INCOME TAX

INTRODUCTION

Presentation by :
VISHAL SOMAI SIR
Sr. faculty of Direct and Indirect Tax
 “
Meaning, Purpose and
objective of Taxes ?
Collect funds from the
public by way of TAXES

Government
Of India

Government provides
security, Infrastructure,
Law. Administration etc.
 Meaning, Purpose and objective of Taxes ?

“
Country is run by the Government of India.
To run the country, Government needs funds and these funds are
collected by government from various sources and one of the main source
of Revenue to the Government is TAXES.
 Kind of Taxes

Direct Tax Indirect Tax

Direct Taxes are paid by the person (Tax Payer) directly to the Government.
The person paying the taxes cannot shift its burden on some other person.

In case of Direct Taxes Impact and Incidence (final burden) are on same
person. Ex. Income Tax

Indirect Taxes are those taxes which the tax payer pays indirectly (through
Registered person). The person paying the taxes can recover it from another
person.

Therefore, in case of indirect taxes impact and Incidence (Final burden) are
on different person. Ex. GST
 Who has power to levy and collect Taxes?

Constitution of India is the parent law. Any law can be made provided it is within
the scope of Constitution of India

As per Article-265, no taxes shall be levied or collected except the authority of

law.

Article-246 of the constitution gives power to levy various taxes between centre
and state Governments with the help of Schedule-VII
 Schedule-VII

Schedule -VII govern power to collect taxes with the help of three list

List-1 List-2 List-3

Union List State List Concurrent List

Central Govt has exclusive State govt has the exclusive Both the Government will
power to make laws power to make laws make law together.

Entry-82 Taxes On Income Entry-46 Taxes on

Property Tax
except Agriculture Income Agriculture Income
Or
Entry-51- Excise on liquor for House Tax
Entry-83 Custom Duty human consumption

Entry-53- Electricity duty

Entry-84 Excise Duty on
Petroleum Products Entry-57 Taxes on vehicles

Entry-59- Tolls

Entry-60- Taxes on Profession

Entry-63- Stamp Duty

 How laws are enacted by Central Government?

Central Government laws are enacted through Parliament and approval

of Hon’ble President of India is must after that.

State govt laws are enacted through state assembly and with the
approval of Hon’ble President of State.

Since Income Tax is Central matter, therefore central govt. has enacted
Income Tax Act, 1961 through Parliament.
 What is the procedure of making any Law/Act?

Hon’ble
President
Draft Bill Parliament
Of
India

Lower House Upper House

(Lok sabha) (Rajya sabha)
 How Amendment/s are made
Taxation Laws:

Amendments are made annually in the tax

laws with the help of Finance Act
 What is Finance Act?

Every year budget is presented before the Parliament by the

finance minister on the first working day of February, every year.

Budget contains Finance Bill which proposes amendments

sought by Central Government in the areas of direct as well as
Indirect Tax

When finance bill is approved by both the houses of Parliament

and receives assent of President of India it becomes, Finance Act
 First Schedule of Finance Act contains 4 parts

Specifies rules of Income Tax for income chargeable to Tax for New
Part-1
Assessment Year
Part-2 It Contains TDS rates for New Financial Year
Part-3 Rates of Advance Tax for New Financial year

Part-4 Rules for Computation of Net Agriculture Income

Finance Act Previous Year Assessment Year

Finance Act,2021 2021-22 2022-23

Finance Act,2022 2022-23 2023-24
Finance Act,2023 2023-24 2024-25
 Define the term "Previous Year".

Previous Year [Section 3]: As per Section 2(34) read with Section 3 of the
Act, the term "Previous year" means the financial year immediately
preceding the assessment year.
Example: For the assessment year 2024-25, the previous year shall be the
period from 1st April, 2023 to 31st March, 2024 and the total income of an
assessee earned in the previous year 2023-24 is assessed in the assessment
year 2024-25.
 Heads of Income [Section 14]

Assessment
Name of assessee: Status:
Year:
1.Income from Salaries [Section 15 - 17] XXXX
2.Incomes from House Property [Section 22 - 27] XXXX
3.Profits and gains of business or Profession
XXXX
[Section 28 – 44DB]
4.Capital Gains [Section 45 – 55A] XXXX
5.Income from Other Sources [Section 56 – 59] XXXX
Total [(1) + (2) + (3) + (4) + (5)] XXXX
The general rates of income-tax for individual for Assessment Year 2024-25 are
as under -

(I) In case of every individual (II) In case of resident

(III) In case of resident
[other than those covered by individual of age 60 years or
individual of age 80 years or
(II) to (III)], HUF, AOP, BOI, more but less than 80 years at
more at any time during the
and every artificial juridical any time during the previous
previous year
person year

Income Rate Income Rate Income Rate

Upto Rs. Upto Rs. Upto Rs.

Nil Nil Nil
2,50,000* 3,00,000 5,00,000
Next Rs. Next Rs.
5% 5% -- --
2,50,000 2,00,000

Next Rs. Next Rs. Next Rs.

20% 20% 20%
5,00,000 5,00,000 5,00,000

Balance 30% Balance 30% Balance 30%

 (1) Surcharge on Income-tax - Surcharge is an additional tax payable
over and above the income-tax. Surcharge is levied as a percentage of
income -tax.

In case where the total income of an

Surcharge
individual/HUF/AOP/BOI/Artificial Juridical Person

Exceeds Rs. 50 lakh but does not exceed Rs. 1 crore 10% of income-tax

Exceeds Rs. 1 crore but does not exceed Rs. 2 crore 15% of income-tax

Exceeds Rs. 2 crore but does not exceed Rs. 5 crore 25% of income-tax

Exceeds Rs. 5 crore 37% of income-tax

 Surcharge

Rate of Example
Particulars surcharge on Components of Applicable rate
income-tax total income of surcharge
Where the total • Dividend income
income (including 5 lakhs;
Surcharge would be
dividend income • STCG u/s 111A 30
levied @ 10% on
and income u/s lakhs;
111A and 112A)
10% • LTCG u/s 112A 25
income- tax
computed on total
exceeds 50 lakhs lakhs; and
income of 95 lakhs.
but does not • Other income 35
exceed 1 crore lakhs

Where (including • Dividend Income

total income 5 lakhs; Surcharge would be
dividend income • STCG u/s 111A 60 levied @ 15% on
and income u/s lakhs; income- tax
111A and 112A)
15% • LTCG u/s 112A 65 computed on total
exceeds 1 crore lakhs; and income of 1.75
but does not • Other income 45 crores.
exceed 2 crore lakhs
 Rate of Example
Particulars surcharge on Components of Applicable rate
income-tax total income of surcharge
Where (excluding • Dividend Income Surcharge would be
total income 5 lakhs; levied @ 15% on
dividend income • STCG u/s 111A 54 income- tax on:
and income u/s lakh;
111A and 112A) 25% • LTCG u/s 112A 55 ▪ Dividend Income
exceeds 2 crore lakh; and of 5 lakhs
but does not • Other income 3 ▪ STCG of 54 lakhs
exceed 5 crore crores chargeable to tax
u/s 111A; and
The rate of ▪ LTCG of 55 lakhs
surcharge on the chargeable to tax
income-tax u/s 112A.
payable on the
portion of Not exceeding Surcharge @ 25%
would be leviable on
dividend income 15%
and capital gains income- tax
chargeable to tax computed on other
u/s 111A and income of 3 crores
112A included in total
income.
 Rate of Example
Particulars surcharge on Components of Applicable rate
income-tax total income of surcharge
• Dividend Income Surcharge would be
Where (excluding 5 lakhs; levied @ 15% on
total income • STCG u/s 111A 50 income- tax on:
income dividend lakh;
income and 37% • LTCG u/s 112A 65 ▪ Dividend Income
income u/s 111A lakh; and of 5 lakhs
and 112A) • Other income 6 ▪ STCG of 50 lakhs
exceeds 5 crore crores chargeable to tax
u/s 111A; and
The rate of ▪ LTCG of 65 lakhs
surcharge on the chargeable to tax
income-tax u/s 112A.
payable on the
portion of Not exceeding Surcharge @ 37%
would be leviable on
dividend income 15%
and capital gains income- tax
chargeable to tax computed on other
u/s 111A and income of 6 crores
112A included in total
income.
 Rate of Example
Particulars surcharge on Components of Applicable rate
income-tax total income of surcharge
Where (including
• Dividend Income
total income
50 lakhs;
dividend income Surcharge would be
• STCG u/s 111A 60
and income u/s levied @ 15% on
lakhs;
111A and 112A) 15% • LTCG u/s 112A 55
income tax
exceeds 2 crore in computed on total
lakhs; and
cases not covered income of 2.85 crore.
• Other income 1.20
under (iii) and
crore
(iv) above
(2) Marginal Relief

(i) Marginal relief is available in case total income exceeds Rs. 50 lakhs. The
additional amount of income-tax payable (together with surcharge) on the excess of
income over Rs. 50 lakhs should not be more than the amount of income exceeding

“
Rs. 50 lakhs.

(ii) Where total income exceeds Rs. 1 crore, the total amount payable as
income-tax and surcharge on such income shall not exceed the total amount payable
as income-tax and surcharge on a total income of Rs. 1 crores by more than the
amount of income that exceeds Rs. 1 crores.

(iii) Where total income exceeds Rs. 2 crore, the total amount payable as
income-tax and surcharge on such income shall not exceed the total amount payable
as income-tax and surcharge on a total income of Rs. 2 crores by more than the
amount of income that exceeds Rs. 2 crores.

(iv) Where total income exceeds Rs.5 crore, the total amount payable as
income-tax and surcharge on such income shall not exceed the total amount payable
as income-tax and surcharge on a total income of Rs.5 crores by

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(3) Basic Exemption limit* : The amount of Rs. 2,50,000 or Rs.
3,00,000 or Rs. 5,00,000 is called "maximum amount not chargeable
to tax" or "basic exemption limit" applicable to the assessee.

(4) Rebate u/s 87A : In case of resident individual whose total

income does not exceed Rs. 5,00,000, rebate shall be allowed from
Income tax @ 100% of such tax or Rs. 12,500 whichever is less.

“
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 Individual/ Hindu Undivided Family (HUF)/ Association of
Persons (AOP)/ Body of Individuals (BOI)/ Artificial
Juridical Person

Default tax regime under section 115BAC of the Income-tax Act, 1961

Concessional tax rates

Individuals/ HUF/ AoPs/ Bols or artificial judicial persons, other than

those who exercise the option to opt out

this regime under section 115BAC(6), have to pay tax in respect of their
total income (other than income chargeable to tax at special rates under
Chapter XII such as section 111A, 112, 112A, 115BB, 115BBJ etc.) at the
following concessional rates, subject to certain conditions specified
under section 115BAC(2) -
 Total Income Rate

Upto ₹ 3,00,000 Nil

From ₹ 3,00,001 to ₹ 6,00,000 5%

From ₹ 6,00,001 to ₹ 9,00,000 10%

From ₹ 9,00,001 to ₹ 12,00,000 15%

From ₹ 12,00,001 to ₹ 15,00,000 20%

Above ₹ 15,00,000 30%

 II. Conditions to be satisfied

The following are the conditions to be satisfied:

Certain deductions/exemptions not allowable: Section 115BAC(2)

provides that while computing total income, the following
deductions/exemptions would not be allowed:

Section Provision

10(5) Leave travel concession

(i)
10(13A) House rent allowance

Exemption in respect of special allowances or benefit to

10(14) meet expenses relating to duties or personal expenses
(other than those as may be prescribed for this purpose)
Daily allowance or constituency allowance of MPs and
10(17)
MLAs
 II. Conditions to be satisfied

Section Provision
Exemption in respect of income of minor child included
10(32)
in the income of parent
10AA Tax holiday for units established in SEZ
(i)
(i) Entertainment allowance
16
(ii) Professional tax

24(b) Interest on loan in respect of self-occupied property

32(1)(iia) Additional depreciation

 II. Conditions to be satisfied

Section Provision

Deduction in respect of Contribution to –

▪ notified approved research association/ university/

college/ other institutions for scientific research
[Section 35(1)(ii)]
(i) ▪ approved Indian company for scientific research
35(1)(ii),(iia),
[Section 35(1)(iia)]
(iii)/35(2AA)
▪ notified approved research association/ university/
college/ other institutions for research in social
science or statistical research [Section 35(1)(iii)]
▪ An approved National laboratory/University/IIT/
Specified person for scientific research undertaken
under an approved programme [Section 35(2AA)]
 II. Conditions to be satisfied

Section Provision

32AD Investment linked tax incentives for specified businesses

(i) Deductions under Chapter VI-A (other than employers

contribution towards NPS u/s 80CCD(2), Central
80C to 80U Government contribution towards Agnipath Scheme
under section 80CCH(2) and deduction in respect of
employment of new employees under section 80JJAA).

Certain losses not allowed to be set-off: While computing total income, set-
off of any loss –
(a) carried forward or depreciation from any earlier assessment year, if
(ii) such loss or depreciation isattributable to any of the deductions
referred to in (i) above; or
(b) under the head house property with any other head of income; would
not be allowed.
 II. Conditions to be satisfied

Section Provision

Depreciation or additional depreciation: Depreciation u/s 32 is to be

(iii) determined in the prescribed manner. Depreciation in respect of any block
of assets entitled to more than 40%, would be restricted to 40% on the
written down value of such block of assets. Additional depreciation u/s
32(1)(iia), however, cannot be claimed.

Exemption or deduction for allowances or perquisite : While

computing total income, any exemption or deduction for allowances or
(iv)
perquisite, by whatever name called, provided under any other law for the
time being force in India would not be allowed.
 Surcharge

In case the Individual/HUF/AoP/Bol and Artificial Juridical Person

pays tax under default tax regime under section 115BAC :

Income-tax computed in accordance with the provisions of section

115BAC and/or section 111A or section 112 or section 112A or
115BBE or section 115BBJ would be increased by surcharge given
under the following table:
 Surcharge

Rate of Example
Particulars surcharge on Components of Applicable rate
income-tax total income of surcharge
Where the total • Dividend income
income (including 5 lakhs;
Surcharge would be
dividend income • STCG u/s 111A 30
levied @ 10% on
and income u/s lakhs;
111A and 112A)
10% • LTCG u/s 112A 25
income- tax
computed on total
exceeds 50 lakhs lakhs; and
income of 95 lakhs.
but does not • Other income 35
exceed 1 crore lakhs

Where (including • Dividend Income

total income 5 lakhs; Surcharge would be
dividend income • STCG u/s 111A 60 levied @ 15% on
and income u/s lakhs; income- tax
111A and 112A)
15% • LTCG u/s 112A 65 computed on total
exceeds 1 crore lakhs; and income of 1.75
but does not • Other income 45 crores.
exceed 2 crore lakhs
 Rate of Example
Particulars surcharge on Components of Applicable rate
income-tax total income of surcharge
• Dividend Income Surcharge would be
Where (excluding 5 lakhs; levied @ 15% on
total income • STCG u/s 111A 54 income- tax on:
dividend income lakh;
25%
and income u/s • LTCG u/s 112A 55 ▪ Dividend Income
111A and 112A) lakh; and of 5 lakhs
exceeds 2 crore • Other income 6 ▪ STCG of 54 lakhs
crores chargeable to tax
u/s 111A; and
The rate of ▪ LTCG of 55 lakhs
surcharge on the chargeable to tax
income-tax u/s 112A.
payable on the
portion of Not exceeding Surcharge @ 25%
dividend income 15% would be leviable on
and capital gains income- tax
chargeable to tax computed on other
u/s 111A and income of 6 crores
112A included in total
income.
 Rate of Example
Particulars surcharge on Components of Applicable rate
income-tax total income of surcharge

Where total • Dividend Income

income (including 50 lakhs;
Surcharge would be
dividend income • STCG u/s 111A 60
levied @ 15% on
and income u/s lakhs;
111A and 112A)
15% • LTCG u/s 112A 55
income tax
computed on total
exceeds 2 crore in lakhs; and
income of 2.85 crore.
cases not covered • Other income 1.20
under (iii) above crore
 Marginal relief

(i) Marginal relief is available in case total income exceeds 50 lakhs. The
additional amount of income-tax payable (together with surcharge) on the
excess of income over 50 lakhs should not be more than the amount of income
exceeding 50 lakhs.

(ii) Where total income exceeds * 1 crore, the total amount payable as income-tax
and surcharge on such income shall not exceed the total amount payable as
income-tax and surcharge on a totalincome of 1 crores by more than the
amount of income that exceeds * 1 crores.

(iii) Where total income exceeds 2 crore, the total amount payable as income-tax
and surcharge on such income shall not exceed the total amount payable as
income-tax and surcharge on a total income of 2 crores by more than the
amount of income that exceeds 2 crores.
 Rebate to resident individual paying tax under default tax
regime under section 115BAC [Section 87A]

In order to provide tax relief to the individual tax payers, section 87A provides a
rebate from the tax payable by anassessee, being an individual resident in India.
The rebate shall be provided as under –
(a) If total income of such individual does not exceed 7,00,000, the rebate shall be
equal to the amount of income-tax payable on his total income for any
assessment year or an amount of ₹25,000, whichever is less.

(b) If total income of such individual exceeds 7,00,000 and income-tax payable on
such total income exceeds the amount by which the total income is in excess of
₹7,00,000, the rebate would be as follows:

Step 1 - Total income (-) ₹7 lakhs (A)

Step 2 - Compute income-tax liability on total income (B)
Step 3- If B>A, rebate under section 87A would be a B - A.

The amount of rebate under section 87A shall not exceed the amount of income-tax
(as computed before allowing such rebate) on the total income of the assessee.
The applicable tax rates are as under - (1) In the case of
co-operative society -

Upto Rs. 10,000 10%

Next Rs. 10,000 20%

Balance 30%

(i) Surcharge on Income-tax: The amount of income-tax computed

above, shall be increased by surcharge of 12% if the Total Income
exceeds Rs. 1 crore.
(ii) Marginal Relief: Marginal relief is available in case total income
exceeds Rs. 1 crore. The additional amount of income-tax payable
(together with surcharge) on the excess of income over Rs. 1 crore
should not be more than the amount of income exceeding Rs. 1
crore.
37
 (2) In case of Local authority and Partnership firm (including LLP)

Partnership firm (including

Local
Authority
Limited Liability Partnership)
Rate of income tax

Surcharge on Income tax, 30% 30%

if total income exceeds Rs. 1
12% 12%
crore

Marginal Relief: Marginal relief is available in case total income exceeds Rs. 1
crore. The additional amount of income-tax payable (together with surcharge)
on the excess of income over Rs. 1 crore should not be more than the amount
of income exceeding Rs. 1 crore.
(3) In case of domestic company and foreign company
[Where its total turnover
or the gross receipt in Domestic Foreign
the PY 2017-18 does not Company Company
exceed Rs. 400 crore]
Rate of income tax 25% 30% 40%
Surcharge on Income tax,
If total income exceeds Rs. 1 crore 7% 7% 2%
but does not exceed Rs. 10 crores
If total Income exceeds Rs. 10
crores
12% 12% 5%
(i) *Marginal Relief: Marginal relief is available in case total
income exceeds Rs. 1 crore. The additional amount of income-tax payable
(together with surcharge) on the excess of income over Rs. 1 crore should
not be more than the amount of income exceeding Rs. 1 crore.

(ii) **Marginal Relief : In the case of every company having a total

income exceeding Rs. 10 crore, the total amount payable as income-tax
and surcharge on such income shall not exceed the total amount payable
as income-tax and surcharge on a total income of Rs. 10 crores by more
than the amount of income that exceeds Rs. 10 crores.