Income under the 5 heads

1. Income Under the 5 Heads Sudhir Yadav

2. Income From Five Heads are as Follows Income from salary Income from house property Income from profit or gain from business or profession. Income from capital gain. Income from other sources.

3. Complete Process of Computation of Taxable Income & Tax Determine the residential status of the assesse Determine the incidence of tax Classify income after considering specific exemption into respective head. Aggregate the income. Apply clubing Provision. Setoff/Carry forward losses (if any) Balance shall be gross total income.

4. Cont 8 . Allow deduction 80C to 80U chpt VI A. 9. Balance shall be total income. 10. Determine the tax payable, applying the rates applicable. 11. Deduct rebate/relief of tax. 12. Add surcharge. 13. Add educational cess . 14. Balance is tax payable. 15. File return of income before the due date of filing .

5. Income From Salary Salaries U/S 17(1) include following:- Wages Pension Gratuity Any fees, Commission, Perquisite,Profit in lieu of salary Any advance salary etc

6. List of Allowance exempted from tax Conveyance allowance . Children education allowance . Any allowance granted to an employee to meet the hostel expenditure of his child . Transport allowance . House rent allowance . Provident Fund . Gratuity . Leave travel concession . Compensation received at the time of voluntary retirement . Encashment of earned leave at the time of retirement . Computation of pension . Entertainment allowance .

7.   Statement of total income from salary   Particular Rs Rs   Basic salary   XXX   Dearness Allowances (DA)   XXX   House Rent Allowances xxx   Less :- Exemptions Under sec10 (13 A) xxx XXX   Eduacation Allowances XXX   Less :- Exemptions Under sec10 (14) xxx XXX   Conveyance Allowance xxx   Less :- Exemption Under sec 10(14) xxx XXX   Bonus   XXX   Gratuity xxx   Less:- Exemption Under sec 10(10) xxx XXX   Perquisities (Taxable)   XXX   Entertainment Allowances   XXX   Gross Salary   XXX Less :- Deductions       U/S 16 xxx     U/S 16(2) xxx     U/S 16(3) xxx XXX   Taxable Income from Salary   XXX

8. INCOME FROM HOUSE PROPERTY Sec 22 of Income Tax Act 1961 Income from houses, buildings, bungalows Tax is based on Annual value.

9. POINTS TO BE REMEMBERED Assessee should be the Owner of the Property Should be not be used for Own Business or Profession In Case of Dispute Regarding Title Property Let Out along with other Assets In case of sub-Letting

10. ANNUAL VALUE (SEC 23) EXPECTED RENT FAIR RENT The rent which a similar property will fetch at the same or nearby similar locality. Municipal Rent Value (MRV) X X X Fair Rental Value (FRV) X X X Whichever is higher (ER) X X X ( If no SR) Standard Rent (SR) ( If available) X X X Whichever is less (ER) X X X

11. MUNICIPAL RENT The value fixed by the municipal or local authority STANDARD RENT Rent fixed by the Rent Control Act Max rent an owner can claim from his tenant as rent ACTUAL RENT Rent for which property has been let out

12. CALCULATION OF GAV Particular House 1 House 2 MRV 1,05,000 1,05,000 FRV 1,07,000 1,07,000 Whichever is higher 1,07,000 1,07,000 SR 1,35,000 1,35,000 ER (Whichever is Less) 1,07,000 1,07,000 AR 1,12,000 98,000 GAV 1,12,000 1,07,000

13. COMPUTION OF HOUSE PROPERTY INCOME Particulars amount amount     Gross Annual Value   xxx Less: Municipal tax -Paid by owner     xxx       Net Annual Value   xxx       Deduction U/S 24           1. Standard deduction -30% of NAV xxx   2. Int. on borrowed capital- Paid or due xxx       xxx       Income from House Property   xxx      

14. Income from Profit/Gain from Business/Profession Chargeability Under sec 28 Profit/Gain from any business/Profession Profit on sale of import entitlement license Duty drawback Value of benefit arising from any business/profession Income derived by trade/profession Income from speculative transaction Income received under keyman insurance policy Any interest,salary , Bonus, commision or remuneration received by partner of a firm.

15. Case business income is not taxable u/s 28 Rental business Dividend on share Speculative transactions excluded :-Hedging contracts and derivative transaction.

16. How to compute PGBP U/S 30 Deductions allowed Rent taken Repairs not in a nature of capex Insurance premium U/S 31 Deductions allowed w.r.t plant & machinery. Sec 32 Depreciation

17. Income from Capital G ain Chargeability U/S 45 (1) Capital Gain tax liability arises when following conditions get satisfied:- There should be a Capital Asset There should be a Transfer Transfer should be in previous year Result of transfer should be profit or gain Such Profit/Gain is not exempt.

18. Exemption for Capital Assets Any Stock-in-Trade. Movable Property (excludes jewellery archeological, Drawings, Paintings, Sculpture). Agricultural Rural Land. 65% Gold Bond -1977 / 7% Gold Bonds-1980/ National Defense Gold Bond issued by Central Government. Special Bearer Bonds 1991. Gold Deposit Bond issued under Gold deposit scheme 1999.

19. Types of Capital Assets There are two types of Capital Assets Short Term Capital Asset Long Term Capital Asset

20. Income from Other Sources Chargeability U/S 56(2) It includes the following Dividend. Windfall from lotteries crossword gambling. Income by way of interest on securities. Income from Royalty Director fees Income from investment

21. Thank You!!! 