risks and rewards incidental to
ownership of an asset, title may or may not
eventually be transferred”.
What are essential conditions for a
financial lease ?
1. a contract for leasing of a specific asset is entered into

between two parties,
2. the contract is for use and occupation of the specific asset,
3. the lease payments are calculated so as to cover the full cost
of the asset together with the interest charges, and
4. the lessee is entitled to own or has the option to own, the asset
at the end of the lease period after completing the lease payment.
Is computer hardware engineering
consultancy leviable to service
tax?
Yes
Are Resident Welfare Associations liable
to pay service tax?
No Resident Welfare Associations (RWA) are
associations where membership is restricted to
only members of the residential complex.
RWAs provide various services to their
members such as maintenance of common
area, facilitating payments etc. For this
purpose, each member is required to make
monthly contribution of specified amount.They
are exempted from service tax.
How should an entrepreneur use
efiling facility for service tax ?
Go to http://servicetaxefiling.nic.in. Assesses
having a 15-digit Sevice Tax Payers (STP)
code can avail of the facility of electronic filing
of their return. Assesses who opt for the e-
filing of return should make an application to
concerned Assistant/ Deputy Commissioner in
the prescribed form. The assessee is thereupon
provided a unique user name and password
Where can appeal be made
regarding service tax ?
Appeal to CESTAT (Tribunal) can be made
against order of Commissioner passed by him
under Section 73, 83A or 84
or to Commissioner (Appeals) under Section
85 [order in appeal from order of AC/DC]
The appeal of assessee should be in form ST-5
in quadruplicate
cross objection should be in form st-6 in
quadruplicate.
Who are coparceners?
: The lineal male descendants of a person upto

the third generation of such person are known
as coparceners.
Can Karta be some younger also
?
the senior member may give up his right of

management and a junior member may be
appointed as Karta with the consent of all other
members. ordinarily HUF is managed by the
father or other senior member for the time
being of the family.
In the absence of a male member
in the family or when all male
members are minors, who will be
the Karta (manager) of HUF ?
a woman member can be treated as manager of

the family for income-tax purposes.
What is known as converted
property?
an individual being a member of Hindu

undivided family transfers his separate
property to the family for the common benefit
of the family, otherwise than for adequate
consideration
When do we have total partition
of an HUF ?
Where the entire joint family property is

divided among all coparceners and the family
ceases to exist as an undivided family, the
partition is total.
When can we assess a firm as a
partnership firm ?
The partnership is evidenced by an instrument

i.e. partnership deed.
The individual shares of the partners are
specified in that instrument.
A copy of the partnership deed certified by all
the partners in writing
A partnership firm has book profit
of Rs. 1000000, what is the tax ?
The firm is in specified profession
90% of book profit for first 1 lakh = 90000

60% of book profit for next 1 lakh = 60000
40% of book profit for remaining amout =
320000
total = 470000 answer
A partnership firm has book profit
of Rs. 850000, what is the tax ?
The firm is in specified profession
90% of book profit for first 75000 = 67500
60% of book profit for next 75000 = 45000
40% of book profit for remaining amout
=280000
total tax = (67500+45000+280000)
=392500 answer
What is the impact of change in
partnership structure on carry
forward / set off ?
Where a change has occurred in the
constitution of a firm on account of death or
retirement, the firm is not entitled to carry
forward and set off so much of the loss
proportionate to the share of a retired or
deceased partner as exceeds his share of
profits, if any, in the firm in respect of the
previous year.
What is succession of one firm by
another firm?
When all the partners in the predecessor firm

are replaced by new partners in the successor
firm, it is known as succession of one firm by
another firm. If a firm is dissolved and some of
the partners take over the firm’s business or
carry on a similar business with or without new
partners, it would be a case of succession by a
new firm
How is tax calculated in case of
retail trade in small scale ?
in terms of Section 44AF, 5% of his total

turnover in the previous year on account of
such business shall be deemed to be his income
so long as his turnover from such business
does not exceed Rs. 40 lac
Give examples of AOP?
Co-heirs, co-legatees or co-donees, joining
together in a common purpose
Members of erstwhile HUF earning income
jointly even after partition of HUF
Company joining with two other companies in
joint venture
Where receivers were appointed in a suit for
dissolution of a firm, the firm would be AOP
Is every group of individuals an
AOP?
No A mere collection of individuals without a

common tie or common aid cannot be taken to
be a body of individuals failing under Section
2(31) of the Income-tax Act, 1961.
Is a non-resident is liable to pay
tax on his foreign income ?
A non-resident is not liable to pay tax on his

foreign income until and unless it is received in
India
Is there any tax liability on Non-
Residents relating to income from
newspapers etc?
No,
in the case of a non-resident, being a person
engaged in the business of running a news
agency or of publishing newspapers,
magazines or journals, no income shall be
deemed to accrue or arise in India
What is the tax rate for a non-
resident and a foreign company ?
1. On dividend incom @ 20%

2. Interest received from Government or an Indian concern on
money borrowed or debt incurred by Government - @ 20%
3. Income received in respect of units, purchased in foreign
currency of a Mutual Fund specified in Section 10(23D) (i.e., a
mutual fund set-up by a public sector bank or a public financial
institution) or of the Unit Trust of India  @ 20%
Will a person be taxed under
house property for income which
is not his own but acquired on
lease ?
Yes
A person who has acquired a right in a building
(under clause (f) of section 269UA), by way of
a lease for a term of not less than 12 years
(whether fixed originally or extended through a
provision in the agreement), is the deemed
owner of the property.
What are rules regarding PAN ?
The application for obtaining PAN No. is made in from no. 49A
along with a prescribed fee and documents. Computer allots the PAN
randomly. It is unique for every person. PAN is a 10 digit
alphanumeric code the first 5 digits are the alphabets, next 4 digits
are the numbers and the last one digit is also an alphabet, e.g.,
TDRLS7498A is an example of PAN. It is mandatory to mention the
PAN on income tax return. Wrong quoting of PAN is an offence,
which is punishable with a fine of Rs. 10,000.
Give some examples of income
from other sources ?
1. Income from subletting
2. Interest on bank deposits and loans and securities.
3. Agricultural income from a place outside India.
4. Rent of plot of land (not included in house property)
5. Mining rent and royalty.
6. Casual income under a will, contract, trust deed.
7. Salary payable to a member of parliament.
8. Income from undisclosed sources.
9. Gratuity paid to a director who is not an employee of a company.
10. Any casual income exceeding Rs. 5,000.
What are rules regarding TDS On
dividend ?
dividend is taxable on the basis of its

declaration while deemed dividend and interim
dividend is taxable on the basis of payment.If
the dividend is more than the specified limit
under section 194 (which is at present Rs.
2,500 in a year) then the dividend has to be
paid only after TDS
Give examples of assets which are exempt from capital
gains tax (the assets which are not taken as capital
assets)?
ssets exclude:
1. Stock in trade held for business
2. Agricultural land in India not in urban area i.e., an area with
population
more than 10,000.
3. Items of personal effects, i.e., personal use excluding jewellery,
costly
stones, silver, gold
4. Special bearer bonds 1991
5. 6.5%, 7% Gold bonds & National Defence Bonds 1980.
6. Gold Deposit Bonds 1999.
Give examples of capital assets,
where long term capital gain is
taken after 12 months (instead of
36 months)?
Equity or Preference shares,
Securities like debentures, government
securities, which are
listed in recognised stock exchange,
Units of UTI
Units of Mutual Funds
Zero Coupon Bonds
What are included in transfer as
per the provisions of capital gain
tax?
• Sale of asset
• Exchange of asset
• Relinquishment of asset (means surrender of
asset)
• Extinguishments of any right on asset (means
reducing any right
on asset)
• Compulsory acquisition of asset.
How is indexed cost of acquisition
calculated ?
Indexed Cost of Acquisition = COA X CII of

Year of transfer / CII of Year of acquisition
COA = cost of acquisition
CII = cost index
How is indexed cost of acquisition
calculated ?
Indexed Cost of improvement = COA X CII of

Year of transfer/ CII of Year of improvement
Does the cost of asset include the
cost of brokerage etc. Also ?
Yes
Expenditure incurred by buyer at the time of
buying the capital assets like brokerage,
commission, registration fees, cost of stamp
paper etc. are to be added in the cost of
acquisition before indexation.
What exemption is available
under sec. 54 on capital gain on
sale of house property ?
House Property transferred was used for residential purpose.
2. House Property was a long term capital asset.
3. Assesses has purchased another house property within a period of
one year
before or two years after the date of transfer or has constructed
another
house property within three years of date of transfer i.e. the
construction of
the new house property should be completed within three years.
What are the 4 conditions for
depreciation on assets ?
Asset must be owned by the assessee.
It must be used for the purpose of
business or profession.
It should be used during the relevant
previous year.
Depreciation is available on tangible as
well as intangible assets.
What depreciation is allowed
when written down value has been
reduced to zero?
No depreciation is admissible where written

down value has been reduced to zero, though
the block of assets does not cease to exist on
the last day of the previous year.
What conditions are necessary for
taxation as per sec. 44AF?
The taxpayer may be an individual, HUF, AOP, BOI, firm,
company, co-operative society or any other person. He or it
may be a resident or a non-resident.
The taxpayer is engaged in the business of retail trade in any
goods or merchandise.
Total turnover from the above business does not exceed Rs.
40 lakh.
Tax will be 5% on total turnover, no deduction under section
30 to 38 is available
What are the tax aspects relating
to construction business (small
scale)?
The taxpayer may be an individual, HUF, AOP, BOI, firm,
company, co-operative society or any other person. He or it may
be a resident or a non-resident.
The taxpayer is engaged in the business of civil construction or
supply of labour for civil construction work. The taxpayer may
be a contractor or sub-contractor.
Gross receipts from the above business do not exceed Rs. 40
income tax is estimated at 8 per cent of the
gross receipts
A person has gross receipts of Rs. 30 lakh from the
business of retail trade and Rs. 35 lakh from wholesale trading in paper.
His total gross receipts are Rs. 65 lakh, Is he requied to have compuslsory
audit as per sec. 44AB
he will not be required to have

his accounts audited, since his gross receipts
after excluding those from the
business of retail trade are still less than Rs. 40
lakh, the limit provided in
section 44AB.
[deduction under SEC. 35(2AA)] Payment of Rs. 1 lakh has been
made – The payment is made to approved National Laboratory for
undertaking scientific research programme. How much deduction is
allowed ?
125000
Give examples of preliminary expenditures
allowed under sec. 35D ?
Expenditure in connection with preparation of feasibility report,
preparation of
project report, conducting a market survey (or any other survey necessary
for the business of the assessee), etc.
Legal charges for drafting any agreement.
Legal charges for drafting the memorandum and articles of association.
Printing expenses of the memorandum and articles of association.
Registration fees of a company under the provisions of the Companies
Act.
Expenses in connection with the public issue of shares or debentures of a
company, underwriting commission, brokerage and charges for drafting,
typing,
printing and advertisement of the prospectus.
How much deduction is allowed
under sec. 35D for preliminary
expenditure ?
5 per cent of cost of project; or

b. 5 per cent of capital employed,
(for corporates)
What is included in Capital
employed in the business of a
company ?
It means the aggregate of the
issued share capital, debentures and long-term
borrowings, as on the last day of
the previous year in which the business of the
company commences.
What is included in Cost of
project for sec. 35D ?
It means the actual cost (or additional cost incurred after
commencement of business in connection with extension or setting
up an
industrial undertaking) of fixed assets, namely, land, buildings,
leaseholds, plant,
machinery, furniture, fittings and railway sidings (including
expenditure on
development of land and buildings), which are shown in the books of
the assessee
as on the last day of the previous year
What expenditures are not
allowed as per sec. 40(a)
INTEREST, ROYALTY, FEES FOR

TECHNICAL SERVICES PAYABLE TO A
NON-RESIDENT
AMOUNT IN RESPECT OF
PAYMENT TO RELATIVES IS
ALLOWED OR NOT ?
NOT IT IS NOT ALLOWED AS

DEDUCTIBLE EXPENDITURE
When advance tax is payable ?
Tax is paid in advance when the liability of

advance tax is Rs.5, 000 or more. (pay as you
earn)
For non-corporate assessees, how
much advance tax must be paid by
what dates ?
On or before 15 September - not less than 30%
of tax payable
On or before 15 December - not less than 60%
of tax payable
On or before 15 March - not less than 100%
of tax payable
For corporate assessees, how
much advance tax must be paid by
what dates ?
On or before 15 June - not less than15% of
tax payable
On or before 15 September - not less than 30%
of tax payable
On or before 15 December - not less than
60% of tax payable
On or before 15 March - not less than 100%
of tax payable
What is TDS rate for winnings
from lottery etc?
Any person responsible for paying income on
winning from lottery or
crossword puzzle shall deduct tax @ 30% plus
surcharge plus education cess.
TDS is payable if the amount of winning
exceeds Rs 5,000 (for lottery etc and this is Rs.
2500 for winnings from horse races etc.)
What is TDS rate for rent ?
Tax to be deducted @ 20 % plus surcharge

plus education cess of total amount (15% in
case payment is made to Individual or HUF).
TDS only if amount exceeds Rs. 1, 20,000.

What are rules regarding TDS on
debentures ?
NO TDS is required if :
1. Interest is paid by A/c payee cheque
2. Interest is paid to an resident Individual and
3. If interest is less then Rs.2, 500 p.a.
4. Debentures are listed in a stock exchange
The rate of T.D.S is:
• 10% plus surcharge plus education cess -for Listed Debentures
• 20% plus surcharge plus education cess-for Non- Listed
Debentures

professional fees ?

plus education cess of total amount.
TDS only if amount exceeds Rs. 20,000

rent ?

plus education cess of total amount (15% in
case payment is made to Individual or HUF)
TDS only if amount exceeds Rs. 1, 20,000.

What are the different names of
VAT ?
Value Added Tax (VAT) is a type of sales tax.

In some countries, including Australia, Canada,
New Zealand and Singapore, this tax is known
as “goods and services tax” or GST; and in
Japan it is known as “consumption tax”

When did European countries
adopt VAT ?
Frnce was the first to adopt it in 1954. On January 1, 1968,
Germany replaced its multi-point sales tax on goods and
services, which extended down to the retail stage, by a VAT
with a normal rate of 10 per cent and a reduced rate of 5 per
cent on foodstuffs and agricultural products. On 1/4/73, UK
also adopted VAT. The EC Fiscal and Financial Committee
had recommended in1962 that all member-countries should
shift to the VAT system, the change was completed only in
1973 when Italy switched over to the VAT.

Who are the dealers, who must get
registration?
dealers with gross annual turnover above Rs.5

lakh have to compulsorily get registered.

What is the benefit of registration
under VAT ?
Every dealer up to the retailer level musst get

registered with the Sales Tax department to get
the benefit of the credit of input tax.

Are Stock/Consignment transfers
exempt from VAT?
Yes

Under VAT, what is tax credit ?
Input tax paid in excess of 4% are eligible for

tax credit. When calculating tax, these taxes
will be deducted

How should tax credit be given in
output tax ?
Output tax is the tax that a dealer charges on

his sales that are subject to tax. The input tax
credit is to be given for both manufacturers and
traders for purchase of inputs/ supplies meant
for both sale within the State as well as to other
States, irrespective of when these were utilized
or sold
What are methods for
computation of VAT ?
1. The Subtraction method: Under this method the tax rate
is applied to the difference between the value of output and
the cost of input;
2. The Addition method: Under this method value added is
computed by adding all the payments that are payable to the
factors of production (viz., wages, salaries, interest
payments, etc.);
3. Tax Credit method: Under this method, it entails set-off
of the tax paid on inputs from tax collected on sales. Indian
States opted for tax credit method, which is similar to
CENVAT.
What is the difference between
FPT & LPT?
The First point tax (FPT) was a system where
tax was placed at first stage. It was convenient
to the revenue but had inbuilt cascading effect.
The Last Point Tax (LPT) was a system, where
tax was put at the last point of sale (when
goods were sold to ultimate customer). It is an
ideal system but it was evasion prone. Now we
use VAT, which takes advantages of both these
sysems
What will be service tax if a
person renders a taxable service of
the value of Rs.10000?
the service tax @12% will be Rs.1200. The

education cess and Secondary & Higher
education cess @3% on Rs.1200 will be Rs.36.
The total tax will be Rs.1236

Will you add income of a child
artist (who performs in TV shows)
in his parents' income?
No
Income derived by the minor from manual work or from any
activity involving application of his skill, talent or
specialised knowledge and experience will not be included
in the income of his parent. It it was not the case, then
income of the minor will be included in the income of that
parent whose total income excluding income includible
under this sub-section is greater

Can the loss of non-speculation
business be set-off against the
income from speculation
business?
Yes

Can the loss of speculation
business be set-off against the
income from non-speculation
business.
No

Can the loss from any activity other than the business
of owning and maintaining race horses be set off
against income from the business of owning and
maintaining race horses.
Yes

Can loss from business of owning and maintaining
race horses be set off against income from the
business other than that of owning and maintaining
race horses.
No

Can we set off unabsorbed
depreciation before carried
forward business loss ?
No
Where any unabsorbed depreciation or capital
expenditure on scientific research has been
brought forward alongwith business loss, the
business loss is first to be set-off.

Can a transferor transfer income without
tranferring the asset or transfer the asset and
keeps the income for himself ?
Where a person transfers to any other person

income (whether revocable or not) from an
asset without transferring that asset, the income
shall be included in the total income of the
transferor.
If the transferor transfers the asset and keeps
the income for himself, the income shall be
included in the income of transferor.
Can a person make revokable
transfer?
Where a person transfers any asset to any other

person with a right to revoke the transfer, all
income accruing to the transferee from the
asset shall be included in the total income of
the transferor.

Income of a minor
All income which arises or accrues to the

minor child (not being a minor child suffering
from any disability of the nature specified in
Section 80U) shall be clubbed in the income of
his parent.

Income of life partner
Where a person transfers some assets directly

or indirectly to a person or association of
persons (trustee or body of trustees or juristic
person) without adequate consideration for the
immediate or deferred benefit of his or her
spouse, all such income as arises directly or
indirectly from assets transferred shall be
included in the income of the transferor.
What is cash credit ?
Where any sum is found credited in the books of an

assessee maintained for any accounting year and the
assessee is not in a position to offer explanation about
the nature and source thereof or the explanation offered
by him is not satisfactory in the opinion of the
Assessing Officer, the sum so credited may be treated as
the income of the assessee in respect of the accounting
year in which the cash credits are found to have made in
the books (sec 68)

What are exception to set off ?
Loss from Speculation Business

Loss from the activity of owning and
maintaining race horses
long-term capital loss can be set off only
against long-term capital gain.

Are Jain families also HUF?
Jain and Sikh undivided families are also

treated as Hindu undivided families

If a Hindu converts to christianity,
is his family still HUF ?
No
If a Hindu gets converted as a Christian, the
family of such a person will not be an HUF.
However a Hindu, along with his son (by a
christian wife) who has been brought up as a
Hindu will be a HUF

Can we have an HUF within
HUF?
YES
A HUF may consist of a number of smaller
HUFs. A smaller HUF has a legal existence
and may be assessable as an independent unit

What are the schools in Hindu
Law ?
HUFs are governed by two schools viz.

Mitakshara and Dayabhaga.

Can a son demand partition in
HUF ?
A Mitakshara son, in whom the interest in

family property is vested by birth, all along
possesses a right to demand partition. A
Dayabhaga son, on the other hand acquires no
interest in the family property by birth and,
consequently, has no right to demand partition
of the HUF property from his father.
Is there any impact on carry
forward of losses in case of death
of partner in a partnership firm ?
Yes
Where a change has occurred in the constitution of a
firm on account of death or retirement, the firm is not
entitled to carry forward and set off so much of the
loss proportionate to the share of a retired or deceased
partner as exceeds his share of profits, if any, in the
firm in respect of the previous year.

Gautam is employed in Delhi. His basic
Salary is Rs. 5,000 per month. He receives
Rs. 5,000 p.a. as house rent allowance. Rent
paid by him is Rs. 12,000 p.a. Find out the
amount of taxable house rent allowance.
As per rule 2A :
least of the following :
1. Rs. 5,000 (actual HRA)
2. Rs. 6,000 (being excess of rent over 10% of salary)
3. Rs. 30,000 (in Delhi, so one-half of the salary of the
assessee).
Least is 5000

Mr. X is the owner of a house property. He lets this
property during the previous year 2007-08 for Rs.
7,000 p.m. The house was occupied from 1.4.2008 to
31.1.2009. From 28.2.2009 it remained vacant. Mr. X
fails to realize Rs. 10,000 from the tenant. The
Expected rent of the house is Rs. 80,000 p.a.
Higher of (expected rent or actual rent) = 80000

less : loss due to vacancy (but it must be more than or
equal to actual rent received) (80000 – 14000) = 66000
gross annual value = 66000

Mr. R. owns a house. The Municipal value of the
house is Rs. 74,000. He paid Rs. 8,000 as local taxes
during the year. He uses this house for his residential
purposes but lets out half of the house @ Rs. 3,000
p.m. Compute the annual value of the house.
Higher of annual value / municipal value : (74000 or
(12*6000) = 74000
less municipal taxes = 8000
net = 66000
less 50% for SOP (self occupied property) = 33000
less standard deduction 11000
net value : 22000 : answer

M is the owner of a house. The municipal value of
the house is Rs. 40,000. He paid Rs. 8,000 as local
taxes during the year. He was using this house for
his residential purposes but let out w.e.f. 1.1.2009
@ Rs. 4,000 p.m. Compute the annual value of the
house.
Higher of municipal value / fair rent

(40000 or 48000) = 48000
less municipal tax 8000
gross value 40000
vacancy allowance = nil
standard deduction = 13333
net value = 26667

Which of these will you include in
calculation of salary for the
purpose of valuation of house
property?
Salary , Entertainment Allowance Bonus Dearness
Allowance (not recognised for computing retirement
benefit) Employer’s contribution to provident fund
(recognised) Education Allowance for one child Lunch
Allowance (Rs. 1000 per month)
answer : salary+bonus+entertainment allowance+lunch
allowance

What is salary for entertainment
allowance ?
Basic Salary exclusive of any allowance,

benefit or other perquisite.

What is salary for valuation of
Rent-free House or Concession in
rent?
Salary + all taxable alloance + bonus etc.

(excluding bonus – if it is not part of retirement
benefit)

What is salary for HRA ?
Basic + DA (if part of contract for

employment) + commission

What is salary for gratuity ?
Basic Salary, D.A. (if given under the terms of

employment) and Commission based on fixed
percentage of turnover.
(It does not include bonus, other commission,
H.R.A. over-time wages and any other
allowance and perquisites.)
If the employee is covered by the Gratuity Act,
D.A. will always be included in salary.
What is salary for Determi-nation
of Rs. 50,000 regarding taxability
of perquisites u/s 17(2)(iii)(c)
Basic Salary, Dearness Allowance, All other

taxable allowances, benefits received in cash,
Bonus, Commission, etc. and all monetary
payments

What is salary for Compensation
u/s 10(10B)
Salary, allowance, value of rent-free or

concessional accommo-dation light, water or
any other amenity and travel concession;
(it does not include Bonus, Gratuity employer’s
contribution to any fund for retirement
benefits.)

Jai works for Government of
Rajasthan. He gets earned leave
of Rs. 2,00,000. How much is tax
free ?
100% x \

Medical expenses reimbursed by employer:
Rs. 7,200 for the period from 1/4/ 2010 to
30/4/10. Is it tax free ?
Yes
(upto Rs. 15000 in one year)

Mr. Anand and his family also availed LTC -
they visited Mumbai and the expenses of Rs.
5,600 being the cost of air conditioned second
class rail tickets was reimbursed by the
employer.
It is tax free (we assume that other conditions

are fulfilled)
(rule 2b and sec. 10(5) )

The employer provides Ravi a car
for personal purposes and
expenses are incurred by the
employer amounted to Rs. 9,900.
It is taxable
there is no tax exemption here

Employer of A made payment of club bills to the
extent of Rs. 3600 for the year. Is it tax free ?
No
however, if it is proved that this club
membership was for office purpose only then it
will be tax free

An employee having his own
house was given HRA is it taxable
?
Yes

Mr. Ajay received Rs. 1,50,000 as gratuity.
He is not covered by the Payment of Gratuity
Act. He worked for 20 years and 9 months
and the average salary for last 10 months has
been 20000.
The least of the following is taxfree :

1. 20*20000 * ½ = 200000
2. 3.5 lakhs
3. actual gratuity amount = 1.5 lakhs

Is hill allowance taxable ?
Yes,
It is given to employees working in hilly areas
on account of high cost of living in hilly areas
as compared to plains. It is fully taxable, if the
place is located at less than 1,000 metres
height from sea level.

Is group medical insurance of
employees taxable in salary
head ?
No
it is tax free
Group medical insurance obtained by the
employer for his employees (including family
members of the employees) or all medical
insurance payments made directly or
reimbursement of insurance premium to such
employees who take such insurance.
Are reimbursement of medical
expenses taxable ?
They are tax free upto a limit

Reimbursement of medical expenses actually
incurred by the employee upto a maximum of
Rs. 15,000 in the aggregate.

Is reimbursement of travel and
stay expenses abroad tax free ?
Yes, but only when the employee’s gross total

income reimbursement of this expenditure does
not exceed two lakh rupees

Is recreational facility tax free ?
Yes
The value of recreational facilities provided is
exempt. However, the facility should not be
restricted to a selected few

Is value of free rations given to
the armed forces personnel
taxfree.
Yes

Is the amount spent by an
employer on the promotion of
family planning amongst its
employees tax free?
yes

Are privilege ticket orders granted
by Railways to its employees tax
free?
Yes

Are Sum paid by an employer to
pension or deferred annuity
scheme taxfree?
Yes

Is Rent-free furnished residence provided to
an Officer of Parliament / Union Ministry /
leader of opposition in Parliament tax free?
Yes

Is Interest free loan to an
employee tax free?
Yes but Only if the amount of loan does not

exceed Rs. 20,000/-.

a professional jockey receives
present from his employer on
winning the race – is it taxfree?
No

Are legal charges incurred by the
employer to defend the employee
taxable ?
Yes
even if the legal charges are related to work
performed during employment

Are payments made by employer
of any loan due to the employee
taxfree.
No

Are reimbursement of tuition fees
of the children of the employee
taxfree?
Only upto Rs. 100 per month per child (for 2

children)

Is payment (by employer) of club
bills of the employee taxfree ?
No

Is payment (by employer) of hotel
bills of the employee taxfree?
No

Is income-tax paid by the
employer due from the employee
taxfree?
No

Is the value of recreational
facilities provided taxfree?
Yes

What will be the income under the
head salary from the following :
Basic : Rs. 20000 per month
DA : 50% of basic
Bonus : 8% of basic + DA
Commission : 1% of sales, commission = Rs. 100000
HRA : 30% of basic
Free telephone, mobile, car facility is provided to employee.
Education expenses of his two sons (Rs. 10000 per annum) is borne
by employer. He is also provided 1 LTC in 4 years.

Solution :
Basic : 20000*12 = 2,40,000

DA : 1,20,000
Bonus : = 28,800
commission = 1,00,000
HRA is tax free upto 40% or 50% of basic + DA = nil
all other perquisites are tax free, so they will not be taxed.
Total salary = 488800 answer

An employee is a director of a company. He
also has 12% of the shares of the company.
Will his salary be a salary of income from
business and profession ?
Yes, it will be salary as he is getting it as salary

for working in a company

Calculate salary from the
following information :
Sitting fees Rs. 20000
Non-practising allowance : Rs. 24000
Hill allowance : Rs. 10000 (the place 800
meter high)
Technical journal allowance Rs. 5000
solution :
20000+24000+10000 = 54000
technical journal allowance is tax free
A company provides free lunch
facility to company. It costs Rs.
40 per lunch. Is it taxable as
perquisite?
No
Upto Rs. 50 is tax free

A company provides free
transport facility to office and
home. Is it taxable ?
Tax free

Example :
For the financial year 2008-09, ‘A’, a Central Government Officer

receives salary of Rs. 77,000 (including dearness allowance of Rs.
42,000) and entertainment allowance of Rs. 18,000. His contribution
to provident fund during this period is Rs. 7,200. In addition, he has
purchased National Savings Certificates (VIII Issue) for Rs. 6,000.
He has been provided with accommodation by the Government for
which the rent determined is Rs. 375 per month and this is recovered
from A’s salary. Compute A’s tax liability for the assessment year
2009-10 assuming that he has no other income.

Solution ..
Salary+ DA is taxable : 77000
entertainment allowance :
(exemption 1/5 or 5000, for govt. Employee)
(18000-5000) = 13000
contribution to PF and NSC is allowed as
deduction in 80C : 13200
taxable income : 90000 – 13200
=76800, which is tax free.
What are Sections 15 to 17 of
income tax about ?
Salary

Income tax about ?
Income from house property

What are Sections 28 to 44D of
Income tax about ?
Profits and gains of business or profession

What are Sections 45 to 55A of
income tax about ?
Capital gains

Income tax about ?
Income from other sources

Where can we include the income
of official liquidator?
An official liquidator appointed by the Court or

by the Central Government is also become an
employee of the Central Government under
Section 448 of the Companies Act, 1956 and
consequently the remuneration due to him
would also be assessable under the head
‘Salaries’.
if an employee receives any money from his
employer as part of the terms of employment for not
carrying on any profession, where will go as per
income tax ?
Salary

Where will you put personal gifts received by the
employee from his own employer on account of the
personal regard or love and affection for income tax
purpose ?
It is tax free

What should we take as salary –
amount actually received or gross
amount ?
Gross amount
any tax deducted at source or other deductions
on account of provident fund, insurance
premium, or on any other account made by the
employer from the salary income, should be
added to the net salary received by the
employee.
The employer becomes insolvent
and therefore salary remains
outstanding for an employee. Is he
still liable to pay tax ?
Yes
Salary is taxable even if the money is not
received or could not be recovered from the
employer due to his insolvency or any other
reason

A payment in appreciation of
personal qualities is a salary or
not, it is made by employer ?
No it is not salary

Raju is employed in a Gas supply
company, the company supplies
free gas to Raju, is it taxable ?
Yes
it is taxable at cost to the employer

Are the following facilities taxable to a non-
specified employee : free sweeper, gardener,
cook, lunch, car facility ?
No

Are the following facility taxable to a non-
specified employee :Rent free house?
Rent Free house is taxable in the hands of all

the assessees

How much exemption is provided
for Compensation received by a
workman under the Industrial
Disputes Act, 1947 ?
Rs. 50000 (the limit may change as per govt.

Notification)

An employee gets commuted
pention, he also receives gratuity,
how much is tax free ?
(Assuming it to be a non-government
employee)
one-third of the pension which he is normally
entitled to receive

Can a firm avoid income from
housing property by transferring it
to individuals ?
No
If a firm transfers its house property to its
partners, before dissolution, merely by book
entries, annual value of the property is taxable
in the hands of the firm

Can an individual have
concession for self occupied
property for two houses?
No
Where the assessee has occupied more than
one house for the purposes of residence for
himself and family members, he has to make a
choice of one house only in respect of which
he would like to claim exemption. Other self-
occupied houses will be treated as if they were
let out
Can depreciation be claimed in
respect of leased assets ?
No
Depreciation is allowable to the assessee only
in respect of those capital assets which are
owned by him.

salary and wages ?
‘Salary’ is generally used in respect of

payment for services of a higher class, whereas
‘wages’ is confined to the earnings of
labourers. However, for income-tax purposes
there is no difference between salary and
wages.

What is pension ?
Pension is a periodical payment for past

services.

What is annuity ?
Annuity is annual grant made by the employer

to the employee.

What is gratuity ?
Gratuity is a lump sum payment for past

services.

What is perquisite ?
Any gain or profit incidentally made from

employment in addition to the regular salary /
wages / remuneration.

What are tax-free perquisites ?
Medical benefits
tea, snacks
residetial accommodation at site
reimbursement of mobile / telephone bills
employer's contribution to staff insurance
scholarship to children of employee
interest free or concessional upto 20000
journal / periodicals related to work
refresher courses/ training
laptops / computers
What are taxable perquisites ?
Rent free accommodation (sec. 17(2)(i))
residential accommodation
club membership
payment of loans of employees
payment of educational expenses of employee
domestic servant
interest free loan / concessional interest loan

revenue and capital receipt ?
An amount referable to fixed capital is a capital

receipt whereas a receipt referable to
circulating capital would be a revenue receipt
Only revenue receipt is taxable in income tax
and only revenue expenditure is allowed

If you receive any compensation
on cancellation of a contract, is it
a capital receipt ?
compensation received for the loss of a capital

asset is a receipt of a capital nature whereas the
compensation received for damage to or loss of
a trading asset is a revenue receipt.

What type of receipt is
commutation of service or
insurance amount received?
a lump sum payment received in commutation
of salaries or pension is a capital receipt,
However, it would be taxable as salary income.
Any amount received under a policy of
insurance would be a revenue receipt if the
policy was held by the assessee as a trading
asset and it would be a capital receipt if the
policy was held as a capital asset.
Will it be taxable for a debenture holder : the
premium received on redemption or the discount on
issue of the debentures by the company
No,
It would be a capital receipt and would not
consequently be liable to tax

Royalty received by a mine owner
shold be income from business
and profession – is it true ?
No
Royalties in every case are taxable as ‘income
from other source

Compensation received on
cancellation of agency should be a
capital receipt, so it should not be
taxed – is it true ?
No
it is taxable as business income by virtue of the
specific provision in Section 28 of the Act

An employee director of a company was paid
Rs. 7,50,000 as a lump sum consideration for
not resigning from the directorship. Should it
be taxed ?
It is a reward received from the employer.

Therefore it is a revenue receipt.

the sales-tax collected from the
buyer of goods is a capital receipt.
- it is true ?
No
the sales-tax collected from the buyer of goods
is a revenue receipt.

Receipt in substitution of a source
of income is a capital receipt – is
it true ?
Yes

If you have spent money on training of production
manager abroad to study new methods of
production- is it a revenue expenditure
Yes
Amount spent by a company for sending its
production manager abroad to study new
methods of production is a revenue
expenditure

What will be the date of receipt –
the date of cheque / date of
encashment ?
If the payment is made by the drawee on

presentment of the cheque, the date of receipt
of the cheque and not the date of its
encashment shall be the date of receipt.

How will you determine the place
of receipt of some payment ?
If the postal expenses are borne by the creditor,

the place of debtor would be place of receipt.
If, on the other hand, the debtor bears the
postal expenses, the place of creditor would be
the place of receipt.

What will be the Date and place
of receipt in case of articles sent
by V.P.P.
In this case the place of the delivery by the

Post Office would be the place of receipt and
the date of receipt would be the date of
payment by the buyer.

What are the incomes deemed to
be received ?
All sums deducted by way of taxes at source (Section 198).

Incomes of dependent persons which are included in the income
of the assessee under Sections 60 to 64.
unexplained or unrecorded investments (Section 69).
unexplained or unrecorded moneys. (Section 69A)

Where does income acrue – at
your registered office or at the
place of contract ?
Income accrues at the place where the source
of the income is situated, which may or may
not be the same as the place from which the
business activities are carried on. Normally,
income accrues at the place where the contract
yielding the income is entered into and for this
purpose the contract should be taken to have
been entered into at the place where the offer is
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What part of income of business of which
all the operations are not carried out in
India, will be deemed as income arising
out in India
in the case of a business of which all the

operations are not carried out in India, only
such part of the income as is reasonably
attributable to the operations carried out in
India is deemed to have arised in India

What is relation between business
connection and income ?
Income arising through or from business

connection to any assessee is deemed to accrue
or arise in India where a business connection
actually exists

What is business connection?
a branch office, factory, agency, receivership, management or other
establishment for the purchase or sale of goods or for transacting any
other business
a factory where goods are made for export outside India
agent or agents in India for the systematic and regular purchase of
raw materials or for the sale of the non-residents' goods
a close financial association between a resident and a non-resident
company
a subsidiary company to sell or otherwise deal with the products of
the non-resident parent company
a continuing licence to a non-resident
What are the cases when income is assessed in the
same year when it accrues ?
Assessment of non-residents in respect of their income from shipping

business (Section 172).
Assessment of persons leaving India (Section 174).
artificial juridical person formed for a particular event or purpose
(section 174A).
persons trying to alienate their assets with the object of avoiding
liability to tax (Section 175).
Assessment of the income from discontinued business (Section
176).

Can tax be levied when it appears to the Assessing
Officer that an individual may leave India during
the current assessment year without any intention of
returning to India
Yes

Suppose your employer
reimburses your expenses
(incurred for office work) is it
taxable ?
No
Mere relief or reimbursement of expenses is
not treated as income.

If an employer gives goods
instead of salary, how can its
value be identified for tax purpose
?
If income is received in kind, its valuation will
be made in accordance with the rules
prescribed in the Income-tax Rules, 1962.
Where there is no prescribed value in the rules,
valuation thereof is made on the basis of its
market value.

If a person buys and sells a crop,
is it agricultural income ?
If a person purchases a standing crop, and

makes a profit out of it, the income is not
agricultural income to the buyer of the standing
crop. The income to the seller of standing crop,
who has put in labour and skill to make the
crop sprout out of the land, is agricultural
income.
What are the cases when
operations on agricultural produce
is also treated as agricultural
income ?
The operation must be one which is ordinarily employed by
the cultivator to make the produce fit for market, i.e., threshing,
winnowing, cleaning, drying, etc.
There is no market for the produce as received from the farm.
The process to make it marketable has been performed either by the
cultivator or receiver of rent-in-kind.
The produce must not change its original character.

Can income tax assessment be
postponed in the event of dispute
regarding income ?
No
Income-tax assessment cannot be held up or
postponed merely because of existence of a
dispute regarding the title of income.

What is ‘carry-over’ concession in
the case of LTC ?
If travel concession or assistance is not availed

during any of the four year block period,
exemption can be claimed provided he avails
the concession or assistance in the calendar
year immediately following that block

Can a person claim taxi fare for
visit on LTC ?
No
air -economy class
or AC rail first class
or first class by public transport
is permitted

Is tiffin allowance taxable ?
Yes
It is given for lunch and refreshments to the
employees. It is taxable.

Is servant allowance taxable ?
Yes
It is fully taxable even if it is given to a low
paid employee, not being an officer, i.e., it is
taxable for all categories of employees.

Is non practicing allowance
taxable ?
Yes
It is generally given to those medical doctors
who are in government service and they are
banned from doing private practice. It is to
compensate them for this ban. It is fully
taxable.

Is hill allowance taxable ?
Yes
It is given to employees working in hilly areas
on account of high cost of living in hilly areas
as compared to plains. It is fully taxable, if the
place is located at less than 1,000 metres height
from sea level.

Is overtime allowance taxable ?
When an employee works for extra hours over

and above his normal hours of duty he is given
overtime allowance as extra wages. It is fully
taxable.

Is deputation allowance taxable ?
Yes
When an employee is sent from his permanent
place of service to some other place or
institution or organisation on deputation for a
temporary period, he is given this allowance. It
is fully taxable.

Is warden allowance taxable ?
Yes
These allowances are given in educational
institutions for working as Warden of the
hostel and/or working as Proctor in the
institution. These allowances are fully taxable.

Vehicle provided to travel from
place of work to home is taxable
or not ?
No
use of any vehicle provided by a company or
an employer for journey by the assessee from
his residence to his office or other place of
work, or from such office or place to his
residence, is not be regarded as a benefit or
amenity granted or provided to him free of cost
or at concessional rate for the purpose of
computation of perquisite.
NEXT FEW SLIDES ARE ON
WEALTH TAX ASPECTS

How is an asset valued under
wealth tax ?
Value of an immovable property i.e. a

building or land apartment thereto
or a part thereof is to be determined according
to Part B of schedule III of wealth
tax act. Calculate GMR

How is GMR [Gross Maintainable
Rent] calculated for a property
which is let out ?
GMR is higher of the annual rent

whether received or receivable by owner or
annual value assessed by
the local authority.

What is GMR if property is not let
out ?
It is the amount of annual rent
assessed by the local authority or if property
is not situated within local limits of a local
authority then GMR is the amount which the
owner can reasonably be expected to receive
as an annual rent.

What adjustments are required in
actual rent to calculate GMR?
i) Municipal taxes borne by tenant

ii) 1/9 of actual rent if tenant bear the repair expenses
iii) Interest @15% p.a. on the amount of deposit (calculate
outstanding amount on monthly basis) made by tenant provided
deposit in not in nature of advance rent for 3 months or less
iv) Amount received as premium or otherwise for leasing the
property as divided by the period of lease

How is NMR calculated ?
We deduct following deductions from GMR :

a) Taxes levied by local authority whether
paid or not
b) 15% GMR to cover other expenses

WHAT ARE THE DUE DATES
FOR FILING THE RETURN
UNDER WEALTH TAX?
31 July (for individuals) and 31 October (for

companies and all those who have to get
accounts audited)

Who must compulsorily file
wealth tax return ?
It is a statutory obligation of every person if his

net wealth on the valuation date exceeds Rs.
30/- Lacs to furnish a return in the prescribed
form (Form BA) with the Wealth Tax offices
on or before the due date.

When will an assessing office (AO) refer the valuation to
valuation officer (V.O.
AO is of the opinion that the fair value of the asset

exceeds the value of
the asset returned by 1/3rd the value of the asset as
returned or more than
Rs 50000. OR
having regard to the nature of the asset and other
circumstances, it is
necessary once reference is made to V.O.


Taxation Issues For Entrepreneurs

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What is section relating to

Deduction in respect of donations

Section 80DDB read with Rule 11DD

It was imposed at a uniform rate of 5% in the

The service tax is payable either on monthly

e-payment is mandatory for those who paid

It is mandatory for every person liable to pay

He must surrender his Certificate of

Delay upto 15 days Rs. 500/-

Since service tax is indirect tax, it is

If service tax is not paid or belatedly paid,

Penalty for contravention of any provision of

Rule 2(l)(ii) of Cenvat Credit Rules: any service – (i) used by a

Yes Section 65(105)(zzzzd): Content

Exemption limit to small service providers

International Accounting Standards

1. a contract for leasing of a specific asset is entered into

: The lineal male descendants of a person upto

the senior member may give up his right of

a woman member can be treated as manager of

an individual being a member of Hindu

Where the entire joint family property is

The partnership is evidenced by an instrument

90% of book profit for first 1 lakh = 90000

When all the partners in the predecessor firm

in terms of Section 44AF, 5% of his total

No A mere collection of individuals without a

A non-resident is not liable to pay tax on his

1. On dividend incom @ 20%

dividend is taxable on the basis of its

Indexed Cost of Acquisition = COA X CII of

Indexed Cost of improvement = COA X CII of

No depreciation is admissible where written

he will not be required to have

5 per cent of cost of project; or

INTEREST, ROYALTY, FEES FOR

NOT IT IS NOT ALLOWED AS

Tax is paid in advance when the liability of

Tax to be deducted @ 20 % plus surcharge

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Tax to be deducted @ 5 % plus surcharge

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Tax to be deducted @ 20 % plus surcharge

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Value Added Tax (VAT) is a type of sales tax.

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dealers with gross annual turnover above Rs.5

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Every dealer up to the retailer level musst get

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Input tax paid in excess of 4% are eligible for

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Output tax is the tax that a dealer charges on

the service tax @12% will be Rs.1200. The

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