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[Music] hello students welcome to direct tax Marathon session in this video I would be covering entire Direct Tax syllabus applicable for CA inter May and November 2024 exams so as you guys are aware direct Tas syllabus is vast guys so but still I will try to cover the entire syllabus along with the Amendments applicable for your exams so especially for May and November exams there are lot of direct tax amendments as you guys are already aware of so whenever I'm explaining I will also stress on those amendments so that you guys give little extra importance for those amendments now coming to the coverage part so yes the video would be long but if you're not able to cover it in one shot better watch it in installment guys but one request from my end is when you are watching this video you have to be extremely attentive guys clear yes so with this what I would be covering in this session I would be just letting you guys know before I start with so this revision material whatever I have done is as applicable for May 2024 and November 2024 exams guys I have completed and I have updated all the things with respect to whatever is applicable for your exam including the Amendments now you as you are aware of paper three taxation is a part of group one in that 50 marks is for Direct Tax and 50 marks is for indirect tax so indirect tax 50 marks there would be two separate set of question paper which will be given guys for this so section a 50 marks multiple choice questions would be asked for 15 marks and descriptive questions would be asked for 35 marks where the first question would be mandatory question preferably it will be on total income guys then coming to multiple choice question there won't be any negative marking but there can be few questions where they would have asked for two marks guys so under McQ there can be few questions asked for one marks there can be few questions asked for two marks as well and as you are aware the syllabus of direct tax is vast so it is like a otion so we will sail through it so please make sure that you guys are extremely attentive when you are watching this video then coming to the index so totally I have made the direct tax syllabus into 10 chapter whereas third chapter has five different parts including all it of income and whereas Chapter 2.1 guys I have made one separate chapter for tax rates but as per IC stud material there is no separate chapter for tax rate but I would be covering all the tax rates applicable including normal rate as well as special rate in one chapter so that it would be easy for the students to study along with the default scheme old scheme everything I would be covering in one chapter fine so this is all about the index with respect to whatever ever we would be covering so in the same order I would be going through in whatever order I have arranged my study material I would be doing it in the same order guys and in my revision material I have also in the first page I have given the section numbers of income tax act in the order I have given I given till the last like deductions from gross total income guys from ATC to ATU even after this there are few sections covered in your syllabus like section 139 which talks about due date of filing the returns but not all the sections guys that is why I just stopped your till ATU but also in between few sections are not a part of your inter cabus where I have clearly mentioned not covered not covered means it is not a part of your inter syllabus Cuts so with this we'll start the session guys hope it will be helpful for you fine now we will start with the first chapter that is Introduction to basic concepts of income tax first of all what is tax tax is a compulsory payment which every person has to make to the government so why the government is collecting the tax in order to meet public expenditure like health education infrastructure public security Etc or and also the salaries paid to government employees these are some major expenditure of the government now in tax there are two categories of tax that is direct tax and indirect tax what is direct tax direct tax is the one where the impact and in incidence is on the same person now sir what is impact what is incidence incident is the liability to pay tax whereas impact means burden of suffering the tax means ultimately the tax is go is going to the government from who pocket see guys income tax is one of the example for Direct Tax now if I am the person who is earning the income I am the one who is liable to pay so incidence is on me and who should pay the tax ultimately me only so impact is on whom me so both incidence as well as impact in case of direct tax will be on the same person whereas in case of indirect tax the impact and incidence will be on two different person example is GST and customs duty now sir in case of GST supplier is the one who is liable to pay GST so incidence is on the heads of supplier whereas he can shift it to the recipient means along with the value what he is charging for goods or services which he's supplying he can also collect the tax from the recipient and remit it to the government and this option is given to the supplier he can do it legally so in that case so supplier has the incidence whereas the impact is shifted to whom to the recipient so GST is one of the example for indirect tax now coming to Sir who leave income tax who has the power to leave income tax central government so income tax is completely the revenue of central government but who has given the power to the central government to leavey the income tax the Constitution so in the Constitution there are three list which is given so in that income tax is a part of Union list guys we'll just go through it the authority to leavey a tax is derived from Constitution Constitution is like a mother law for all other law in India let us first understand that it talks about only some articles which are relevant for taxation I have taken it here guys article 265 no tax shall be livid or collected except by the authority of law means even for the government the authority to leave tax should be given by Constitution only then the government whether it is state or Central or local government they can leavey the tax and collect it from the people only if they have given the authority from the Constitution then article 246 distribute legislative powers including taxation between whom Parliament and State schedule 7 of article 246 as three list guys Union list powers of central government means whatever taxes are covered in Union list who has the power to leave it who has the power to make laws with respect to the taxes which are covered in Union list means it is only the central government and income tax I have given you entry 82 of the Union list list one in the seven schedule to article 246 of the Constitution of India has given the power to the parliament Parliament is nothing but central government to make laws on taxes on income other than agriculture income so central government has the power to make a law with respect to income or taxing the income except agriculture income sir what about agriculture income to leavey tax on agriculture income the power has been given to state government guys so it is a part of legislative list but no states are living as on today no states are living tax on agriculture income so as on today agriculture income is completely exempt in India guys clear yes so sir Income Tax Act 1961 whatever we learn who has made it who had the power to make it central government it is central government guys okay now coming back to the list legislative list or we also call it as state list powers of state government so whatever taxes has been included in legislative list who can leave it who can make the law with respect to it means the respective state government then coming to concurrent list so whatever tax has been included in concurrent list it can be livid and collected by both the governments and even laws can be made by both the governments that is central government as well as the respective state government so what if there is any conflict made between the laws of central government and state government which will prevail central government law central government law will prevail guys the big boss of the nation now the administration part so who administer the income tax or indirect tax and all see under the min of Finance which is like a from a part of the government Department of Revenue is there and under Department of Revenue for Direct Tax purpose we have cbdt that is Central Board of direct taxes and under cbdt for income tax administration we have a separate Department called income tax department then coming to indirect tax we have cbic that is Central Board of indirect taxes and Customs under that for GST purpose GST count is there and in your syllabus in inter only GST is covered whereas Customs you guys would be learning it only at final level guys okay now coming to income tax who has the power to leavey and collect the income tax in India it is only with central government they are the one who has the power to make laws with respect to income tax and also they have the power to leave and collect it from the people so it is completely the revenue of central government guys this tax is livid and collected under which law Income Tax Act 1961 so wherever we'll see act act act act here means Income Tax Act next coming to components of income tax law there are different components of income tax law what are those Income Tax Act annual Finance act income tax rules circulars notifications as well as the legal decisions given by the court that is whenever there is any conflict between the ass and the department so if income tax law is like a film guys assume it is a film Income Tax Act play the role of the hero it is the hero or heroin then income tax role is just supporting that it is just supporting the income tax act so they're just playing the supporting role whereas annual Finance Act is like a guest role every year it will come and go because Finance act will be will be there for each and every year agre so it is like a guest role which will be coming and going and whenever there is anything to be disclosed so at the beginning of the movie you would have seen okay they would have given okay nothing in this connect to real life or some disclosures they would have given or notifications so circulars and notifications is more related to like that guys okay and also they will show all the names of hero heroins actors and all at the beginning like that fine so we'll start with the income tax act first income tax act 1961 income tax in India is governed by the income tax act 1961 it is amended from time to time by What annual Finance act this act came into force from 1st April 1962 so some components of income tax law like subsection Clause Proviso explanation also covered what exactly is that come on guys a section may have subsections or Clauses and sub Clauses so what is the difference between subsection and clause see Clause when each part of this section is independent of each other and one is not related with the other such Parts Are CL called a clause so whenever we read each Clause separately they are not dependent on each other they independent especially definition section so in income tax various terms whatever they have used they have defined it under section two Clause something like 21 21 agriculture income is defined in 21A so is it connected to any other definition no each definition is independent guys clear so in income tax if you ask me sir which are those sections which will have Clauses section two as well as 10 guys they will always have Clause section 10 talks about exemption so even 10 has various Clauses so 101 102 102 a like that so each of them is independent okay now coming to subsection where each part is related with other dependent they dependent it is known as subsection and all subsection taken together completes the concept example is like section 56 guys Section 5 has two subsections when can I tell whether an income is taxable in India is only when I know both the subsections pi 1 as well as Pi 2 same way section six has six subsections now actually including subsection 1 a it is seven subsections clear so when can I tell a person is resident in India is only when I know all the subsections guys especially even for individual Section 1 1A and subsection 6 all together I have to read only then I will be able to tell okay when the individual is resident in India so this section six taken together along with all the sub subsections will give us exact information about residential status of a person clear so when one subsection is related to the other so they're like depending on each other we call them as what subsection and not clause so in simple guys it is easy for you to remember in income tax section two whatever talks about definition and section 10 is always having Clauses whereas all other sections they are having subsections now coming to Proviso the provisor spells out the exception or condition to the provision contained in the respective section subsection Clause so now there will be one provision we call it as general provision or just a provision and for that they may tell this provision is not applicable to so and so person or else they may tell this provision is applicable only if the turnover is more than so and so limit so Proviso is putting some condition or they are giving some exception or else they may tell the above benefit is not available if you contribute in cash please contribute it in any mode other than cash so all these are some examples for provisual then coming to explanation the explanation gives a clarification relating to the provisions contained in the respective SE section or subsection or Clause so wherever any clarification is required the clarification in the law will be given through explanation guys through explanation sorry now s example guys in section 80 ggb and GGC they have told contribution to political party or electoral trust can be claimed as deduction now it is very important to Define what is political party what is political contribution so that they have given through explanation same way put on condition telling if you contribute in cash there is no deduction and that condition is what provis that condition is provisor so whatever explanation they have given what is political party what is political contribution that is explanation for the respective section clear yes so now coming to income tax rule it will always play a supporting role to Income Tax Act guys that is wherever reference is given in the law to the rules with respect to any valuation or with respect to any procedure then we have to refer to income tax rules which is called as it came to forth from first day of April 1962 we call it as income tax rules like for example sir under income tax law everyone is supposed to charge depreciation under wdv method except electricity company or power sector company and whenever we are charging the depreciation as per wdb method the rates are given in the rules in the ACT they have referred to the rules and the rate of depreciation for each block of the asset is given in the rules guys next coming to notification the cbdt issues notification from time to time for proper Administration it is for administration of the income tax act any notification issued by cbdt and central government will be binding on everyone guys so whenever government want to inform anything to the public at large or whenever they want to bring any change or whenever they want to bring any new provision how do they bring it through notification Even in our classes and all we would have not notification number so and so so anything which they have to bring as a new law or new provision they will bring it by way of notification and notification is binding on everyone no one can take a protection telling sir I didn't read this notification then coming to circular circular is more related to internal purpose for the Departments circulars are issued by cbdt to clarify the doubts regarding the scope and meaning of the provisions of the law and provide guidance to the income tax officers and assist and this is binding only on the department but assass can take the advantage of it simple guys if you guys have already watched my statutory update video there there are given some circulars or guidelines on all with respect to TCS that is with respect to liberalized remittance scheme whenever you're are converting your money into foreign currency and all so how to exactly apply this there is an amendment which is brought because before 30th September different rate was there after 30th September or from 1st October the different rates are there how exactly to apply and how do we consider that 7 lakh limit and all more clarification is given now through circulars this just for better understanding already they have brought a provision through a notification now how exactly this works they have given it through by way of circulars same way with the 101d exemption so newly they have brought five lakh limit with respect to 101d exemption if in any year if you have paid more than 5 lakh premium then you are not eligible for exemption now they have given more clarifications with respect to that F how do we consider it is it like only for one policy what if the same person is having multiple policy how do we consider F lak all these guidelines or clarification they have given through circulars and one more important thing guys before watching this video if you are not at all watched till now the statutory update video first I suggest you to watch that and then continue with the revision video why because there are few changes amendments which has been brought both for direct as well as indirect tax which I already covered through statutory update videos so if you're not yet watched please do watch it and then continue with the revision notes is what I suggest that is revision video sorry yeah next coming to the judicial decisions that is the decisions given by the various courts if any decision is given by the Supreme Court guys which we call it as Apex C that will be binding on everyone including the income tax department within the jurisdiction of the country whereas if there is any judgment given by a respective High Court assume Karnataka High Court it will be binding only the for the people within the jurisdiction of Karnataka as well as the income tax department sir will it be binding for the people of Tamil Nadu Andra Pradesh or Telangana no it won't be sir what like one judgment is given by Karnataka high court is it binding on another high court no they can give different judgment sir what if the other high court is given a judgment then that will be binding to the people of that state as well as whatever income tax department will come within its jurisdiction now sir one high court decision was given assume Karnataka high court now it has been overruled by Supreme Court what is applicable sir Supreme Court's decision Supreme Court's decision will be applicable for the entire country guys now coming to basis of charge as per section four total income of a person earned in the previous year is chargeable to tax in the assessment here guys so total income is defined in section 2 Clause 45 that is person is defined in 231 previous year in Section 3 and assessment year in 29 and income income alone is defined in section 224 which is an inclusive definition it covers various items which we would be covering one by one under the respective head Skies Now concept of income income might be earned in the form of cash or in kind so even if it is received in kind is it taxable yes in that case we have to calculate the value of Whatever item we have received that will be considered as income in the hands of the person then some incomes would be taxable on re basis some income would be taxable on acral basis some whichever is earlier like that under the respective head they have given how is it taxable then income can be legal or illegal so even illegal incomes are taxable yes it is taxable see with respect to legality there is a different Indian Penal Code which will take care of but still even illegal incomes are taxable under income tax law then income can be temporary or permanent so assume now after your exam you guys were free for one one and half month or two months and you did some freelancing and earned some income for a temporary period so is it taxable yes see whether it is less than basic exemption limit or more than basic exemption limit that is a question mark but is it considered as income yes guys then sir permanent income I am working as an employee every month I am getting a salary or every month I am getting an interest income dividend income sir what is it is it income yes whether the income is temporary or permanent income is income then you may receive your income in the form of Lum suum or installment however you receive it the pattern of receiving the income will not change then gifts even gifts are taxable we have a exclusive section for this under other sources that is 56 to 10 there we will see whether it is taxable or not depends on what is the value of the gift you receive received from whom you have received on what location you have received based on that we have to decide whether it is taxable or not for the recipient then whether the income is a revenue or Capital receipt we have to check so now what is capital what is revenue have they defined it in income tax law no but whatever we have learned in our account same thing we have to consider even for income tax purpose now if there is any amount which is referable to fixed Capital we call it as capital receipt if there is any amount referable to circulating capital we call it as Revenue receipt now sir what is fixed Capital what is circulating Capital fixed capital is not involved directly in the process of business it remains unaffected during the process guys means on day-to-day basis it will not be keep on increasing decreasing example sale proceeds of building machinery or plant will be a capital asset in simple sale of fixed assets okay then circulating Capital circulating capital is a turned over in the business and which ultimately results in what profit or loss example sale proceed of stock in trade is a revenue receipt that is Goods or inventory guys now sir what is revenue receipt profits and gains which is arising from various transactions which are entered into in the ordinary course of business means my business itself is doing it sir are those which are incidental to or closely associated with this business would be Revenue receipt chargeable to tax revenue receipts are normally taxable unless specifically exempt so the revenue receipts are normally taxable guys but if any anywhere under Section 10 if they have given exemption yes the assass enjoy the exemption if not it is understood that it is always taxable then coming to Capital receipts normally it is not taxable but if it is specifically included in the law then it will be taxable for example in income tax law they included specifically some Capital receipts like capital gains on the transfer of capital asset even though it is in the nature of capital receipt still taxable same way compensation received on the termination of agency contract it is in the nature of capital but still taxable why because specifically included in the law same way compensation received on premature termination of employment contract of employment even that is in the nature of uh Capital receip but still taxable why because section 17 specifically includes that under income tax law guys clear but one more small thing which I would like to tell is see always check whether a particular item is it a stock for the assy or is it a fixed asset based on the nature of the business if buying and selling of that is his business then it becomes stock and when you sell that stock it is always Revenue re guys and sir no no buying and selling the item is not his business but he has had it to run this business for a longer period we call it as fixed assets for example guys for Aro Pro Academy Furniture chairs bench desk and all is what fixed asset are they into the business of buying and selling all this no sir so in that case what is it fixed asset if at all in the future for any reason if they sell this furniture what is it for them Capital receipt same way for a furniture dealer whatever Furniture chair bench desk they buy and sell what is it for them stock and in that scenario what transaction it will be Revenue transaction or Revenue re hope you guys got the clarity next the definition of person is given in section 2 Clause 31 person includes all categories of persons guys that is an individual who is a natural human being like you and me then Huf Hindu undivided family a company any category of company domestic foreign public private every one person company every company is covered here a firm that is partnership form and your form includes LLP also then an association of person or body of individuals or local Authority and every artific artificial judical person not falling within any of the preceding sub Clauses so who will fall in this every artificial judical person like any charitable Institution educational institution hospitals everything will everyone will fall under this category guys then assess definition very important they may ask in descriptive to Define it guys assess means a person by whom any tax that is income tax under income tax law or any other sum of money which includes like interest late fee penalty is payable under this act this act means Income Tax Act guys so if you are paying any tax that is income tax or any other sum of money means interest late fee penalty under income tax law you treat as assess then it also includes other category of persons that is every person in respect of whom any proceedings has been initiated under the act for the assessment of means the assessing officer has initiated an action against you to compute your income or the income of any other person for whom you are liable to pay tax like clubbing G all or law sustained by him or such other person or the amount of refund due to him or such other person now if the assessing officer has taken initiative to calculate your income or someone else income for which you are liable to pay tax or you have claimed a loss of 10 CR 5 CR but is recomputing it again to cross check or you have claimed a refund of income tax assume one lakh but is recomputing it again so in any of these three cases guys you are treated as assy then every person who is deemed to be an assass deemed to be an ass we call it as representative assass and all assume you are acting as an assass for your minor childrens or for a unsounded person of unsounded mind or there is some non-resident who is carrying on business in India you are acting as an agent for him so you might be treated as representative assass so you are deemed to be an assass for income tax purpose maybe not for your income but for someone else income then every person who is deemed to be an assass in default that is you have violated some provisions of income tax law so in that case you would be treated as asset in default guys especially the pay payer whenever he supposed to deduct TDS but if he has not done it then the payer would be named as assass in default every assass is a person for sure but every person need not be an assass guys then coming to assessment year assessment year means a period of 12 months commencing on 1 April of every year and ending on 31st March of next year so it will always be a period of 12 months guys it can never be less than 12 months it starts from 1 April and ends on 31st March coming to previous year definition which is given in section three previous year means the financial year immediately preceding the assessment year means this is the year in which we have earned the income and for your exams sir what is the previous year applicable 23 24 so for your exams the previous year 23 24 would be applicable guys fine now in India everyone are supposed to follow the uniform Financial y that is from 1st April to 31st March so know or I want to follow calendar year or I want to follow some other fancy years can I do it no for income tax purpose everyone are supposed to follow Financial year which we call it as previous year previous year normally will be a period of 12 months guys but in the following cases it will be a period of less than 12 months might be important for mcqs and all so in the following cases previous year will be less than 12 months when is it in case of newly set up business or profession or a new source of income coming into existence in the middle of the previous year assume guys after you qualify you started working so you guys started working and start earning from for the first time from first December 23 okay I'm just taking random date because sir already date is over don't get confused so 1 December 23 in that case which is your first pre for the first time you started earning from 1 December in that case which is your previous year 1 December to 31st March 24 guys clear sir no sir I'm starting my business newly for the first time from first July 23 in that case which is your first previous year 1 July to 31st March 24 guys so that means it is less than 12 months yes sometimes ass may start assume sir I started a new business or new profession from 1st February 24th in that case which is my first previous year 1st February to 31st March Mar 24 okay means it is only a period of 2 months guys clear yes same way if you are already carrying on the business from last 10 15 20 years but now you're are closing down your business in between the year assume you closing down your business on 30th September in that case which is your previous year now from 1st April 23 to 3th September guys like last previous year for this business our profession clear yes so only in this scenarios previous year can be less than 12 months whereas in all other scenarios previous year also will be a 12 months period guys but assessment here for always for any assess in any case will always be a period of 12 months next general rule is that income earned in the previous year is taxable in the assessment year but there are certain exceptions for this guys means in the following cases the following five cases income earned in previous year is taxable in previous year only so which are those cases shipping business of non-resident so if a non-resident is having any shipping business in India means they are coming from outside India carrying the passengers and goods from Indian port in that case before they leave Indian Port the government is asking them to pay tax and in that case whatever the revenue they collect or whatever fright charges they collect for carrying goods and passengers from India 7.5% of that is considered as income guys 7.5% is considered as income and on that whatever is the tax rate applicable for them they have to pay it for example assume totally they have collected 10 lakh for carrying goods and passengers from Indian port to foreign port in that case how much is considered as their income 7.5% 7.5% guys which comes to 75,000 this is considered as as their income on this whatever is their tax rate they have to apply on that apply on this and pay the tax only then they will be allowed to leave Indian Port fine next person leaving India permanently section 174 so if assessing officer get to know if any person is leaving India permanently then he can ask to pay tax from the beginning of the previous year till the probable date of departure whatever income he has earned in the previous year you can ask him to pay tax and only then he will be allowed to leave India then Association of person or body of individuals or artificial judical person formed for a particular event or purpose now if there is any UOP or Boi which is formed for a particular purpose and if that purpose is likely to be served in the previous year only we are achieving our Target on 31st December itself in that case whatever income is earned till 31st December the assess will be asked to pay tax in the previous year itself because in the assessment year there won't be any association of person or body of individual because by then already they have achieved their purpose and they would have discontinued their business or operation or for whatever purpose they have been established then transfer of property to avoid tax if assessing officer get to know that any person has transferred the property and he has no intention to pay tax then in that scenario assessing officer can ask that person to pay the tax on the transfer of property which is like capital gains in the previous year itself guys then the last one discontinued business so if any any person has discontinued or liquidated his business in the previous year then the assessing officer has an option either to ask him to pay tax in the previous year only or wait till assessment year and here in case of discontinuance of business or liquidation of business and all the assessing officer can wait till assessment here because here the control of the company would be taken care by a neutral person called Liquidator guys he will be managing means he will be selling all the assets of the business and make sure that he's clearing all the liabil next we have one more thing normally income earned in the previous year gets taxed in the assessment Year yes but in few cases where assassi has earned income in some other past year but he has not disclosed it but income tax department or assessing officer has detected that income in the current previous year so when is it taxable sir this income was earned somewhere in the past but now detected by the department so when is it taxable it was supposed to be taxed in the past but ass has not disclosed it so when is it taxable in the year in which the department has detected it and the rate is heavy okay it comes to including sarch charge say and all it comes to 78% tax rate is 60 but including SAR charge and says it comes to 78% guys tax rates we will see it later in separate chapter okay which are those cases sir cash credits that assume the person has credited some amount in his books of accounts but he doesn't have proper explanation for it in that case that amount whatever he has credited is considered as his income then unexplained Investments he has made few Investments he has bought from some fancy cars like imported Cs and all for which is not able to explain the source then unexplained money especially during raid if any money has been found or if any assets have been found or any jry has been found for which the assy or the person is not able to give any explanation which is not satisfied by the assessing officer in that case whatever is the value of that money or Investments which are found will be considered as income guys amount of investment not fully disclosed in the books of accounts so he has made an investment of 10 CR but he has disclosed only 2 CR in his books in that case whatever is the value of the investment which is not disclosed like 8 CR will be considered is as his income unexplained expenditure assume you guys after your exams you hope that you will pass the exams and you went for a Goa and did a huge party big party for that you have spent 2 crores sir 2 cres yes assume imagine dream of it so you have spent 2 CR after a week you received a invitation or notice from the Department telling we got to know you have done a big party in Goa you have spent almost 2 CR there can you please explain the source of your income because if you able to spend 2 CR obviously earned it somewhere but in the past you never paid the tax in that case if there is any expenditure which you have incurred for which you are not able to offer any explanation then whatever is the amount of expenditure it will be considered as income for you then amount borrowed or repaid on only that is a promise which has been made to pay any certain sum of money on a future date guys okay so if I have borrowed any money or if I have repaid anything on uni then at the time of borrow or at the time of repayment only then it will be considered as income if some amount is considered as income when it is borrowed again when it is repaid same amount will not be considered as income all this put together from a to F we call it as undisclosed income undisclosed income which is taxable as per section 115 BB e guys okay next coming to agriculture income agriculture income is defined in section 21 what is agriculture income guys I will just explain it in simple assume I have an agriculture land which is used for agriculture purpose if I myself is doing cultivation in my land is it an agriculture income yes sir I myself is cultivating it and I am cering the crops and I'm selling it as it is I'm not doing any processing see if I am doing any further process and all like for example potato is converted into potato chips or sugar cane is converted into sugar or Jagger and all that is manufacturing also will get involved in that case I have to segregate how much is my agriculture how much is non- agriculture now I cultivated the crops and I sold the crops as it is but see I can do some activities which will make the product available in the primary market like cleaning trending and seering and all so yes sir I myself cultivated the agriculture crops I Saed it and I sold it in that case is it the agriculture income for me yes next thing I am a lazy person I have an agriculture land but I'm lazy to do agriculture activities so what I thought I will let out this to you I will let out my agriculture land for you you are very hard working you are a farmer but you don't have a land in that case you did the cultivation in the land you harvested it and you sold the crops now for you whatever you have earned from the sale of crops is it an agriculture income for you yes guys now coming to me you will pay rent for me sir what is that rent is it an agriculture income yes now rent can be of two form if you're paying rent in cash or in money is it an agriculture income for me yes because ultimately my land is used for agriculture purpose yes next assume you are giving in kind means whatever your growing 50% of that you are giving to me so in that case my income or my rent whatever I'm charging is in kind in that case even that is considered as agriculture income yes so whatever is the value of the crop you are giving to me is an agriculture income guys clear so ultimately if land is used for agriculture purpose the owner of the land whatever is earning plus whoever is using the land for agriculture activity whatever they are earning from the sale of crops is also considered as agriculture income clear now sir what if I let out my agriculture land for film shooting or song Shooting oril political canvas or any launch of new products means they're coming and doing it in my agriculture land from that I am earning some income is it also considered as agriculture income no because here the purpose is not served is it used for agriculture activity in that scenario no film shooting song shooting or political canvas for whatever purpose it is in that scenario whatever income the assess is earning is not an agriculture income guys fine next income from Land we understood even income from Farm building will be considered as agriculture income but subject to certain condition that is the land whatever land is there the building should be in the land or next to that land immediately next to that land immediate vicinity and that building should be used as Storehouse dwelling house or h house either by the person who is cultivating in that land or the owner of the land either of them should be using it and this building should be subject to land Revenue in that place or it should not be situated in specified area in simple urban area it should not be associated in specified area and this condition is only for building purpose for land there is no condition like that clear yes so in that case if from this building if there is any income earned by the ass subject to the all the conditions then if all the conditions are satisfied even the income from that building will be considered as agriculture income guys next agriculture income from a land situated in India and used for agriculture purpos is always exempt in income tax guys in India it is completely exempt as per section 10 sub Clause one section 10 Clause one next if the same assy guys listen here listen if the same assy is engaged in both agriculture as well as business means he's cultivating as well as whatever he is cultivating is not selling as it is he's using it as a raw material in the manufacturing process in that case how do we decide how much is agriculture how much is businessing income they in the rules they have given some percentage of segregation guys percentage of segregation what is it sir there are some specific Rule and one general rule we will learn all this specific rule rule 7A if the ass is engaged mean same see growing as well as manufacturing of rubber in that case 65% would be considered as agriculture income and 35% would be considered as business income which is nothing but pgbp guys okay pgbp or we also call it as non-ag ulture income which is nothing but taxable under pgbp then 7 B1 coffee grown and manufactured which is nothing but cured only in India 75% agriculture income 25% business income then sir what if the same ass is growing cured roasting and grounding in India means coffee is grown cured roasted and grounded means more of manufacturing is there in that case 60% agriculture 40% business then if tea is grown and manufactured in India 60% agriculture 40% business income guys and Sir this percentages has to be applied on what is it on the sale value or what guys whatever you have grown and manufactured for example the final product rubber coffee or tea whatever sale value you are getting from that you have to reduce cost of cultivation of your agriculture produce then you should also reduce your manufacturing cost whatever profit or in income you get on that we have to apply the percentage and we do segregation okay so non-agriculture income is otherwise called as business income or pgbp clear so please be careful so normally whenever they have given any figure in the question it is understood they would have given directly this if not if they have given the sale value they would have given in the question cost of cultivation and the manufacturing cost First reduce that whatever amount you get on that you apply the respect effective percentag to segregate Agriculture and business income guys is that clear yes next sir what if the assess is doing any other products if is growing and whatever is growing is using it as a raw material to manufacture is output like whatever potato is growing is using it to process as potato chips or sugar can is growing growing and is using it to manufacture sugar or Jagger sir in that SC Ario general rule will will be applicable guys general rule s will be applicable what is it where in any other case the income is partially agriculture income and partially business income the market value of any agriculture produce so raised by an ass which has been further utilized or processed in such business will be considered as agriculture income and the same shall be allowed as deduction while calculating business income we call it as general rule whatever we learned here is specific rule means they have clearly told this is applicable for coffee tea rubber for any other product general rule is applicable Let me Give an example guys assume an assass is growing sugar cane and he's converting that into sugar guys okay now when he has grown sugar cane and he is converting it into sugar on the day is putting this sugar cane into manufacturing process what is the fair market value of that we have to check what is it fair market value of sugar cane on what day sir on whichever day it has been put into the manufacturing process as a raw material okay we have to take fair market value of sugar cane on the date of on which it has started using it for manufacturing process from that we have to reduce cost of cultivation fine whatever we get is called agriculture income whatever we get we call it as agriculture income now coming to Sir sugar we have processed sugar from sugar K and we have sold it so now take sale value of sugar from that you have to reduce the cost of raw material and here raw material did the purchase it from the open market no whatever he grown only used it so whatever was the fair market value to calculate the agriculture income was there now that will become the cost of raw material year so cost of raw material is nothing but the fair market value of the sugar cane which was considered to calculate agriculture income minus one more cost manufacturing cost that is the cost which is incurred for manufacturing the sugar can sorry sugar whatever we get here is business income guys whatever we get here is business income this is as for general rule seven is that clear yes sir what if the ass is only growing no manufacturing then 100% is agriculture income sir what if the assess is doing only manufacturing then whatever is income is earning is purely business income guys yeah so whatever rules we saw here is same assess is growing as well as Manufacturing in that scenario how do we decide how much is agriculture how much is business income and there are some important definitions which are covered in this chapter like agriculture income in section 21A assess 27 assessment year 29 then income definition which is inclusive definition 224 then person 231 and previous year three guys section three yes guys now we will revise chapter 2 which talks about scope of total income and residential status residential status is given in section six whereas the scope of total income is given in section five but section five has to be read along with Section 7 and N9 so these are four sections which would be covering in this chapter now coming to residential status first we'll see residential status and then we will go to scope of total income so residential status is given in section six the incidence of a tax of a person depends on residential status whether an income is taxable in India or not depends on residency status of a person guys section 61 gives the basic conditions applicable for an individual to decide whether they resident or non-resident so there are two condition even if one condition is satisfied they will become resident and once they become resident we have to apply section 66 and check whether they're ordinary resident are not ordinary residents so the additional conditions are given two condition if both the conditions are satisfied they become ordinary resident if not not ordinary resident then coming to if an individual is not covered in section 61 which depends on the number of days of stay in India then we should check for the same individual section 61a and in section 61a the number of days of stay is not important they have given some condition if that conditions are satisfied yes we will deem the individual to be resident in India then coming to section 62 which talks about the residential status of hu undivided family aop and partnership firms then for Hindu undivided family alone we have to also check the additional conditions given under Section 66 for which K of HF has to satisfy both the condition given under Section 66 then coming to for other categories of people 64 is applicable residential status of that is body of individual artificial Jal person and local authorities but we'll study 62 along with 63 64 guns because both has same criteria both has same criteria then coming to section 63 it talks about residential status of the companies then 65 will tell one residential status for all the sources of income it will not change edwise means for each head of income different residential status will be there sir no and residential status has to be checked for each and every year separately fine yes guys and I have made one chart I have made one chart where all all the sections are covered what is it we will see one by one first so please be attentive guys this is very important section six subsection one which is applicable for indivisual as two basic conditions guys if an individual satisfy any one of this condition he will become resident sir what if he he or she doesn't satisfy both the conditions given here then they will be nonresident sir what are those two condition he or she should have stayed in India during the previous year 2324 during the previous year 2324 what is the previous year for us guys 2324 so if there is any question for you to determine residential status it will be for previous year 2324 so your first work is to check how many days they stayed in India in previous year 2324 so in the previous year 23 24 check how many days they were in India at least 182 days or more if yes okay good then in our second condition if not no sir less than 182 days then check the second condition see if first condition is only satisfied no need to check second condition guys because any of this condition has to be satisfied not both okay assuming first condition is not satisfied then check the second condition in the previous year the assess should be for 60 days or more in the in India and one more condition is there four years preceding the previous year he should be in India for at least 365 days that is 365 days or more it is like this guys so during previous year 23 24 first condition is 182 days or more if that is not satisfied then second condition 60 days or more plus for this one more condition is there go back to last 4 years all four years put together all four years put together at least they should be in India for 365 days all four years put together and this four years will not include our previous year for previous year we will check 60 days whereas 4 years preceding the previous year 365 days hope it is clear okay so if any of this condition is satisfied then an individual will become resident in India but there are few cases where only first condition is applicable there are two cases where only first condition is applicable that means if you are an individual who is covered in under any of these two points then you will become resident only if you are in India for at least 182 days or more only for condition is applicable second condition is not at all applicable so when is it an Indian citizen who leaves India as a member of Indian ship are for purposes of employment outside India or second case here income is not at all important guys in the first scenario they have not given any reference for income irrespective of the income if you're an Indian citizen who leaves India as a member of Indians ship or for the purpose of employment outside India then For You Second condition is not applicable then second one one Indian citizen or a person of Indian origin extra one person person of Indian origin engaged in business employment or profession outside India comes on a visit to India during previous year that is 23 24 he was settled outside now he's coming to India during previous year and for what not to settle here only for visit purpose and his total income other than the income from foreign sources is only up to 15 lakh that is in simple Indian income is up to 15 lakh in both these cases he will become resident only if he's in India for 182 days or more okay next in this same scenario guys they told Indian income up to 15 lakh so what if it is more than 15 lakh same scenario Indian citizen or person of Indian origin settled outside India for business employment or profession and now coming to India during previous year for a visit but their Indian income is more than 15 lakh in that case they're telling second condition will be applicable but instead of 60 days it is 120 days means for them for those see whoever is covered here what is the condition condition looks like this 182 days or more second condition 120 days or more means instead of 60 it is 120 days or more and 365 days or more during four years preceding the previous year everything remains same but only instead of 16 they removing 60 and they're taking double of that that is 120 days clear yes sir next next next coming to deemed resident Point guys deemed resident Point sir this has to be checked only when individual is not covered in section 61 guys when the individual is not covered in section 61 and for 61 number of days of stay in India is important during the previous year whereas 61a is not giving any reference to it what is it we will see section 61a Indian citizen having total income other than income from foreign sources in simple Indian income more than 15 lakh in previous year shall be deemed resident in India if is not liable to tax in any other country so that is Indian citizen should be the ass and that is the person or individual is total income other than the income from foreign sources that is in simple Indian income more than 15 lakh and he should have not paid tax in any other country then we are telling we will adopt you my son we will adopt you my son or daughter as a deemed resident for India you are considered as resident purpose and here number of days is not at all important guys and in the exam they may confuse you by giving number of days and all please don't get deviated okay then sir what is the person of Indian origion if any of your parents or grandparents are born in undivided India that is before 1947 there was no India Bangladesh Pakistan and all all this were called as undivided India clear so if any of the individuals parents or grandparents are born in India undivided India then the person or individual is called a person of Indian origin guys okay fine sir next once an individual satisfy any of this condition once an individual satisfy any condition given under Section 61 he will become what resident in India so what if it doesn't satisfy both non-resident but if he satisfy any one condition he will become resident for which we have to go and check section 66 additional conditions to see whether they're ordinary resident or not ordinary resident in section 66 they have given two additional condition if both these conditions are satisfied they are what ordinary resident so what if anyone is not satisfied or both is not satisfied then they are called as not ordinary resident guys or else we will call it as resident but not ordinary resident clear so what is it and guys please be careful for Section checking section 66 we should always check the past we are deciding the residential status for 2324 but for 66 they are just referring to history only because 2324 how many days he was there in India and all we checked in section 61 only again we need not check it so for checking 66 we will just go back to the history and see in the past what was so first condition under Section 66 resident in India at least for 2 years out of 10 years preceding the previous year means in the last 10 years live previous year 23 24 go back to last 10 years check how many years he was resident in India and in that year obviously you should have satisfied what section 61 only then you would have become resident in India AG so in the past so in the last 10 years at least two years you should be resident in India Okay Plus in the last seven years leave previous year 23 24 go back to last seven years check totally how many days he was there in India all seven years put together how many days he was there in India he should be in India for at least 7:30 days or more guys at least 7:30 days or more in that case both conditions should be satisfied in if he has satisfied both ordinary resident if not not ordinary resident but one important catch here please look you please look you so yes you told if an individual has satisfied any one condition under Section 66 sorry 61 we will go to section 66 and check additional condition is it even in this exception cases also yes we have to check it but if an individual has become resident as per this provision guys that is more than 15 lakh second condition is applicable that is 120 days in this scenario or in case of deemed resident we need not check additional condition because they're always not ordinary resident I repeat once again if an individual has become resident as per this provision or as per section 61a deemed resident they will always be not ordinary resident they will always be not ordinary resident guys clear now one more important clarification guys assume an individual is covered in this provision Indian income more than 15 lakh is covered here but he has satisfied first condition not the second condition 182 days only has satisfied in that case sir should we check additional condition yes yes we have to check please see keep Simple agenda guys if first condition is satisfied don't worry about any other things okay only if first condition is not satisfied then we have to see whether the person is covered in exception category or not and all so what they are trying to tell in income tax provision is if a person has become resident as per this provision that is he is covered in second point that is 120 days or more it is not 60 for him 120 120 or more and 365 days and he has satisfied this condition and has become resident should we check whether he is an ordinary or not ordinary no need he straight away not ordinary resident clear hope it is clear for you bit confusing because they messed up so too much in the residential status but still I will quickly repeat once again guys if a person is deemed resident as per section 61a or if he has become resident by covering in this point and he has satisfied second condition that is 122 120 days or more along with 365 days or more during four years preceding the previous year in this two scenarios they will always be not ordinary resident in any other scenario once a person resident as per section 61 we have to check whether they're ordinary or not ordinary hope it is clear for you then one more Point connected to this this one an Indian citizen who leaves India as a member of Indians ship for him only first condition is applicable yes sir and while calculating how many days he was in India they have given one rule 126 reference what is it we will see an individual being citizen of India and a member of crew of a ship the period of stay in India in respect of eligible o sir first of all what is eligible o guys with respect to ship if either origination point or destination point is in India and the other point is outside India for example assume origination Port is Mumbai Port whereas destination is somewhere in Singapore in that case do we call that as eligible W yes same what if it is vice versa so assume origination is in Singapore whereas destination is any port in India assume Chennai port in that case will be considered as an eligible o yes guys okay means it has it is traveling International outside the country but either of the port that is the original or destination either of this should be in India and the other should be outside India clear only then we call it as eligible o so the period of stay in India will not include the period beginning from the date of joining till date of signing off as mentioned in the continuous discharge certificate guys sir what is it assume guys I am the Indian citizen who is working in any shipping company I'm going outside India as a member of crew of Indian ship okay sir now assume I entered the ship as on 5th June 5th June and I am coming out of the ship as per continuous discharge certificate I'm coming out of the ship as on 10th November uh sorry 10th October we will take 10th October 23 5th June to 10th October so this many days is considered to be outside India this many days is considered to be outside India so the date I'm signing in as well as the date I'm coming out both will be considered as outside India from year to year means in simple if I have to tell tell the calculation so June how many days 30 days in that from 5th June I am outside India it is considered to be outside India including 5th June so how many days I have to minus only 4 days so it is 26 days so June July 31 days August 31 days then September 3 days October 10 days and how much ever number of days you get here is considered to be outside India not inside India outside India clear let us quickly calculate also I guess 128 please cross check if I'm wrong um H 128 guys okay so this many days is considered to be outside India so in the financial year 2324 how many days is there come on guys how many days are there in in previous year 23 24 366 it is a Leo okay so how many days is considered to be outside India 128 days so remaining days if the question is silent we'll assume it to be in India we will assume it to be in India guys so please be careful how much ever is the build as per The Continuous discharge certificate we will completely assume that is outside India remaining days if question is silent we'll assume that the remaining days is in India accordingly we have to decide and this whatever we get should be more than 182 days because for him straight away only first condition is applicable not the second condition less than or equal to one 182 days guys is that clear yes okay next we'll continue with Section 6 subsection 2 which talks about we will study section 6 subsection 2 along with 64 because the criteria is same guys who all are covered HF oop partnership firms in subsection two whereas body of individual artificial judical person and local authorities in subsection 4 sir when they are said to be resident in India only if the control and management of the Affairs means where the policy decisions are taken if it is only or partly in India even if one Deion is taken in India then they are said to be resident in India guys they are said to be resident in India now coming to HF once they become resident in India that is when when the control and management is partly or only in India we should also check whether they're ordinary resident or not ordinary resident for which we have to refer to section 66 and here HF cannot satisfy both the condition who has to satisfy Kaa on behalf of HF if karta who is the head of the family if he satisfy both the condition given under Section 66 then HF will become ordinary resident guys so irrespective of the residential status of karta means karta residential status we have to check it from Individual point of view now if if K satisfy both the condition given under Section 66 HF will become ordinary resident if not not ordinary resident guys clear next coming to 63 that is the residential status of company Indian company will always be resident in India no poem nothing should be applicable for Indian company always resident in India coming to foreign company we have to check poam poam means place of effective management that is where key management and Commercial decisions are taken if poem is in India then we tell that foreign companies resident in India sir what if poem is outside India then foreign company is non-resident in India guys then sir what about poem how do we decide whether the poem is in India or not is not a part of your inter syllabus you will be learning that in the final clear yes so next coming to 65 guys we have to check the residential status for each and every every year separately just because I become resident in this year doesn't mean that I will be resident forever so for each and every year residential status has to be checked separately and there will be only one residential status for one year means for every source of income only one residential status will be there sir will residential status change for each head of income no it will not yeah yes then so in single chart I have tried to cover all the points with respect to to residential status guys next few more points and see I have tried to do all the problems in my regular class I have tried to cover all this scenarios and I have done various problems kinds so if but all if you have any confusion or if you not yet watch those video but watch that that will give you more clarity even it is available on YouTube also so residential status you can just refer to video three there where I would have covered all different things means all the videos you can watch but I'm telling you wherever the problems are there especially for individuals because different scenario is there different possibilities are there covering all the possibilities I have tried to do the problems so it would be good if you guys know how exactly to apply this Provisions okay next points to remember few points you have to keep in mind here sir so does residential status has got with anything with the nationality or citizenship and all no guys the residential status has got nothing to do with citizenship nationality and place of birth or doile doil means the place where you have permanent home H A person can be a resident in more than one country also in the same way you can escape from being resident in any country also you can escape like that now see guys here in the exception scenario and all they have given reference to Indian citizen person of Indian origin but they have not told every Indian citizen is straight of a resident nothing like that they have just given reference to Indian citizen so that doesn't mean that Indian citiz will always be sir resident in India no no next for all the practical purposes while counting the number of days of stay in India the date of arrival as well as the date of departure both is considered to be in India guys irrespective of the time of arrival irrespective of the time of departure the day of arrival as well as the date of departure will be considered to be in India and see while calculating this guys please be careful including both days as per rule 126 including both the days we will consider to be outside India including both the days as per continuous dis certificate what is the date of entering into the ship what is the date of signing off if whatever is the duration between this including both the days is considered to be outside India this is as per what rule 126 yes so please be careful with this calculation whereas in any other case date of arrival as well as departure both are considered to be in always stay in India need not be continuous like you can come go come go totally how many days you were in India we have to count it or active nor it is essential that the state should be at usual place of residence business or employment of individual why he came to India where he was staying with whom he was staying we don't care he came to India how many days he was in India again assume he again went back and came to India so we will calculate total period the stay of like 182 days 60 days 365 days on all they it not be continuous even if you're coming and going we will count okay totally how many days you were in India it must be noted only that individual and hqf would be ordinary resident not ordinary resident and non-resident so with respect to individual HF there are three possibilities ordinary resident not ordinary resident and non-resident whereas in any other case for any other person guys they will be either ordinary resident or non-resident no in between category for them no in between category for them guys clear yes so we're done with Section six now we are moving towards section five scope of total income so once we understand residential status now it is easy for us to decide whether an income is taxable in India or not okay so there are three possibilities here ordinary resident where we call resident and ordinary resident then resident and not ordinary resident this will be there only in case of individual and HF guys whereas the last category is non-resident and sometimes in the question they may give only resident sir in that scenario what should we consider it sir assume it as ordinary resident guys okay mean they have given only resident but for you it is Clarity is required whether they're ordinary or not ordinary assume they're ordinary if the question is not clear on that clear yes fine so coming to income received in India or deemed to be received in India or income which is acre or arises in India or deemed to acre or arise in India which is given in section n so D what is D me has if guys so we call both of this as Indian income guys if you earned any income in India or if you have received any income in India it is always taxable irrespective of the residential status of the person it is always taxable guys clear we call it as Indian income okay sir so what if there is any income earned and received outside India earned as well as received outside India in that case we have to check whether there is any connection within India if any income is earned and received outside India but from a business which is controlled from India me diss are taken from India in that case it is taxable in case of ordinary and not ordinary whereas for non-resident it will not be taxed yeah yes then if any income is earned and received outside India but from a profession set up in India for example assume guys I have set up my practice in India but I went to us gave some service to my client there and I came back to India I earned the income there received income there so in which category it will fall sir year because I have earned from a profession which was set up in India I would have earned this income outside India but received outside India but still where it will fall in this category so in that case it will be taxable if I am a ordinary resident or not ordinary resident whereas if I am a non-resident it will not be taxable guys clear so if there is any income which is earned and received outside India check whether is it from a business controlled from India is it from a profession setup in India if yes guys they would have clearly given it in the question accordingly it is taxable only for ordinary and not ordinary resident then in any other case that means sir income eared outside India receiv received outside India no connection to India clear so in that scenario it is taxable only for ordinary resident it is taxable only for ordinary resident so in simple if I have to tell for ordinary resident Global income is taxable guys that is income earned anywhere in the world received anywhere in the world will always be taxable for him sir what if this person has paid already tax in that foreign country also chances are there but in that scenario while carh calculating the income in India we have to consider this foreign income but from tax liability you will get the relief guys for example assume I am an ordinary resident while calculating my total income I have to take my Indian income as well as foreign income so we got total income on this we have to apply the tax rates applicable in India as applicable to the ass nor if an individual labates are applicable so we got assume final tax liability we got a final tax liability I'm just cheing random figure 20 lakh okay sir so should I pay entire 20 lakh in India no on foreign income if I already paid some tax in foreign country then that will be available as relief double taxation relief we call it as okay provided Indian government as double taxation avoidance agreement with that country in which I have paid tax so this relief and all how do we calculate so is not a part of your inter syllabus but I'm just explaining you for your better understanding guys that's all assume you already paid 2 tax in the foreign country so you will get that as credit remaining 18 lakh you have to pay it in India so in simple while calculating income yes we have to consider foreign income also if you are an ordinary resident and all but while paying tax if already tax has been paid in the foreign country then a relief can be available to the assy guys C but what is this relief how do we calculate it how do we compute it how do we decide it because exchange rate and all will be there those things you guys would be learning at final level clear and in final level you will be learning much more things which are very interesting guys and whatever Direct Tax as well as indirect tax which you learn here for 5050 marks there it is two different paper for 100 marks so now make sure that your guys are studying to properly with proper Bas Basics so fundamentals everything you take care know properly so that it will be very helpful for you at final level because at final level also income tax at whether it is GST and all remains same but little advanc you will be learning so if you learn well now it will definitely had value for you at final level and your target is not just to pass inter it is to qualify as a CA so to qualify as a CA you should also think how do I clear my final from now itself because all six papers whatever is there one or the other way it will be covered in final guys especially if I'm talking from tax point of view yes it is covered as two separate paper at final level so please make sure that you guys are learning it in a right way at inter level and also don't skip any portion or any chapter or any topic because that may adversely affect you at final level also so don't just think of passing by getting 40 marks or 50 marks please try to cover the entire syllabus so in tax I feel is very interesting subject guys so provided you show interest so make sure that you show interest and you learn everything even at inter level you score very good marks which will help you to get overall Aggregate and also it will definitely help you for your final preparation yes good you will do now yes now coming to non-resident only Indian income would be taxable for them only Indian income these are like just a shortcut which I have mentioned but you for you you should have the complete knowledge of the table guys now few points to remember whenever you're dealing with scope of total income when once an amount is received as income remittance or transmission of that amount from one place or person to another does not constitute receip of income in the hands of the subsequent recipient or at a place of subsequent recipient okay means if I have earned the income and if I have received it whose income is that mine and once I have received assume I am transferring or I am remitting it to my parents or my wife or my children's will it be considered as income for them also no no it will be an income only for me then any past untaxed foreign income if it is brought into India it's not taxable in the hands of an assass means if any income was earned in the past in a foreign country where it was supposed to be taxed in foreign country but now during the previous year assess is bringing into India that income so on this who has lost the revenue the foreign country so Indian government is telling I will welcome you with both the hands bring that because money will flow into our economy we are telling we will not tax you because first of all this income was not taxable in India it was taxable in some other foreign country and they have lost the revenue we are welcoming you with the both the hands to bring that money into India okay then any exempt income will be excluded from total income of every ass means whether it is an Indian income or foreign income whichever income for that particular income if exemption is given under income tax law in India then while calculating the total income we will not include it because ass need not pay tax on it agree yes sir next guys income received in India includes deem to be received in India deem to be received in India means what sir as if received in India as if received in India sir how to remember section seven easy what is the chest number of doni jersey number seven de to be received in India D Don so somewhere you can connect especially the cricket fans okay in India to the income actually received by the ass or on his behalf certain other incomes not actually received by the ass and are not received during the relevant previous year are also included in his total income for income tax purpose means ass has got the benefit but literally might not not have received the amount but he will be getting the benefit in the future for example employer contribution to recognize Provident fund of the employee in whose account in whose name the account is opened employee but will employee get the money today only no whenever he withdraw it or after his retirement agree so immediate benefit he might not be getting but who is the ultimate beneficiary employee so if employer contribution is in excess of 12% because up to 12% it is exempt if it is inexcess of 12% assume employer is contributing 15% so how much is taxable for employee under salary a 3% sir is it received by him literally no because it is contributed to the fund which is in his name still it is deemed to be received by him in the previous year so 3% in excess of 12% how much ever is there is taxable to the employee in the previous year in which employer has contributed even though he has not directly received the amount into his bank account it is credited to the PF fund which is in the name of employee same way sir what if it is an interest so interest on the contribution whichever is given by employer employee if it is up to 99.5% it is exempt if it is more than 99.5% the difference is taxable assume okay it is actually as of now 8.25% but for academic purpose they may give any rate guys now assume the interest credited to PF account balance is 10% in that case indexes of 99.5% how much is there 0.5% will it be considered as income for employee yes where under salary head when in the previous year only but as of now he has not received any money no sir he will withdraw it only after retirement or only in the long term still it is deemed to be received by him deemed to be received by him same way guys in case of unrecognized Provident fund we know when it is withdrawn it is taxable in the hands of employee yes sir now if an employee is transferring unrecognized Provident fund balance to recognized Provident fund when he withdraw from recognized Provident fund it is exempt so what they're telling is when you're transferring the balance from unrecognized Provident fund to recognized Provident fund whatever is the fund transferred is deemed to be the income for the employee clear means even though is not withdrawing it's transferring the fund from unrecognized to recognized and in the future when he withdraw from recognized he enjoy the exemption no no we cannot give complete exemption now whatever balance you are transferring from unrecognized to recognized I will just give an example interesting urpf assume guys in my name in unrecognized Provident fund we had 10 lakh balance if I withdraw this amount any day it will be taxable yes sir now what I planned was ah let me transfer this to recognized Provident fund for which I enjoy the exemption I transferred this in 23 24 then in the future any contribution I made was for RPF so it had a opening balance of 10 lakh then every year I have contributed totally assume I have contributed another 20 lakh and I'm withdrawing 30 lakh in the RPF in the future date any time in the future when I withdraw from RPF they're giving me the exemption now assess will try to take the benefit of 10 lakh also yes sir so what they're telling is in the year in which you transfer the fund from unrecognized to recognized it will be considered as income what amount sir whatever fund balance you transfer whatever fund balance you transfer you transferring from one balance One Fund to another fund still it is deemed to be received by the employee deemed to be received by employee guys and in the future you enjoy the exemption for entire 30 lakh because for this 10 lakh he has already paid tax and this 20 lakh is contributed to RPF for which examp assumtion is available okay same way if employer has contributed to NPS MPS employer contribution to NPS has to be included under the salary head then deduction is available under Section 8ccd for both employee contribution as well as Employer contribution but first employer contribution has to be included under salary head literally is NPS given to employee directly no it is contributed to NPS account which is opened in the name of employee even in that case it is deemed to be received by him and we will include it in the salary head okay now sir one quote I have given here the secret of to getting HED is to get started guys so I know definitely you guys would have started with your preparation and all but guys you have to push yourself hard now so very little time is left for your exams you know lot of competitions are there you can see here and there next to you your friends are really preparing well so you guys have to stay highed so please make sure that you guys are dedicating more time push yourself to give more and more time towards your preparation and definitely you will be able to do well guys clear and whenever you feel sir I'm wasting time I'm not able to focus on my studies remember one thing guys the time what you're wasting you making your parents to work long more longer just remember that the more you waste the time here the more longer you are making your parents to work just remember remember this one thing that will make you have that fear yes I have to study it clear yes okay section n income deemed to AC are arise in India sir if any income is earned in India it is in Indian income deem to ur or arise Aur or arise is nothing but earned guys deem to ur or arise in India see in section n they have list out few items where they clearly told the following income is always an Indian income it is deemed to ur or arise in India it may look like earned outside India received outside India and all but we are telling it is deemed to ur or arise in India means whoever is earning this kind of income it is always taxable for them in India guys so which are those we'll quickly go through the following income shall be deemed to acre or arise in India any income uring or arising to an assass in any place outside India whether directly or indirectly through or from Business Connection in India so what is Business Connection in India if any nonpresent is having any business Act acity in India but through an agent he is not coming and doing business here he's carrying he's outside India but doing any business activity in India through an agent in that case that non-resident is having Business Connection in India and whatever is earning in India through this business connection is deemed to ur or arise in India and it is taxable here but only to the extent what is it earned in India from business activities for example guys assume Jeff bizos is having Business Connection in India he's carrying out some business activi through an agent in India he has totally earned 100 CR in the previous year 23 24 but through business activity in India he has earned only 10 CR so how much is deemed to acre in India only 10 CR not whatever he is earning not whatever he is earning and we have certain exceptions also for this next through or from any property in India or through or from any asset or source of income in India or through the transfer of capital assets which in India guys this is as per section 911 now if you have any asset or property situated in India and if you are let out and if any income is earned in India so source is where in India so income is deemed to acur or arise in India you might be receiving it in foreign currency outside India whatever it is it is always deemed to aiz in India same way sir what if I sell any asset or property in India the capital gains is taxable in India guys because it is deemed to acree or arise in India because the source the asset or property is in India India you would have sold it to a customer outside India you would have entered into agreement outside India you would have sold it in foreign you would have collected the money in foreign currency doesn't matter the source is in India it is always deemed to occur your rise in India then any salary paid for the services rendered in India is always deemed to acre in India even assume we have I have served my employment service in India but now for two months I have gone outside India for which I am getting the salary for rest period or leave period also still it is considered to be income deemed to acre in India sir I have rendered my employment service in India now I am getting pension but I I am settled now in us or UK there I'm getting the pension still pension income is taxable under salary head and it is deemed to acreise in India why because pension what I'm getting is due to the employment which I have rendered in India so if employment service is rendered in India whatever salary income I getting including pension income what I get after retirement is deemed to occur your AR in India next salary payable by central government for a citizen who is rering service outside India but for an Indian government yes always deemed to ur your as in India but for them allowances and perquisites are kept exempt but still whatever salary is paid by Indian government for a citizen outside India who is rendering services to Indian government like Indian embes operating outside India or spy who is working as a spy so in that case for them even though they're rendering service outside India but they are giving it for whom Indian government who is paying salary for them Indian government it is deemed to acre or arise in India next dividend paid by Indian company even if it is paid outside guys still Indian company they're having operations where in India so whatever dividend declared and paid by them is always deemed to ur or arise in India then interest royalty and fee for Technical Services I have covered it by way of single chart here guys interest is paid when when we have borrowed the loan and Loan whatever we have borrowed where is it used for what purpose it is used is important then when do we pay royalty when we have taken any patent rate copy rate or trademark whatever in return we may pay royalty then when we will pay fee for Technical Services whenever we have ailed any technical or Management Services in return we pay fees and where we have used this Services is important clear and for what purpose now guys so who has earned this income is non-resident that is either in the of Interest royalty of fees Whoever has earned the income is a non-resident now who is the payer we have to see if the payer is a government always for the non-resident it is the income deemed to agree or arise in India for the non-resident whoever is earning it or receiving it for them it is always deemed to occre or arise in India sir so whatever possibility we are checking here is the payer so what if the payer who is paying the interest royalty or fees is the resident in India but the recipient is non-resident in that case generally taxable guys so for non-resident it is deemed to be acre or arise in India but in the following two cases it is not deemed to acre or arise in India hence it will not be taxable so when is it if money borrowed and used for technical or or technical or royalty services are utilized for the purpose of business or profession carried out outside India means if the money borrowed or the services are used outside India for business or profession then they're telling no it is not income deemed to acre or in India is not taxable for non-resident same way if money borrowed and used or Technical Services or royalty services are utilized for making any income from any Source outside India whatever money I have borrowed I investing outside India to make money there in that case also whoever is receiving that amount for them it is not deemed to acree or arise in India it's not taxable now so what if the payer is a non-resident payer also non-resident receiver also is non-resident in that case it is taxable only in the following two cases if money is borrowed and used for the purpose of business or profession carry down in India or in case of technical or royalty Services it is it is utilized for the purpose of business or profession in India or making income from any Source in India in this two cases only it will be considered as deemed to occur your arise in India for a non-resident and it is paid by whom non-resident so is it taxable in India sir yes guys it would be taxable then the last Point any sum of money paid by a resident Indian to a non-corporate non-resident or a foreign company means guys resident is paying to non-or non-corporate means other than company non-corporate nonresident non-corporate non-resident or foreign company so resident is paying more than 50,000 without consideration without consideration to whom non-corporate non-resident or foreign company okay so you can see here income arising outside India being any sum of money paid without consideration by a resident Indian resident person to a non-corporate non-resident non-corporate means other than company or a foreign company would be deemed to occur or arise in India if the same is chargeable to tax under Section 56 to10 that is gift taxation if agre some exed 50,000 guys simple if a resident assume outside India okay it is outside India paying more than 50,000 to a non-corporate non-resident or foreign company then you check for the recipient is section 56 to10 applicable yes only if the value of the gift is more than 50,000 in that case for them it is income deemed to acre or arise in India as per section 9 and accordingly taxable and accordingly taxable in India so simple for the recipient whoever is receiving the money without consideration we have to check whether section 56 210 is applicable which is a part of income from other sources if s for them whatever they are getting is income deemed to occre or arise in India as per section 9 and ends taxable guys ends taxable so this is all about chapter two guys where we have covered residential status as per section six and along with scope of total income as per section five read with Section 7 and n clear yes fine guys so now we will revise Chapter 2.1 which talks about the tax rates applicable for assessment year 2425 or the previous year 2324 now before we start with sir where the rates would be given income tax is to be charged at the rates fixed for the Year by annual Finance act but will all the rates be given there no there is something called as special rates applicable on special income which will be given in income tax act itself now the rates of the tax depends on the category of the person that is whether the person is an individual HF company partnership fir yop Bo like that then the amount of income what they have earned then residential status of the person also because for residents there are some benefits given like increased basic exemption limits and all then age of the individual also is sometimes important then the type of income now coming to type of income there are two categories of income guys so whenever have asked you to calculate tax tax is always calculated on total income first check whether total income includes any special income or not so if total income includes any special income then calculate the tax on special income first so what is the rates applicable for special income it is always the special rates which are given under the respective section in income tax act itself and whoever is earning the special income the rate will always be special guys irrespective of the scheme that they are opting for and irrespective of the category of residential status okay then coming to normal income any other incomes which are not taxable at special rates are called normal income which are taxable at normal rates and normal rates will always be given in annual Finance act and this depends on the category of the person it can be slab rates or it can be flat rate then coming to that rates also whatever normal rate is there it also depends on the scheme opted by the assess whether he following default scheme or whether he is following optional scheme the rates are different then sir what are the special incomes so we spoke about the special income what are the special incomes I have just given a note here we will discuss all this in detail long-term capital gains taxable under section 112 at 20% Then long-term capital gains taxable at 10% under Section 112a then short-term capital gains at taxable at 15% under Section 111a then cash income at 30% under Section 115 BB now there's a new section also winnings from online games which is taxable again at 30% as per section 115 BBJ these are some special income tax about special rates guys we'll cover all this again in detail now so now we will start with the tax rates applicable but before this I will just discuss the format of calculating the tax then we will come back to the tax rates yeah this is the format which we have to use or which we have to follow whenever we are calculating the tax and guys one disclosure one clarification wherever I would have given the format highlighted in green color so this is the format which is given in the law which you guys have to strictly follow please don't even interchange the positions guys okay wherever I have given any format which I have highlighted in this like this in the green color please follow the same even for your exam purpose okay now as I told you whenever there is a total income we have to calculate tax on it first check whether total income includes any special income or not if s first calculate tax on the special income by applying the special rate and the remaining income is taxable at normal rate which can be either slab rate or flat rate depending upon the category of the person and the scheme optained by them then we will add up both we get something called as gross tax liability gross tax liability and if assess is eligible for a rebate rebate is available only for Resident individual who totally income is within certain limit if the assess is eligible for rebate please reduce it and rebate is always before sarch charge and SS SK see first of all rebate will not be available whenever sarge is applicable because Sarge and rebate will not work simultaneously together but I'm just telling you rebate should always be provided before such charge and sis not after sis please be careful okay next rebate if available we will provide it then we get tax after rebate then if at all if there is any search charge applicable to the asso SAR charge is not always applicable if whenever the total income of the assess is crossing the certain limit like 50 lakh 1 CR 2 CR 5 CR 10 CR sear charge would be applicable in that case add SAR charge sub charge is not on income it is always on gross tax liability so whatever is the rate of SAR charge it should always be applied on gross tax liability guys so assume that 10% is the surcharge rate we will apply 10% on what figure this figure please be careful and rebate and SAR charge will not be applicable to the same person in the same year because rebate is available only when your total income is within 5 lakh or 7 lakh where S charge is applicable when the total income of the ass is more than like 50 lakh 1 CR 2 CR 5 CR 10 CR guys okay then once we add S charge we have to add whatever figure we have got that is gross tax plus sear charge whatever figure we have got gross tax plus SAR charge on that 4% health and education says always guys always for all the ass irrespective of their income means any person who is liable to pay tax always has to pay 4% solds on his tax sir what if the such charge is not applicable then on the gross tax only we have to calculate 4% say Sir what even after claiming rebate there is some small amount of tax to be paid by the assc then on that tax whatever after claiming rebate whatever figure is there on that we have to calculate 4% says always so in simple whenever a person is liable to pay tax we should always apply 4% s guys once we do all this we get final tax liability of the person which which he has to pay to the government if he has already paid something in the form of TDS TCS Advanced Tax and all we will reduce it and only the balance he will pay or if you already paid excess tax then he can claim the remaining whatever excess he has paid as refund and if the person has not filed the return within due within the time if he has not paid the advanc tax even though he's liable to pay then he will be liable to pay some interest under Section 234 a b c and all for this tax liity whatever we have got we have to add interest and pay that to the government before filing the income tax returns guys clear so this is about the format now what are the rates applicable for each category of assesses we will see guys you have to be extremely attentive here very very important chapter why because there are lot of changes which has been brought in this chapter including the tax rates rebates sear charge everything so please be very careful when your guys are learning this chapter very important I'm expecting question on this especially in May exam because the tax everything they have altered first I will start with it guys previously there was something called as old scheme and new scheme old scheme and new scheme agree yes now the old scheme has now been made as what optional scheme and new scheme has been named as default scheme whatever was there as new scheme previously now in the finance act 2023 they have changed the name as default scheme whereas whatever old scheme was there now it has become optional scheme so in simple it is assumed that ass will be following default scheme if it doesn't want to follow default scheme they can then he can opt out of that and follow what optional scheme and follow optional scheme hope you guys have got an idea so because there are lot of changes which they have brought through Finance act 2023 especially in this tax rate chapter I will be mentioning what on all is that guys first previously whatever news scheme was there previously under Section 115 BAC this was applicable only for individual and HF but now they have made it open for others also means all the laborate SES are a eligible for this default scheme which is now called as default scheme so what is it we will see individual h of EOP Boi and artificial judical person in simple I call them as slabbery guys can pay tax at concessional rates under default tax regime under Section 115 B so previously this was there only for the individual HF now they have made it open even for aop Boi and artificial judical person however they have to foro certain exemptions and deduction under this regime means if they are following 115 bacc default scheme the tax rates are kept lower no doubt in that but they have to foro certain exemptions and deductions so which are those exemptions which are those deductions I would be covering it headwise guys so along with the each head of income what is not available under default scheme I will also be covering them at the end of each hit clear just so then alternatively if he doesn't want to follow means if this laborate I will use the name laborate s for all this individual HF EOP Boi and artificial judical person if this laborate assy doesn't wish to follow default scheme then they can opt out of default scheme and they can follow regular provisions of the ACT which we call it as optional regime where the tax rates are given where in the annual Finance Act whereas if you are following default regime where the tax rate is given section 115 BAC of income tax act okay now under default tax regime what is the tax rate so for any individual whether they are resident or non-resident every HF aop Boi artificial jic person irrespective of their age and residential status this are the tax rates guys what is it total income from all the source except special incomes guys because for special income it is always special rate irrespective of the scheme you are following so these are the rates applicable for normal income in simple so what is the rate sorry up to three lakh tax rate is nil which we call it as basic exemption limit then from 3 lakh to 6 lakh 5% then 6 lakh to 9 lakh 10% then 9 lakh to 12 lakh 15% 12 lakh to 15 lakh 20% Then more than 15 lakh 30% there is no 25% rate please be careful it is easy to remember for every 3 lakh increase in income the tax rate will increase by 5% guys but above 15 lakh it straight away 30% there is no 25% rate please be careful with it clear yes guys next tax rates prescribed by annual Finance act for optional tax regime that is if the slab rate ass doesn't wish to follow default regime then they can opt out of default tax regime and follow what optional tax regime okay in that case any individual resident or non-resident every h of aop Boi artificial jic person if their total income excluding special income means in simple normal income if it is up to 250 which is basic agential limit nil then 2 lh50 to 5 lakh 5% 5 lakh to 10 lakh 20% more than 10 lakh 30% and please be careful guys all these are slab rates not flat rate for example if my income is 12 lakh how do we calculate the tax sir up to 2 lakh 15 mil 2 lh50 to 5 lakh 5% which comes to 12,500 then 5 lakh to 10 lakh 20 % which comes to 1 lakh that is 5 lakh into 20% Then more than 10 lakh how much is there 2 lakh that is my I told my income is 12 lakh so from 10 to 12 how much is the difference 2 lakh on that how much is the tax rate 30% so which comes to 60,000 C we have to add all this we will get gross tax liability guys hope you understood yes so next if the assass is a resident individual who is a senior citizen means aged 60 or more at any time during the previous year but less than 80 years in that case basic exential limit is three lakh guys up to 3 lak no tax 3 lakh to 5 lakh 5% 5 lakh to 10 lakh 20% more than 10 lakh 30% next sir what if the individual is a resident aged above 8 years at any time during the during the previous year we call them as super senior citizen s if you have crossed 8 Superman sir you now that is how it is there because the life expectancy has gone very less now people with 30 40 50 60 years only are like dying in that case if you have lived in India for more than 80 minutes we are treating you as super senior citizen and what is the basic Asen limit applicable 5 lakh means there is no first laab at all so up to 5 lakh nil 5 to 10 20% there is no 5% slab then more than 10 lakh 30% straight away now sir how do we check it guys if the SSC has tested 60 or 80 at any time during the previous year on any day is eligible for higher basic essential limit and cbdt has also given the clarification telling if assassi that is resident individual if they are celebrating their 60th or 80th birthday 60th or 80th both simultaneously cannot happen either of the two if a resident individual if they are celebrating their 60th or 80th birthday on 1st April of the assessment year still there eligible for a higher basic exential limit of 3 lakh or 5 lakh Guys as the case may be clear means because they would have completed 60 or 80 on 31st so still they are eligible for clear up so on any day in the previous year or even on 1 April of assessment year if they have celebrated that 60 or 80th they're eligible for higher basic agen limit but please be careful one thing to note here is this thing is not there under default so under default even if you're a super senior citizen or senior citizen what is the basic essential limit it is always 3 lakh there is no I basic essential limit given under default regime only one rate for everyone guys and even here under optional regime it is only for Resident individuals who is age 60 or more or 80 or more so what about others like HF aopb and all for them basic exen limit is always 2 lh50 2 lh50 2 lh50 is that clear yes next for other categories of person for other categories of person the tax rates applicable for other categories of ass are as follows partnership firms LLP and local Authority they are taxable at a flat rate of 30% on their normal income guys because even see for anyone whoever is having special income it is always special rates guys so total income excluding special income is always taxable at flat rate of 30% means even if they have 100 rupees income they have to pay 30 PES in that so what if they have 1 lakh 30,000 so what if they have 10 CR 3 CR so whatever is their income 30% of that they have to pay as tax which we call it as flat rate not slab rates okay then coming to companies for foreign company always the tax rate is 40% guys coming to domestic company they have optional scheme not default optional scheme now if the domestic compan is opting for an optional scheme available under Section 115 baa then 22% is the tax rate if the domestic company is opting for optional scheme eligible under Section 115 B bab it is available only for domestic manufacturing company which has been established on or after 1 October 2019 but before 31st March 2024 that is the end of our previous year so in that case 15% is the tax rate but if they are following any of this optional scheme then they have to foro certain exemptions and deductions guys but this optional schemes are not covered for you te at inter level in detail they just given the rates that's all so you need not worry much about this now no sir domestic companies are not opting for any of this optional scheme then we have to check what was their turnover in the year 2122 in the year 2122 if it is within 400 cror that is less than or four less than or equal to 400 CR in the previous year 2122 then in the previous year 23 24 tax rate is 25% to see what is the tax rate applicable for previous year 2324 we have to check the turnover of which year 2122 and it should be within 400 CR less than or equal to 400 CR then the tax rate is 25% if not 30% if not 30% guys if the question is silent about the category what they are following and the question is silent about the turnover in the previous year 2122 always apply 30% for domestic company then coming to Cooperative Society even for them slab rate is applicable but different slab rate there is no basic AG limit for them up to 10,000 10% then 10,000 to 20,000 20% more than 20,000 30% straight away then for them also Cooperative societies also there is some optional scheme available what is it we will see tax rate in case of manufacturing Cooperative Society resident in India they should be resident in India if they want to follow optional scheme set up and registered on or after 1 April 2023 that is the beginning of our previous year and commen US manufacture of article or thing before 31st March 24 that is before the end of our previous year opting for concessional tax regime under Section 115 Bae which is a new one guys what is the tax tax rate 15% of the income which they are getting from manufacturing any other Cooperative Society who is resident in India can also opt for optional scheme which is available under Section 115 bad bad but they are not manufacturing because they're if they're manufacturing for them Bae is available sir I am a resident Cooperative Society but not engaged in manufacturing then you can opt for for optional scheme available under Section 115 bad what is the tax rate 22% 22% of their income and here also total income means excluding special income guys okay then not Cooperative Society resident in India can opt for consal rate of tax under Section B A or B B as the case may be subject to certain condition means they also have to foro certain exemptions and deduction what exactly is bad Bae what they have to foro and all is not a part of your syllabus this rates you be careful with it they may ask in McQ that's all Maximum okay now we have seen till now what are the tax rates applicable and for domestic Company please be careful guys this two we call it as optional scheme there is nothing called default scheme and for domestic company if they are not opting for optional scheme it is understood that they're following regular scheme where the rate is either 25% or 30% 25% is like for a small companies whose turnover in the year 2122 is like less than or equal to 400 CR if not always 30% clear and if they are following this regular provision they need not forego any exemptions and deductions okay so we have seen what are the normal rates applicable normal rates or we call it as general rate or base rate gross rate everything is one and the same guys C yes now special incomes what are special income and what is the rate applicable for it we will see here first I have given in the chart where the capital gain special incomes capital gains special income first if there is a long-term capital gain sir how do we decide whether a gain is a long-term or shortterm depends on the period of holding guys period of holding where there are 12 months 24 months 36 months for different categories of assets which I would be covering in capital gains head now assume the assc has long-term capital gains on the transfer of equity shares unit of equity oriented fund or units of business trust which in short I call them as EFT e for Equity shares f for Equity oriented fund fund f for fund then t for trust that is units of business trust in short I call them as EFT guys okay what is the tax rate sir as per section 112a 10% is the tax rate but in excess of 1 lakh for example assume I have a long-term capital gain on the transfer of equity shares three lakh so entire three lakh has to be included in total income while calculating total income under capital gain set but while calculating tax we have to 3 lakh minus 1 lakh because up to 1 lakh it is not taxable remaining 2 lakh would be taxable at 10% clear so please be careful guys any long-term capital gain under Section 112a fully first should be included in the calculation of total income under the hit capital gains but while calculating tax up to 1 lakh is not taxable in excess of 1 lakh whatever is there is taxable at 10% Okay then if there is any long-term capital gain on the transfer of any other assets like land Building jry anything then it is covered under section 112 and it tax rate is 20% on the entire amount here there is no benefit of reducing one lakh and all okay next coming to short-term capital gain if there is a short-term capital gain on the transfer of EFT guys whichever we saw in 12a same thing 111a if there is a short-term capital gain on the transfer of EFT then the tax rate is 15% as per section 111 on the entire amount here also we cannot reduce one lak 15% on the entire income but for both of this there is a condition telling Securities transaction tax has to be paid Securities transaction tax has to be paid only then we will treat them as special income and taxable at special rate sir what if there is a short-term capital gain on the transfer of any other asset like land Building jewelry we will always treat them as normal income guys it is not special income it is just a normal income taxable at normal rate so what is normal rate whatever we discussed before this depending upon who has earned it depending upon who has earned it okay next hope you guys are clear with this yes so please be careful so how do we classify the gain as longterm or shortterm and all it depends on period of holding so when the asset is transferred that is capital asset we have to check how long did the assess he hold it before selling it if he has seld it for more than 12 or 24 months or 36 months depending upon the category of the asset we call it as long-term and on the transfer of that we have to compute what long-term capital gain same way if the ass before transfer has held it for less than 12 months 24 months or 36 months as the case may be then we call that asset as short-term capital asset and when he has transferred it we have to compute short-term capital gain and all short-term capital gain is not a special income only short-term capital gain on the transfer of EFT is special any other asset is always a normal income it is taxable at the rate applicable to the ass as for the scheme obtained by them okay next 115 BB winnings from lotteries crossb puzzles races including arace card games and other games of any sort gambling or bitting of any form or nature it is always taxable at 30% guys whereas now they have added one new section which is important 115 BBJ winnings from online games which is Al again taxable at 30% and both of this are taxable under income from other sources income from other sources when I go there again I will touch this then coming to section 115 BBE unexplained money in investment expenditure Etc deemed as income under Section 68 69 69 a b c d which is nothing but undisclosed income which we already covered this incomes are taxable in the year in which it is detected by the income tax department yes sir at what rate what is the tax rate 60% as per with Section 115 BBE and you can see I have given more explanation here unaccounted money explained unexplained money investment expenditure and all would always be taxed at 60% and for it sarch charge irrespective what is your income sarch charge is 25% and including says 4% what is the effective tax rate 78% and please be careful guys 25% has to be applied on what 60 because S charge is always on gross tax and here gross tax is how much 60 so whatever you get for that we have to add 4% okay so it is like 60 plus 60 into 25% whatever we get both put together for that we have to add 4% the effective rate would be 78% hope you understood clear yes for example assume you have 100 rupees undisclosed income so on that 60 Rupees is the tax then on 60 rupees 25% would be 25% would be what Sarge which comes to 15 rupees 15 rupees so now how much you got 75 on 75 4% is the sis on 75 4% is the say which comes to 3 rupees so what is the actual effective tax rate it is like 78% effectively end up paying how much 78 guys including s and sear charge and Sir can I Avail the benefit of basic agen limit or can I claim any expenditure can I adjust any loss against this no against undisclosed income you cannot claim basic agen limit you cannot claim any loss or you cannot claim any expenditure straight away whatever is the value will be taxable as income and the rate is 60 or the effective rate including sech charge and say is 78% guys then even one more note I have given you that is against the special incomes you cannot claim any chapter 68 deductions guys against special incomes whether it is capital gain special income or the Casual incomes or even 115 BBE you cannot claim any chapter 68 deductions clear yes and against the cash ual income you cannot even adjust the basic exemption limit you cannot even adjust basic exemption limit sir I have only 2 lakh winnings is it straight away taxable I am an individual sir yes 2 lakh is straight away taxable at 30% you cannot claim any expenditure you cannot claim any deductions you cannot even adjust your basic essential limit against what casual incomes both covered under BB as well as BBJ whereas capital gain special income you cannot claim any chapter 6A deductions but while Computing capital gains yes you can claim certain expenditure like cost of acquisition cost of improvement expenses on transfer and all you can claim sir can I adjust my basic agential limit against capital gain special income yes provided you are a resident individual and HF only then you can adjust the basic agen limit in any other case you cannot adjust basic agential limit against capital gains special income guys I will cover this again when I go to capital gains chapter you need not worry so in simple guys against cap uh against to any special income we cannot claim chapter 6A deductions that is from section 8C to ATU agree yes then against casual income and undisclosed income you cannot claim any expenditure you cannot even adjust your basic exemption limit you cannot even adjust your basic exemption limit and against undisclosed income you cannot adjust any loss also any loss also even against casual income you cannot adjust any loss sir against capital gains income can I adjust any loss Yes means only if it is of same nature only if it is of same nature that is long-term loss can be adjusted against long-term gain same way shortterm Capital loss can be adjusted against short-term gain or long-term gain only this is possible clear so accept this whether against casual income or against undisclosed income you cannot set off any loss guys any loss sir where is this income taxable under which head even this is taxable under ifos only if it is detected in the year in which it is detected it will be taxable under the head income from other sources that is undisclosed income C again I will try to cover these points when I go to the respective topics guys so I have given some images Al what and all is covered here okay now sir this rates are like for for every s yes Whoever has so and so income which are special in nature for them the tax rate is always special whether they're following default scheme optional scheme whatever it is the rates will always be same guys so whenever the total income includes any special income first calculate the tax on special income then on the remaining income which you consider as normal income sir what if the question they have not given they have simply mentioned because has a total income of 20 lakh they not told what the 20 lakh includes if the question is silent about special income assume the entire income as normal income guys assume the entire income as normal income is that clear yes next rebate next is rebate rebate from income tax to a resident individual only for Resident individual it is available under Section 87a rebate under Section 87a is available only to resident individual whose total income is below certain limit when is it under default regime important guys again a new thing previously it was different but now they have changed it through Finance act 2023 rebate to resident individual payable paying tax under default regime under Section 115 B is if total income of such individual does not exceed 7 lakh means if it is up to 7 lakh less than or equal to 7 lakh the rebate shall be equal to how much 100% of the actual tax liability are 25,000 which whichever is less means whatever is this tax liability or maximum 25,000 guys or maximum 25,000 whichever is less so in simple I will just show the calculation as it is a new provision I'm just helping you in the calculation guys seeo assume um Mr Rago age 26 years and resident in India has a total income of 650,000 and is following default tax regime how do we calculate the tax come on default regime up to 3 lakh nil I'm straight away giving the numbers up to 3 lakh n 3 to 6 lakh what is the tax rate 5% so amount comes to 15,000 then 6 lakh to 9 lakh it is 10% but this s has only 650,000 so 50,000 is taxable at 10% hope you guys are able to okay yes next 5,000 so what is this tax liability 20,000 so rebate how much actual tax liability or maximum 25 whichever is lower here what is the actual tax liability 20 ,000 20,000 I call this as gross gross tax guys okay f is available yes so what is the final tax payable nil so should we add SS and all no and please be careful rebate is always before SS students May commit Mistake by taking it after SS please be careful guys if by chance if this figure is positive assume 5,000 or 2,000 something we have got for that we have to add four per and pay to the government clear yes but here as the tax is nil you need not show so how much is say and all because 4% of nil or zero will always be a zero only yeah yes guys next this is again important something uh something related to or similar to relief they have given here what is it sir if total income of such individual exceeds 7 lakh the rebate would be as follows what is it step one total income minus 7 lakh that is you find out the difference between 7 lakh and total income then compute the income tax liability on the total income as usual whatever calculation you do then if B is more than a rebate under section 87 a would be B minus a guys sir how is this again this is also a new guys please be careful I feel somewhere that all this are important from exam point of view yeah Mr P he is 35 years and a resident in India has a total income of 75,000 sir his income is more than 7 lakh is he still eligible for rebate yes now they're telling yes it is available but please be careful this this calculation is only under default regime this is not there under optional okay compute his tax liity under default regim fine guys first so as his total income is 7 lakh more than 7 lakh you can apply the steps total income in excess of 7 lakh what is the difference 7 L5 minus 7 lakh 15,000 next calculate tax on 75,000 do it by way of like working better so up to 3 lakh nil then 3 lakh to 6 lakh 5% which comes to 15,000 which comes to 15,000 yes so next 6 more than 6 lakh up to 7 l50 see more than 6 to 9 lakh it is 10% but here ass's total income is only 715,000 so it is like 1 15,000 into 10% so 1 15,000 into 10% 11,500 so 26,500 26500 is what gross tax liability GTL gross tax liability sir is he eligible for a rebate yes how much now gross tax liability is 26500 we will go here so I will just take the exact figure 26 500 26 500 okay now since B is more than a this we will name it as B and this as a so since B is more than a whatever is the difference B minus a B minus a how much is that 26500 - 15,000 which comes to 11,500 is it a rebate yes sir available so from 26500 we have to reduce it so I will just write 26500 here 26500 from that 11,500 so what is the net you will get 15,000 for that you will add 4% says and pay the tax for that you will add 4% says and pay it to the Govern government hope you guys got it this is only when the total income is more than 7 lakh and Sir should I check it for any amount no guys I just tested and verified it so only if the total income is more than 7 lakh but within 728 that is 7 lak 28,000 apply this step apply this step if it is more than 728 even if you apply the amount of rebate will be n that means there will be not there won't be any amount of rebate available so it's better if the total in in of a resident individual under default regim is more than 7 28,000 straight away do normal calculation you need not do this step calculation you need not do the step calculation do something like this straight away but rebate will not be available rebate will not be available so in this case so what is the rebate available for him so 11,500 remaining 15,000 we have to add 4% say for this and pay the final balance to the government guys clear hope you guys got it so try to remember that some it's actually like 7ak 27,700 change but you need not exactly remember the figure at least 728 you remember if it is more than 7 lakh up to 7 lakh 28 apply this apply this sir what if it is less than 7 lakh then apply like this whatever we did first sir what if the total income is more than 7 lak 28,000 then rebate is not at all available straight away do normal calculation straight away do normal calculation okay guys rebate to resident individual paying tax under optional tax regime here it is available only if the total income is up to 5 lakh assess is a resident individual whose total income is up to 5 lakh what is the amount of rebate sir actual tax liability are 12,500 whichever is lower please be careful under optional scheme it is different under default regime it is different and here rebate is available only if the total income is up to 5 lakh sir what about if it is more than 5 lakh should we do this step calculation under under optional no that is not there under optional only under default please be careful okay some common points for both the rebates the amount of rebate should always be calculated after gross tax liability guys that is before health and education says please be careful with it the step but rebate is not available against the tax payable under Section uh that is long-term capital gain taxable at 10% under Section 112a that is long-term capital gain on the transfer of EFT so if there is any long-term capital gain covered under Section 112a which is taxed at 10% in excess of 1 lakh against that tax there is no rebate available there is no rebate available let me just give simple example for this guys assume the total income the total assume the ass is following default scheme the total income of the ass is like six lakh 6 lakh okay in that we will see the breakup long-term capital gain under Section 112a is 1 5 lakh remaining is normal income which is 4.5 lakh guys remaining is normal income which is 4.5 lakh so how do we calculate tax now on this 1.5 lakh minus 1 lakh into 10% which is 50,000 into 10% which comes to 5,000 which comes to 5,000 yes sir and on normal income up to 3 lakh nil then 3 lakh to 4.5 5% % 3 lakh to 4.5 that is 150,000 taxable at 5% so I will take like this better 4.5 lakh minus 3 lakh into 5% which is 150,000 into 5% guys which comes to 7,500 7,500 now what is the gross tax liability of the person GTL 12,500 what is the cross tax liability of the person 12,500 sir is he eligible for rebate yes assuming is the resident individual following default scheme total income is within 7 lakh is he eligible for rebate yes now how much rebate you can claim actual tax liability or 25,000 whichever is more but here how much rebate he can claim guys come on you answer me come on tell me how much reate you can claim is it 12,500 no sir only 7,500 sir why not this 5,000 against 5,000 re bate cannot be claimed under Section 87a even if you're following optional scheme also same story only whatever tax is payable as per section 112a on that we cannot claim rebate under Section 87a even though assess is eligible only against tax payable under Section 11 12 year you cannot claim so that means you can claim 7,500 Year yes remaining is how much 5,000 for this 4% you have to add s and pay to the government hope it is clear yes good next Sarge one more important thing sub charge is not always applicable guys please be careful it is applicable only if the total income of the ass is crossing certain limits that is 51 2 5 10 crores like that okay so when is it applicable please be attentive sir first of all whenever sarch charge is applicable it is calculated on what figure gross tax liity not on income it is on gross tax Li see whatever rates we discuss normal rate or special rate it will always be applied on income figure and once we get we have to add both on that we have to apply for example guys assume SSC has both special income and normal income first we have to calculate tax on special income okay sir then we calculate tax on normal income okay sir we will add up both what do we get gross tax liability assume the assess is liable to pay suchar charge so SAR charge at 15% let me take 15% 15% has to be applied on which figure sir this figure that is gross tax liability clear so randomly I'm taking assume tax on special income is 2 lakh tax on normal income is like around 30 lakh cross tax liity how much you will get 32 lakh so Sarge 15% has to be applied on how much 15% on 32 lakh on 32 lakh guys and after this whatever sub charge you get assume the tax liability you get after such charge for that you have to add 4% health and education 4% Heth and education say whatever tax you get after such charge which I already explained in the format I'm just covering it again fine guys now we will see sarge is an additional tax payable over and above the income tax but still it is a part of income tax only but this is targeted for the people who have huge net worth or income R okay sarge is lied as a percentage of income tax and here percentage of income tax is nothing but gross tax G okay thank guys category of person individual HF EOP Boi and artificial judical person pays tax under default tax regime means the slab rate who whoever is following default tax regime when they are liable to pay such charge if the total income is up to total income which includes special income also okay if total income is up to 50 lakh no surcharge guys if it is more than 50 lakh but up to 1 CR then 10% is the S charge if it is more than one CR but up to 2 CR then 15% is the such charge flat so for example my income is 1 CR 10 lakh in that case flat 15% is a charge rate not slap okay next if the total income is more than 2 CR you have to exclude few special incomes okay and please be careful this is only for Sarge purpose investment based income I will call it that investment based income means all the three capital gain special incomes that is longterm as well as shortterm plus dividend income also guys please be careful dividend is not a special income for tax purpose tax rates purpose but only for surcharge purpose they're treating it as dividend so from the total income remove all this incomes that is capital gain special income and dividend income whatever figure you get if that is more than 2 CR then whatever tax you calculate on that the sarge rate would be 25% then on the special incomes whatever you tax you calculate on that the sarch charge rate is 15% the sarch charge rate is 15% bit confused but I will explain them including uh along with the illustrations then sir what if the total income is more than 2 CR but including all the special incomes that is capital gain special income and dividend income I repeat once again dividend income is not a special income for tax rate purpose it is always taxable at normal rate but only for Sarge purpose it is treated as special in simple investment based income Skies okay now that is either capital gains are dividends okay sir total income is more than 2 CR but including all this sir if I exclude include them then total income is not more than 2 CR in that case whatever tax you calculate on that the surcharge rate would be 15% clear sir let me understand with an illustration sir yes guys fine quickly please look into it I have covered different scenarios if it is if the total income is within 50 lakh guys no search charge at all obvious has to pay tax but no S charge okay see the first illustration short-term capital gain under Section 118 30 LH long-term capital gain under section 112a 25 lakh other income means normal income 40 lakh total income is 95 means more than 50 lakh within one CR yes what is the sarge rate 10% so calculate tax on special income tax on normal income you get gross tax on Cross tax what is the sarge rate 10% same way next sir shortterm gain L under Section 1111a 60 long-term gain under section 112 65 then other income 50 lakh total income is 1.75 CR means more than 1 CR but up to 2 CR in that case again calculate tax on special income at whatever rate is applicable that tax on normal income then add up both on that what is the sarge rate 15% not 10% 15% okay sir next third one dividend income see taxable at normal rate but only for capital gains special okay dividend income 54 lakhs long-term gain g under section 112 a 55 lakh and other income 3 cror total income is how much 4.09 crores so you check excluding this two special is it more than 2 CR yes sir so other income is how much 3 CR so that means is it more than 2 CR yes so in that case what will be the sarge rate please be careful guys first calculate tax on dividend income and long-term capital gain there is a different way of doing it guys if you want to refer to all this illustration I have solved all this illustration in my regular class which I have also published in YouTube channel so please watch into it the third video in tax calculations where I have solved all this illustrations if you literally want to understand all these calculations like how we calculate the tax stepwise sir better watch that video but if you already done if you are my student if you already watched it in or if you already attended my class hope you guys will already be knowing it just understand here just recap it is that's all okay because especially when dividend income is there the calculation is bit different okay guys on whatever tax you have calculated on dividend income and long-term capital gain the sarge rate is how much 15% whereas on the other incomes whatever tax you have got what is the sub charge rate it is 25% that is whatever tax you have calculated on the income of 3 CR okay sir next sir my total income is 2.25 CR but if I exclude special incomes then it is less than 2 cror sir it is less than 2 cror in that case what should I do then we have to apply straight away 15% you can see guys total income is more than 2 CR but including all the special incomes if I exclude special incomes then it is coming to how much only 1.10 CR Which is less than 2 CR where is it following sir this last category this category clear yes s so in that case what is the surcharge rate so first calculate gross tax including tax on special income normal income everything on that the charge rate is 15% guys okay next next you can see the total income is 7.15 CR more than 2 CR then you can see special income is 50 and 65 so other income is how much 6 crores is it more than 2 CR yes sir then what is the rate applicable separate rates so what are those separate rates sir first calculate tax on special income on that sarch charge rate is 15% whereas whatever tax we get on normal income on that what is the search charge rate 25% clear yes sir and this is please be careful total income including special income or even if you exclude it even if you exclude other income you can see it is more than 2 CR so on whatever tax we calculate on normal income excluding capital gains on dividend income what is the sarge rate 25% on special income whatever tax we calculate what is the charge rate 15% fine sir next now what if the same set of assesses that is laborate s if they are following optional scheme means they're shifting out of default tax regime and they are following what optional scheme they're shifting out of default scheme and they following which scheme optional scheme so what is the search charge rate up to 50 lakh no sarch charge more than 50 lakh but up to 1 CR 10% more than 1 CR up to 2 CR 15% then more than 2 CR up to 5 CR something ined see till here everything remains same guys but after this one extra rate is there this one extra rate is there under optional scheme okay more than 2 CR but up to five CR excluding special incomes in that case whatever tax you get on that 25% is a sarch charge whereas on special incomes sarch charge rate is 5 15% okay sir what if the total income excluding special incomes including like dividend income you have to exclude capital gain special income and dividend income if the total income excluding all this is more than 5 CR then whatever tax we calculate on that S charge is 37% something extra here this is not there under default please be careful okay whereas whatever tax we get on special incomes the sarge rate is 15% sir what if our total income is more than 2 CR but if I exclude all the special income it will not be more than 2 CR it will be less than 2 CR in that case including all the income if it is more than 2 CR but if you exclude it is not more than 2 CR then whatever tax you get both on special income as well as on normal income the sarge rate is one rate that is only 15% that is only 15% in simple guys in both the cases default as well as optional the maximum search charge rate applicable in case of capital gains taxable intersection 111a 112 and 112a as well as dividend income the maximum Sarge rate is 15% but not more than that but not more than that okay so same illustrations sir what if I am following optional scheme you can see total income is more than 50 lakh yes sir so calculate tax on special income as well as normal income on that the S charge is 10% okay next sir what if my total income is more than 1 CR but within 2 CR then calculate tax on special income plus normal income add up both you get gross tax on that what is the sub charge rate 15% fine so next you can see total income is more than 2 CR even if I exclude special incomes it is more than 2 CR even if I exclude special income it is on 2 CR then what do you do first calculate tax on special incomes on that S charge is 15% then tax on normal income on that surcharge rate is 25% clear yes sir then next so what if my total income is more than 2 CR but including all the special incomes if you exclude the special incomes it is less than 2 CR sir it is less than 2 CR this is last case guys this case last case clear H yes sir in that scenario calculate tax on special income plus tax on normal income you get gross tax on gross tax apply 15% such straight away straight 15% guys next I'm going to this same scenario what I have given in fifth but under optional scheme it will change guys my total income is more than how much 5 CR sir even if I exclude special incomes it is more than 5 CR you can see that is normal income is more than 5 CR yes what is the sarge rate applicable first calculate tax on special incomes including like dividend if it is there on that what is the sech charge rate 15% then tax on normal income on that what is the sarch charge rate 37% the highest rate high EST rate guys clear yes guys so all this illustrations actually I have solved so as I already told you if you guys want to refer to you can refer to part three of tax rates chapter where I have solved all this illustration under both default regime as well as optional regime even if you guys have already watched especially my students it's better once you watch whenever you guys are free just watch it because this are some important calculation guys it will take time it is good if you guys watch and and practice it also because if this kind of questions comes in the exam it should not take much time for you to do it there clear that the only intention of me fine so for other assesses what is the surcharge rate sir and Sarge whenever it is applicable you should know you have to apply it okay they would have not given any in in the question guys fine for other categories of assass for the partnership firm LLP and local Authority if the total income is more than one CR including all special income if their total income is more than one CR such charge is always applicable at 12% then coming to foreign income foreign company if the total income is more than 1 CR but up to 10 CR Sarge rate is 2% sir what if the foreign company's total income is more than 10 CR then the sarge rate is 5% flat flat 5% in case of domestic company and Cooperative Society if the total income is more than 1 CR but up to 10 CR surcharge rate is 7% sir what if the total income is more than 10 CR 12% 2 + 5 7 then 7 + 5 12 you can remember like that guys clear next in case of a domestic company who is opting for an optional scheme under Section 115 baa or bab and in case of Resident Cooperative Society opting for optional scheme under Section 115 bad or Bae then for them the sarge rate is always 10% irrespective of their income there is nothing like only if their income is more than that this whatever income they have such asge rate is 10% and optional scheme which is available for domestic company and Resident Cooperative Society guys okay then in case see aop aop is already covered here only Association of person but here one special rates they have given where Association of person which has only companies as members aop who is having only companies as members so can company be a member of Association of person yes so if an aop is having a members only who are companies then this is sech charge rate applicable for them if not whatever rates we already discussed here clear H yes so if the total income is up to 50 lakh no such charge if it is more than 50 lakh but up to 1 CR 10% more than 1 CR 15% and higher rate and all is not there here clear so if there is any other aop where others are also members please follow this guys either default regime or optional regime okay fine then coming to health and education says the amount of income tax as computed including Sarge there on shall be increased by means if S charge is applicable so gross tax plus SAR charge on that 4% say so what if SAR charge is not applicable straight away on gross tax 4% s 4% SS guys in all cases whenever the assess is liable to pay tax so section 288a will tell the total income of the ass has to be rounded off to the nearest 10 Rupees nearest 10 Rupees means five or more round off to next 10 less than five round off to previous 10 for example guys total income assume 10 lakh 10,568 we have to round it up to how much 570 then sir assume it is 564 we have to round up to how much 560 so what if it is 565 we have to round it up to 570 five or more next 10 less than five previous 10 guys okay same way rounding of the tax payable and refund du uh refund due section 288b if you get confused 288 and B which will come first total income or tax first income and then tax Cas because we always calculate tax on income so 288b is telling the final tax to be paid by the assass or the refund due has to be rounded off to nearest 10 same way that is five or more round off to next 10 or less than five previous 10 and please be careful the rounding off should always be applied on Final figure don't apply it on gross tax and all please be careful even when you are calculating the income when which figure should you round off sir whatever income we calculate under each no whatever is the total income the total income has to be rounded up to nearest 10 C not even gross total income also the total income final figure clear guys yes see in the format I have given both rebate as well as Sarge but both will not operate simultaneously guys either rebate or Sarge now at least you have understood when rebate when Sarge both will not come simultaneously in the same scenario fine CH sir now we have learned when ass has an agriculture income it is completely exempt under Section 101 that is agriculture income from a land situated in India used for agriculture purpose is completely exempt guys but if the same assy has both agriculture income as well as non-agriculture income means they're trying to tax that non- agricultur income at a higher rate by putting some different format that is partial integration they're trying to tax the non-agriculture income of the ass at a year rate guys this is only for those ass who have simultaneously both agriculture income as well as non-agriculture income for the pre same previous year same previous year okay so when is it applicable is it always no only if the following two conditions are satisfied guys that is both the condition that is who is the ass the concept applies only to individual HF EOP Boi or artificial judical person who simultaneously have both means laborate guys slab rate assy irrespective of which scheme they are following if their net AG see even Cooperative Society SLB rate is applicable for them like 10,000 20,000 30,000 we saw for them it is not applicable please be careful okay they following regular scheme still this agregation is not applicable for them okay sir next so we'll apply this partial integration only when the slab rate assess is net agriculture income is more than 5,000 and non-agriculture income means other than agriculture is more than basic exen limit as applicable to the ass guys whether he's following default or option whichever it is you know what is the basic essential limit if non-agriculture income is more than basic essential limit plus agriculture income more than 5,000 only then we have to apply this integration if not our normal calculation normal calculation means whatever we saw here clear and even when we are applying partial integration tax rates will not change tax rates will not change and ass is free to follow default or optional scheme clear yes yeah next agriculture income plus non-agriculture income add up both see guys please be careful don't get confused only non-agriculture income we call it as total income or taxable income agriculture income we never call it as total income because before calculating total income if there is any income which is exempt we have to remove it before so our total income will not include agriculture income but still here we are adding up both we are adding up both total of a plus b means agree plus non- agree then calculate tax on that calculate tax on that sir what is the tax rate whatever we have discussed clear and sometimes non-agriculture income may also include some special incomes please be careful apply this tax rate and for agriculture income always assume normal okay and accordingly calculate the tax if at all they have given guys if at all if they have mentioned anything about special only then consider and only non-agriculture income can include special income whereas agriculture income will always be treated as normal year for tax calculation for tax calculation is that clear yes so tax on CU calculate that is the addition of both then first step we are done with next agriculture income plus add basic agen limit applicable for the ass under the respective scheme then calculate tax on that whatever figure is there here on that you calculate tax separately sir what rate whatever rate is applicable to the ass under the respective scheme okay then we are done with second step now third step this is First Step this is second step now whatever tax we have got in first step and second step keep it separately so we are deducting each other now that is what tax we have got on Tax Plus agree plus non- agree from that we are reducing tax on agriculture income plus basic agen limit we are reducing it okay so whatever we get here we will continue with our regular calculation so indirectly what they telling okay tax on agriculture income we are not asking you to pay we are reducing it but indirectly guys I have explained this along with an example in my regular class they're trying to push you for an higher slap okay now so tax payable is D minus F we got that is nothing but T minus F guys okay now that is tax on agree plus non- agree minus tax on agree plus basic a limit okay from here our regular calculation will continue if by chance non- agriculture income is within 5 lakh or 7 lakh as applicable to the ass for rebate then you can claim the rebate maximum 12,500 or 25,000 as per the scheme then if non-agriculture income is more than the threshold limit like 50 lakh 1 CR 2 CR then we have to add S charge also then health and education say will always be there 4% and we will calculate the final tax payable one thing please be careful guys whenever we are checking rebate S charge and all we have to only look into non-agriculture income and not agriculture income because our total income is nothing but non-agriculture income and agriculture income as it is exempt under Section 101 it will not be a part of total income but here only for calculation purpose in the step one we are adding it that doesn't mean that our total income will increase total income is nothing but non-agricultural income fine next marginal relief coming to Marginal relief whenever SAR charge is applicable to the assy guys we have to check marginal relief also sir is it always no guys when your total income is marginally more than the threshold limmit applicable for sarch charge like what is the threshold limit applicable for sarch charge 50 lakh 1 CR 2 CR 5 CR 10 CR if the ass's total income has crossed the threshold limit by marginally by a smaller amount sir in that case they're telling you can check marginal relief you can check marginal relief if it is available you can claim it so you can see it is applicable in case of ass who is liable to pay such charge marginal relief has to be checked only when total income is marginally more than 50 lakh or 1 CR 2 CR 5 CR or 10 CR whatever is the limit applicable sir how is it see it guys I have given it in the format for format here total income you take calculate tax on total income calculate tax on total income as usual whatever we already discussed same B then add up the search charge if obviously it is applicable that is why we are checking the relief so add up the sear charge okay sir then you get total this our normal calculation this is our normal calculation nothing special now something special with respect to relief we're checking in Second Step calculate tax on the limit which you are crossed because of which such charge is applicable for you clear means assume your income is 51 lakh so what is the limit you crossed 50 lakh so tax on 50 lakh agre now yes sir then sir what if I have crossed 1 CR limit assume my income is 1 CR 1 lakh in that case we have to calculate tax on what one CR year so whichever limit we have crossed on that limit we have to calculate tax so at what rate whatever rate applicable to the assess and in case of marginal relief and all they won't give any special incomes and all guys you need not worry if at all if they give first consider special income and remaining you consider as normal income tax it at that rate but I don't think they will give it you need not worry okay next sir in the Second Step should we add such charge yes only if the total income crosses second or higher limit second or higher limit sir what is it guys please listen here now assume my total income I will just explain with an example my total income is 51 lakh 51 L I'm an indivisual okay tax on total income I have to calculate yes Sarge as applicable means how much 10% okay sir and in the Second Step tax on how much we have to calculate 50 lakh tax on 50 lakh okay so if if my total income is exactly 50 lakh is such charge applicable no only if it is more than 50 lakh so should we add S charge here no sir then total income minus what is the limit I have crossed 50 50 lakh limit I have crossed so what is my total income 51 lakh what is the limit I have crossed 50 lakh so how much it will come to 1 lakh we have to add so in the Second Step did we add sub charge no because we calculated here tax on 50 lakh and if my income is exactly 50 lakh no sir charge clear yes sir next I I will take a different scenario guys now assume my total income is 1 CR 1 lakh 1 CR 1 lakh sir is search charge applicable yes first calculate tax on it okay sarch charge at what rate 15% because I have cross second limit yes sir I'm an individual okay by the way then tax on what is the limit I have crossed 1 CR calculate tax on 1 CR yes sir we calculated as per our normal calculation then should we add such charge yes why because here we have calculated tax on one CR if the assess is total income assuming one CR because tax we have calculated on one CR if the exactly total income is 1 CR is S charge applicable yes why because total income is more than 50 lakh but up to one CR is a charge applicable yes but at what rate 10% at 10% yes sir then total income minus whatever limit you crossed you calculated tax year at 1 CR yes so same thing you do 1 CR 1 lakh minus 1 CR how much you get 1 lakh add up that also add up that also that will be the end of Second Step hope you guys got it similar way assume guys sir my income is like I will just erase this h no sir assume I'm a domestic company my total income is 10 CR 5 lakh 10 CR 5 lakh so is Sarge applicable yes domestic company Sarge rate is more whereas for foreign Company Lower why sir because for them normal rate is more foreign company normal rate is how much 40% whereas for domestic company we have lower rates so that is why for foreign companies suchar rates has been kept lower whereas for domestic company such as rates has been kept higher guys okay now the domestic company I'm talking about so calculate tax at whatever rate applicable for them SAR charge what rates sir as they crossed 10 CR limit suchar charge would be 12% S charge would be at 12% okay then in the Second Step ta calculate tax on the limit what the ass has crossed what is the limit they have crossed 10 CR calculate tax on 10 CR next sir should we add such charge yes why if the income is exactly 10 CR is search charge applicable yes sir how is it if more than 1 CR up to 10 CR what is the search charge rate for domestic company 7% 7% so is it should we add sarch charge here yes on whatever tax figure we have got here on that 7% says okay so then again add one more item what is it total income minus the limit what we have crossed what is the total income of the 10 CR 5 lakh minus what is the limit he has crossed 10 CR so how much we will get here 5 lakh 5 lakh that is the end of Second Step guys hope you guys got it please be careful especially with respect to Sarge many students may miss it here so I repeat first step is as usual guys nothing special clear yes second step is calculate tax on the limit which the assass has crossed because of which such charge is applicable whether it's 50 lakh 1 CR 2 CR 5 CR 10 CR whatever is the limit then if the ass's total income is exactly that limit is such applicable if s add SAR charge and SAR charge year would be applicable only if the ass has crossed second or higher limit guys if he has crossed first limit then you will calculate assume for domestic company also they have crossed one CR limit so here you will calculate tax on one CR plus should we add such charge no why because if the total income is exactly one CR S charge is not applicable only if it is more than one CR S charge will be applicable so that means in the second step when should we add s charges what only when the assy has crossed second or higher limit for sarch charge applicability then you add up also the difference between the total income and the limit the ass has crossed on which you have calculated the tax year clear you will get B so now we have got A and B compare A and B compare A and B A is nothing but normal step B is like different here okay sir we are checking relief lower of A or B will be the tax payable for that health and education says we have to add 4% and pay the final tax to the government and what was the relief available for us sir so relief is nothing but the difference between a and b that is only when a is more than b assess will be eligible for a relief assass will be eligible for a relief guys simple Let me Give an example guys assume I will see ass total income is 51 lakh 51 lakh and his tax I'm just taking random figure total income was 50 lakh and tax liability is coming to assume 25 lakh including suchar charge including such charge now if his total income is exactly 50 lakh if his total income is exactly 50 lakh sir the x liab is coming to 23 lakh sir tax liability is coming to 23 lakh see because on 50 lakh there is no sarch charge whereas if it is 51 lakh yes sarch charge is applicable so because of that there is a increase in tax liability just because one lakh increase in income the tax liability has increased by how much 2 lakh just one lakh increase in income tax has grown up by 2 lakh which is not fair to the S which is not fair to the asssa guys correct so what is the maximum increase in the income one lakh they're telling okay when the income has increased by one lakh maximum increase in tax liity also should be one lakh and not more than one lakh so in this case one lakh they would be giving it as relief clear so in simple the relief concept is like this if the increase in income above the threshold limit whatever is there because of that the tax liability is going Beyond this increase in that case they're giving the difference as relief they're giving it as a relief guys okay we are done with this then few assumption question which you have to keep in mind while solving the questions guys if the question is silent if at all if the question is silent so what is it if nothing is specifically mentioned in the question assume this that is if residential status of the assess is not given assume is a resident if age is not given assume is less than 60 years that is only for individual then assume they have given total income and they have asked you to calculate tax but they have not given any information about special income assume the entire total income is a normal income and apply the normal rates then if the question is silent about the scheme followed by the ass whether he following regular scheme sorry that is default scheme or optional scheme always assume the S is following default scheme in the question if it specifically mentioned please follow the same guys please follow the same and also guys if you want to refer to the soft copy of whatever document I'm using for this revision I have shared it in my telegram Channel you can just have a look into it you can just take it there or download from there where so the channel name is caas G that is my full name you can check it out there I have already shared you can take the same and make use of it okay then one more important thing with respect to the default scheme with respect to the default scheme and optional scheme whatever we discussed sir what should assy follow when should he follow see he can check under both what is the tax liability and whichever is lower you can follow it if the assy that is the slab that is individually a of op Bo artificial judical person if they don't have any income under the head pgbp that is they don't have any business income or professional income every year they have an option to switch behind optional scheme and uh default scheme means in one year obviously you can follow only one scheme means every year you can keep on changing this year default scheme next year optional you can keep on changing it so at the end of every year or in the assessment year what you do is you calculate tax liit Ender both the options whichever is lower you for it they have that choice so when should they inform to the department that which scheme they are following at the time of filing the returns at the time of filing the returns now if individual h of aop Bo or artificial judical person if they have any income under from business or profession that is under the pgbp then they don't have this Freedom they would be understood that they are following default scheme but once in a lifetime they can opt out of default scheme and they can go for opt option scheme and again from optional scheme they can come back to default scheme once but that is the end again they can never go back to optional scheme in their lifetime but if they're shutting down their business or profession where they don't have any business or professional income in the future again they will have that Liberty to switch be uh switch between the optional scheme and default scheme but when they have income under the head bgbp they have only once to switch uh between both that is normally they will be following default if they don't want default they can go back to optional because they want to claim certain deductions and exemption yes sir so they opt out of default and they went to optional now from optional can they come back to default again sir yes but they can never go back to optional again they can never go back to optional again sir what if they are closing down their business or operations or professions in that case yes they will have the same Liberty which I explained before every year they can switch between the optional scheme and default scheme guys clear so this is all about the revision of tax rate chapter yes students so now we will start with the heads of income that is chapter three before I start with the Eds of income we will just go through what all sections we have covered till now so come back to the page number one where I have given the section numbers so we'll see what all sections we have covered till now guys yeah see section number one and two in any act will be same guys like section one of any act will talks about short title extent and commencement whereas section two gives definition of various terms used in that respective law fine now coming to our income tax act so section number one talks about what short title extent and commencement what is the short title of income tax act 1961 guys it act it act then extent sir it is applicable to what all states or is it entire India yes guys so Income Tax Act 1961 is applicable to entire India including Jammu and Kashmir so as of now Jammu Kashmir doesn't have any special status but in 1961 it had so but still Income Tax Act is applicable to entire India including Jammu Kashmir guys all the states and union territories okay then coming to commencement sir from when did it commence from 1st April 1962 guys it got commenced from 1st April 1962 then coming to definitions we have seen few definition already covered in section two Clause something like agriculture income person assass and all we will be seeing some more definition going ahead guys with the respective chapters then the previous year has been defined in section three then General charging section four means what income is taxable under income tax law they have told the total income of a person earned during the previous year is chargeable to tax in the assessment year agre that is what is called General charging section in addition to this under each Ed of income there is a specific charging section that is the first section under each head is a specific charging section which tells what income is taxable under that respective head guys okay then coming to section five so this sections we have covered then coming to section five scope of total income so depending upon the residential status of a person whether an income is taxable in India or not so we have to categorize into Indian income foreign income which we already learned then coming to section six which talks about residential status of different categories of person different categories of person and here please be careful with individual which is very important guys bit confusing but still hope you guys have got a proper hold on it and important then coming to section s income deemed to be received in India so even though in the previous year if the ass has not received it it is as if he has received it it is as if he has received it guys 7 for Ms doni Jersy number so D for deemed to be received then Section 8 talks about dividend income I have not yet covered it I would be covering it in income from other sources guys because dividend income is always taxable under other sources at normal rates see dividend income is not a special income for income tax purpose but only for Sarge purpose the maximum surcharge rate applicable on the tax calculated on dividend income is 15% guys under both default scheme as well as the optional scheme then coming to section 9 income deemed to be a or arise in India that is as if it is earned in India so we saw the section 5 6 7 and 9 in the same chapter then coming to section 10 which talks about General exemption and now guys under new syllabus there is no separate chapter for exemption previously it was there but now under uh new syllabus they have removed it and where wherever it is required under the Respec to head they have given the exemption even I am doing in the same way so the exemptions we would be covering under the respective head guys wherever we encounter any income if at all if any exemption is available we will discuss there only one exam exemption we already discussed which is very important that is agriculture income exemption which is given in section 10 clause one then coming to section 11 12 13 a 13B and all is not a part of your inter syllabus so I mentioned it here just to be in the just to give the sections in the sequence but not covered in your inter syllabus guys then coming to section 14 classification of HS of income so there are five HS of income under the income tax law so that classification is given in section 14 and after 14 whatever is there guys till 59 till 59 that is from section 15 to 59 it is all about HS of income it's all about heads of income so that is what we will be learning from now CLE so each and every in detail we will be learning it first we'll start with salary guys fine so let us start with yeah sir how do we compute the income under various head we will be learning in this chapter once we derive why are we doing that calculation because we have to calculate our total income and tax is always liable to be paid by the assy on its total income on his total income so while Computing the income we have to first check okay under each head what is the income taxable for the ass so there are totally five heads of income what is it income from salary covered in section 15 to 17 15 being the charging section then income from house property section 22 to 27 talks about income from house property so what about section 18 to 21 guys it has been omited from the income tax law as on today next so in income from house property section 22 being the charging section then profits and gains of business or profession section 28 to 44d talks about pgbp and 28 is the charging section here then capital gains section 45 to 55 talks about capital gains income and 45 being the charging section then income from other sources section 56 to 59 56 being the charging section so first we have to check okay is there any income taxable under the respective head and we compute it and how do we compute it we will learn one by one then if there is any income which is exempt in the hands of assassi then we will claim the exemption under the respective head only guys we will claim the exemption under the respective head only that means it will not form part of this figure if there is any income which is exempt we will reduce it from the respective head only then we should also do two adjustments with respect to clubbing of income and whenever the clubbing get attracted like if my wife's income is clubbed with me or if my minor children's income is clubbed with me clubbing will always get attracted under the head income from other sources kind then we should also take care of set off and carry forward of losses see set off and carry forward of losses I have given it you that doesn't mean that that will come after the HS of income depending upon whether it is INRI adjustment or inter adjustment we have to do it under the respective head or against the other RS guys we learn all this how do we exactly adjust the loss and all I'm just explaining the format now so once you do all this you will derive a figure called gross total income and from gross total income we can claim various deductions under chapter 6A from section 8C to U and if at all if the assess is eligible for it once we claim the deduction then whatever we get is called total income or taxable income and this is the figure on which we have we have to compute the tax guys so under each it whatever is the first section it is the charging section which tells what income is taxable under that respective head guys is that clear yes sir next coming to the first head of income guys we'll start with salary now income from salary section 15 to 17 talks about salary calculation so you can see I have just given the format here so how do we calculate the salary guys any benefit which employee is receiving from his employer under employer employee relationship section 15 is what is talking about about section 15 is the charging section it is telling any benefit which the employee get whether it is in the monetary term or non-monetary any benefit which employee gets from his employer under the employer employee relationship is taxable under this s is taxable under this head okay sir so it might be in the fancy names whatever allowances whatever benefit the employer is giving to the employee might be in some fancy name but still it is taxable under the head salary but the basic criteria here is employer employee relationship if there is employer employee relationship anything which employee get from his employer is taxable year whether the employee is a full-time employee part-time employee who is the employer company now partnership LLP now government non-government doesn't matter clear and whenever you are learning salary head assume yourself as an employee guys if you're getting so and so benefit from your employer what is taxable in your hands we have to analyze okay so we'll start with basic pay dearness allowance dearness allowance is given to meet the increased cost of living due to inflation and all then bonus commission City compensatory allowance medical allowance guys this items will always be fully taxable irrespective of any condition it will always be fully taxable then sir see please be careful with da and commission especially guys da is always fully taxable but while calculating few exemptions under the salary head they have given one condition telling if provided in terms of employment or if it is forming part of retirement benefit one and the same only if that condition is satisfied we will consider da while calculating the exemption or while claiming exemption and while calculating salary income like as per this format irrespective of the condition we should always take da we should always take da don't get confused so da condition is applicable only to check the exemption and not to calculate income for calculating salary income da will always be fully taxable hope you guys got it clear yes then even coming to commission guys commission however in whatever form it is received it is always fully taxable but while calculating few exemptions they have told salary means basic pay plus da plus commission for da condition I told you provided in terms of employment or forming part of retirement benefit only if it is covered in that condition we will consider D same way they would have told if it is expressed as a fixed percentage of turnover that is see commission can be paid in two form guys see if commission is paid every month 5 5,000 10 10,000 fixed amount then it is not expressed as a fixed percentage of turnover so while calculating exemption we will not consider Commission because condition is not satisfied but while calculating salary commission should be taken commission should be taken sir when commission will be paid as a as a percentage of turnover as assume the company has told employee whatever turnover or sales you achieve we will pay 2% of that as commission we will pay 2% of that as Commission in that case yes we can tell commission is expressed as a fixed percentage of turnover in that scenario sir should we take it in salary calculation yes of course we have to take and while calculating exemption sir should we take it yes we have to take it clear so this just a clarification which I wanted to give at the beginning itself guys hope you understood clear I repeat once again da and commission will always be taxable under the head salary irrespective of the condition but while claiming few exemptions like H exemption or any other exemption under salary head they would have told salary means basic pay plus da condition attached plus commission condition attached so there we should take to check how much is the amount of exemption I can Avail I should take da and commission only if that condition is satisfied if not we will we will not consider the dend commission clear whereas in salary cation we should always consider it okay then there might be many other allowances which are provided by the employer so for which some exemption is available to the employee in that case check how much is received how much is received you can do it by way of working note then how much is exempt remaining if still some figure is positive means bring it here in the main answer received allowance allowance whatever is received then how much is exempt you will reduce it after reducing the exemption if still some positive figure is there which is taxable then bring it to the main answer all taxable allowances same way all taxable perquisites guys so for this also for few perquisites most of the perquisites we have to do some calculations so do the calculations and then whatever is the value of the perquisite which is taxable in the hands of employee under the head salary bring it here what is perquisite what is allowance how do we calculate it everything we will learn so once I do all this whatever benefit the employer employee is getting from employer we get gross salary guys and from gross salary there are three deductions which employee can claim under section 16 under section 16 okay once we claim this deduction whatever we get is called taxable salary or income from salary so that is what figure we have to take in our total income calculation whatever figure we will derive you this figure we have to consider it while calculating the total income clear yes sir fine guys we'll now proceed further with salary head Provisions so section 15 as I already told any income which employee is receiving from his employer under employer employee relationship is taxable under this h on what basis sir on due or reip basis whichever is earlier due or receipt basis whichever is earlier if salary is earned but but not received it will be taxed on due basis but again it will not be taxed on re basis same way sir what if any salary is received in advance so is it it is taxable advanc salary is taxable on receip basis but again it will not be taxed in on due basis in the future either due or receip whichever is earlier first we will tax it and in the future on the basis of another we will not tax it again we will not tax it again because it will lead to double taxation then section 16 has three deductions which we will see later then section 17 has defined three words that is 171 defines salary 172 defines perquisite 173 defines profit in Li of salary guys only three sections are covered in this head then sir what is the difference between foregoing of salary versus surrender of salary foregoing of salary means I told my employer sir for a particular month don't give me a salary use it for any charity purpose assume I am working in infosis so for the month of February whatever salary they're giving me I told no no please keep it for in infosis Foundation use it for any good purpose don't give me in that case is it taxable for me or not it is taxable because I have earned it so it is taxable for me what I have done with it have I received it or not doesn't matter yes if I have done any charity contribution or any contribution then I can claim deductions under Section 0g but the question is whatever salary I have earned even though if I have not received is it still taxable for me under the head salary yes that is called foregoing of salary then what is surrender of salary guys if there is any surrender of salary in the public interest to the central government then it will not be taxable in the hands of employee Whoever has surrendered the salary to the central government for them it will not be a part of their salary income so assume I have surrender I am a central government employee I have surrendered only 15 days salary so in that case only that 15 days salary will not be taxable for me it's not like entire year is exempt no no no 11 months so 11 and a half months whatever salary I would have earned and received now that will be taxable only the 15 days salary which I have surrendered only that will not be taxable guys then coming to allowances sir first of all what is allowance allowance is like guys it is given in monetary term every month employer will be giving a fixed sum to the employee to use it for a specific purpose irrespective of whether you use it for that purpose or not that is called allowance so every month or every year employer will be giving a certain sum of money to the employee to use it for a certain purpose that is called allowance so it will always be in the monetary term so there are some allowances which are fully taxable first we will see fully exempt and partly taxable allowances then we will come back to fully taxable guys so better is to remember what is exempt and what is partly taxable remaining all is fully taxable okay so fully exempt allowances allowances provided to high court and Supreme Court judges allowances paid by Uno that is the United Nation organization to its employees any allowances guys provided by them is exempt allowances provided to central government employees being citizen outside India this we discussed in section 9 also if central government is providing any allowances including any perquisites to the citizen who is rendering service outside India but for Indian government is exempt guys see salary paid by Indian government to a citizen out rering Services outside India is considered to be deemed to Aur arise in India but all the allowances and perquisite given to them is exempt so then what is taxable like basic pay bonus da those things are taxable not D because da also comes under the allowances so only like normal items like basic pay bonus commission those things would be taxable for them guys that's all okay next so partly taxable allowance we can call it as partly taxable or partly exempt allowances which are those one by one first h house rent allowance section 1013a If an employer is giving hous rent allowance to employee to meet the rental expenses of employee whether employee is staying in his own house or he staying in a rented house doesn't matter employer is giving it but employee can claim exemption only if he's actually staying in rented house and if he's paying rent sir what if employee is receiving the H allowance but he's staying in his own house can he claim exemption no no no sorry you cannot yeah H is exempt to the extent of least of the following what are those three points are there actual H received whatever employee has received then rent paid minus 10% of salary rent paid minus 10% of salary and what is salary I have given at the end of this chapter guys or at the end of this a we will see clear yes so rent paid minus 10% of salary then amount equal to either of these two guys not both either of the two see where the means where the accommodation is occupied by the employee means where the rented houses 50% of the salary where such accommodation is situated in means the rented house is situated at Chennai Delhi Mumbai and Kolkata I call it as CDM K chinamas DMK okay we have formed a party called chinamas DMK so in any of this four cities if you have an accommodation then 50% of salary in any other City it is 40% guys in any other City it is 40% clear so in the third point it is either 50 or 40 not both clear yes sir so least of the following is exempt guys least of the following is exempt as I told you see only if the assess is staying in a rented house he can claim exemption sir assume he's receiving H for the entire year for all 12 months but he stayed in rented house only for 8 months in that case proportionate exemption only can be claimed whatever H is received for four months during which he didn't stay in rented house is fully taxable fully taxable now exemption can be claimed only for whatever H is received for for 8 months in that case even that salary has to be considered for only 8 months whenever you are applying certain percentage of salary now so you have to take only that 8 months salary because exemption is available only for the period during which the employee is staying in a rented house guys hope it is clarifi okay if question is silent about the bu we will always assume that a rent is paid by the employee for full 12 months if they specifically given that rent is paid only for 8 months 9 months 10 months please to to please do two different calculations guys clear yes next special allowances for performance of official Duty so if there is any allowances which is given by employer to employee to perform any official Duty that is for official purposes then how much is exempt actual allowance received or the amount which is spent for the same purpose whichever is lower guys amount received or the amount which is spent for the same purpose whichever is lower so what are those allowances y the allowances are like traveling conance daily allowance helper allowance research allowance uniform allowance Etc guys okay so now for example assume sir employer has given 20,000 allowance for me I have spent only 15,000 for the same purpose how much is exempt 15,000 so remaining 5,000 is taxable sir what employer has given me 20,000 but I have spent 25,000 in in that case how much is taxable nothing so if you have spent more than that how much is exempt is whatever you have received whatever you have received and in that case nothing is taxable nothing is refundable guys yeah if you have spent more than what you have received then allowances to meet personal expenses section 10142 personal expenses are covered in Clause two guys 10142 alliances which are granted to meet personal expenses are exempt to what extent the extent of amount received are the limits given here what is the amount the employee has received or the limit which is given here whichever is lower whichever is lower guys come on in case of tribal area allowance for purpose why is it given specified area of Madia Pradesh Tamil Nadu utar Pradesh Karnataka tripura Assam West Bengal or Bihar or orisa if employee has been posted in any of this area not entire State specified area of those States then employer might give some tribal area allowance and that is exempt up to what extent 200 rupees per month then children education allowance which is given by employer to meet the educational expenses of the employee is exempt maximum how much 100 rupes per month per child maximum two childrens what are if employe is having five children 10 children or three childrens in that case exemption is available only for two childrens sorry one more thing sir assume employee has two childrens but he is receiving allowance for only one child so exemption can be claimed for how many child only one child one just because you have two child you cannot claim exemption for both the child so for whichever number of child you are receiving exemption can be claimed only for that many number of child but maximum two child so what if employees is receiving the education allowance from his employer for three childrens exemption can be claimed for only two children that how much maximum 100 rupees per month per child they're giving huge exemption okay hostile expenditure allowance which is given by employer to meet the Hostile expenditure of his of his childr is exempt maximum 300 rupees per month per child up to a maximum of two child same like education guys then transport allance these are the allowance given by the employees sorry employers to employees and exemption is available for of how much 3,200 per month only for whom physically challenged deaf dumb blind employees so what about for others for them there is no exemption then transfer for transport of employees so if there is any employee who is working in the transport system means the employer is engaged in the business of Transportation in that case how if any transport allowance is given to the employee how much exemption they can claim 70% of whatever allowance they getting are 10,000 per month whichever is less guys whichever is less okay so next this is all about the allowance guys so we have seen which which are the allance there are three allowances which are fully exempt there are three allowances which are partly taxable remaining all allowances are fully taxable guys so if there is any other allowances which are not covered in this two list it is always understood that they're fully taxable they're fully taxable so I will just go through the list once quickly dearness allowance additional dearness allowance or dearness pay everything is one and the same then fixed medical allowance tiffen or meal allowance servant allowance non-practicing allowance Warden allowance and Proctor allowance deputation allowance overtime allowance other allowances like family allowance project allowance marriage allowance so will employer give allowance to get married yes some of them great employees City compensatory allowance dinner allowance telephone allowance all these are fully taxable guys so this is all about the allowances next we will move towards perquisites important and also bit lengthy so please be attentive here perquisite sir first of all what is perquisite perquisite is defined in section 17 subsection two guys now sir perquisite means if employer is giving any benefit to the employee or his family member in kind that is in non-monetary form it's like giving car to use or is giving house to stay there without paying any rent these are called what benefit in kind or else it may also include some reimbursement assume any expenditure is incurred by employee or any of his family members which are reimbursed by employer even that will fall under the category of perit guys one thing you keep in mind here is see depending upon what is the benefit which the employee or his family members has got we have to check what is the value of perquisite CLE and how do we calculate the value of perquisite they have given in the law itself we have have to strictly follow the same yeah so we have to see what is the benefit which employee or his family members has got and what is the value of the perquisite as per the income tax law and one thing is guys whichever benefit they have got once we calculate the value of perquisite if any amount is recovered from employee means employer is charging some amount to employee but small amount so if any amount is recovered from employee we have to reduce it only the balance would be the taxable perquisite in the hands of employee under the head salary hope you guys got it I repeat if employee or his family members has got any benefit from employer first we have to calculate okay what is the value of that perquisite from that for any perquisite if employer has recovered any amount from employee or he has charged any amount from employee or he's deducting it from employees salary but small amount in that case we can reduce that amount and only the remaining amount is called taxable perquisite which will be a part of income from salary in the hands of employee good so now valuation of taxable perquisite one by one we will see especially this is important guys non-government employee because there is a change in this which I have already covered in my statut update video important listen here valuation of taxable perquisite in respect of unfurnished accommodation that is if employer has provided any accommodation to employee to stay along with their family members in that case it is a perquisite in the hands of employee yes sir even if it is a furnished accommodation guys means along with the house sir what if Furniture refrigerator everything is given AC TV bed everything is provided in that case first in the first step we will assume that the accommodation is unfurnished and do the valuation for that we will add the furnished part yeah yes so first one is with respect to unfurnished part that is only for the building or for the home which is provided by employer to employee in that case guys we have to check whether the property is owned by the employer or whether he has taken it on higher and he has given means rent whether the employer has taken the building on rent and he has given it to the employee we have to check it if the accommodation was owned by the employer which he has given to the employee to stay there along with their family members in that case we have to check the population of the city in which the accommodation is provided as per 2001 census as per 20 sorry 200 11 census previously it was as per 2001 census but now it is 2011 census guys please be careful this is the change sir check the population so if the population of the city in which the accommodation is provided is up to 15 lakh then we have to take 5% of salary then if it is more than 15 lakh but up to 4 lakh then we have to take 7.5% of salary then if the population is more than 40 lakh we have to take 10% of salary guys either of the three will come not all three either of the three and sometimes in the exam sir they have not given the population of the city but they have given the name of the city like Chennai Bangalore Kolkata Delhi whatever Hyderabad in that case you should know that the population of those cities especially the tier one cities and all is more than 40 lakhs guys so straight away apply for 10% of salary as perquisite and please be careful just give a note telling it is assumed that the population in Hyderabad City or whichever City they have given the name in the question it is assumed that the population is more than 40 lakh as the question is silent on the same just give a note whenever you assume anything please give a note for it okay yes so this is when the accommodation is wounded by the employer sir what if it is hired means employer has taken on rent and he has given the accommodation to employee in that case 10% of the salary or whatever the rent employer is paying to the owner whichever is lower is the perquisite guys whichever is lower is the perquisite value then they have also told this is again a clarification given through statutory update guys when the accommodation is provided by the central government or state government to an employee who is serving on the deputation that is on a task or a mission with any body or undertaking under the control of such government is to be calculated in accordance of the above table as if the accommodation is owned by employer means if central government or state government is providing accommodation for any employee of body or undertaking which is under the control of Central or state government they're telling they are considered as the employee of body or undertaking and in that case valuation has to be done as per point a only as if they're non-government employee as if they're actually not government employee but valuation has to be done as if they're non-government employee guys is that clear yes next sir this whatever we discussed was for non-government employee what about for government employee very easy Plain Central or state government employees means the accommod is provided by the government to its employees in that case whatever is the license Fe determined by the central or state government that will be the value of purpos with respect to unfurnished accommodation and in any of this case guys either A or B if anything is recovered from employee we have to reduce it it is a common dialog for all the perquisites okay next sir what if the accommodation is furnished then you derive whatever value you have got as per A or B depending whether the employees government or non-government you calculate the value as if the accommodation is unfurnished for that we have to add whatever value we have got we have to add if the furniture is owned by the employer and he has given it so whatever is the cost of the furniture we have to add 10% of that we have to add 10% of that to the value of perquisite sir and 10% is perom please be careful sir what if Furniture is provided only for 8 months 9 months and accordingly take it only for that many months guys clear means you have to do the proportionate calculation like 10% into as you 8 months into 8 by 12 it should be like that so what if the furniture is taken on higher and is given it is given to the employee in that case whatever is the actual higher charges which the employer is paying will be the value of perquisite in the hands of employee guys simple now assume for first even though the accommodation is furnished we have to assume it is unfurnished and we have to decide the value for which we have to see whether the employee is non-government employee or government employe so for non-government employee we have to check whether it is owned ored accordingly we have to decide the value of peros it for government employee always license fee so whatever value we have got for that if the accommodation is furnished we have to add check whether the furniture is owned by the employer if yes whatever is the cost of furniture to the employer take 10% of it and 10% is per ROM on the cost then same way if it is HED we have to add whatever higher charges which the employer is paying so what if it is partly owned partly HED then for whatever is the cost of furniture which is owned take 10% of it then for whatever part it is hired whatever is the actual High charges paid take both take both and even here guys while taking 5% of salary 7.5% of salary or 10% of salary and all that is for non-government employee we have to take it for the period during which accommodation is provided by by the employer to employee if accom normally accommodation will be provided for full entire previous year guys but if by chance if they put any googly in the exam assume accommodation is provided only for eight or 9 months during the previous year then he might be receiving salary for the entire year but accommodation is provided assume only for 8 months in that case so whatever salary we have to take now please calculate only for 8 months even though he's getting for entire 12 months please take it only for8 months and apply the percentage guys apply the percentage because the value of perit should be calculated only for the period for which accommodation is provided by employer to employee if nothing is mentioned in the question we always assume that it is provided for the entire year okay so this whatever we saw was if the accommodation is not in hotel what sir if accommodation is provided in wal if accommodation is provided in votel what should we do guys if accommodation is provided in hotel it will be furnished only so in that case we have to straight away apply this we have to straight away apply this no furnished unfurnished no TW steps calculation nothing straight away 24% of salary during the period for which the accommodation is provided in hotel if it is provided for entire year take salary for entire year and apply 24% then sir what if it is provided only for one month take one month salary take 24% of that or actual higher charges paid or payable that is room charges whichever is lower guys whichever is lower and if the hotel accommodation is up provided up to 15 days on account of transfer of employee then it is not taxable so what if it is provided Beyond 15 days for example it is provided for 30 days in that case for 15 days it will not be taxable for the remaining 15 days it will be taxable clear yes sir then if accommodation is provided in remote area it is not taxable guys it is 100% exempt provided to any employee what is remote area sir remote area means the area located 40 km away from the town and having population less than 20,000 and one more thing guys now assume I was provided accommodation in Karnataka okay we have to calculate taxable peros now I have been transferred to Tamil Nadu even in Tamil Nadu my employer has provided the accommodation whereas in Karnataka still it will continue because my family members are staying and in Tamil Nadu he has again provided me one more accommodation where I alone Assi alone is staying it so in that case they're telling both the houses are considered as perquisite yes but once I have been transferred to Tamil Nadu for the first 90 days for the first 90 days only one house will be considered toal calculate perquisite either of the house Assi can decide either Karnataka or Tam Nadu so obviously he will decide wherever the value of the perquisite is lower he will decide that to offer it to taxation another house will be exempt for first 90 days if even after 90 days if both the houses are still continued to be provided to the employee then from 91st day both the houses will be taxable as perquisite both the houses would be taxable as perquisite guys so up to 90 days only one house even after 90 days still if both the houses are provided both the houses would be taxable as perquisite in the hands of employee okay then one more uh new provision they have brought not so relevant for our previous year but still I will just explain guys now this is applicable from first previous year for this provision whatever I will explain now is 2324 now assume with respect to accommodation you got value of perquisite in 23 24 3 lakh you got three lak and the same accommodation provided to the same employee even in next year even in next same accommodation is provided to the employee same employee same accommodation but the value is coming to 4 lakh because this there is a gradual ik in the salary so accordingly the value of perquisite is coming to 4 lakh in that case they're telling no no straight away don't Tax 4 lakh check 3 lakh into apply indexation similar to how we calculate index cost of acquisition guys so three lakh was the value of purpos in the last year yes for the same house for the same employee yes so calculate CI that is cost inflation index for which you now for current that is 2425 you apply divided by cost inflation index for 2324 we have to take same like how we calculate index cost of accusation assume guys I'm randomly taking assume this comes to 3 lak 60,000 so maximum perquisite which will be taxable in 2425 is 3 lakh 60 and not 4 lakh even though the value is coming to 4 lakh they're telling we have to restrict it to 360,000 we have to restrict it to 360,000 it is like actual value or whatever amount we have got by applying this calculation whichever is lower will be taxable as perquisite in the hands of employee this is in which year 2425 so this provision is applicable only for the future periods guys subsequent period so for this this provision the first previous year is 2324 so for previous year 2324 we will not have any past so we don't have any reference where we can apply this cost inflation index so that means for 23 24 whatever is the value of perite you get straight away that will be taxable you need not even check this calculations guys this is only for subsequent years good yes okay next so if any loan is provided by employer to employee at free of cost or at a concessional rate then whatever is the benefit which employees enjoying is taxable under the head salary guys how is it where the employer grants a loan to an employee or any member of his household more than 20,000 if the amount of loan is less than 20,000 nothing is taxable okay taxable perquisite will be what guys loan amount into SBI interest rate means we have to take the standard SBI interest rate minus actual interest charge by the employer guys simple assume let me take SBI interest rate 12% the amount of loan given by employe year is 1 lakh so how much is taxable 1 lakh into 12% 12,000 is the taxable purp assuming employer is not charging any interest he's given interest free Loan in that case 12,000 is taxable in the hands of employee as perit next sir what if employee is charging but he's charging 7% sir concessional rate in that case what is the discount rate he is offering 5% correct now 12% is the SBI rate actual interest rate charged by employer is 7% what is the discount he has given 5% so that will be taxable as perquisite that is the amount of loan 1 lakh into 5% which comes to 5,000 will be taxable as perquisite in the hands of employee okay but if the amount of loan is less than 20,000 nothing is taxable guys even though he has given free next however no value would be charged if such loan and made available for medical treatment if the loan is given for medical treatment with respect to prescribed diseases even though it is more than 20,000 even though it is given interest fre still nothing is taxable guys nothing is taxable okay wherever I would have highlighted something in green color means it is tax tax rep perquisite are not taxable okay value of perquisite in respect of use of any movable asset by an employee any member of his household other than motor car so if any if any asset movable asset is given by employer to employee to use it so ownership is retained by employer only but he has just given to use to the employee in that case if it is a laptop or computer nothing is taxable guys because it is very much required nowadays to work in the laptop sir laptop is used for what purpose what are he what is he Googling or what is he searching in that what is he watching what videos he's watching doesn't matter for whatever purpose it might be used laptop or computer provided by employer to employee is fully exempt guys okay what if it is other assets owned by the employer check what is the cost of the employer take 10% of it 10% is perom clear whatever is the cost of the employe take 10% of it then if any amount is required from employee reduce it remain is taxable same way sir what if it is hired by the employer means this assets whatever is covered here is any movable asset other than laptop computer and motor car and for motor car also we have a separate provision we will see it okay so what if it is HED by the employer means employer has taken on rent and he has given it to the employee in that case whatever is actual High charges employer is paying we have to take it if any amount is recovered we have to reduce remaining would be taxable guys remaining would be taxable yes next sir we will see motor car because here motor car is excluded other than motor car sir what if motor car is given we will see that also you can just see yeah this point I will cover it as yeah so now value of perite in respect of use of motor car guys here we have to see three important things that is Sir who owns the car who owns the car okay who meets the expenses who meets the expenses and car is used for what purpose this three are important guys who owns the car two possibilities there employer employee then expenses who is incurring it two possibilities might be there employer employee then who for what purpose the car might be used three possibilities are there fully official that is office purpose then fully personal then fully 100% personal off obviously in that case whatever is the benefit got by the employee will be taxable if it is fully official nothing will be taxable guys if it is fully personal then whatever is the value will be taxable perquisite whatever is the benefit employee is getting then the most important thing and confusing is what if it is partly and this is where the questions would be targeted partly sir car is used partly for office purpose partly for personal purpose so when a car is provided employee is not using it only to go to office and come back he's also taking his wife for a long drive he's taking his childrens to the school and dropping them so he's using for personal purposes also in that case what is the taxable perquisite is very important guys this point plays a major role from from your exam point of view what is taxable perquisite is important clear yes so we will see yeah first who owns the car car is owned by employee okay in that case you see for what per who is incurring the expenses that also we have to see second category car is owned by employee expenses also met by employee what benefit is getting nothing so nothing is taxable guys nothing is taxable okay next car is owned by employee we are still under the first point under the second category who is incurring the expenses employer who is incurring the expenses employer now we have to see for what purpose car is used car if it is used for fully official purpose guys nothing nothing is taxable because office now so he's not getting any personal benefit so what if the car is used fully for personal purpose then what is the benefit which employee is getting guys only the expenses because car is owned by him only so he's getting only the one benefit which is with respect to expenses so what is the value of perquisite actual expenditure incurred by employer minus if any amount is recovered okay sir car is owned by employee expenses is met by employer but car is used partly for official and partly for personal purpose in that scenario important guys value of purose it is you take whatever is the actual expenditure incurred by the employer okay from that we have to reduce 1,800 per month if the cubic capacity of the car is up to 1.6 lit or we have to reduce 2,400 per month if the cubic capacity of the car is more than 1.6 L and even if driver also is provided for whom salary is paid by employer irrespective of the actual salary we have to add 900 rupees per month 900 rupees per month and if any amount is recovered we have to reduce it guys simple guys assume car is owned by employer and employ sorry car is owned by employee and expenses is met by employer car is used partly for office and partly for personal purpose assume actual expenditure incurred is 20,000 per month by employer who is incurring the expenditure employer expenditure okay sir now from this we have to either reduce 1,800 or 2,400 depending upon the CC of the car either of the two assume the CC of the car is more than 1.6 guys in that case we have to reduce how much 2,400 and this is not per anom it is per month okay per month so 2,400 also per month we have to reduce clear even if driver is also provided then add up 900 add not reduce 900 this see driver is provided for whom salary is paid by whom employer and irrespective of how much salary is paying we have to add only 900 clear yes sir so whatever we get will be the value of perquisite per month obviously we have to do into 12 months if car is provided for entire 12 months guys clear sometimes they would have given expenses incurred for a year in that case from that you reduce 2,000 so for example assume they have given expenses incurred by the employer for a year is one lakh in that case CC of the car assume is more than 2 point 1.6 so you have to reduce 2,400 into 12 you have to reduce yeah because 2,400 or 1,800 is per month assume driver is also provided then in that case you have to add up how much 900 into 12 900 into 12 guys okay CH we'll proceed further so please be careful it is we will take actual expenditure and reduce either 1,800 or 2,400 yeah you can just write it here actual expenditure then 1,800 or 2,400 per month if driver is also provided then 900 per month okay if anything is recover recovered we will reduce it okay when car is owned or hired by employer it is owned or hired by the employer means he is providing it and we have to see who has incurred the expenditure sir expenses also is incurred by employer only means employees is getting double benefit we have to see okay if it is used fully for official purpose actually is not getting any personal benefit no perquisite then if it is used only for personal purpose double benefit is getting one is car one is expenses both so with respect to both it has to be taxed actual expenditure incurred by the employer plus 10% of the actual cost of the car or higher charges if car is taken on higher guys so this is with respect to car and this first item is with respect to what actual expenditure so we have to take both as car is used for personal purpose then from that we have to reduce amount recover from employee then if it is partly for official purpose and partly for personal purpose then value of perit will be straight away 1,800 or 2,400 either of the two depending upon the CC of the car so what if driver is also provided add 900 guys please be careful here we took actual expenditure and we reduce 1,800 or 2,400 but here straight away what is taxable is 1,800 or 2,400 per month if driver is also provided then plus 900 per month clear yes even here if something is recovered we have to reduce it okay next if car is expenses is incurred by whom employe owned by employer car is owned by employer but expenses met by employee if it is used only for official purpose no perit guys see in any scenario if car is used for official purpose nothing is taxable guys if it is used for personal purpose what whatever is the benefit got by employee that would be taxable so here what is the benefit he's getting expenses he's only incurring he got what only car so with respect to car if car is owned 10% of the actual cost of the car and 10% is perom please be careful then if it is HED whatever is the higher charges we have to take it if driver is also provided then whatever is the actual salary paid to driver if driver is also provided whatever is the actual see expenses are met by employee only but if by chance salary of the D ever is paid by employer then whatever is the actual salary we have to add it whatever is the actual salary we have to add it then sir what if the car is used partly for office and partly for personal purpose then in that case value of purpos will be please be careful reduced amount 600 or 900 per month depending upon the CC of the car if CC of the car is up to 1.6 lit then 600 if it is more than 1.6 then 900 if even if driver is provided irr perspective of the actual salary we have to add just 900 salary paid is maybe 15,000 per month 20,000 per month or 25,000 per month for the driver but if it is paid by the employer please add only 900 please add only 900 please be careful guys here expenses are incurred by employee if by chance if driver was appointed by the employer and if salaries paid by him only then we have to add the salary part in both these cases in both this cases if not please don't add any salary yeah yes this is with respect to usage of assets guys given by employer to employee sir what if he has sold any asset so this will come only if asset is sold by employer at a discounted price obviously when employer has to sold it before selling he has to own it guys and obviously would have purchased it at a particular cost so what we have to do is whatever is the cost of the asset we have to check for the employer from that we have to reduce is depreciation for each completed year of usage by whom employer from the date of purchase till the date of sale sir what if it is 3 years 9 months we have to reduce depreciation only for 3 years for each completed year months we have to completely ignore guys so what if it is 3 years 11 months still you have to reduce depreciation only for 3 years so depreciation has to be reduced for each completed year of usage by the employer from the date of purchase till the date of sale of asset to the employee now what is the depreciation rate we have to take here they only given depending upon the category of asset so in all the cases guys we have to take actual cost to the employer from that we have to reduce depreciation so depreciation for each completed year so if it's an electronic equipments 50% perom as per wdb method if it is a motor car 20% perom as per wdb method then if it is other asset like cycle two wheer or any other asset other than motor car and electronic equipments then it is 10% perom as per slm method and whatever depreciation we have discussed here has got nothing to do with Section 32 depreciation which we will discuss in pgbp guys this is only for the purpose of calculating perquisite under the head salary okay so amount recovered from the employ that is nothing but the actual sale value we have to reduce it at whatever value he has sold we have to reduce it so what if he has given free of cost then we will not reduce anything here so once we reduce the actual sale value whatever is the balance we get is the tax taxable perquisite guys electronic equipments refers to computer chips hard dis printer and all and if the asset is older than 10 years it was purchased by employer 10 years before sir and now he gave free of cost to the employee nothing is taxable guys because what employer thought was asset is anyway waste I have to put it for scrap why should I put more efforts my employee is there okay he will take it let me give it free of cost to him in that case nothing is taxable as perquisite in the hands of employee next perquisite value in respect of sweeper Gardener Watchman or a personal attendant if the attendant or whatever domestic servants we call all put together if they are appointed by employer then what is the perquisite value actual cost to the employer that is nothing but whatever salary the employer is paying and it is taxable only in the hands of specified employee it is taxable only in the hands of specified employee sir what if the sweep or Garden or Watchman or personal attendant is appointed paid by employee himself for him for whom the salary is paid by employer in that case whatever is the amount of salary paid by employer to the sweeper Gardener Watchman or PA will be taxable in the hands of employee irrespective of whether he is a specified employee or not it is taxable for all the employees guys if employer has appointed it is taxable only for specified employee if employee has appointed it's taxable for everyone sir now who is specified employee we have to understand I have just given that after a few pages yeah you can see here guys specified employee this is only for salary head who is specify employee if a director of a company is also an employee like oldtime director full-time director if he is also an employee he's always a specified employee then if an employee is having substantial interest in the company that is 20% or more of the equity shares if he's holding or profit sharing ratio is having then he called specified employee then last category employee whose income from salary exceeds 50,000 in a specified employee now after reading this point any employee will be specified employee that is 50,000 not per month perom if salary income of the employee is more than 50,000 perom is always specified guys so if an employee is covered in any of this points is called as specified employee fine Chell next perquisite value in respect of gas electric electric energy or water supply for household consumption so if any electricity bill and all of employ or his house is paid by employer in that case ameni is if it is purchased by the employer means he has purchased and given it or whatever is the bill he's paying it for employee or his family in that case whatever is the amount paid or payable to the Outside Agency minus if anything is recovered we have to reduce remaining is taxable sir what the amenities like electricity or water is provided by the employer from his own source means he is engaged in the business of generation and uh supply of electricity or power or supply of water in that case whatever is the manufacturing cost of the water or units of electricity as given to the employees house we have to take that from that if there is any amount recovered like if any concessional amount is charged to employee we have to reduce it remaining would be taxable guys clear next if value of perquisite in respect of free education or conation education see education allowance is different education facility is different whatever we are talking now is education facility training expenses of employees always not taxable guys because training is much required like upgrading the skills and interpersonal skills of the employee if any training is provided it is not taxable as purpos fixed education allowances taxable under Section 10142 we saw but exemption is given for 100 rupees per month per child maximum two children oh huge then actual amount of school fees paid or reimbursed by the employer for the children of employees chargeable to tax as perquisite in the hands of employees so whatever is the see sir it is it is like that employer is paying the school fees for the employees children in that case whatever the school fee the employer is paying is taxable as perquisite in the hands of employee or El sir employee paid School fee of his children which is later reimbursed by employer in that case whatever is the amount which the employer has reimbursed will be taxable as perquisite in the hands of employee however whatever reimbursement or the tuition fee paid can be claimed as deduction under Section 8C by whom by the employee now we have to see where the education facility is provided if education facility is provided in the educational institution see if it is provided in any other school education employees childrens are studying in any school for which school fees is paid by employer what is the value of perquisite whatever is the school fee paid by employer sir what if the school fee is paid by employee and reimbursed by employer whatever is reimbursed by employer is taxable in the hands of employee sir next what we are seeing is what if education facilities provided by employer in the school owned by him or managed by him or controlled by him in any case so employees childrens are studying in the school or college which is is owned or managed by the employer in that case what we have to see is we have to check if the cost of Education in the similar institution or in the near locality if it is up to 1,000 rupees per month per child no limit for number of child nothing is taxable if the cost of Education in the similar institution that is the in the competitive college or school if the cost of education is up to th000 rupees per month per child now no chance of having so much it is much more than that guys so if at all if it is there nothing is tax sir what if it is more than 1,000 rupees per month per child then whatever is the amount of cost of Education in the similar institution will be taxable as perquisite in the hands of employee full amount entire amount you need not even reduce 1,000 rupees notes while calculating the amount of perite any amount paid or recovered we are to reduce it which is a common diog even in case of Education facility if anything fees is recovered but lower amount in that case whatever amount is recovered from the employee we have to reduce it then scholarship received by an employees children from employer is a perquisite in the hands of employee and the same is exempt under section 106 so if employer has given scholarship to the employees children it is a perquisite in the hands of employee but exempt fully exempt under Section 1016 guys then value of perquisite in respect of free meals or concessional meals that is also they taxing whatever meals or snacks snacks tea and all is exempt but meals if the value of the meals is more than 50 rupees it is taxable guys so if the meals provided by the employer during the office s or zodax or food coupon given by the employer if the value of the meal is more than 50 rupees up to 50 rupes it is exempt the difference is taxable for example the value of the meal provided by employer is 80 rupees assume guys in that case only 30 rupes would be taxable and in case of tea snacks provided during office hours is fully exempt clear including fruits and all then free meals provided during the office working hearts in remote area is fully exempt okay next free or concessional tickets the value of any benefit or amenity provided by the employer who is engaged in the carriage of passengers or Goods means the employer is engaged in travel business to an employee or to any member of his household for personal or private Journey free of cost or at a concessional fee so whatever is the benefit which the employer is giving to the employee will be taxable in any convenience owned or leased or made available by any other Arrangement by such employer for the purpose of transport of Passenger or Goods so what is the value of perquisite taxable year is value at which such benefit or amenity is offered for such by the employer to the public means if others were traveling what is the amount you would have charged take that from that if any amount is charged to the employee but concessional amount reduce it so if nothing is charged then don't reduce anything so entire amount whatever is charging to the general public will be taxable as perquisite to the employee but if there is transportation facility provided by the employees of Airline and Railways Indian railways okay in that case full exemption is available guys nothing is taxable as perit especially whoever is an employee of Indian railways like central government employees for them some transport facilities will be provided in Railways free of cost or at a concession rate not only for employee for their family members also in that case nothing is taxable even for airline okay value of perquisite in respect of gift guys gift first we have to check is given by whom if it is given by others not by employer by others we have to check section 56 2 10 which falls under income from other sources which we will learn in the fifth head of income so what if it is given by employer we have to see in what form it is given if it is in given in the form of cash or money it is fully taxable irrespective of the amount you have received 1,000 2,000 5,000 10,000 20,000 whatever is the amount is fully taxable if it is in kind if it is in kind we have to check what is the fair market value of the gift if the fair market value of the gift is less than 5,000 nothing is taxable if the fair market value of the gift is more than or equal to 5,000 then entire Val is taxable assume the employer gifted a watch to the employee and the value of the gift is 6,000 in that case how much is taxable entire 6,000 sir what if the value of the watch is 4,000 nothing is taxable nothing is taxable guys okay sir next value of the perquisite is equal to sorry first what is it value of perquisite in respect of specified security or SP Equity shares in simple we call it as ESOP employee stock option plan so if employer has offered the shares of the his own company to employees at a discounted price see as per companies at 2013 no company can issue the shares at discount but for employees as they put their sweat into the company's growth they can issue shares at a discount so in that case if the shares are issued at a discount so whatever is the value of the discount which employee has enjoyed why did he enjoy it because of employer employee relationship so whatever is the discount he has got will be taxable under the head perquisite now value of purpos fair market value of the shares issued on the date of exercising the option so on whatever date the option is exercised by the employee on that day we have to check the fair market value then from that we have to reduce amount paid by the employee to acquire the shares which is nothing but the purchase price so assume guys the fair market value of the shares was 300 rupees but the share is offered to the employee at 200 rupees so what is the discount he's enjoying 100 so 100 rupees per share assum he's alloted thousand shares so how much is taxable as perquisite for him 100 into ,000 yeah and one important thing in the future sir what if the employee sell this shares we have to compute capital gain yes what will be the cost of acquisition it is 300 rupees even though he has paid only 200 remaining 100 was taxable for him as income under the head salary yes so they're telling under capital gains head in future if ESOP Shares are sold what is the cost of acquisition for employee means the fair market value which was considered to compute income under the head salary as on the date of exercising the option that will be allowed as cost of acquisition clear yes now sir what should we take it as fair market value so normally they would have given straight away in the question if it is not given some information might be given from where you have to pick it if Shares are listed on recognized Stock Exchange then we have to take the average of opening price and closing price of the share means on the date of exercising the option opening price closing price you take take the average of it like how you take the average stock opening stock closing stock all divided by two Ina same way sir what if the shares are listed on more than one recognized Stock Exchange it is listed in NSC also it is listed in BC also sir in that case average of opening and closing price of the share on the recognized Stock Exchange which records the highest volume means on the date of exercising the option in which exchange highest volume was there means highest bought and sold the demand for the shares was more in which exchange we have to consider that so in that exchange assume the highest volume was there in NSC so in NSC on the date of exercising the option what is the opening price what is the closing price take the average of both so what if the shares are not at all listed private companies in that case value as determined by Merchant Banker so motor car we have already seen we'll proceed further value of perquisite in respect of credit card expenses taxable value of perquisite that is membership fees or annual fee incurred by the employer on a card provided to an employee minus if any amount is recovered guys but if the expenses are exclusively incurred for official purpose then nothing is taxable but obviously in that case the employer has to satisfy the conditions like he has to meet uh keep the details of all the expenditure which has been incurred and he should also give a proof that yes all this expenditure is incurred for official purpose then value of perquisite Interest of Club expenditure what is the value of perit cost incurred by the employer minus if any amount is recovered but even here in the case the employee enjoy the corporate membership in a club the value of benefit wouldn't include the initial membership paid like lifetime membership Fe whatever will be paid by employer that will not be taxable as per CIT so whenever you go whatever benefit you enjoy free of cost only that would be taxable as perquisite in the hands of employ guys however if such expenses are incurred only and exclusively for official purpose nothing would be taxable in the hands of employee provided conditions are satisfied that is employer has to maintain the data of whatever expenditure has incurred and he should also give a proof that all this expenditure is incurred exclusively for official purpose then the value of perquisite in respect of health club sports similar facility if it is provided to all the employees as a whole guys nothing is taxable if it is provided only to selected employees then whatever is the value of benefit they are getting will be taxable in the hands of that selected employee then employer contribution this I will cover it later along with the PF part because it is connected to Provident fund next taxfree perquisite in all the cases so if any employee is getting the following perquisites for them it is fully ex it is actually perquisite but exempt guys which are those the value of the following perquisite is not included in the salary income of the employee refreshment the value of refreshment provided by the employee during office hours and in office premises is fully exempt like tea coffee snacks everything is exempt guys but lunch only up to the value of 50 rupees only up to the value of 50 rupees if it is more than 50 the difference would be taxable okay then recreational facilities the value of recreational facilities provided is exempt however the faciliity should not be restricted only to few employees it should be provided to all the employees it should be open to every employee telephone facility telephone facility provided at the residence of the employees exempt to the extent of the amount of telephone bills paid by the employer when it is used for official and personal purpose see if telephone Alliance is fully taxable but if telephone connection is given including mobile so for which the bill is paid by employer nothing is taxable guys transport transport provided by the employer to the employees as a group and not to an individual or a few employee alone from their place of residence to the place of work which we call it as cap facility guys cap facility so cap facility provided by the employer is not taxable any perquisites provided by the central government to the citizens of India who is rendering Services outside India any perquisite is exempt any even allowance any allowance is exempt any perquisite is also exempt then employer contribution to stop group health insurance schemes employer contribution to stop group health insurance scheme is exempt in the hands of whom employee whereas premium paid by the employer on life insurance policy of the employee is taxable as perquisite health insurance accident insurance and all whatever premium is paid by employer to employee is not taxable but if it's life insurance premium whatever life insurance premium is paid by employer for the life of the employee it is taxable as perquisite in the hands of employee so personal accident insurance payment of annual premium by employer on personal accident policy affected by him to his employee is exempt in the hands of employee amount spent on training of employees amount spent by employer on training any training provided by employer to employee is exempt guys free rations the value of free rations given to the Armed Forces personal is exempt free rations or at a concessional rate whatever they provide then laptop computer provided by employer to employe is exempt then rentree houses provided only to some selected people what are those who are they rentree houses are convinced to high court or Supreme Court judges office of parliament Union Minister and leader of opposition in Parliament are exm tax paid by employer on non-monetary perquisite of employee is exempt in the hands of employee under Section 1010 CC guys see if see on the salary income of employee employee has to pay tax but if employer is paying then whatever tax employer is paying on non-monetary perquisite will not be considered as income in the hands of employee C I will cover this point again because later again explanation is there medical facilities so we'll see okay let me just cover up that guys so salary PID tax fee let me cover this first okay then we'll proceed with other points when employee Bears the burden of tax on the salary of the employee the income from salary in the hands of employee will consist of his salary income and also tax on his salary paid by the employer however as per section 1010 CC the income tax paid by employer on non-monetary perquisite on behalf of employee would be exempt in the hands of employee and the same is actually this is not allowed for employer as expenditure he cannot claim it as expenditure guys now simple assume the income from salary of employer sorry employee is 10 lakh on this employer is need not like pay tax but still employee is paying sorry employer is paying it in that case assume the tax paid by employer for the income of the employee let me take simply tax liability 1 lakh in that on non-monetary perquisite how much is paid assume 20,000 guys on others it is 80,000 so whatever tax is paid on non-monetary perquisite it is exempt under Section 1010 C in the hands of employee nothing is taxable what what about others sir whatever tax is paid on other items like monetary benefits that is taxable so now should we added to salary income yes so now after adding this what is the salary income of the employee 10 lakh 80,000 so because of this obviously the tax liability will go up which employee has to pay before filing his returns clear so if tax is paid on salary income of the employee by employer then whatever tax is paid on non-monetary perquisite is not taxable or non-monetary benefits whereas whatever taxes paid on other benefits or salary or monetary benefits that will be taxable as per it in the hands of employee which we have to add it to salary income and accordingly the liability of the tax liability of the employee will go up which he has to clear before filing his returns sir should he pay it again 80,000 no no no see whatever one L assume guys after considering all this and after considering all the heads of income his final tax liability of the employee I'm talking about is coming to 3 lakh in that case already on of him the employer has paid how much one lakh we will reduce one lakh whatever is paid by employer remaining 2 lakh he will pay who employee employee will pay because employer maximum you would have paid tax only on salary income that to whatever tax he has paid on monetary perquisites or monetary benefits will get added to salary so accordingly the tax liability will again go up so that difference he has to settle it fine CH next the last item here medical facilities so value of perite in respect of medical facility fixed medical allowance is fully taxed if it is given in the form of allowance if it is given in the form of facility guys the following medical facilities provided by the employer are not chargeable to tax the value of any medical facility provided to an employee or his family members in any Hospital clinics which are maintained by employer that is wounded and maintained by employer or in any government hospitals if treatment is given in the hospital owned by employer or government Hospital the full perquisite is fully exempt with respect to medical facility so medical treatment given to employee or any of his family members so medical facility outside India then cost of medical treatment and cost of stay is exempt only up to limit permitted by RBA see if the medical treatment is given for the assass or his family members outside India there are three expenditure which would be incurred guys that is medical treatment expenditure then cost of stay as well as cost of travel so cost of medical treatment and stay is exempt only up to the Limit permitted by RBA assume for medical treatment and cost of stay the actual expenditure incurred by employer for employee or his family member one see patient along with one dependent they can go okay so in that case asum actual expenditure incurred by employer is 15 lakh but amount permitted by RBI is only 7 lakh in that case remaining 8 lakh would be taxable as perquisite Cas as perquisite and amount permitted by RB is not a fixed amount it will change from case to case so that if what all if there is any question they would have mentioned it in the question what is the amount permitted by RBI next cost on the Travel is exempt only if the gross total income of the employee before including such expenditure does not exceed 2 lakh so that to gross total income cost of travel is exempt only if the gross total income is within 2 lakh for the employee sir what if it is more than 2 lakh entire cost of travel will be taxable entire cost of travel would be taxable okay cost of travel includes both going as well as coming back guys next leave travel concession Section 105 an employee can claim exemption under Section 105 in respect of leave travel concession exemption under Section 105 is available to all the employees Indian as well as foreign citizens exemption is available in respect of value of any travel concession or assistance received or due to employee from his employer including former employee for himself or any of his family members in connection with his proceedings to any place in India travel should be to any place in India if you go abroad yes you can go employer can pay expenses but whatever EMP employer has paid is taxable as perquisite employee can enjoy exemption only if the travel is to to any place in India either on leave or after retirement from service or after termination of his service what is the amount of exemption actual amount spent by the employer are the amount specified as per the class guys as per the class means depends in which mode of transportation you have gone air Railways or any other mode they have prescribed certain class so as amount prescribed as per that respective class are the actual expenditure incur whichever is lower is exempt and exemption can be claimed for two times in a block of four years current block is from calendar year 22 to 25 in a block of four years you can claim maximum two times exemption but in a particular block if you not claimed the exemption then maximum you can carry forward one unutilized block or unutilized benefit to next block so in the next block maximum you can claim is three clear yes salary paid tax free we have seen other benefit or amenity so whatever perquisite we have seen sir is it an end list no what if any other benefit or perquisite is provided by employer to employee how do we value it the value of any other benefit or Amun service right or privilege provided by the employer shall be determined on the basis of cost to the employer whatever is the cost to the employer will be the value of perquisite in the hands of employee but that cost to the employer should be determined under arms length transaction as reduced by employees contribution if arms length transaction is like a transaction entered between two unknown party where each of them are not influencing the price each of them none of them are influencing the price guys okay so this is all about the perquisites guys now let us move towards retirement benefits so gratuity so gratuity is a lome payment which employer would have paid to the employee for his long-term service so whatever gratuity is received if it is received during the service it is fully taxable guys if it is received by any employee during the service it is fully taxable if it is received at the time of retirement or termination of the employee or in case of death if family members are receiving it they can enjoy the exemption what is it sir if it is government employee 100% exempt if it is a non-government employee we have to check whether they are covered under payment of gratuity act or not if a non-government employee is covered under the gratuity act then least of the following is exempt what is it actual gratty received or statutory limit of 20 lakh which is a fixed amount then 15 by 26 into L drawn salary per month that is before the retirement or before the termination or before the death whatever is the monthly salary they drawn into number of years of service completed round off if months is more than 6 months that is number of service assume guys they have rendered 25 years 9 months of service so as 9 is more than six we have to round it up to 26 years so what if it is 25 years 4 months we have to take 25 years only so if the months is more than six take next year if months is less than six or equal to six ignore the months and take how many years they have completed C yes next sir what if a non-government employee is not covered under the gratuity act then least of the following is exempt guys first two remains same actual gr be received or a statute limit of 20 lakh then last point is different off into average salary of last 10 months per month that is before you retire or terminate or before the employee die what is the last 10 month salary we have to take and average it see this average will come only if there is any hike or increment in the last 10 months if the salary was same then last 10 month salary whatever you get divided by 10 if you do monthly salary will remain same so how do you calculate average salary of last 10 months means calculate the total salary of last 10 months divided by 10 if monthly salary is same for all last all 10 months then we'll straight away take that only as average salary guys see this will be given in the question if not I have told you how to calculate it so last 10 month salary add up divided by 10 that is average salary okay then number of years of service completed no round off so even if he has completed 25 years 11 months of service we have to take only 25 years completely ignore the months whether it is more than 6 months less than 6 months doesn't matter completely ignore the months guys is that clear so what should we take it as Sal and all we will see it later guys I have covered it at the end fine next guys in the past or in the same year if employee has received gratuity from any other employer or the same employer and he has claimed exemption whatever is the amount of exemption he has already claimed has to be reduced from this 20 lakh statut limit whatever is the statut limit from that we have to reduce whatever exemption is already claimed earlier if at all if he has claimed next commuted pension section 101 a provides exemption see if it is a monthly pension whatever monthly pension whoever is receiving it whether government employee or non-government employee it is always fully taxable C if it is commuted pension means employee instead of receiving every month pension he told sir I want some emergency money so please give me in lumsum so whatever amount is receiving as lumsum pension is called commuted pension for which exemption is available under Section 1010a if he is a government employee 100% exempt guys if he is a non-government employee we have to check whether he has received gratuity also or not if he mean along with pension he's also got gratuity so in that case is if he has received gratuity then how much is exempt 1/3 into commuted pension received divided by commuted percentage means if you had received the entire Comm pension how much you would have got we have to see one/ third of that will be exempt sir no sir he has not got any gradu he's getting only pension in that case instead of 1x3 it will be 1 by two what is exempt is 1 by two means the amount of exemption would be more guys I just explain this guys listen assume the employee was getting pension throughout the previous year that is our previous year but on 1st October okay he was getting 10,000 pension per month okay now from 1 October he wanted some lumsum amount so he commuted 60% of whatever he is supposed to get in the future is receiving now as Lum suum how much sir six lakh he is getting how much 6 lakh okay 60% remaining 40% he will continue to receive yes so from 1st October to 31st March even after 31st March he will continue to receive but it is the end of our previous year so we are bothered only till 31st March so how much pension he will get 10,000 into 40% which is uncommited part 4,000 so before commutation he was getting 10,000 he commuted 60% so remaining 40% he will continue to receive monthly so in that case how much is taxable guys monthly pension is always fully taxable 10,000 into 6 months whatever he is getting from April to sep number because in October he commuted so for October he will be getting only 4,000 okay next 4,000 he got for another 6 months this is monthly pension taxable for all the employees next with respect to commuted pension how much did he get 6 lakh okay 6 lakh so how much exemption he can claim exemption is if he is a government employee 100% exempt if he's a non-government employee okay so in that case 6 lakh divided by what is commuted percentage how much he commuted 60% means if he has got entire amount how much he would have got we have to do 60% in into did he get gratuity if s the amount of exemption would be 1x3 if he has got gratuity if he has not got gratuity the amount of exemption would be one by in case of non-government employe clear obviously if this amount is going Beyond 6 lakh then obviously exemption is restricted only to Maximum 6 lakh you cannot claim exemption more than the amount what you have received that is for sure in any exemption it is like that okay so uncommitted monthly pension is taxable in all the hands guys including government employees next leave salary section 1010 now leave salary is what see during the employment employee will be eligible to take certain number of paid leaves paid Le assume the employee was eligible to take 60 days of paid leave every year but he has not availed it so he's very obedient only whenever it is genuinely required he has taken the leave whereas rest of the year he has worked literally for the employer in that case whatever is the leave period he had but not availed you would have got that as in the form of leave encashment or leave salary for example guys assume in a year he was eligible to take 60 days leave 60 days leave but he has taken only 10 days leave so remaining is what 50 days so 50 days is called leave credit and he will get paid for it extra over and above whatever monthly salary is getting you will get paid for this 50 days means you are eligible to take paid leave but still you have not taken so whatever credit you have you can encash it and receive it in the form of salary over and above your monthly salary so if leave encashment is received during the employment it is fully taxable for all the employees if it is received at the time of retirement or termination guys then exemption is available under Section 1010 daa how much sir if he is a government employee 100% exempt guys then non-government employee least of the following is exempt act leave encashment received stat limit of 25 lakh or last 10 months average salary into 10 months last 10 months average salary into 10 months see straight of into 10 months last 10 months average salary you have to calculate into 10 months you have to do okay then leave credit into 10 months average salary per month so average salary of last 10 months means hope I have already explained you guys understood even for the gratuity I told last 10 months total salary you take divided by 10 months that is the average salary per month for last 10 months yeah yes so here we have to multiply the average salary with 10 months and here we have to multiply with leave credit sir how do we calculate leave credit sir as per at listen here leave credit is leave eligible as per it act which is maximum 30 days for each year of service for each year of completed service 30 days is the leave eligible as per it act employer may give 45 days 60 days 80 Days 90 days he might be great but it Act is telling maximum 30 days as per us okay minus leave taken if at all if this figure is positive we call it as leave credit so that we have to take it here and there can be few scenarios where employee has leave credit as per employer but he may not have leave credit as per it act in that case what happens whatever leave encashment he has received will be fully taxable because this limit will become zero in that case will become zero in that case yes next so leave encashment received during the employment is fully taxable like guys same like gratuity also if any leave encashment was received in the past and employee has enjoyed the exemption means whatever amount of exemption has already enjoyed we have to reduce it from 25 lakh limit we have to reduce it from 25 LH means lifetime exemption available for leave encashment is 25 lakh for an S same way for gratuity also lifetime exemption available is 20 lakh if any exemption was claimed in the past we will reduce it from statut limit while he's claiming the exemption for second or more time next Provident fund one of the important thing so with respect to Provident fund where the contribution will be both from employer as well as employee for the future benefit of employee guys so in that case there will be three things to be considered here employer contribution employee contribution and interest earned on the fund balance see employee contribution actually is not an income it is like an investment for which deduction is available under Section ATC whereas employer contribution yes it is a benefit to the employee but is it taxable we have to see what about interest interest is also actually income on both employer and employee contribution whatever interest is earned actually is an income income but is it taxable we have to see okay we'll see statutory Provident fund it is applicable only to the government uh employees or for educational institution or colleges guys so in that case employees contribution is available as full deduction under Section ATC but ATC has a maximum limit of 1 lh50 that is there then employer contribution is fully exempt under Section 101 nothing is taxable as salary income then in coming to interest whatever is the interest rate fully exempt guys under Section 101 okay then recognized Provident fund this will come to the non-government employees non-government employee recognized Provident fund means which is recognized by the commissioner of income tax so in that case if the fund account which is opened by the employer if it is in recognized Provident fund whatever is the employee contribution employee can claim deduction under Section ATC then employer contribution it is up to exempt only up to 12% of salary under Section 1012 10 12 exempt only up to 10 12% 12% of salary if the contribution is within 12% nothing is taxable if the contribution is more than 12% assume employer is contributing 14% of employees salary to PF account in that case only the excess of uh in excess of 12% whatever is there that is 2% will be taxable guys then interest is exempt only up to 99.5% per actually as of now the interest rate is 8.25 but still for academic purpose they can give any rate so if interest rate is below 9.5 nothing is taxable if it is above 9.5 assume 10% then in that case only 0.5% would be tax able guys clear yes next unrecognized Provident fund there is no tax benefit given for this so for employee contribution no deduction under Section ATC then employer contribution and interest will not be taxable yearly but it will be taxable when it is withdrawn when it is withdrawn guys when it is withdrawn it is like this please listen you when the amount is withdrawn from unrecognized Provident fund assume the amount withdrawn is 30 lakh in that employee contribution is like 10 lakh employer contribution is around 10 lakh then interest is 10 lakh and interest 10 lakh I'm just taking a random figure employee contribution employer contribution so interest on employer contribution is 5 lakh interest on employee employer as well as employee contribution both interest is 5 lakh H okay sir in this case guys now employee contribution is anything taxable sir no because whatever has invested is's getting back and even when he invested every year or every month when he contributed ATC was not available for him so hence this is not taxable then employer contribution whatever is withdrawing it is taxable under which head income from salary then interest whatever is getting on employer contribution it is taxable under the head salary whereas whatever interest is getting on his own contribution will be taxable under the head income from other sources guys will be taxable under the head income from other sources okay next public Provident fund which is open to anyone okay even though you are not in an employment you are a self-employed person entrepreneur or anyone even as a student you can open ppf account so in that case what there is no question of employer contribution here so whatever is the assy contribution you can claim deduction under Section ATC guys see for all this contribution deduction is available under Section ATC but maximum there is a limit under ATC which you C which is maximum 150,000 okay then whatever interest you getting on ppf contribution is fully exempt under Section 101 guys sir but there are some googly additional points for this what are those from RPF that is recognized Provident fund if you're withdrawing the money after the 5 years of continuous service nothing is taxable but if you are withdrawing within 5 years of continuous service then entire amount whatever you withdraw would be taxable that is actually only employer contribution will be taxable okay now it if you are withdrawing within 5 years but for the case of disablement or ill health or in case of discontinuance of the employer's business then nothing is nothing is taxable guys due to the following reasons if it is withdrawn even within five years nothing is taxable then if employee contribution in a year is more than 250,000 then whatever interest is earned in excess of the contribution made with in excess of 250 will be taxable guys simple assume in the previous year 23 24 employee contribution is 3 lakh how much is in excess of 2.5 lakh 50,000 so no doubt interest will be earned on the entire contribution of 3 lakh but what they're telling here is in excess of 250 how much you contributed 50,000 on that whatever interest you are earning is taxable as perit it's taxable as perquisite and they're telling if employees contributing without employer contribution means employer is not contributing only employee then instead of 2 l50 the limit is five lakh the limit is Five lakh For example employee alone contributed assume 6 lakh employee alone in that case how much is in excess of 5 lakh 1 lakh on that whatever interest is earned is only taxable as perquisite interest no doubt guys will be earned on the entire contribution but what is taxable is only in excess of 5 lakh whatever you have contributed only on that interest would be taxable and whatever 2 l50 and 5 lakh I'm talking is with respect to employee contra contribution sir what about employer contribution we had left one point in perquisite now yes come to that employer contribution as per section 17-7 total of the following in excess of 7 lakh 50,000 during the previous year will also be taxable under the head salary as perquisite so employer contribution to recogniz Provident fund to approv Super anation fund that is for the benefit of employee or employer contribution to NPS National pension scheme as per section 80ccd if all this put together is more than 7.5 lakh guys then whatever is in excess of 7.5 lakh will be taxable as perquisite in the hands of employee sir should it should all the three be there no see all three put together they're telling assume sir only recognized Provident fund is there employer has contributed 8 lakh only for recognized Provident fund employer has contributed 8 lakh how much is in excess of 7.5 lakh 50,000 50,000 is taxable as what perquisite in the hands of employee and also as per section 17 to 7A whatever income is earned on 50,000 that is whatever interest you have earned on 50,000 will also be taxable as perite will also be taxable as perquisite under Section 17 to 7 guys let me take one more example see these three points are there but it need not be always that all three put together yeah just a second uh now assume employer contribution for all this fund put together or any of this fund put together or any two or any one let it be anyone okay so all this put together is 10 lakh is 10 lakh employer contribution how much is in excess of 7.5 lakh 2.5 lakh so in that case is 2.5 lakh is taxable AS perquisite Plus on this whatever income is earned is also taxable as perquisite as per section 17 to 7 and they have given how we have to calculate this value which we have covered in detail in our regular class so 2.5 lakh as well as the income earned on that will be taxable as perquisite in the hands of employee has salary guys that's all okay now getting back we have deductions we have deductions under section 16 this is available only for the ass who has salary income sir I don't have any salary income can I claim deduction under section 16 no no no you cannot yeah standard deduction a standard deduction of 50,000 or the amount of gross salary whichever is lower is to be provided to all the employees guys so actual salary income or 50,000 50 is always available for every employee whoever is having salary income see many of time this will be hidden information in the question you guys to take it whenever they give salary received by vkas salary earned by Vias and all guys please be careful 50,000 even though question is silent at least 50,000 deduction you have to provide if sometimes while calculating total income and all if they have already given income from salary computed or taxable salary if they have already given it is understood it is already computed figure they have already taken care of standard deduction also if they have simply given salary earned salary received and all please take care of the standard deduction which you have to reduce CLE yes so sir what what if the salary income of the employee is less than 50,000 assume he has worked only for one or two months where salary is less than 50,000 in that case assume I have only 40,000 salary in the previous year 23 24 how much standard deduction I can claim only 40,000 oh entertainment allowance deduction is available only to the government employees guys so deduction is available only to the government employees whereas for others no deduction how much sir least of the following entertainment allowance received 20% of the basic pay are 5,000 whichever is lower the entire see whoever is receiving the entertainment allowance first it has to be added in gross salary and deduction can be claimed only by government employee whereas for non-government employe deduction is not available and this is deduction and not exemption guys then profession tax profession tax is paid to the state government it is the revenue of the state governments for the professions provided in the respective States now if profession tax is paid by employee himself it is an obligation of employee guys if employee himself has paid the profession tax out of his pocket then you can straight away claim deduction under section 16 clause three sir what if employees profession tax is paid by employer it is the obligation of employee met by employer first it has to be included as perquisite before calculating gross salary then deduction will be claimed for whatever amount is paid the effectively the effect means the net effect would be nil guys C so I repeat if it is paid by employee directly straight away claim deduction if it is paid by employee first include it in perquisite while calculating gross salary and then provide deduction for whatever amount is paid by employer okay then important note with respect to salary guys this is only for claiming exemptions and all or while valuing perquisite for the purpose of salary chapter salary means what guys that is whenever we are calculating any exemption salary means basic pay plus da condition attached that is if provided in terms of employment or forming part of retirement benefit plus commission only if it is expressed as a fixed percentage of turnover this we have to take only if the conditions are satisfied whereas while calculating taxable salary we have to take da and commission no matter what I have already covered this okay so salary means basic pay plus da plus commission for D and commission condition attached this is where the maximum places the salary means but it changes in few cases guys gratuity covered under the gratuity act for non-government employees salary means what only basic pay plus DM okay gratuity for the employees who are covered under gratuity act non-government employee their last drawn salary is there now we have to take what sir last drawn salary includes what only basic pay plus da and for no condition okay then entertainment allowance it is straight away we saw just now 20% of basic pay straight away then with respect to perquisite while valuing rent free accommodation we have to take the percentage of salary now that is 5% or 7.5% or 10% of salary so what salary means there sir basic pay plus de provided in terms of Employment Plus bonus for commission no condition any fees and all taxable allowances but we should not include any perquisite and we should also not include any benefit which is given at the time of retirement clear yes sir so these are the three scenarios where salary will change in any other case guys salary means basic pay da plus commission for da and commission condition attached now we are done with salary head the impact of section 115 B that is default scheme guys we already learned default scheme which is given under Section 115 BAC what are the tax rates so if the r is following default regime then he has to foro certain exemptions and deductions so in this table I have given under salary head what all exemptions and deductions he has to foro so whatever I have highlighted in the last column allowed not allowed allowed means even under default regime it is allowed see guys all this exemptions deduction under the optional scheme it is allowed provided you satisfy the conditions whatever is given in the respective section whereas under default regime you you should know whether is it allowed or not try to remember anyone guys what is allowed or what is not clear yes we'll go through first allowances H not allowed then any allowances paid to high court or Supreme Court judges and paid by un not to its employees any allowance given to them was exempt now but under default regime nothing is allowed everything is taxable okay then sir any allowances paid by Indian government outside India to a citizen that is allowed under both the schemes then wherever I have highed in green color that means allowed g means not allowed danger exemption under Section 10141 that is the allowances given to meet the official Duty expenses traveling allowed conveyence allowed daily allowed whereas others are not allowed guys then exemption under Section 10142 which is given for personal purposes children hosel and other alliances are not allowed whereas transport Alliance provided to handicap diff Dem blind employees so physically challenged in simple for them it is allowed 3,200 whatever is there is allowed then coming to perquisites only one perquisite is allowed guys okay that is the miscellaneous cases so what you try to remember is what is not allowed okay all other things are allowed the miscellaneous what are not allowed sir free food and beverages up to 50 rupees it is exempt now under default scheme even that 50 rupees is taxable entire amount is taxable that that is value of foot next rentree official accommodation and leave travel concession provided to high court and Supreme Court Judge is taxable even that leave travel concession provided for any places in India that is also fully taxable that is not allowed in case of any other perquisites whatever exemptions is given to employee under optional scheme same thing is available even under default scheme guys so here you can try to remember what is not allowed remaining all others are allowed then coming to retirement benefits everything is allowed under retirement benefits everything is allowed guys then coming to deductions under section 16 standard deduction is allowed guys very important because previously even this was not allowed but through Finance act 2023 they made it open now so standard deduction can be claimed even if the assess is following default regime whereas the other two deductions are not allowed other two deductions are not allowed guys clear so these are the exemptions and deductions which we learned in salary head which are allowed or not allowed under the default regime is that clear so in the single table I have tried to cover everything what is allowed or what is not allowed guys one more important thing we already covered this rates and all under the previous chapter that is Chapter 2.1 that is with respect to tax rates but just an highight guys please be careful especially with default regime because lot of changes has been brought in default regime through Finance act 2023 and they have made it as default previously it was called new scheme what is the basic essential limit under default regime guys three lakh irrespective of the age of the individual irrespective of whether he's resident non-resident whereas under optional scheme the basic agential limit is 2 l50 normally but if the individual is resident age 60 or more 3 lakh 80 or more five lakh I basic Asen limit is available under optional scheme whereas under default scheme it is not so the tax rates are also changed under default regime up to 3 lakh nil 3 to 6 lakh 5% so for every 3 lakh increase in the income the tax rate will increase by 5% but there is no 25% slam straight away if the income is more than 15 lakh 30% rate guys clear even rebate so rebate is available under optional scheme only if the total income is of a resident individual is up to 5 lakh whereas under default regim if the total income of the resident individual is up to 7 lakh it is available maximum 25,000 but even if it is more than 7 lakh still it is eligible but we have to apply the steps it is which is very similar to Marginal relief guys but here you have to check only if the total income is more than 7 lakh but within 7 L 28,000 whereas this benefit is not there under optional scheme guys even Sarge rates it was same before but now they have changed it which we already learned Sarge rate is almost same but only one highest rate under option scheme is 37% but that is not there under the default scheme the highest rate under default scheme is 25% so whenever the total income is more than 2 CR under default regime such charge rate is 25% and in case of optional scheme if the total income is more than 2 CR but up to 5 CR then it is 25% more than 5 CR 37% but in both the scenarios guys if there is capital gain special income or dividend income the maximum surcharge rate on that is 15% is 15% these are some of the important differences between optional and default regime guys thank you we are done with this head yes guys now we will revise the second head of income which is income from house property section 22 to 27 contains the provisions with respect to the income from house property section 22 being the charging section specifies the annual value of the property comprising of building or the land opport there to that is land attached to the building means building is there along with that land whatever is attached to the building like parking space space or Garden area even that is covered here guys there to of which the assess is the owner is chargeable to tax under the head house property so annual value of the property which is like a building mainly building if there is any land underneath that or which is a part of the building even that would be covered here and the assy should be the owner of that property then only the income from that property would be taxable under this head guys yes next exceptions the annual value of the following properties will not be taxed under the head house property but it will be taxable under the head PG PP that is profits and gains of business or profession which are those property which is occupied by the assass for the purpose of his own business or profession for his own business or profession means assess is carrying on the business in the primes which is owned by him in that case it is not taxable you then properties of an assass Engaged in the business of letting out of properties that is assass is engaged in the business of letting out the property in that case whatever rental income is getting will be taxable under the head house proper sorry under the head pgbp guys okay then this head deals with self-occupied let out property either for residential purpose or commercial purpose see whether the property is let out for residential purpose or commercial purpose whatever rental income the assess is earning is taxable under this head but if the property is used for ass's own business or profession then it is not covered here guys okay even notional income Provisions are applicable under this head that is in case of deem to be L out property guys what is deemed to be L out property and all we will see so there are three categories of property under the income tax law what are those let out property what is the possibility of having income from let out property any amount of income or loss guys with respect to self-occupied property or unoccupied property maximum any ass can have two self-occupied property even if he is having more than two House properties as self occupied inexcess of two whatever is there will be considered as deemed to be let out property so in case of self-occupied property having income is not at all there but you can have zero income or you can have maximum amount of loss of amounting to 30,000 or 2 lakh Guys depending upon how much you can claim with respect to interest then deemed to be let out property it is as if the property is let out so in that case so any amount of income or loss you can have because that is at par with let out property at par with let out property fine then so with respect to let out property how do we compute the income if the property is let out guys and even for deemed to be let out property the calculation is like this and the format is given in income tax law only for which you have to stick to first we have to start with gross annual value sir what is gross annual value see in section 22 itself they've used the word annual value they are not straight away told rental value so while calculating gross annual value we have to consider Municipal value Fair rent standard rent and also the actual rent earned by the owner so how how do we determine it first we will see that annual value computation is covered in section 23 subsection 1 if there is no vacancy means if the properties let out throughout the previous year for all 12 months by the owner in that case how do we calculate the gross anal value we'll compare first Municipal value with Fair rent and we will take whichever is higher then we will compare that with standard rent and take whichever is lower guys and whichever is lower what we get is called expected rent then we will compare that with actual rent so what is actual rent annual rent minus analized rent annual rent means monthly rent into 12 months guys minus unrealized rent is Sir when tenant is staying in the property but he has not paid the rent so unrealized rent can be uh reduced only if rule four conditions are satisfied so under rule four there are four condition if all the four conditions are satisfied yes if the owner has not recovered the rent from the tenant even though the tenant stayed in the property then you can reduce that as unrealized rent while calculating actual rent okay so whichever is higher we will compare this to whichever is higher we take it as gross annual value guys now sir what is Municipal value this is the value fixed by the municipal authorities to leave a municipal tax guys then Fair rent means reasonable rent means if the similar property in the similar locality is let out at what price it will be let out we have to see then standard rent this is the maximum rent which can be charged as per the rent Control Act so this also we have to consider this is just to avoid the manipulation by the owner disclosing lower rent guys okay next sir what if there is vacancy how do we calculate the gross annual value till here everything remains same guys till here everything remains same that is till expected rent then what we do here is when there is vacancy even if the propert is vacant for 1 month two month or whatever period during the previous year we have to apply this we will compare expected rent with actual rent plus loss due to vacancy expected rent with what actual rent plus loss due to vacancy in that case if actual rent plus loss due to vacancy is more or equal to expected rent then we will take actual rent as gross annual value so what if it is vice versa if expected rent is more than actual rent plus loss due to vacancy then we have to take expected rent as gross annual value so how do we calculate actual rent when there is a vacancy actual rent is nothing but annual rent minus loss due to vacancy that is the period during which there was no tenant in our house property is vacant we couldn't even find the tenant then unrealized rent means property was occupied by the tenant but he didn't pay this we can reduce only if rule four conditions are satisfied guys yes so then what is annual rent it is nothing but monthly rent into 12 months fine so this is when there is vacancy okay so once we derive gross annual value we have to take it to our main calculation sometimes they would have given straight away gross annual value if not given we have to compute it and sometimes guys they would have given only rent in the question they not they would have not given Municipal value Fair rent standard rent and all in that case if the information is not given straight away take actual rent only as gross annual value clear that is only when question is silent about Municipal value Fair rent standard rent and all okay so gross gross anal value of the property we will take from that local taxes or Municipal tax paid by the owner during the previous year Municipal tax property tax local tax everything is one and the same guys it should be paid by the owner during the previous year only then we have to reduce it so I have given some points with respect to this we can see there is no specific section for multipal or local or property taxes but still it is allowed as deduction while Computing income from house property deduction is permissible subject to the following condition it should be paid by whom owner who is the asso it can be claimed only on payment basis sir for previous year 23 24 I was supposed to pay Municipal tax of 25,000 but I am not paid can I claim deduction no assuming the next year 2425 I paid 25,000 of 2425 plus last year's due both I paid in 2425 how much can I claim full 50,000 you can claim in 2425 so Municipal tax paid is always allowed on payment Cas payment basis guys so when whichever year you actually pay it to the municipal authorities you can claim the deduction if it is paid by tenant it is not available as deduction then it should be actually paid during the previous year if it is paid in the future then in whichever year you have paid it you can claim the deduction and sometimes guys this Municipal tax and all will be given as a percentage and that percentage has to be applied on Municipal value yeah so if Municipal tax local tax or property tax is given as a percentage please apply it on Municipal value and take the amount fine next coming back to the format we get net annual value once we reduce Municipal tax paid sometimes they would have given paid by a tenant and all please be careful if it is paid by tenant no deduction guys you can just give a note telling not allowed okay deduction under section 24 standard deduction is available under section 24 a that is 30% of nav for everyone whoever is having income from house property guys okay which is standard deduction again there is no separate deduction for any other expenditure provided and under Section 24b interest on housing loan if all if the ass has taken any loan for construction or purchase repairs renovation of the houses and all then whatever interest is paying on that loan he can claim it on acal basis this is allowed on acal basis guys please be careful with this this is allowed on accural basis fine so so after doing all this see for all if there is a loan we have to reduce interest many assess would have not taken the loan in that case should we reduce interest sir no there is no standard amount and all for interest whatever is payable during in the previous year if at all if you have taken the loan only then you reduce it so then you will get taxable income from house property which will form part of our total income calculation now we will talk about the section 24 deduction in detail so as we saw there are two deductions under section 24 first deduction is 24a standard deduction 30% of net annual values allowed as deduction are standard deduction or flat deduction irrespective of the actual expenditure incurred no separate deduction for repairs Insurance ET is allowed however this deduction is not available on the self-occupied property this deduction is not available for self-occupied property only for L out property or deemed to be L out property guys and please be careful many of times question may not be straightly on income from house property they would have asked you to calculate total income or tax tax liability guys but there they would have simply given rent received by the ass please provide at least no no information is given in the question they have just simply given rent received guys always assume that rent receiv received itself is a gav and please provide for 30% flat deduction straight away if question is silent about Municipal tax paid interest and all please don't do anything but at least standard deduction you have to give it you have to give it even though the question is silent even in salary head even though the question is silent still at least 50,000 standard deduction you have to give it same way here even if question is silent if rent received or actual rent is given please at least provide 30% standard deduction even though the question is silent okay next no separate deduction is available for repairs painting insurance or any other deductions guys next interest on borrowed Capital which is important guys this is important interest payable that is on acal basis on the loan borrowed for the purpose of what and all acquisition construction renovation repairs or reconstruction can be claimed as deduction PCR guys Tri R movie you would have watched now so PCR p means purchase c means construction Tri R repairs renovation reconstruction yes sir if loan is taken for any of this purpose then whatever interest you are paying on that will be allowed as deduction it can be claimed on accural basis then interest relating to the year of completion of construction can be claimed fully in the year in which it is completed irrespective of the date sir what about the interest for pre-construction period interest payable during the construction period that is pre-construction period can be accumulated and claimed as a deduction over a period of 5 years in equal installment from when commencing from the year of the completion of construction guys I will explain this please listen here looking here listening good date of loan date of loan assume 1st July 2018 and date of completion of construction date of completion of construction is assume 1st September 22 so in which year first check which year the construction is completed 20 to 23 so guys from 20 to 23 whatever ever is the interest from April only not from first September first April only so for entire year 2223 in which year the construction is completed you can claim the interest in that year only Plus for all the future years in the respective year you will claim now so what we have to do is take the preceding 31st March whatever the completion is completed now take preceding 31st March 31st March 22 yes sir sir what about the interest relating to this SP from the date of loan till 31st March 22 what about that interest we call it as pre-construction period so this we call it as pre-construction period we have to calculate what is the interest for this period assume guys it is 5 lakh we have to claim it in five equal installment sir from when from the year in which construction is completed so whatever interest is related to pre-construction per we can claim it in five equal installment from the year in which construction is completed so what about the interest relating to the year in which construction is completed you can claim fully in that year only irrespective of the date so in the year 2223 if construction is completed on any date property is ready we have to compute income from house property so in that case from the beginning of the year till the end of the year you can claim interest for that year so current year interest you will claim plus 1 15 of preconstruction period interest guys pre-construction period interest clear yes so this pre-construction period interest will come only for the first five years from the sixth or seventh year if still loan is outstanding you'll claim only that respective year interest that respective year interest guys okay sir guys if the loan is taken for let out property or deemed to be let out property whatever interest you are liable to pay entire loan interest you can claim entire interest whatever you are paying you can claim it as deduction so for let out property or deemed to be let out property there is no threshold limit to claim interest whatever your paying you can claim it whereas if it is a self occupied property maximum you can claim is 30,000 or 2 lakh guys it is actually 30,000 but if the following conditions are claimed then instead of 30,000 it is 2 lakh instead of 30 it is not 30 plus 2 lakh instead of 30 it is 2 lakh so when is it if both these conditions are satisfied if the property is acquired or constructed from the loan which is borrowed on or after 1st April 1999 see guys only loan should be taken for a purch or construction sir what if it is taken for repairs renovation reconstruction then maximum 30,000 sir what if loan was taken before 1st April 2019 sorry 1 April before 1st April 1999 then still maximum 30,000 okay then one more condition such acquisition or construction is completed within 5 Years From the end of financial year in which loan was borrowed both this condition has to be satisfied guys for example assume loan was borrowed on 1st August 2018 guys so in which year the loan is borrowed 1819 1819 which is the end of the year 31st March 2019 so what they're telling is especially when loan is taken for construction loan has to be construct sorry house has to be constructed within five years from the end of the year in which loan is borrowed when did I borrow the loan date of loan 1st August 2018 so which is that year 1819 end of that year is 31st Mar 19 so 5 Years From There 5 Years From There guys so maximum construction has to be completed within that time period so for example here it will be 31st March 24 so maximum construction has to be completed within this bill only then you can claim maximum 2 lakh for self-occupied property and also there is one more condition with respect to interest whatever you are paying you have to submit the document or proof of whatever interest you are paying only then you can claim 2 lakh for self-occupied property if not maximum 30,000 and this maximum 30,000 or 2 lakh with for self-occupied property is including pre- construction year interest clear means if it is a self occupied property both put together maximum 30,000 or 2 lakh guys or 2 lakh and there is no restrictions with respect to from whom you have to take the loan sir I have taken the loan from bank financial institution is it allowed yes interest is allowed sir I have taken the loan from my parent friends relatives is interest allowed yes it is allowed sir what about principal repayment principal repayment is not allowed as deduction year it is allowed under Section ATC but subject to certain conditions subject to certain conditions guys fine is it good to go yes so the format we discussed annual value calculation we discussed Municipal yes 24 deduction we discussed let us move forward so self-occupied property 23 subsection one talks about lout property we have seen what if is a self occupied property or unoccupied property straight away only one thing we have to check that is interest guys because for self occupied property ground value or net annual value will always be nil so hence there is no Municipal tax paid allowed as a deduction even though it is paid still no deduction even 30% of standard uh standard deduction is not allowed so only one thing which we have to check is interest on housing loan that two if it is there so what if we have self-occupied property but we have not taken any loan then straight away the income from self occupied property would be nil then sir what if I have taken the loan then what is the maximum interest allowed for self ED property 30,000 or 2 lakh or 2 lakh Guys not both please be careful we just now discussed it clear actually 30,000 but if certain conditions are satisfied it is 2 lak and all conditions has to be satisfied please be careful okay so I have given some points here interest on loan borrowed shall not exceed maximum 30,000 or 2 lak guys see if actual interest is less than this only you can claim that much sir assume actual interest is only 1 lakh what how much you can claim only one lakh sir actual interest is only 1 lak 80,000 how much you can claim only 1 lak 180 so actual interest is three lakh but how much you can claim maximum 2 lakh so remaining one L can I carry forward no no because it is allowed on acal basis even though you're not paid it still you cannot carry forward it if the loan is borrowed for the purpose of repairs renovation or reconstruction then the maximum deduction allowed is how much per interest 30,000 the limit of 30,000 or 2 lakh is as per person and shall be including 1/ of the accumulated interest of pre-construction period which I told you here so 2,00 2 lakh or 30,000 is including both so for the first five years of completion of construction you will have current year interest plus 1/5th of pre construction interest both put together maximum you can claim 30,000 or 2 lakh sir maximum how many properties can the ass have as self-occupied property two so now both the properties put together 2 lakh or 30,000 or it is per property each no both put together per person or per assy it is 30,000 or 2 lakh Guys clear yes next property which is partly let out and partly self-occupied so if a single unit of a property is self occupied for few months and let out for few months during the previous year it will be treated as let out property for the entire year so Municipal value Fair rent standard rent and all will be taken for full year whereas actual rent will be only for late out period so we'll compute the gab so here it is a disadvantage to the ass but still they telling whatever Municipal tax you pay for the entire year is allowed as deduction 30% is allowed fully interest is allowed without any limit because we are treating the property as what let out property so it is as if the property is let out for the entire year guys clear yes even like for one month 2 months 5 months 6 months if it is let out during the previous year entire year it is assumed to be let out property okay next deem to be let out property de de to be let out property section 23 subsection 4 easy to remember guys 23 subsection 4 deemed D fourth alphabet D starts with which starts with d so fourth alphabet is D so subsection four same way self-occupied property maximum how much you can have two sir so subsection 2 23 subsection 2 okay where an assass has occupied more than two houses for the purpose of Resident and let it out for rent and sorry not let it out for rent then at the option of the assass he can choose maximum two houses as what self-occupied that is if assass and his family members are using more than two houses for their self occupation as per income tax they're telling maximum you can keep two houses as self occupied remaining houses you have to offer it as team to be out property sir which house to keep as self occupied which house to keep as deem to out property it is a choice of the assist he will do the calculation and see wherever the value is higher better to keep those properties as self-occupied and remaining property try to offer it it as deemed to be let out property so other self-occupied houses will be treated as as if the property is let out and the annual value will be determined in the same way how we calculate for let out property guys the benefit of nil annual value in respect of two self occupied property will be given only for individual HF so now company has three property all three they have self occupied for their employees and others directors and all in that case how many properties will be traded as self occupied sir zero because only for individual HF who is an ass they have two they can keep maximum two houses as self-occupied for any other categories of ass there can be no question of having self-occupied property it is straight away let out property or deemed to be let out property even if they are using it for themselves or their employees or directors it will be considered as deemed to be L out property okay the compettition of income from deemed to be let out property is as follows guys expected rent has to be adopted as gross annual value then Municipal tax whatever is paid for the entire year will be allowed then both the deduction under section 24 is allowed even for interest there is no threshold limit you can claim full whatever you are paying property let out partially sir there are two parts in our house or two floors ground floor first floor first floor is let out ground floor is self occupied in that case treat them as two separate property and accordingly determine the value guys so if Municipal value fair and standard rent and all is given for the entire property both put together then you divide it in on area basis you divide it for let out portion because for self occupied we will not calculate GV at all so with respect to let out portion whatever is the unit for that we have to calculate gav so for that for that purpose Municipal value Fair rent standard rent and all has to be divided between the L out portion and self-occupied Portion in the area basis even Municipal tax paid is allowed only for the L out portion only for let out portion even the 30% standard deduction is allowed only for let out portion guys whereas interest yes for both it is allowed but for self occupied maximum limit is there then inadmissible deduction section 25 sir if any loan is taken outside India for the purpose of purchase or construction of house property so whatever interest is paid outside India or payable outside India it is allowed as deduction under Section 24b provided TDs is deducted if the owner has failed to deduct TDS then he has caused loss of Revenue to the government government is telling no no we will not allow interest as deduction as per section 25 then 25A if there is any Aras of rent or unrealized rent received subsequently so are of rent means if there is any increase in rent retrospectively or in the past there was an unrealized rent where the owner has satisfied the role for conditions and he has reduced it while calculating actual rent but in the future the tenant actually came in search of the owner and he gave the amount in that case he recovering his loss at par with bad Deb recovered similar to that yes so so so if any areas of rent or unrealized rent is received during the year that is during the previous year sir what if in the previous year the ass is not the owner unrealized rent is related to assume 20156 during which I was owner so tenant stayed in my property but didn't pay rent but in 23 24 he came in search of me and gave the rent whatever he was supposed to pay in 15 16 but now I have already sold the property I have already sold the property so in 23 24 I am not no more the owner still whatever unrealized rent or are of rent is received by the owner during the previous year or received by the assc during the previous year is taxable under the head house property only guys is taxable under the head house property but 30% flat deduction will be provided only remaining 70% would be tax whatever you receive 30% flat deduction which is similar to like flat deduction standard deduction which we discussed in 24 year but for this only flat deduction will be given no more expenses will be allowed guys even if you have incurred any legal expenses and all for Recovery nothing will be allowed as expenses 30% flat remaining 70% would be taxable so what during the previous year assassi was the owner of the property he received the rent and all then with respect to some past year he received are of rent or unrealized rent in that case we have to compute as usual income from house property from the let out property plus whatever unrealized rent we have got we have to add it for this unrealized rent or are of rent 70% of that we have to add that will give our total income from house property will give you income from house property clear yes yeah next co-ownership under Section 26 sir what if two or more persons own the same house in that case even though it is co-owned property we have to first check whether the property is self occupied or let out prop property if the property is self-occupied property guys each of the coowner will get if self-occupied each coowner will get maximum 30,000 or 2 lak deduction depending upon the conditions clear now sir assume I own a property along with my brother we have borrowed the loan what is the maximum interest I can claim assume 2 lakh conditions are satisfied what is the maximum interest my brother can claim 2 lakh assume in addition to this I have one more self-occupied property I have one more self-occupied property so how much I can claim both the houses put together one is co-owned one is another one is fully self-owned in that case both the houses which are self occupied both the houses put together I can claim maximum 2 lak Guys yeah yes sir what if it is the properties let out if the co- property is let out then calculate the income as if the property is owned by one person and the final figure whatever we get is we have to divide it between the co-owner in the ratio guys in the ratio of ownership so in simple if I have to tell assume one of the properties go owned by the owners two or three owners are there compute the income as if the property is owned by one person in that case no limit for interest also claim it fully so assume there are three owners so divide it between three owners a b c in whatever is the ratio of their ownership that will be taxable in their respective hands under the head income from house property next deemed ownership section 27 guys section 22 use the word annual value of the property of which the assass is the owner is taxable under this head so now section 27 is giving few cases even though someone else is the legal owner we are assuming we are deeming that this person is the owner so even though the legal ownership is in someone else and income tax is telling this person is deemed to be the owner accordingly the income will be taxable in their hands even though they are not the legal owner so which are those cases we will see as for Section 20 the following persons though not the legal owners of the property are deemed to be the owners for the purposes of section 22 to 26 which are those transferred to a spouse or a minor child other than minor married daughter as a gift or for inadequate consideration guys if assume husband has transferred house property to wife free of cost or for inadequate consideration section 56 to10 will not be applicable why sir because they are relative close relative yes so in that case 56 to10 will not be applicable yes just a second let me mention gift taxation will not be applicable not applicable yes sir now what section 27 is telling is even though legally wife is owner we are deeming that husband is the owner that is the transfer that is the husband is the owner so in that case whatever rental income wife is earning where is it taxable in the hands of husband that is under the head income from house property as if the husband is the owner so same case guys if parents have transferred the house property to minor Childs minor child okay that is any any person within 18 in that case even though legally legal owners are whom the child but still the parent who transferred it that is either the father or mother they are deemed to be the owner and income from house property whatever is earned from this property whichever is transferred to minor child will be taxable in whose hands that transfer the transfer then one exception is there you sir parents transferred the house property to married minor daughter minor daughter who is married sir how can you marry a minor daughter legally not permissible guys but still in income tax law they have covered it if parents has transferred the house property to a married minor daughter without consideration or for free of cost section 27 is not applicable section 27 is not applicable but clubbing will get attracted clubbing will get attracted so in that case whatever rental income this minor married daughter is earning from this house property which is transferred by parent Whoever has transferred it will be clubbed in their hands clubbing will get attracted guys clubbing will get attracted clear under Section 64 under Section 64 by next holder of an imparable estate that is HF if HF is holding the asset on behalf of their members legally the members might be the owner but still who is managing it HF so who is deemed to be the owner for income tax purpose HF so the rental income is taxable in whose hand HF then member of Cooperative Society so if Cooperative Society has allotted any of their house to their members even though they have just allotted they have given it for use who is the actual owner Cooperative Society but for income tax purpose they telling we will consider member as deemed owner and income if at all if there is anything is taxable in the hands of member then person in the position of the property that is the buyer guys buyer has purchased the property but he has still not registered the property in his name he has taken the position of the property but not still registered so legally the owner is still seller buyer has already occupied the property but still is not registered the property in his name in that case they're telling even though legally the seller might be the owner we are considering the buyer as the deemed owner for income tax tax purpose then person having right in the property for a period not less than 12 years so if a property is taken for a lease for a period of more than 12 years then the lesie will be considered as deemed Doner guys the lesie For Whom the property is given on lease even though he is not the legal owner lesser is the owner still Lessie will be considered as deemed owner okay so I have just given the format here guys how do we compute the income from house property for different categories of asset so there are three categories of asset so sorry house property what are those guys let out property self-occupied property deemed to be let out property self occupied maximum two okay for self-occupied we will see straight away we will always go to what interest part if at all if it is there maximum allowed how much 30,000 or 2 lakh subject to conditions clear yes so for self-occupied property you can either have nil income or a loss maximum 2 lakh whereas in case of let out property the entire format will be applicable guys entire format so for let out property and deemed to be let out property the calculation will be same to same but with respect to deemed to be let out property actual rent will not come so straight away what we have to do is expected rent only we will take it as what GV straight away we will take expected rent only as GV and we will start Computing the income from house property with gav that is the only change between L out property and deem to be L out property because for deem to be L out property there is no question of having actual rent guys clear yes so next coming to Sir what if you have a loss from any house property sir is there any possibility of having loss yes especially when you have interest even for L out property deemed to be L out property there is having chances of having a loss so if the loss is a current year loss you have two possibilities guys so if you have a current year loss under the head house property the loss from one house property can be adjusted against the income from another house property without any it whatever is the loss provided you have income from other house properties if not sir can I adjust it against other rates of income yes loss under the head house property can be adjusted against other rates of income but maximum 2 lakhs maximum 2 lakh but this is not allowed under default regim which I will again explain so in simple house property loss first you see sir loss from one house property can I adjust it against the income from another house property yes then sir if I don't have income from the house property I have only loss can I adjust against other R of income yes maximum 2 lakh so if that is also not possible what you do third possibility is carry forward the loss for maximum next 8 years it has the life of Maximum 8 years so once you carry forward the loss once you carry forward the loss you can adjust it only within the same head of income that is house property guys so house property loss can be adjusted only against income from house property but maximum 8 years okay now coming to Sir now sir what about salary yet you didn't do it see there is no question of having loss under the head salary guys there is no question of having this loss under the head salary if you are working as an employee for your employer employer may suffer loss but you will never go for a loss okay sir what about impact of section 115 BAC that is default scheme on house property see if assass is following default regime then interest on self-occupied property will not be allowed guys so in simple if the assess is following default regime the income from self-occupied property will always be nil nil nil because interest is not allowed even though he paying interest still it is not allowed for him okay then if the assess is following default regime current year house property loss cannot be adjusted against other rates so second point we saw here if there is a current year house property loss maximum we can adjust against otheres maximum 2 lakh now but that is not allowed if the assess is following default regime maximum is house property loss can be adjusted only within house property income next the last one here is set off of brought forward house property losses against current year house property income if related to disallowed deduction that is interest deduction for self-occupied property so that is guys assume I have a broad forward loss sir assume in 2223 I was following optional scheme which was then called Old scheme okay and I have a loss from house property of how much are 150,000 and this is from which property self-occupied property when can you have loss from self-occupied property when you have interest agree now yes sir now assume in previous year 23 24 I want to follow default scheme I want to follow default scheme so under default scheme interest on self-occupied property under section 24 B is not allowed yes not allowed and sir I have a loss with respect to house property can I carry forward yes you can carry forward you can adjust it only within the same head but if the loss is related to a deduction which is blocked under the default scheme this loss you have because of what because of the interest on self-occupied property but now once you come under default scheme 24b deduction is not allowed for self self-occupied property yes so they're telling if you have any loss relating to the deduction which is blocked under Section 24b in simple you have a loss on self occupied property please leave it there and come please leave it there and come because we are blocked now under default regime so if you have any loss related to that even though it is in the past when you are following optional scheme still under default scheme you cannot carry forward you cannot adjust it sir what if I had a loss from let out property or deemed to be let out property can I carry forward yes but maximum you can adjust it only within the the same it only you can adjust it within the same it you can see I have given here in blue color not allowed if related to disallowed deduction that is interest deduction for self-occupied property means you have a loss but due to that loss is due to what in the past interest on self occupied property in that case as under default scheme interest on self-occupied property is blocked you cannot carry forward any loss related to that even though it is related to past year so this this is all about the house property head [Music] guys yes guys now we will revise the third Ed of income which is profits and gains of business or profession section 28 to 44d contains the provisions with respect to pgbp in short I use the name as pgbp guys that is profits and gains of business or profession 28 being the charging section tell the profits and gains of any business or profession which was carried on by assassi at any time during the previous year is chargeable to tax under this it means at any time mean even for few months if he has carried on any business or profession and if he has earned anything out of it it will be still be taxable under this state it need not be carried on by the ass throughout the previous year pass maximum business will be carried on go on forever but still even if you have done any business or profession for a few months or few days during the previous year whatever you have earned through it will be taxable under this head guys now there are few more items which are covered under Section 28 like so if you are like receiving any subsidy or incentives from the government or any other Authority or if you're getting any export incentives or Duty drawback or if there is any compensation received on the termination or modification of any contract with respect to the business or profession if any perquisite or benefit which is received from the business or from the profession where it is not received by the employee but by others like part-time director and all in that case then if any salary interest bonus commission received by a partner from partnership firm is taxable in the hands of partner under the pgpp but only to the extent allowed to the partnership firm as an expenses as per section 40b what is 40b we will learn later guys clear yes sir then if any stock is converted into Capital asset if a stock is converted into Capital asset so is it is moving outside the head guys that is it is going from pgbp to which head it is going to capital gains head so in that case what they're telling is whatever is the fair market value of the stock as on the date of conversion that will be taxable as business income means it will be considered as business income guys in which year in the year of conversion and in the future if this Capital asset is sold what is allowed as the cost of acquisition whatever was the FMV that becomes the cost of acquisition to the capital asset so what if this Capital asset is used for the business so we have to add it to the block of the asset to claim depreciation what value will we added to the block the FMV FMV will will add it to the block of the asset as per section 43 subsection 1 which talks about actual cost guys clear yes so these are some important points covered under Section 28 and before I proceed further with Section 29 guys so I just want to tell few points with respect to that see as per section 145 which is telling while Computing the income under the head pgbp and income from other sources we have to follow either the accounting system that is either the acal system or cash system whichever the ass is following regularly to maintain his books of accounts whichever is following regularly for accounts same thing we can follow here that is either the marcant or acal system or the Cash System guys clear now sir the business was carried on not with an intention to earn profit it was just purely for charitable purpose or to give some Services still we earned some profit we ended up making some profit will it still be taxable of course the intention to earn profit is not important you earned profit it is taxable under the head pgb and while calculating the income if the ass is carrying on number of businesses each business will be traded separate guys and the expenditure of one business cannot be claimed against the income of another business so so each business has to be treated separately income has to be calculated separately by claiming the expenditure of each business separately and at the end we can Club it at the end we can Club it because the total income from all the businesses will be taxable under the head pgpp guys is that clear yes and also while Computing the income under the head pgbp and income from other sources for the assy who is following martile system of accounting which is nothing but acrel along with income tax provision they should also follow IC s that is income computation and disclosure standards there are 10 standards which is actually not a part of your inter syllabus but while Computing the income under the head pgbp and other sources the ass whoever is following Mercantile system of accounting has to follow in addition to income tax provision they should also follow ICS guys yeah yes sir so with this few points we'll start with competition of income under this head so is competition format is given in section 29 so normally whatever income would have already calculated as per accounts we will take it as a base guys assume this is the pnl account which is given as per accounts now for company and all we call pnl statement but for income tax purpose we always use the name pnl account guys P account or income and expenditure account in case of NPO so so they would have already credited certain incomes or revenue and they would have already debited they would have already debited certain expenses or they would have debited losses and at the end they have given got net profit now we will take this as a base guys assume this net profit is 10 lakh we will take this as a base to compute income under the head pgbp so you can see here profit as per preand appointments it is nothing but as per accounts yeah normally it will be given in the question okay sir so let us see guys I will explain all the adjustments one by one so we will take net profit as per pnl account as a base 10 lakh we will see now what expenses to be added or what items has to be added one by one first one expenses or losses which are disallowed but debited to pnl account assume guys there is an expense or losses which is debited in pnl account 2 lakh either of the two but as per income tax law it is not allowed it is disallowed or it is inadmissible in that case because of this already your profit has come down so what should you do now add Back 2 lakh add Back 2 lank same way next item income taxable as business income but not credited to pnl account sir there is an income which is taxable under income tax law as business income but they are not credited here for example bad dates recovered and all some special items they have given in income tax law assume there was a bad de recovered of 50,000 which is taxable but not credited to pnl account so because of this income should have gone up but you are not credited it so what should you do now add it up add 50,000 that is income which is taxable income tax law under the pgb but you are not credited in your accounts chances are there then expenses in excess of the allowed amount debited in pnl account guys there is an expenses which is debited in pnl account assume 5 lakh but as per income tax law only 4 lakh is allowed as per income tax law only 4 lakh is allowed so ex how much you debited one lakh so as per income tax law only four lakh but actual amount debited is 5 lakh so now your profit has come down by how much 5 lakh but actually allowed expenditure is how much only 4 lakh so how much excess we have debited 1 lakh so how much we have to add back 1 lakh we have to add back one lakh guys next coming to deduction item expenses or losses allowed but not debited to pnl account so sir there is an expenses of assume three lakh which is allowed as per income tax law which normally they would have given in adjustment allow as for income tax law but ass has not debited to his p P account so in that case what should we do reduce that 3 lakh whatever is the expenses which is allowed but not debited to pendal account normally they would have given somewhere in the adjustments so we have to reduce example is depreciation assume under income tax law depreciation is mandatory but ass has not debited it has not debited it yes sir so if that is the case we have to reduce it then income not taxable as business income but credited to pnl account sir here every income earned will be credited in accounts yes sir like agriculture income or whichever income rental income share dividends share sale of assets sale of shares everything will be credited here okay sir so profit on sale anything but they are not taxable under the head pgb in income tax law they're taxable but not under this hit so what we have to do already you credited your assume it is 10 lakh because of that profit has gone up so what should we do now reduce whatever income is credited but not tax under this hit so obviously while Computing the income under the respective head we have to take care of this we have to take care of this same way guys assume sir agriculture income they have credited here in accounts and all there is no concept of exempt and all assume agriculture income three lakh they have credited so obviously because of this profit has gone up but in taxation it is not taxable so what should we do we have to reduce it what is the amount 3 lakh so reduce it so if there is any income which is exempt under income tax law under any section but if it is credited to pnl account because of which profit has gone up so what you have to do now reduce it pull it down bring it down so finally after doing all this you will get taxable income from business or profession guys is that clear so this is normally when asss is following acal system sometimes if asss is following Cash System of accounting guys they would have given you receipts and payments account or they would have simply given what is the income what is the expenses in that case what you do is like this please listen so you take income or Revenue whatever the assy has earned taxable under the head pgb that is as per section 28 or as per section 41 which talks about deemed profits under pgbp only you will take it then you will allow all the expenses you will all allow all the expenses as per section 30 to 37 what all expenses is allowed as for Section 30 to 37 everything you allow it so revenue or income you will take you will reduce expenses or the losses as per section 3237 whatever you get will be the taxable business income or taxable professional income this is only when s is following Cash System of accounting or if they have given only the information they have not given pnl account and all but they have given only what income he has earned What expenses he has incurred they have not given any net profit and all in that case you go in a straight way instead of doing reverse calculation like this you can do straight away like this majority of the time they will give like this only guys if at all if by chance if they give the information with respect to income and expenses separately without giving the details of B account and all please follow this format fine so now we will see from now on we will see what expenses are allowed from section 30 to 37 they have given the list of expenses which are allowed while Computing the income under the head pgbp we'll see each of them expressly allowed deductions section 30 expenses of business premises business premises is nothing but building in which business is carried on guys deduction is allowed in respect of rent rates current repairs and insurance for building that are used for the business or profession by the assass now any Revenue expenditure will be incur guys if ass is the tenant whatever rent he is paying or whatever expenditure he is incuding including current repairs and all will be allowed if the ass is the owner yes any Revenue expenditure is incurring on the property including like any repairs or insurance is paying and all is allowed but on the capital expenditure you can claim depreciation under Section 32 so capital expenditure deduction will not be given here same way section 31 expenses of business assets any other assets other than building like plant and machinary Furniture equipment this section allows deduction in respect of expenses on current repairs and insurance of the plant and missionary furniture and used for the purpose of business or profession so what if it used for personal purpose can I claim the deduction here no no no you cannot and here also the deduction is given only with respect to revenue expenditure so what if planted machinary Furniture is owned by the ass in that case on the capital expenditure he can claim deduction under Section 32 for depreciation guys yeah yes s so now what is this current repairs for both it is allowed guys like whether it is for building or any other asset current repairs means the expenditure which is incurred on the asset which will not increase the productivity or efficiency of the asset it will continue to work in the same way how it was working so what is capital repairs then Capital repairs means if after in in inuring this repair expenditure if the efficiency or productivity of the asset if it is improving or increasing then we call it as capital repairs and we have to add that to the cost of the asset guys we have to add it to the cost of the asset okay so next section 32 one of the important section under pgbp guys okay depreciation under income tax law is compulsory deduction guys and it is completely different from what you would have learned in accounts so what depreciation you will calculate in accounts on asset to asset basis even if there is any asset sold during the year till the date of sale you will calculate the depreciation so those things are not there in pgbp guys or in income tax law it is entirely different here so what is it we will see this section provides for compulsory deduction of depreciation the rate of depreciation is given in income tax rules and what are the rates sir asset wise so there are four categories of assets guys four categories of asset three category will fall under tangible assets one category is in tangible asset so under tangible asset three category are there first building building used for residential purposes means sir if it is used for personal purpose deduction is not allowed but assume the company or the employer has taken the building and he has given it for the employees to use we saw rent free accommodation and all or it is used as guest house by the employees in that case can employer claim deduction on the building on capital expenditure as depreciation yes it is used for residential purpose but obviously it is not considered as for personal it is considered as for business only so in that case 5% depreciation for any other building 10% if there is any temporary structures and all then the rate is 40% guys but any other building like office building Factory building and all 10% furniture and fittings furniture and fittings included electron electrical fittings will always be depreciated at 10% then all these rates whatever is given is wdv Method please be careful and under income tax law everyone are supposed to follow wdv method except power sector company who is engaged in if the assess is engaged in the business of generation of power or generation and distribution of power they have an option either to follow wdb method or slm method whereas everyone else has to follow wdb method of depreciation guys fine next coming to plant and missionary under plant and missionary there are lot of subcategory motor car motor buses motor laes motor taxis used in the business of running them on higher rate is 30% in any other case motor cars there it is Dee at 15% because the usage would be less then ship which will go on water 20% aeroplanes and Aero engines which will go in here 40% then books any books 40% then computer including computer software 40% then any other plant and missionary if they have simply given plant and missionary in the question please always charge depreciation at 15% then intangible asset category all intangible assets including like patent right copyright trademark or any right except Goodwill on Goodwill whether it is purchased or self-generated Goodwill there is no depreciation whereas on any other intangible asset the depreciation rate is 25% guys 25% fine sir now these are the depreciation rates and guys whenever you are learning pgbp always learn it from employer point of view so employer point of view or the person who is doing the business or profession so salary I told you to learn it from employees point of view whatever benefit employees is getting it is taxable under salary same way employer are the person who is carrying on the business or profession whatever expenses he is incurring is allowed as expenditure but subject to income tax Provisions okay what are the conditions sir ass must be the owner of the asset and he should have used the asset for business purpose or profession purpose during the previous year so what if it is partly used for business and partly for personal purpose in that case whatever is attributable towards official purpose is only allowed guys for example assume we have calculated the depreciation for the previous year we got 10,000 but 60% is used for personal purpose so how much depreciation we can claim only 40% only 4,000 can be claimed whatever is attributable towards office purpose next there are certain exceptions for the ownership that is even though the assess is not the legal owner still he can claim the deduction for example if he has occupied the property the building as a tenant but if he has incurred any capital expenditure for like interior and all then on that capital expenditure whatever he has incured he can claim depreciation even though he is not the owner of the building same way if any asset is is purchased on higher purchase basis or Emi basis where the ownership will be given only after the payment of last installment sir can assess start claiming depreciation from the day he start using the asset yes even though he's not the legal owner still from the day he got the asset after paying the down payment so he can start using the asset now so in that case from the day he start using the asset he can start claiming the depreciation now in the format you can see like how we calculate wdb guys under income tax law asset is means everyone are supposed to follow wdv method I told you except power sector company so when wdv method of depreciation is followed depreciation is always claimed on block basis what is block sir group of asset which is falling in same category and which is having same rate of depreciation guys same class and same rate of depreciation okay so we will not claim it asset wise here we will claim it block-wise whereas for the assess who is claiming depreciation as per slm method they will claim depreciation as for what asset basis for each asset they will calculate the depreciation separately like as if you guys TW it in accounts whereas wdv method it is always block basis okay sir so when we are calculating the depreciation on block basis how do we calculate it we have to take first opening return down value which is nothing but the closing return down value for the last year so this will for us it will always be as per 1st April 23 opening wdb as on 1st April 23 for that if there is any asset which is purchased during the previous year we have to add it guys we have to add it so we have to also check whether the asset is purchased and put to use for more than 180 days or less than 180 days if it is 180 or more then you can claim full depreciation if it is less than 180 days means you can claim only half of the depreciation guys so for that I have kept on standard date you can see like this so if there is any purchase which is made between 1 April to 4th October 4th October 23 if there is any purchase which is made and put to use during this period you can claim 100% of the depreciation guys so what if any asset is purchased from 5th October 23 to 31st March 24 everything will fall under our previous year only so if there is any Purchase made during this bu and put to use during the previous year you can claim only 50% of the depreciation means whatever is the normal rate of depreciation 50% of that 50% of that you can claim it as a depreciation guys okay that is only in the first year in the next year and up you will claim fulfill okay so asset we have to see when it is purchased newly during the previous year which is the previous year for US 23 24 we have to check is it used for 180 days or more or less than 180 days for which I have given the date here you can see if it is on or after 5th October it is considered for less than 180 days and claim only 50% of the normal dep guys if it is before 5th October then give full full depreciation you cannot you need not literally calculate the number of days and sit in the exam but try to remember this date try to remember this date okay next fine sir so asset Acquired and put to use at what value will we add the asset to the block means actual cost so actual cost how to calculate is given in section 43 subsection one guys at whatever cost you have purchased the you have to add it to the block but what exactly how do we calculate it is given in section 431 guys cost of the asset should include whatever is the purchase price we have paid that is to the seller plus what all expenses we have incurred to bring that asset and install it in our place till the asset is ready to use so in simple all the expenditure which is incurred till the asset is ready to use we have to capitalize it and we have to add that value to the cost of the asset clear yes sir and if by chance if any sub go so in simple guys I will give an example assume I have paid 10 lakh to purchase an asset okay and to bring it to my place I have incurred 20,000 Transportation cost so this is purchase price then sir for loading and unloading I have incur 10,000 yes should we capitalize it yes we have to do it next so what is the cost we have got 103,000 now assume sir on sale value the supplier has charged the supplier has charged 18% GST supplier has charged 18% GST that also he has collected from me only I am a recipient so supplier has all the right to collect it from me so I have paid how much GST on the purchase price I have paid assume 1ak 180,000 okay sir now can I add this also to the cost depends on am I eligible to claim ITC or not if I can claim the ITC of this in our GST input tax credit then we should not add it we should not add it so in the our case cost will be how much 10 lak3 only sir no sir due to any reason ITC is not available for me due to any reason which we will learn in GST okay sir credit is not available for me for whatever GST I have paid on the purchase of the asset in that case can I add it to the cost of the asset yes guys you can add it to the cost of the asset accordingly the cost of the asset will go up clear yes now assume next so if Government is given any subsidy or incentives to purchase the asset to purchase the asset so if any subsidy is given with respect to purchase of an asset we have to reduce it from the cost of the asset but we have an option assume I have received 30,000 incentives guys so I have an option to reduce it and take the reduced value to claim depreciation if not then this straight away this 30,000 will be taxable as business income as per section 28 clear there's an option given to the S you can reduce it from the cost of the asset in that case nothing will be taxable as per section 28 if he is not reducing it from the cost of the asset then it will be taxable it will be taxable as business income as per section 28 hope it is clear yes so and I have told you with respect to ITC if ITC is available don't add it if ITC is not available please add it to the cost of the asset and also in section 23 subsection sorry 43 subsection one they have clearly told if you have paid more than 10,000 in cash to a single person in a single day then the cost what you have incurred will be considered to be zero means nothing will be added to the cost of the block or cost of the asset clear means you have to pay it in any mode other than cash guys if you are paying more than 10,000 in a day fine next we have to reduce the sale proceeds during the previous year and here sale includes the scrap or even if asset is destroyed by like any natural Calamity or fire or theft and all if any insurance compensation is received even that we have to take here Insurance compensation and sir when the asset is sold do we compute any profit or loss on the sale of the asset no guys in income tax we don't calculate profit or loss on the sale of individual asset we will not calculate the profit or loss on the sale of individual asset okay sir next and even if the asset is sold at the end of the year even on 30th March or 31st March still we have to reduce it from the block of the asset and if any asset is sold during the year on that we cannot claim depreciation guys so once we reduce that we will get wdb for the purpose of depreciation we have to calculate the depreciation under Section 32 as per the respective rate given in the rules and guys please be careful if by chance in this item if there is any asset which is included which is purchased during the previous year for less than 180 days then please split up then please split up assume this value guys is 2 lakh so on that 2 lakh assume the depreciation rate is 10% you can claim only 50% on the remaining value assume WTB for the purpose of depreciation is 10 lakh what what will be the remaining value 8 lakh so it is understood if this 8 lakh worth of asset is used for more than 180 days you can claim full 10% depreciation clear so in simple if wdb for the purpose of depreciation includes any asset purchase during the previous year but put to use for less than 180 days then you can first consider that where you will claim only 50% of the depreciation for the remaining value we will claim full depreciation guys clear and for this to decide sir the sale and all has happened from where always follow fif basis first in first out C if nothing is mentioned in the question assume that sale whatever has happened is from opening wdb guys yeah because normally we are not in the business we assets is not in the business of buying and selling the asset if then then that is called stock not Capital asset are not the asset clear so if nothing is mentioned in the question with respect to sale from where it is made we will always assume that the sale is from opening wdb guys okay sir so once we reduce depreciation we will get closing return return down value that will be as on 31st March 24 which will become the opening value for next year clear yes so so we'll see what all points if the ass asset is capable of being used means put to use means even if the asset is ready to use we can start claiming the depreciation guys and when the asset is sold there is no question of calculating profit or loss on that like how we do in accounts we will never do it in tax then all the assets all the ass has to follow wdb method of depreciation on which depreciation will be claimed on block basis and the rates are given in the rules only for the ass ass who is engaged in the business of generation of power or generation and distribution of power they can follow slm method or wdb method they have option for both okay now only when depreciation fails under Section 32 we will compute capital gains section 50 and whenever we are Computing capital gains under Section 50 it will always be shut down irrespective of the period of holding guys so when section 32 fails it is only in two scenarios guys that is when all the Assets in the block are sold irrespective of the value because there is no asset in the block to calculate depreciation value might be there but there is no asset so in that case depreciation section 32 fails immediately we will compute short-term capital gain or loss under Section 50 then when the sale proceeds we have sold only few Assets in the block but the sale proceeds exceed the block value when there is no value in the block guys that is assume we had 10 Assets in the block whose value is 10 lakh we have sold only three assets but for 12 lakh so immediately what happens let me try to go thiser is not working okay let me see guys let me try to use different color at least okay now assume I will try to take it here there are 10 assets whose value is 10 L guys sir I have sold only three assets for 12 lakh so in that case what happens there is no value in the block there are seven Assets in the block but there is no value in the block and for the purpose of calculating depreciation we can never take negative value even if it is a negative we will always mention it as nil so there is no value to claim depreciation in that case what we have to do is Sir depreciation under Section 32 fails then we have to compute capital gains sir what in the future if this seven assets are sold then straight away we will compute capital gains straight away we will compute capital gains under Section 50 and in that case cost will not be there because we would have already reduced cost for this three assets under Section 50 while Computing capital gains so in that scenario in the future if at all if this sum assets are also sold we have to straight away compute short-term capital gain or loss under Section 50 guys it will be gain actually yeah next if the assc is engaged in the business of manufacturing or power generation or power generation and distribution if he has purchased any new plant and machinary during the previous year and if he has installed in the factory then in addition to normal depreciation of 15% he can also claim additional depreciation of 20% guys means that that is in the first year 15% normal plus 20% additional both you can claim both you can claim but 20% is only in the first year from the second year and all you will be eligible to claim only normal depreciation clear and here also guys while claiming additional depreciation of 20% new plant and machiner should be installed in Factory condition is there if it is installed in office and all then normal depreciation only sir new plant and machiner is purchased and installed in Factory but during the previous year it is put to use only for less than 180 days sir in that case you claim only 10% in the current year remaining 10% in the next year but 10% obviously has to be calculated on actual cost PR because 20% additional depreciation is allowed on actual cost so if during the previous year if it is put to use for less than 180 days claim 50% now that is 50% of 20% means 10% remaining 10% in the next year even though the asset is not new in the next year still the balance 10% can be claimed in next year guys yes yes sir this is all about the depreciation guys then coming to section 35 expenditure on scientific research section 35 see there are two categories of dedu CS given you if assassi himself is engaged in the business of research then whatever Revenue expenditure and capital expenditure he has incurred capital expenditure except land whatever expenditure he has incurred you can claim it in that respective year sir what if he has incurred any expenditure before the commencement of year commencement of business whatever capital and revenue expenditure has been incurred 3 years before the commencement of business is also allowed in the year of commencement of business but capital expenditure except land whereas Revenue expenditure only two expenditures are allowed that is salary for research personal excluding perquisite and cost of raw material only these two are allowed so if there is any other Revenue expenditure incur before the commencement of business those things will not be allowed C whereas capital expenditure yes it will be allowed except land so if you have incurred any Revenue any revenue or capital expenditure after the commencement of business except land it is allowed in that respective year but 3 years before the commencement of business if you have incurred Revenue expenditure only in two nature is allowed that is salary to research personal excluding perquisite and the cost of raw material only these two are allowed any other Revenue expenditure will not be allowed whereas capital expenditure will be allowed except land clear yes sir then even though the assess is not engaged in research he can contribute to the outsider who is doing research but who is approved to do research in that case whatever contribution is giving he can claim 100% deduction under the pgpp even though it is not related to his business even though it is not related to his business guys you can see so what all is there so ass is doing his own business means 3511 and 3514 I will just read it Revenue expenditure incurred on scientific research related to ass's own business then capital expenditure this one capital expenditure except land incur on the scientific research related to ass's own business whatever is the expenditure he has incurred will be allowed guys and please be careful sir for capital expenditure when he has claimed deduction under Section 35 this asset will be added to the block but with nil value because you already claimed 100% deduction so we will add the asset to the block but with nil value that means you will not be able to claim any depreciation clear but except land anyway land is not a depreciable asset but still then remaining contributions guys contribution to approved research Association college or Institute and University for research purpose allowed that is scientific research then contribution to company for scientific research allowed 100% whatever amount you contribute then contribution to approved research Association College Institute and University for resarch social science and statistical research allowed then last one contribution to National Laboratory IAT for scientific research undertaken under an approved program allowed as deduction guys so contribution to Outsider is allowed provided their approved provided their appro so whatever amount we are contributing can be claimed as deduction under the head pgbp only okay next Capital sir now one more important thing connected to deductions sir I am contributing to Outsider but what if I don't have income under the head pgpp can I still contribute yes so in that case deduction is available under chapter 6A guys if the ass has contributed to the outsiders for research purpose but he doesn't have any income under the pgpp then he can claim deduction under Section 80 GGA under Section 80 GGA that is only when the ass doesn't have bgbb income if you has pgpp income he can claim it as expenditure under the head pgpp only next 35 ad again one of the important which talks about specified business so there are list of specified businesses given guys so I have not mentioned Ito but you guys already will be aware of it is good to know because see sometimes they may directly given give in the question that ass is engaged in the business of specified if not they may give the nature of the business the ass is doing so in that case it is your responsibility to identify whether it is specified or not clear so specified business like cold chain facility warehousing facility infrastructure facility or portal of two star or more or hospitals with at least 100 beds all those things are covered and specified at least have an idea about what is covered you need not mug up the list guys okay so if asss is doing any specified business any capital expenditure he has incurred except lgf not kgf lgf except lgf means what land good Goodwill and financial institution for this three capital expenditure deduction is not given here any other capital expenditure if he has incurred then he can claim 100% deduction in the same year guys so what if he has incured capital expenditure before the commencement of business he can claim it entirely in the year in which he has commenced the business without any limit no three years limit nothing so whenever he has started the business if any capital expenditure is incurred before that entire capital expenditure he can claim except lgf in the year in which he has started the business and once he has started the business any expenditure he incur he can claim it in the respective year he can claim it in the respective year okay sir and there are certain conditions guys that ass cannot claim deductions under Section 10 daa or he cannot claim chapter 68 deduction and done eding c eding c means the income base deduction you cannot claim it then the loss from specified business can be adjusted only against the income from specified business all these conditions are there plus guys one once the assess has claimed the deduction you under Section 35 ad for capital expenditure sir in the future assume you claim the capital expenditure deduction in previous year 23 24 for 5 CR and in the future what if he sell this asset assum in 2425 he sold this asset whatever is the sale value will be straight to taxable as pgb income guys sale value will be straight to taxable as pgpp income as per section 28 so in section 28 this item is included the sale value of the the capital asset on which deduction is claimed under Section 35 ad except lgf if it is sold in the future whatever is the sale value or even if it is put for a scrap whatever is the scrap value will be taxable under the hit pgpp sale value straight away because you already claimed 100% benefit of it then sir for the asset so forget about the sale now sir for the asset whichever I have claimed deduction can I claim depreciation also no 100% benefit is already given here you will add the asset to the block but with nil value that means you cannot claim depreciation on that okay sir next guys once assc claim the deduction for capital expenditure assume in 23 24 for specified business assume the amount is 5 CR next 8 years at least he has to use this for specified business at least for 8 years he has to use this asset for specified business sir what if you use within 8 years for non-specified business bus assume guys after 2 years the asset start the assess started using this asset for non-specified business can you do it yes you you may do all this dramas so in that case what they telling whatever deduction you have claimed under Section 35 ad will be withdrawn will be withdrawn and it will be taxable so how much your claim deduction under Section 35 ad 5 CR but not straight away 5 CR we will reduce okay if this asset was used for non-specified business from the day one that is from last two years how much depreciation you would have claimed how much depreciation you would have claimed under Section 32 as per the respective rate whatever is applicable for this asset we have to reduce it clear assume randomly I'm taking amount comes to 1 CR remaining 4 CR would be taxable as pgbp income for the assc guys so I repeat whatever deduction is already claimed under Section 35 ad we have to take it minus notional depreciation means if at all if this asset was used for non-specified business from the day one how much depreciation would have been claimed by the ass we are not allowing it now but if it was allowed how much assume I got one CR we will reduce it remaining four obviously for this we have to follow the rate whatever is given in the rules guys so we got remaining value as how much 4 CR that will be taxable as pgbp income Plus for nons specified business we will add it to the block of the asset as for Section 43 subsection one what will be the cost sir 4 CR so to add the asset to the block with respect to non-specified business what value should we add 4 CR and for non-specified business can we start claiming depreciation on four CR yes because now the asset got added to the block you can claim the depreciation for your non-specified business but what will be the cost not 5 CR 4 CR whatever was taxable under the head pgbp will be and it will be taxable as for which business not non-specified business but for specified business so in the year assume in the year 26 27 you used it after 2 years or else 2526 I will take 2526 okay so used it in that case 4 CR will be taxable as what specified business income not non-specified business income but for non-specified income business in for non-specified business whatever was taxable as specified business income will be allowed as what cost to to claim depreciation is that clear yes sir sir what if it is used after 8 years no problem you can use it free okay next we'll move forward preliminary expenses section 35d the expenditure incurred by the ass before the commencement of business or before incorporation or in connection to extension or expansion of his present business but is setting up a new Branch or new unit for that whatever expenditure he has incurred for expansion or extension will be considered as preliminary expenses now sir how much deduction you can claim deduction is allowed only for Indian company or other than Indian company means it should be resident in India only for them deduction is allowed then first we have to calculate qualifying amount guys and whatever is the qualifying amount 1 15if of that will be allowed in five first five years means in the year in which the commencement has happened including that year five years deduction will be given or if the expenditure is incurred for extension or expansion for the first five year of expansion or extension means including that year we will allow it for five years in five equal installment now sir what is the limit for the assess who is other than company but resident in India qualified amount is actual preliminary expenses has to be compared with 5% of cost of project we have to take whichever is lower whichever is lower okay sir and that will be the qualified amount that will be allow as one a deduction for five equal installment guys let us assume so actual preliminary expenses assume is 2 lakh then 5% of cost of project sir first of all what is cost of project cost of project means cost of fixed asset so assume guys the cost of fixed assets of the business is 15 lakh or else let me take 10 lakh so on 10 lakh 5% comes to how much sir only 50,000 so how much is allowed sir 50,000 or 2 lakh whichever is lower 50,000 and that is allowed in how many install M are P installments from the year in which the business is commenced or the expansion has taken place clear mean 10 10,000 each in each year okay so cost of project is nothing but cost of fixed assets guys it will not include current assets fixed assets means longdom assets next sir what if it is an Indian company first we have to check EA guys I of 5% of cost of project or 5% of capital employed sir what is capital employed Capital employed refers to issued share Capital both Equity as well as preference but it will will not include reserves and surplus please be careful reserves and surplus it will not be included only Capital then debentures plus long-term borrowing so in simple everything is long-term related guys you can take Capital employed but in your account FM and all you would have learned Capital employed but Capital employeed includes reserves and surplus but here we should not include reserves and surplus please be careful okay sir assume share capital of the company is 5 lakh debentures is 5 lakh long-term borrowing is 5 lakh Guys so we have to take how much 15 lakh we have to take 15 lakh okay sir so so first point a 5% of cost of project let us assume cost of project is 10 lakh 5% of that we comes to 50,000 then Capital employ is 15 lakh so 15 lakh into 15% sorry 5% 15 lakh into 5% 75,000 so whichever is higher how much we have to take 75,000 agina 5% of cost of project or 5% of capital employed whichever is year then actual preliminary expenses assume actual preliminary expenses is 2 lakh so we have to take whichever is whichever is lower year in a whichever is higher higher of 5% of cost of project or 5% of capital employed I will repeat guys so assume cost of project is 10 LH 5% of that comes to how much 50,000 then Capital employed I have assumed to be 15 lakh on that 5% comes to 75,000 so take whichever is higher 50,000 or 75,000 whichever is IO 75,000 point8 point B is actual preliminary expenses assume let us take it as 2 lakh so whichever is lower 75,000 so this is the qualifying amount it is allowed in five equal installment it is allowed in five equal installments yes so clear yes for the first five years and guys whatever figures I told you that is cost of project or Capital employed as on what day should we take it sir listen here assume during 2324 during 2324 any day if I have started my business or if I have expanded my business or if I extended my business then what is the end of the year 31st March 24th this is the date on which I prepare balance sheet yes so on this day when I prepare the balance sheet check what is the fixed assets and check what is the share Capital what is check what is the long-term borrowing clear only that you take or debur also only this figures we have to take as on the last day of the year in which businesses commenced or businesses expanded or extended okay then guys whenever asss is claiming deduction under Section 35 ad audit is mandatory for him he has to get it audited means whatever actual expenditure he has got incurred and all audit report has to be submitted by an accounted that is nothing but ched accountant one month prior to the due date of filing the income tax return When audit is applicable the due date for filing returns is 31st October one month prior to that means 30th September and now they also told with respect to few actual preliminary expenditure along with the audit report you should also give the statement confirming what are the expenditure you have incurred and how much is that so this is all about section 35d guys yeah now we will get into section 36 section 36 subsection 1 talks about other expressly allowed deductions guys so under that the first one insurance premium ium paid insurance premium paid on the insurance policy taken to cover the risk of damage or Destruction for the stock or store or for the goods is allowed as expenses same way health insurance premium paid on the policy taken in the name of the employees is allowed provided it is not paid in cash not even single rupees should be paid in cash even if health insurance premium paid for on the health of the employees is assume th000 rupees still it should not be paid in cash guys it should not be paid in cash so it should be paid in any mode other than cash that is the condition here okay and Sir what about life insurance premium for example if employer has taken life insurance policy in the name of employee and if employer is paying the premium can you claim it as deduction yes but under Section 37 because there is no specific section for life insurance premium allowed as a deduction there is no specific section for it that means it is allowed under Section 37 guys it is allowed under Section 37 okay so next bonus and commission deductable in full as long as the bonus or commission shall not be payable to employees as profits or dividends because dividend is not allowed as an expenditure under income tax law it is treated as appropriation of profit so if you are paying it in the form of distribution of profit or dividend then it will not be allowed but if you are paying it in the name of bonus or commission yes it is allowed but subject to 43b subject to 43b what is 43b we will cover it later wherever I have given subject to 43b guys for those expenses you have to check section 36 also you have to check 43b also only when both are satisfied the expenses will be allowed okay next interest on borrowed Capital so if an assy has borrowed the loan for the purpose of his business or profession whatever interest is paying on that loan will be allowed as expenditure guys will be allowed as expenditure but one thing to note here is if loan is borrowed for the purpose of purchase of an asset any interest paid till the asset is put to use whatever interest is paid till the asset is put to use will be capitalized and will be added to the cost of the asset as per section 43 subsection one guys means we have to add it to the block I repeat once again if loan is borrowed to purchase an asset whatever interest is paid till the date the asset is put to use has to be capitalized and will be added to the actual cost of the asset as per section 43 subsection one and whatever cost we get after adding the interest interest we will add it to the respective block is that clear sir what what about the interest paid after the asset is put to use it is stated as Revenue expenditure and you can claim it under section 36 subsection one nice so what if loan is taken for any other purpose for running the business or for working capital purpose and all if it is used for business or profession purpose whatever interest is paid will be allowed guys next employer contribution to Provident and other funds employer contribution to any funds like Provident fund super anation fund or any other fund which is for the benefit of the employee and it should be contribution to recognized funds only then it is allowed as per section 36 and there are some condition as per section 43b also we will see it means time limit is there under Section 43b next employee contribution important guys employee contribution to various funds what normally employer will do is he will deduct it from employees salary and deposit it to the respective fund so what they're telling here is whenever you deduct means whenever employer deduct employee contribution it is considered as is income guys employee contribution is considered to be income of whom employer and when you deposit when you deposited to the respective fund he can claim it as expenditure means the effect would be nil clear I repeat once again whenever employer deduct employees contribution to various funds it will be considered as income and we have to credit it to his pnl account and when he deposit it to the respective fund within the due date given in the respective fund within the due date given in the respective fund it has to be deposited then he can claim it as expenditure for example sir PF assume whatever PF has been deducted in the month of August in August employer has deducted 1,200 employee contribution as PF guys so as as soon as he deduct it will be credited here 1,200 and if you deposit it so within the due date of the respective fund so for PF what is the due date to deposit is 15th of next month 15th of next month sir are we supposed to know the due dates under the respective acts need not be I'm just giving it as an example but employee contribution has to be deposited within the due date of the respective fund guys now August contribution has to be deposited within on or before 15 September okay only if it is dep deposited on or before 15th September he can claim it as an expenditure sir what if the amount is deposited on 20th September or October November then you cannot claim it as an expenditure you cannot claim it as an expenditure so indirectly it becomes taxable income for the employer and he will end up paying tax on it so to discourage this delay deposit what the emplo means what the income tax department has done is whenever you deduct employee contribution we will consider it as an income please make sure you deposit it within the due date given in the the respective fund don't play around with the employees money that is what they are indirectly trying to communicate here guys okay next bad debts if there is any bad debts which is written off in the book as irrecoverable that is allowed as an expenditure see guys bad date is allowed means you already suffered the loss that is allowed sir what about sir I'm expecting some loss in the future I want to create provision for bad and doubtful debts is it allowed no provision for bad and doubtful debts is not allowed except for Banking and financial institution guys only for bank and financial institution where there is high risk of NP and all that is non-performing assets they're allowing provision for bad and doubtful debts but C are subject to certain conditions whereas for any other categories of SSC provision for bad and doubtful debts is not allowed as an expenditure only when you suffer the bad debt yes you got to know my customer will not pay me forever in that case you can consider it as a bad Deb loss and you can return it off okay so what about any other Provisions like for provision for future liability or future losses if I am creating can I claim it no but that is as per section 37 no Provisions will be allowed as expenses guys okay next expenses on family planning this is allowed if it is revenue in nature claim it in one year but if it is capital in nature claim it in P equal installment guys claim it in five equal installment means in the current year if you have incur assume 5 lakh capital expenditure then you can claim it in 1 of each that means one lakh this year and remaining one one lakh in the next four years yeah and Family Planning of whom guys it can be anyone okay means you are giving some seminar or training to your employees on Family Planning program for that you have purchased some laptop you purchase some projectors or you purchase some furniture for them to sit there they have to come and sit and listen to you so in that case if you at all if you have incurred any capital expenditure it will be allowed in five equal installment and this deduction is allowed only for corporate ass means companies only for companies guys next if assass is engaged in the business of buying and selling securities so whatever you earn from buying and selling of Securities is taxable under which head guys pgbp in that case Securities transaction tax whatever you pay at the time of buying security as well as selling securities is allowed as an expenditure is allowed as an expenditure because here security is like a stock for him okay means inventory whenever he buy and sell the income would be considered under the pgbp in that case Securities transaction tax would be allowed for you and me we are not engaged in any buying and selling of Securities as a business so when we buy and sell we pay Securities transaction tax sir what about that is it allowed no guys it is not allowed sir what is the nature of the business guys if you are doing int intraday trading we call it a speculation what is speculation sir see speculation is something which you buy and sell online without physical delivery we call it a speculation ation and speculation is one of the special business for income tax purpose so if you're are doing intraday trading that is buying and selling on the same day that falls under speculation in that case the income will be taxable under the head pgbp even if it is a loss it is covered under the head pgbp but speculation loss can be adjusted only against speculation business income at the end of this head I will talk about losses okay sir what if I buy now and sell it in future so there is a period means 12 months or more than 12 months if you're selling it with than 12 months then short-term gain if you are selling it after 12 months then long-term gain taxable under capital gain set guys taxable under capital gains hit okay just for knowledge purpose I just mentioned you okay now coming to commod Commodities transaction tax if the assess is engaged in the business of buying and selling commodities any income from that will be taxable under the pgbp yes so in that case whatever Commodities transaction tax he will pay while buying and selling commodities it will be allowed as expenditure under the head pgb in simple business expenses okay now coming to section 37 General deductions guys till section 36 we have seen specific deduction means under each section they told this is what the expenses is allowed subject to so and so conditions clear means they name the expenditure now coming to 37 they are telling no no we cannot give all the list of expenses if there is any expenses which is not covered from section 30 to 36 which is incurred for the purpose of business or profession which is not capital or personal in nature for the assy then it is not illegal or IM immoral it is not illegal or immoral and it is not specifically dis disallowed under the income tax law that is under section 40 or 43 B and all it is not disallowed specifically in that case they're telling if all these conditions are satisfied if all these conditions are satisfied then you can claim that expenditure under Section 37 which we call call it as general deduction there is no name of the expenses covered here they have given five condition if all the five conditions are satisfied here what are those guys quickly sir the expenses is not covered in section 3236 because if it is covered in 3236 you will claim it in respective section and condition also given there only yes next it is not covered in section 3236 it is not capital in nature it is not personal in nature it is not illegal in nature it is not imoral in nature then it should be incurred for business or profession purpose and it should not be specifically dis disallowed under the income tax law under any section only then it is allowed under Section 37 guys next if there is any expenditure incur explanation if there is any expenditure incurred by the assass for the purpose which is offense or prohibited by law is not deductible for example I have paid bribe sir I have paid bribe in for whatever purpose okay to get GST registration or for any purpose in that case connect claim it as an expenditure no guys you cannot clear yes so if something is offensive in law or prohibited by law that cannot be claimed as an expenditure then CSR expenditure inut as per section 135 of the companies act 2013 is also disol so CSR you would have learned in your company law sir when the company has to contribute to the society at large now if at all if a company or the corporate are contributing to the uh CSR fund so in that case can they claim it as an expenditure under pgbp no guys because it is not incurred for business purpose it is not incurred for business purpose but definitely you're contributing toward Society but that cannot be claimed as business expenditure the purpose of CSR is out of whatever you earn a little percent small percentage of that contributed to the society I have given some more these are not expressly given in the law in any section guys but obviously these expenses are not allowed under income tax law which you should know which are those sir prefer and Equity Dividend because it is appropriation of profit then any provisions created for future liability or expenses guys provision only for bad and doubtful deaths is allowed only for bank and financial institution whereas for others it is not allowed same way if there is any provision created for future liability or expenses that will not be allowed for anyone then transfer to any reserve like free Reserve General Reserve so capital reserve any amount if you have transferred to any Reser that will not be allowed as expenditure even because even this is called appropriation of profit guys then charitable and political contribution if the assess who is having the income under the head pgpp if they have contributed anything for charitable or political purpose it is not allowed as an expenditure here guys but they can claim deduction under Section 80 ggb and GGC clear means for political contribution whereas for charitable contribution they can claim deduction under Section 80g deduction for charitable contribution under Section 8G and for political contribution 8 ggb or GGC clear yes so it is not allowed as business expenditure now so till now we have seen what is allowed and also in 37 we have seen some cases where the expenditure is not allowed sorry till now we have seen what is allowed and in section 37 few cases we have SE which is not allowed which is not allowed in addition to this in section 40 they have given some expenses which is disallowed disallowed means it is not allowed as per income tax law if it is already debited to pnl account if we are taking net profit as a base to compute the taxable business income what should we do we have to add back these items we have to add back these items so the first item is with respect to TDs guys see whenever payer is paying any expenses to pay it is the duty of the payer to check whether the expenses is covered under TDS or not guys he has to check whatever payment is making whether it is covered under TD d s or not if s DDS has to be deducted and he has to remit it to the government within 7th of next month the due date to remit TDS there are certain exception cases but standard date is 7th of next month TDS has to be deposited by the payer to the government on or before 7th of next month guys 7th of next month clear yes sir so the duty of the TDs is with whom payer okay in detail about TDS we will discuss in a separate chapter but whatever is relevant as of now I am explaining now payer failed to deduct TDS he didn't deduct TDS or else he has deducted TDS but not remitted to the government within not TS due date within the due date of filing the income tax returns which will fall in assessment here they're giving good amount of time to the payer if you have deducted but not remitted to the government within the due date given under section 139 subsection 1 for filing the returns sir what is the due date to file income tax returns guys if the assc is engaged in international transaction where he supposed to submit transfer pricing report then the due date to file return is 30th November of assessment year for us it is 2024 then sir if the assy is a company or if their books of accounts is subject to tax audit then the due date to file income tax return is 31st October of the assessment year okay then in any other case it is 31st July 31st July of assessment year so return filing will always happen in assessment Year guys okay so for previous year 2324 return will always be filed in assessment year 2425 but what due date depends on what category of assess I am clear yes so so any of this three has to be there now if payer has deducted TDS but not remitted to the government within the due date of filing the income tax return RL is not at all deducted TDS then they're telling the expenses cannot be claimed by the payer whatever amount he has paid without deducting TDS to the pay or he has deducted but not remitted to the government now that expenditure payer cannot claim it under the pgpp so while calculating his business income he cannot claim that expenditure sir how much sir depends on who is the pay if pay is non resident or foreign company or if he is outside India if if is outside India 100% of the expenses will be disallowed guys 100% of the expenses will be disallowed sir what if TDs is deducted next year can you can claim it as a next year whatever is disallowed now you can claim it in next year if you make it good in the next year same way if the payment is made to resident in India resident in India then if TDs is not deducted or deducted but not remitted to the government within the due date of filing income tax returns as given in section 139 subsection one then 30% of the expenditure will be disallowed not 100% guys 30% 30% would be disallowed okay sir sir what if it is dis deducted next year means after the due date it is deducted and remitted in that case it will be allowed but next year but how much will be allowed again 100% no whatever was disallowed will be allowed in the next year clear yes so hope you understood so section numbers also I will just mention you so for this 4081 guys and for this 40a one year okay consequences covered is same but obviously the expenditure disallow is different 100% in case of non-resident foreign company are outside India and in case of Resident 30% is allowed okay let us see TDS not deducted or deducts TDS but not paid the same on or before the due date of filing return returns under Section 1391 please be careful guys here they are not referring to TDs due date actually teds due date is 7th of next month but here they are giving good amount of time to the payer even see if he has not deposited within 7th of next month from E obviously interest will start that we will learn in TDS chapter but under pgpp to claim it as an exp expenditure still have good amount of time if TDs is not deducted at least do it in next few days or few months so that you can claim that as an expenditure that is why they are giving some extended time here okay as per section 481 any sum payable outside India or to a non-resident or a foreign company within India so for this foreign company non-resident and all even if it is within India then 100% is disallowed in the previous year as per section 41A the expenses payable to a resident that is in India 30% disallowed in the previous year sir what if TDs is deducted or remitted after the due date in that case whatever is disallowed in the current year you can claim it in next year guys is that clear yes and also this is a provision covered in TDS chapter guys assume payer has not deducted TDS but pay is a very obedient tax payo he has disclosed the income whatever he has earned from payer and he has paid tax on it and he has filed the Returns on the date the pay has filed the returns by paying tax on the income what he has earned from payer for pay payer whatever expenses was disallowed now will be allowed will be allowed I repeat once again this is a provision covered in TDS chapter but I'm just mentioning here because as it is connected sir payer is not at all deducted TDS okay but pay is a very obedient taxpayer he disclose the income whatever he has earned from the payer and and he has paid tax on it and he has filed his return on the day he has filed the returns that is the pay the payer can claim whatever expenditure was disallowed in the past because he didn't deduct TDS so obviously section 40 A1 or 40 A1A would have been attracted so in that case what they are telling is whatever expenditure was disallowed for the payer will be allowed in the year in which the pay has disclosed this income paid the tax and filed the returns clear yes so next as per section 482 income tax or foreign income tax shall be disallowed anything paid under income tax including say sech charge will be disallowed guys even if you have paid tax in any foreign country under any foreign income tax law you cannot claim it as expenditure in India amount paid by way of royalty license fee service fee privilege fee service charge by a state government undertaking to state government will be disallowed then as per section 483 this is important salary is covered exclusively here that means 401 will be applicable to any payment made other than salary okay so one will not cover salary because for salary there is a separate section what is it salary payable outside India are to a non-resident and TDS has not been deducted or TDS has been deducted but not paid to the government within TS due date not return due date here what they have given is TS due date so that is nothing but 7th of next month even if it is deposited 8th it is permanent ly disallowed guys it will not even be allowed in the next year it will not be allowed even in next month so if TDS on salary is not deducted or deducted but not remitted within 7th of next month then it is permanently 100% disallowed permanently you cannot claim it can you cannot even claim it in the next year okay then coming to section 40b which is exclusively applicable to partnership form guys now disallowance it talks about disallowance in case of partnership form so here what is it sir if partnership firm is paying interest to the partner how much interest can the partnership firm claim is not whatever they are paying whatever interest is mentioned in the partnership deed or maximum 12% guys whichever is lower the interest as mentioned in the deed or maximum 12% whichever is lower so what if interest is not at all mentioned in the deed so partnership firm can run even without deed assume there is no partnership deed at all in between the partners in that case even though the partnership firm is paying interest they cannot claim it guys they cannot claim it as expenditure clear yes next sir what about salary bonus commission or remuneration paid by partnership form to Partners can they claim it yes but subject to certain limit subject to certain limit guys and conditions what is it so for whomever the salary bonus commission is paid he should be an active partner not a sleeping partner and the amount of remuneration or salary whatever is paid to the partner should be mentioned in the deed or the manner of calculating should be mentioned in the deed guys only then it will be allowed okay so the partner should be working partner and how it is calculated and all should be mentioned in the deed sir what if there is no deed at all remuneration is not allowed sir deed is there but in that nothing about salary or remuneration is mentioned even in that case no expenses will be allowed in the hands of firm as salary paid to Partners other expenses and all they can claim but salary bonus commission paid to Partners cannot be claimed guys okay assuming the partner is a working partner and the deed provides for the payment of salary sir how much it can claim is actual remuneration paid by the firm to the partner or the limit given under Section 40b whichever is lower guys whichever is lower so when we are calculating the limit under Section 40p first we have to compute book profit so what is book profit how do we calculate this the business income of the partnership firm after all the expenses but before remuneration if remuneration is already debited please add back that whatever is debited please add back that and whatever profit you get after all the expenses of the firm but except this remuneration that is called book profit r that is called book profit so sir what if there is a book loss still remuneration is allowed but maximum 150 considering all the working Partners okay so on the first 3 lakh book profit or in case of loss 150,000 or 90% of book profit whichever is higher means minimum 150 will be given and this is all put together assume there are three four working Partners all put together is the limit for the firm as a whole then on the balance 60% right I will tell you so listen here assume the book profit of the firm is 10 lakh how do we calculate it sir so here up to three lakh it is 90% which comes to 270,000 then on the remaining 7 lakh it is 60% ni on the remaining 7 lakh it is 60% so if I have to do the calculation just a second so 420 oh 420 then 270 this is the limit as per section 40b limit as per 40b agina yes sir so how much it comes to 6 lakh 90 assume guys the actual remuneration paid by the firm to the partners is around 5 lakh is around 5 lakh so how much is allowed now actual remuneration or limit whichever is lower how much 5 lakh 5 lakh would be allowed sir what if actual remuneration is 15 lakh actual remuneration is 15 lakh limit as per section 40b is 6 lakh 90 in that case how much is allowed 6 lakh 90 6 lakh 90 guys and one more important thing guys when firm is paying interest or remuneration to Partners now for a form to claim expenditure we have to check section 40b interest maximum 12% remuneration actual remuneration or the limit as per 40b whichever is lower so whatever is allowed as expenditure for the firm will be taxed taable as income will be taxable as income for whom for the partner guys clear so whatever is allowed as expenditure is only taxable as income for the partner for example assume the form has paid interest to the partner 15% on capital or on Loan in that case how much is allowed for the partnership firm only 12% sir so in that case how much is taxable in the hands of partner only 12% what is allowed as expenditure for the firm is only taxable in the answer partner even though if he has received more still only what is allowed for partnership form will be taxable to the partner under which head pgbp under the head pgbp hope you guys are clear yes next same way one exemption is there if partnership firm after paying Pro tax on their profits if they distribute any share of profit to the partners is it taxable for the partner no share of profit distributed by The Firm to the partner is exempt in the hands of partner guys only interest and remuneration paid by the firm to the partner is taxable under the head pgpp but only to the extent allowed to the part firm for example here you can see limit as per section 40b is how much 6 lak9 but actual remuneration given to partner how much 15 lakh so here firm has given actual remuneration of 15 lakh to the partner but how much is allowed for the form only 6 lak 90,000 only 6 lakh 90,000 so how much is tax for the firm sorry partner under the head pgbp it is only 690,000 and not entire 15 LH even though he has received 15 lakh the remaining amount was disallowed for the firm same way it is not taxable in the hands of partner guys hope it is clear for you next 48 48 is also important especially A2 and A3 A2 is telling as per section 482 excessive or unreasonable payments made to any specified person that is either the relative or associate Associated concern where we have substantial interest that is the assy along with his relatives if he's having any substantial interest in any other entity or concern we call it as Associated concern then it is dissed how much is disallowed only to the extent of unreasonable for example assume guys I'm carrying on any business I have paid one lakh to my brother which is unreasonable to the extent of 30,000 actual payment if I had done for anyone else under the arms length transaction I would have paid only 70,000 whereas as just because my brother I have paid 30,000 extra one lakh I have paid so 30,000 whatever is excess is dissed is dissed and even in accounts you would have seen sir how will the auditor get to know because auditor has to check all this whether he has paid excessive or unreasonable and all companies are supposed to disclose related party transactions guys there the auditor has to identify what are the payments made to related parties and is there any excessive payment made for them by considering arms length price okay next as per section 483 if any cash payment is made to a single person in a single day in excess of 10,000 it is disallowed guys it is disallowed means cash expenditure is not allowed if the payment is made to a Goods transporter who is engaged in the goods of flying iring of goods carriages then they handle more of cash for them instead of 10,000 the limit is 35,000 mean up to 35,000 in a single day you can make a payment in cash but above 35 you cannot make above you cannot make now see you can plan your tax like this means expenditure and all you can pay more than 10,000 but not for a single person you can pay for multiple people so for a single person in a single day you cannot pay more than 10,000 so can I pay 10 10,000 every day for a single person yes exactly 10 is also okay exactly 10 also is okay and for this there are certain exceptions guys like if you're making any payment to Banks or RBI or any Life Insurance Corporation or if you are making any payments in a rural area where there is no banking facility if you are making any payment to Farmers and all they're telling okay you can make it in cash there are certain exceptions for it okay now guys see expenses will be disallowed here only if it has crossed the previous sections if already as per section 37 or as per section 36 if any expenses is not allowed again we need not check 482 or 8 A3 for this for example assume here guys if health insurance premium paid 2,000 in cash is it allowed no as per section 36 only it is not allowed so now can I go and do an argument telling sir in 483 limit is 10,000 I have paid only 2,000 can I claim it no because in 36 subsection one only they have clearly told you should not pay it in cash not even a one rupe you can paint in cash clear so for which expenses we will check 48 to and all is the expenses which has already crossed all other above other sections that is it has already crossed from 30 to 37 and it has come to 40 only then we will see okay is it disallowed here or not yeah same way assume in section 37 if any expenditure is like prohibited or illegal or immoral it is disallowed sir I paid bribe 5,000 in cash can I claim it because 483 is telling up to 10,000 I can pay in cash no no because in 37 itself they telling you cannot pay something which is prohibited under the law that means under 37 only it will be blocked you cannot go further and check 40 guys hope it is clear huh next as per section 4087 no deduction shall be allowed in respect of any provision made by the ass for payment of gratuity so with respect to payment of gratuity we have seen employee can claim exemption under salary head now can employer claim it as an expenditure yes he can claim it only in the year in which he has paid but what many employees employer will do is as the gratuity lumsum amount has to be paid they may create a provision from the beginning itself to because they know that when the employee reti are terminated we have to pay them in lumsum so every year from now itself out of the profit they may create provision and they may set it set it aside to pay the gratuity in the future so in that case when they are creating the provision is it allowed no then when is it allowed only when the in the year in which the graduate is actually paid to the employee entire amount whatever is paid will be allowed as an expenditure guys yeah yes next section 43a change in the rate of exchange sir I have purchased any asset okay let me just give an example guys I have purchased an asset for $1 lakh from a foreign supplier on credit I have purchased an asset from a foreign supplier on credit my purchase price is $1 lakh and I have taken 3 months credit I have taken 3 months credit guys so when I purchased the exchange rate was 75 rupees per dollar 75 rupees per dollar so what was the the cost of my asset when I purchased it I would have added to the block at what value 75 lakh I would have added at what value 75 lakh to my block yes so asume after 3 months I am making the payment and I went to the bank or authorized dealer to buy, sorry $1 lakh but they told sir the exchange rate is 80 rupees or else let me take both the scenarios on the date of payment on the date of payment exchange rate exchange rate on the date of payment guys two possibilities assume it has gone up to 80 rupees assume it has gone up to 80 rupees per dollar in that case I will end up paying how much guys 80 lakh rupees 80 lakh but I already booked the expenditure of how much capital expenditure 75 LH now what I have to do is as there is an exchange loss exchange loss of how much 5 lakh rupees I already booked the capital expenditure 5 lakh but now I ended up paying more 5 lakh so in that case we call it as exchange loss due to exchange rate fluctuation so what we have to do is we have to add it to the cost of the asset so if there is exchange loss we have to add it to the cost of the asset and we will start claiming the depreciation on the increased cost on the increased cost C I have already added to the cost block for 75 lakh now we will add add another 5 lakh we will add another 5 lakh clear yes sir what if the exchange rate was both possibilities there assume 72 rupees it happened to be on the date of payment when I went for exchange the exchange rate happened to be 72 rupees so I will end up paying how much guys 72 lakh but I have already booked the expenditure of how much 75 lakh that means there is an exchange gain of 3 lakh exchange gain of 3 lakh I already booked the expenditure I have already booked the expenditure of how much 75 lakh so in that case I have to reduce exchange gain of how much guys 3 lakh so what will be the net cost of the asset 72 lakh I would have already added 75 now I cannot go scratch that and rate 72 so from 75 whatever is already added to the block we have to reduce three lakh exchange gain so if there is exchange gain we have to reduce if there is exchange loss we have to add guys both simultaneously will not happen anyone I have explained both the ways what if there is exchange gain what if there is exchange loss both I have considered and this exchange rate I have to consider on the date of payment not at the end of the year because in accounts and all you would have learned it in a different way on 31st March if there is any fluctuation in exchange rate we will Book Exchange gain or loss and all but here it is not like that on the date of payment whenever you are making the payment after 3 months or 6 months after one year or 2 year or 5 year or six year whenever you are making the payment check what is the exchange rate so so see what is the exchange loss or gain you would have already recorded the asset when you have purchased it on credit so in that case they're telling if at all if there is any exchange l or gain normally it will be so if there is exchange loss added to the cost of the asset if there is exchange gain reduce the cost of the asset and on that increased or decreased cost you will start claiming the depreciation that is all about section 43a guys and also please be careful this is applicable in two cases when is it where in has acquired any depreciable asset from any country outside India on credit so the supplier is outside India you purchased the asset from him and you are using for your business or profession in India okay sir next you purchase asset in India but from a current from the loan which you have borrowed from foreign lender you have purchased the asset in India you have paid for the supplier but loan you have taken you have taken the loan from a foreign lender or foreign institution and you purchase the asset in India and for supplier you have paid full but you have borrowed loan so when you're repaying the loan guys when you are repaying the loan if there is any exchange gain or loss you have to adjust it to the cost of the asset to the cost of the asset clear so I have mentioned here exchange loss means add it exchange gain means deduct either of the two will be guys not both next 43b again one of the important section guys 43b because even in section 361 when I was going through some expenses everywhere they are given some expenses 43b subject to 43b subject to 43b now what is 43b guys you they have given some list of expenditure where they are told the following expenditure is allowed only if it is paid means the expenditure is related to previous year 2324 okay they're telling this expenditure has to be paid within the due date of filing the income tax return assume the due date applicable for filing the income tax return is 30th October of assessment year this payments will be allowed as expenditure only if it is paid even though it is related to previous year 23 24 still extended time they are giving they're not telling you have to pay it before 31st March only they telling you have to pay it within the due date of filing income tax return sir what if I am not paid it assume you have paid it somewhere in November or December so previous year expenditure you have paid next year November or December it will be allowed in next year disallowed in the current year but allowed in next year guys clear and when it is disallowed full amount will be disallowed not 30 40% and all full amount will be disallowed so what is it we will see as per section 43b deduction will be allowed of the following expenses only on payment basis that is only if the payments are actually made within the due date under section 139 subsection one what are those taxes duties set or fees payable under any law except income tax law means under income tax law if you pay anything it is not at all allowed so this taxes Duty s and all will include like GST Municipal tax Municipal tax paid for office building or factory building yeah so if any tax other than the income tax means like GST Municipal tax and all guys or property tax then bonus and commission to employees interest in respect of term loans or advances borrowed from specified institutions leave encashment amount payable to Indian Railway for use of Railway asset and employer contribution to PF or super anation fund or any other fund for welfare of employees all this payment will be allowed only if it is paid within the due date of filing income tax return which will fall in assessment here guys so there are three due dates whichever is applicable to the ass the expenses this expenses has to be paid within that date irrespective of which method of accounting the ass is following you might be following acral system you might be following Cash System doesn't matter the following expenses is allowed only if you have paid within due date of filing income tax return return if it is paid after the due date of filing income tax return you can claim it in next year but in the current year it will be disallowed okay and please be careful what is covered here is employer contribution so in section 361 also they told employer contribution is allowed provided the contribution is for recognized or approved funds and it should be for the benefit of employees and here they are telling it should be deposited within the due date of the due date of filing income tax returns whereas for employee contribution year only they told it has to be deposited employee contribution has to be deposited not within the due date of the return it is within the due date of the respective fund so please be careful for employee they have put the condition and time limit under Section 361 only employee contribution it has to be deposited within what the due date of the respective welfare funds whereas employer contribution has to be deposited within the due date of filing the return clear so for employer contribution they have given extended time whereas employer cannot play around with employee money please deposit it within the due date of the respect fund which will normally be monthly clear like 15th of next month or 20th of next month and all okay guys now coming to an important thing see this is a new provision which is added to section 43b only but separately applicable the time limit whatever we just just now discussed that is the due date as per section 1391 will not be applicable for this there's a new item which is added under Section 43b guys as per Finance act 2023 but implementation of this has been postponed as it is as it received certain criticism or objections from the stakeholders government postpone the implementation of this provision whatever we are talking now okay from year to year postpone the implementation but if at all if by chance what if they ask for academic purpose in the exam I'm just covering it okay the implementation of this has been postponed even though it was uh brought through Finance act 2023 still it has been postponed but still for AC mic purpose good to know if at all if by chance if they ask any question in the exam you guys should handle it so what is it we will see it is covered in 43b only but separate provision oh what is it sir some payable by an assc to a micro or small enterprices okay for supply of goods or services beyond the time limit specified in section 15 of msme development act msme means micro small and medium Enterprises guys okay so simple it is assy from micro and small Enterprise okay so asss has obtained certain goods or services from micro and small Enterprises now he's making payment for this he's making payment for this the question is can he claim it as an expenditure of course because it is an expenses for him he has purchased certain Goods or he has taken some services and he is pay paying it and for that can assy claim it as an expenditure of course he can claim but the condition is it has to be paid within the time limit given in section 15 of msme development act not within the due date of filing the returns they are given section 15 reference to what section 15 of msme act so if assess has paid the amount within the due date given in section 15 of msme development act he can claim it in the current year sir what if he has made the payment of in the next year then he can claim it in next year if it is disallowed in the current year it will be allowed in the year in which you have actually paid the amount guys clear so please be careful the due date what is mentioned here is as per section 15 of msme development act and not the due date of filing income tax returns guys fine sir so what is it what is the section 15 telling what is actual due date this is as per section 15 what I'm reading now return agreement between assass and micro or small Enterprise exist is there any return agreement between the assass and the Enterprise check it if s then payment has to be made within what time payment has to be made as per the agreement means in agreement whatever time is given or within 45 days of accepting the goods or services whichever is earlier so now assume guys in the agreement 30 days is given so 30 days or 45 days whichever is earlier 30 days so in the agreement 60 days is given so 60 days or 45 days whichever is earlier 45 days agreement means agreement between the ass and Enterprise if at all if they have any return agreement so maximum is 45 days even though there is an agreement maximum time given as per the section 15 is what 45 days so what if there is no agreement at all no agreement in that case payment has to be made within 15 days from the date of accepting the goods or services tax so simple if ass and micro and small Enterprises has a written agreement with respect to payment they're telling make the payment as per the agreement or maximum 45 days whichever is earlier sir what if there is no agreement within 15 days within 15 days of accepting the goods or services payment has to be made guys and this due dates are given where not in income tax law section 15 of msme development act okay next sir what if the payment is not made so normally these payments are like guys for the goods or services which are purchased at the end of the year somewhere in February March guys clear because this deadline of 35 sorry 45 days or 15 days and all normally comes at the end of the year so if the payment is not made within this days but made after that then obviously you can claim the expenditure in the year in which you have made the payment guys so you can see however if the sum is not paid within the time limit specified above the deduction for expenses should be allowed in the previous year in which actually it is paid clear yes sir that's all this is a new provision so please be careful with it which is a new item added to section 43b but the time limit and all is kept separate okay it is not the time limit as applicable for other items for other items and all it is the due date of filing the returns whereas for this something special okay next coming to section 41 guys deemed profits section 41 enumerates items of notional income which are deemed to be the income from business or profession so there are five subsections here what are those we will see one by one the items of deemed profits are inlisted below remission of of liability recuitment of loss or expenditure guys if assassi has claimed any expenditure for his business or profession in the past and if he has recovered that now then what whenever he has recovered it it will be taxable as his business income or professional income and in the current year assume okay guys let me give an example assume in 2021 he had claimed on expenditure or loss now in 20 uh 23 24 he has received it he has recovered that loss or he has recovered that expenditure in that case it should be considered as his income as what income business income only so what in 23 24 is no more carrying on any business he has already closed down still it will be taxable as business income still it will be taxable for him under the head pgpp guys next balancing charge on the assets depreciated under slm uh method for power sector so only for power sector companies there is an option to follow SL slm method where they will charge the depreciation on asset to asset basis guys I will just discuss this with an example now assume an assc who is engaged in the business of generation of power or generation and distribution of power has purchased an asset for a cost of 10 lakh 10 lakh and he has already claimed the depreciation for 3 years 1 lakh each 3 lakh totally 1 lakh each for 3 years guys so he has claimed how much 3 lakh so what is the return down value of the asset now wdb of the asset 7 lakh so please listen here now if this asset is sold guys if this asset is sold let us see both we will talk from both profit and loss point of view so assume the sale value is assume the sale value is I am taking different possibilities sale value is only 5 lakh sale value is only 5 lakh that means there is a loss of how much 2 lakh this will be allowed as terminal depreciation under income tax law under that pgb you can claim it as terminal depreciation which is nothing but loss on sale you can claim it in the year in which you have sold the asset under the pgbp only as what terminal depreciation this is when there is a loss on sale on the asset which on which the depreciation was charged on slm basis next assum we have sold it at a profit so I have sold it for 9 lakh I have sold it for how much 9 lakh guys that means there is a profit of how much 9 lakh minus return down value 7 lakh there is a profit of 2 lakh and this is taxable under the headit pgbp as balancing charge balancing charge that is what we are learning under subsection two c so it will be taxable under the headit pgbp as balancing charge it is nothing but profit on sale guys nothing but profit on sale next we will see assume the sale value is 15 lakh guys assume the sale value is 15 lakh so what was the wdb of the asset on the date of sale 7 lakh so what is the profit made 8 lakh so is entire 8 lakh taxable under the pgbp no they're telling what is the maximum benefit you have taken under the head pgbp till now three lakh what is the depreciation you have claimed what is the profit which has come down under the head pgb due to depreciation three lakh only till now so they're telling okay if your profit is more than three lakh you have to divide it 3 lakh will be taxable as balancing charge under the head pgpp remaining 5 lakh that is inex whatever profit is there inex of three lakh what is three lakh guys the depreciation which you already claimed under the pgpp so under the P under the pgpp how much profit has come down due to depreciation three lakh so how much income or profit would be taxable under the head pgpp only 3 lakh then what about the remaining 5 lakhs sir it will be taxable under the head capital gains guys straight away actually it is short-term capital gain it will be taxable under the head capital gains is that clear yes so that means simple if there is a profit on sale only to the extent of depreciation already claimed will be taxable under the head pgbp as balancing charge if there is any excess profit it will be taxable under their capital gains whereas if there is any loss on sale whatever is the loss whatever is the loss will be allowed as terminal depreciation under the hit pgbp in the year of sale clear yes sir next sale of scientific research assets without using the business see if the asset is sold on which the deduction is claimed under Section 35 so under Section 35 except land for all the capital expenditure you can claim the deduction in the same year even if you have incurred it in before the commencement of business you can claim it in the year of commencement now sir I had purchased the asset for scientific research I have claimed the deduction and without even using it I have sold it without even using it for my scientific research business I have sold it which is like unfair what you have done you have misused the benefit given so they're telling okay whatever is done assume guys the assc has claimed deduction under Section 35 10 lakh so now whatever is the sale value so the deduction you have claimed or the sale value whichever is lower will be taxable under the head pgbp so assume the sale value is 12 lakh so how much is taxable 10 lakh 10 lakh sir what about if the sale value is around 8 lakh how much is taxable under the headit pgbp 8 lakh whichever is lower the deduction claimed are the same s value whichever is lower is taxable under the head pgpp guys clear sir what if the sale value is 18 lakh then what is taxable under the head pgb is only 10 lakh remaining 8 lakh will be taxable under the head capital gains guys remaining 8 lakh would be taxable under the head capital gains is that clear yes next sir I have claimed deduction under Section 35 uh that is for 20 lakh Ive used it for few years or few months and after that I have sold in that case in that case guys as I have purchase as soon as I purchase I will claim deduction under Section 35 yes so as soon as you claim deduction for 100% of the capital expenditure under Section 35 we have to add the asset to the block we have to add the asset to the block but as for Section 43 subsection one the cost of the asset is nil because you already taken 100% deduction okay so we have added the asset to the block at nil value now if in the future if the asset is sold obviously section 32 will fail because there there's no value in the block so immediately we have to compute capital gain that is short-term capital gain under Section 50 guys that is in the year in which the asset is sold after using it for scientific research business for few months or few days or few years if you're selling it then straight away we will compute short-term capital gain or loss under Section 50 under Section 50 because this asset is added to the block but with nil value but nil value clear yes and there is no 8ye period and all that is only for 35 ad asset year whenever you are selling it in that year we will apply that section 50 straight away next bad de recovered allowed earlier sir bad dat we have claimed in the earlier in the past now what if it is recovered obviously in the past you have claimed it as an expenditure your profit of the business has come down you paid less tax now if you're recovering back it has to be taxable under the H pgbp yes so bad date recoverable which is taxable is bad date recovered minus bad date disallowed earlier if at all if assessing officer has disallowed anything in that year assume I claimed one lakh but he he allowed only 80,000 so how much was disallowed 20,000 so when I recover in the future from the amount recovered if at all if something was dissolved in the past by the assessing officer we have to reduce it only the remaining is taxable and if the question is silent about this part guys assume nothing was dissolved nothing is dissol so in that case whatever is recovered will become taxable clear yes so easy to remember the sections also 41 uh subsection one is like recovering any losses or expenses and all 412 balancing charge start with B so subsection two B is the second alphabet then scientific research so science and all so subsection three then subsection four bad debts d d fourth alphabet debts clear so subsection four okay subsection five is a new section which was added by 2023 what is it deemed profits from a defunct business can be set off against broad forward losses of such business even after the expiry of four years guys assume you have any of the income covered here okay now so now in 2021 assume you had claimed an expenses or losses of 10 lakh now in 23 24 you're recovering that to the extent of 6 lakh so is it a business income or yes and from this business which I was carrying on in 2021 I had a loss I had a loss so I was Keep On Carry forwarding this once you carry forward the business loss you can adjust it only within the same a but I was not able to adjust because I didn't have any business income assume now 8 years period also is over for the loss 8e period also is over somewhere in the future from this business I recovered 6 lakh from somewhere in the future assuming 30 31 I recovered 6 lakh and from this business I had a loss which is already expired so this six lakh guys which I recovered from the business which I was carrying on in the past for which I had claimed expenditure is it taxable under the head pgbp yes business income now sir I had some loss with respect to the same business for which you are taxing now now can I adjust that loss against this 6 lakh they're telling yes you can adjust the loss even though the period of 8 years is lefts till you can adjust the loss because you are recovering something from your business you recovering from something from your business as what teed income in that case if you have a loss any loss from the same business even though you would have closed that business or even though 8 years period is over from that business business loss means normally business loss you can carry forward for how many years maximum 8 years that period is also over still they're telling you can adjust it adjust it what against what the deemed income whatever is covered under subsection 1 2 3 or four if at all if it is there if at all if it is there even though eight period is 8e period is over guys okay so the next part of the head pgbp we are done with the calculation part and all is books of accounts and audit as well as some presumptive schemes guys so let us start with maintenance of books of accounts section 44 AA who should maintain the books of accounts this covered here first is specific person we will understand who is specified person there it is given in rule 6f specified person includes person carrying on the business sorry profession of not business profession of legal or medical or engineering or architectural or the accountancy or technical consultency or interior decoration or the film artist or the company secretary or information technology professional we are also covered CS here okay so if the ass is carrying on any of these professions then they are called what guys specified profession or specified person in that case whether you are doing the profession as a individual HF partnership for LLP whatever it is when should you maintain the books of accounts if the gross receipts is more than not sales we cannot sell ourself it is gross receipts okay means whatever fees we are charging to our clients if gross receipt is more than 150,000 in all the three years immediately preceding the previous year guys now we are checking whether should be maintain the books of accounts for the previous year 2324 so they're telling leave 2324 go back to last 3 years 22 23 22 sorry 21 22 then 20 21 2021 in all these years guys gross reip is how much more than 1.5 more than 1.5 more than 1.5 let it be any amount but more than 1.5 one then in the current year you have to maintain the books of accounts so what if in one year it was less than 150,000 then you did not maintain the books not mandatory voluntarily you can maintain but it is not mandatory for you to maintain the books of accounts in the current previous year guys why they are giving the reference to the past is because when you are supposed to maintain the books of account you have to maintain it from day one so obviously you should know okay from April itself you should know whether you are supposed to maintain the books of accounts or not next non-specified person if they are individual or HF income from business or profession more than 250,000 and your profession means other than the specified profession clear yes so income from business or profession more than 250,000 or they have given two limits sales or turnover or gross receip from business or profession is more than 25 lakh then in case of other s other s means like firm company partnership for and all guys or LLP income from business or profession more than 1ak 120,000 and please be careful profession will not include the specified profession as per rule 6f other than that okay or sales turnover or gross receipt from business or profession more than 10 lakh any one of this guys either the income is more than the limit or the turnover or sales is more than the limit anyone if it is crossed also you have to maintain the books sir when sir in any one of the three years immediately preceding the accounting here so guys in this case non-specified person if income is more than the threshold limit whatever they have given or if sales is more than the threshold limit in any one year not in all three years in any one year also in the last three years if it is more than the limit then they're telling you have to maintain the books of accounts in the current year you have to maintain the books of accounts in the current year please be careful both need not be satisfied anyone either the income or sales is more than the limit and not in all the three years in any one year out of the last three years yes next sir what if I'm starting in business or profession for the first time and during the previous year they're telling this is actually not so relevant but they still put like this if you're starting a new business or profession during the previous year they're telling by the end of the year if you feel that if your income or sales cross whatever limit is applicable for you whatever is the limit applicable for you check it if you feel that by the end of the year if your turnover or income crosses so and so limit please maintain the books of account from day one from day one see year and all they giving limits with respect to past whereas for the new business profession and all they're telling you have to maintain it from day one if you feel that by the end of the year you will cross the limit which will not make much sense but still this is how the provision is okay next if the assc is following presumptive scheme guys presumptive scheme under Section 44 a e bb or BB BBB okay B and BB and BBB is not a part of your inter syllabus but if the ass is following a presumptive scheme under Section 44 AE 44 bb or BBB and is telling my income is lower than the presumptive income as calculated as per the respective section in section 44 AA they telling maintain the books please prove us that your income is lower than presumptive income by maintaining the books and here there is no limit with respect to like there is no condition telling only if their income is more than basic agent limit they have to maintain the books nothing like that is there whereas for next point it is like that where the assess is following presumptive scheme under Section 44 ad that is for business or ADF that is for professions guys and if they're telling their income is less than the presumptive income and as for the normal provision whatever normal Provisions they have to see where what is allowed what is disallowed and all as per the normal provision if their income is more than basic exential limit then they have to maintain the books of accounts and get it audited they have to maintain the books of accounts and get it audited sir books of accounts has to be maintained for how many years 6 years from the end of relevant assessment year effectively 8 years guys because if the books of accounts is related to 23 24 previous year obviously you have to maintain for this year yes sir then which is the assessment year 2425 so which is the end of the assessment year 25 31st March 25 from years you have to from here you have to maintain for six years so effectively six years here plus this two years so 8 years you have to maintain the books of accounts including the year for which the book relate to so what if I don't maintain the books of accounts if a person fails to keep and maintain or retain the books of accounts as H and other documents then penalty would be liid up to 25,000 up to 25,000 okay next audit of accounts whose books of accounts has to be audited as per the tax law is given in section 44 ab and audited audit has to be conducted by whom chatted accountant in practice okay section 44 AB makes it obligatory for a person to get his accounts audited before the specified date by a charted accountant so if audit is applicable you have to get it audited by a charted accountant within a specified date so what is a specified date I have given here you can see in blue color spe specified date is 1 month prior to the due date of filing the income tax return under section 139 sub section one guys whenever tax audit is applicable the due date for filing income tax return return is 31st October of assessment year 1 month prior to that means 30th September so the tax audit report has to be submitted on or before 30th September of the assessment Year guys so now for whom audit is applicable let us see if the assess is carrying on the business then if the sales are turnover from the business is more than one CR audit is applicable but this limit of 1 CR has been increased to 10 CR this is an amendment please be careful important 1 CR limit has been increased to 10 CR but subject to condition what is it aggregate of all amount received and all payments made in cash does not exceed 5% of the set amount means if you have 100 lakhs received okay whatever is the amount if you have received maximum 5% you can receive it in cash remaining 95% or more than that you should have received in any mode other than cash okay sir next if you have made a payment whatever is your total payment in that maximum 5% you can make it in cash okay 5% or less than that in remaining you have to make it in any mode other than cash clear if both this condition is satisfied that is for receipt as well as payment only then 10 CR limit is applicable if not one CR guys okay next on that note I will explain later then if gross reip in profession is more than 50 lakh so if the assess is carrying on the profession then if the cross reip is more than 5050 lakh then it is applicable for them that is audit is applicable for them guys here there is no increased limit and all next same way if the ass is following like however we learned in accounts same way you if the ass is following presumptive schemes under Section 44 a or BB and BBB and he's telling no no my income is less than pres income the department is telling please maintain the books of accounts and get it audited and pro it same way if the ass is following the presumptive scheme under Section 44 ad that is for business or Ada that is for profession and if the assess is telling his income is lower than the presumptive income and as per the normal provision if their income is more than basic exemption limit they have to maintain their books of accounts and get it audited guys they have to maintain the works of accounts as per section 44 eia and they have to get it audited by a chattered accountant as per section 44 AB okay sir what is the penalty if I am subject to tax audit but still I have not got in that case the penalty under Section 271b would be 0.5% of the turnover or rupes 150,000 whichever is lower means maximum 150,000 maximum 1 lak 15,000 guys next coming to presumptive schemes see first of all what is the purpose of bringing this presumptive schemes I will tell you see for the person who is doing small business or professions and all it is very difficult for him to understand what is allowed under income tax law what is is allowed how much to pay how much not to pay in cash is very difficult for them to understand in the initial stage only so to support the small business and professions they brought presumptive scheme under income tax law telling sir you need not maintain any data okay you need not worry about what expenses are allowed What expenses are disallowed you just maintain the data with respect to your gross receipts or sales and I will tell you what is your presumptive income or teemed income like 5% or 8% or some amount I will tell you as your income please pay tax on it you need not maintain your books of accounts you need not get it audited and you need not even worry about what is allowed what is disallowed and all clear for example assume your sales is 1 lakh they telling 8% is your income remaining 92% is deemed to be your expenses and you need not even prove that what is that 92% how much you have incured for what nothing clear this is just to support the small business and professionals guys to reduce their complaints burden and obviously once you following presumptive scheme it is understood that you it is understood that all the expenses is allowed for you it is not like sir from presumptive scheme can I reduce any expenses no no no the presumptive income is straight away like your taxable business income or professional income which is taxable under the head pgbp okay so for whom it is applicable is it applicable always no there are some threshold limits and there are some exclusions also what are those we will see one by one guys section 44 ad this section is applicable to a resident individual HF or a firm other than LLP for LLP this section is not applicable carrying on any business other than business referred to in section 44 AE because for that there is a separate presumptive scheme that is Goods Carriage business whose total turnover or gross receipt from such business in the previous year is how much guys does not exceed 2 CR means up to 2 CR exactly 2 CR also fine this was already there but now they have added one more limit which is new thing does not exceed 3 CR 2 CR was the limit but now they telling okay even if it does not exceed 3 CR but condition aggregate cash reip in relevant previous year should be less than or equal to 5% of the total turnover or gross reip there is no point with respect payment only receip guys normal limit is 2 CR but now they have increased it to 3 CR provided your receips in cash is only up to maximum 5% of your total receips 5% or less than that not more than that assume I am my receipt in cash is like 6% 10% then what is the threshold limit applicable For Me 2 CR sir what if my cash receipt is within 5% then the threshold limit applicable for me is 3 CR clear so in that case what is the presumptive income sir presumptive income is 8% of your gross receipt paid or payable to the ass so whatever gross receipt you have got through during the previous year 8% of that is deemed to be the income C and remaining 92% is understood is the youro expenses and you need not prove it also okay now guys here I am going through the note actually 8 % is the rate but now they have brought down to 6% not tax rate income rate okay what is it preservative income under Section 44 ad shall be calculated at 6% on the turnover gross received sh sales if the following conditions are satisfied means both the conditions what is it the turnover or gr reip is received by any mode other than cash and the above payment is received during the previous year or before the due date of filing the income tax return only then the rate is 6% if both this condition is not satisfied then the rate is what 8% presumptive income is how much 8% Let me Give an example guys assume for previous year 2324 your gross receipts are turnover is one one CR I'm taking one CR Sor or else okay 1.5 CR first of all am I eligible yes sir okay how it is received we will see guys now out of 1.5 CR I will just give 0.3 CR is received in cash 0.3 CR is received in cash okay next 1 CR is received in any mode other than cash in other modes in other modes before the due date before the due date of filing the returns okay next remaining is how much 0.2 CR is not received not received within the due date within the due date clear yes sir so in this case how much is the income see for whatever you have received in cash the percentage of income is 8% 8% then one CR you have received in any mode means electronic modes or any other mode Bank through banking channels so before due date you have received what is the rate 6% 6% then 0.2 CR you are not received it within the due date see if you are receiving it after the due date how you receive doesn't matter the rate is 8% so assume you may receive it after the due date whether you receive it in cash or other modes doesn't matter the rate would be 8% clear so we have to add up all this this will be the presumptive income for thees this will be the presumptive income for the ass guys that is on 0.3 CR or 30 lakhs 8% on 1 CR 6% on on 20 lakh 8% once we add up all this that will be the presumptive income for the ass for the previous year 23 24 so in simple any money received before the due date of filing the income tax returns in any mode other than cash on that 6% on the remaining amount it is 8% guys is that clear yes next guys so what was the threshold limit here 2 CR but now they have increased to 3 CR subject to your cash receipts should be maximum 5% now in audit guys you can see sir for a business what is the threshold limit applicable one CR now in presumptive scheme you are telling sir threshold limit is 2 CR or 3 CR agree see for audit 1 CR or 10 CR assume now sir my limit is more than one CR but it is within 2 CR or within 3 CR in that case I'm following presentive scheme should I get my books audited no no you need not so if you are following section 44 ad even though you cross this threshold limit still for you audit is not applicable that is what is given in the note guys that is what is given in the note is that clear yes because whoever is following strictly the presumptive scheme for them books of accounts and audit is not applicable okay so whoever is paying tax as per the presumptive scheme under Section 44 ad has to pay Advanced Tax only in one installment on or for 15th March of the previous year guys then fourth one assess is required to follow no sorry first third point the provisions of 44 ad shall not apply to the following businesses what are those a person carrying on any profession referred to in rule 6f because for them separate scheme is there 44 Ada okay then person earning income in the nature of commission or brokerage because normally for them the profit margin would be more they're telling no presumptive scheme for you then agency business also not available then ass covered under Section 44 AE that is Goods carriage business because for them separate scheme is there then ass who is availed the exemption under Section 10 a 10A 10A is actually deduction 10B 10ba or any other deduction claimed under chapter 6A Under The Heading C that is income base deduction so for any of this assy they're telling presumptive scheme under Section 44 ad is not available okay then assess is required to follow the same scheme for next 5 years however if he fails to do so presumptive taxation under Section 44 a d shall not be available for next 5 years that is once you come under the presumptive scheme you have to follow the presumptive scheme for next 5 years that is the year you have come plus 5 years so totally 6 years provided you are eligible for it so what in between the 5 years if my threshold limit has crossed obviously how to go out obviously you have to go out okay now what they're telling is this is like subsection Four Guys once you come in follow the presumptive scheme under Section 44 ad for that year plus next 5 years in any of this 5 years if you are going out then please don't come back for next 5 years don't come back to 44 ad for next 5 years even though you are eligible and once you go out of 44 ad you have to compute the income as per normal provision by considering what is allowed what is disallowed and all and as per normal provision if your income is more than basic agential limit then you have to maintain your books of accounts and get it audited by a chattered accountant guys clear yes next 44 Ada this is for the professions which are covered in rule 6f guys so if the ass is carrying on any of the profession mentioned in rule 6f then he can go for presumptive scheme under 44 ADM what is it we will see this section is applicable to resident individual or partnership form but not LLB only for individuals and partnership form the two who are resident engaged in the specified profession as per rule 6f which just now I told and whose gross total reip in the previous Year from such profession does not exceed 50 lakh so 50 lakh is the limit which was there but now they have increased it to 75 lakh but subject to limit that is if their aggregate cash reip is less than or equal to that is with respect to Total receip means whatever their receiving in cash should be within 5% out of their total receipts guys only then 75 lakh limits so what if my cash receipt is more than 5% of my total receips then still you can be eligible for uh this presumptive scheme but the limit applicable for you is 50 lakh the limit applicable for you is 50 lakh so what is the presumptive income guys straight away 50% of the gross receipts so once you guys start your article ship and all most of your principles might be following this presumptive scheme provided they turnover sorry gross receip we don't call turnover for profession it is gross receip if the gross re is within 50 lakh or 75 l so what is their presumptive income straight away 50% whatever is their gross receip 50% and here there is no lower rate higher rate and all only one rate and again a point connected to 44 AB guys you can see so for the person who is carrying on the profession when should he M when should he get his books audited is when the pro gross reip from profession is more than 50 lakh but there now they given the increase limit of 75 lakh sir what if I am eligible for that 75 lakh because my cash reip is within 5% in that case if your gross rip is more than 50 lakh but within 75 lakh and if you are following presumptive scheme under Section 44 Ada then for you the audit is not applicable that is what is mentioned in note guys you can see section 44 AB is not applicable for the professionals who opt to pay tax under 44 AA okay so please be careful guys under ad whatever that 300 lakh is there that is a new change then even this under Ada whatever 75 lakh they have increased the limit which is a new change brought through Finance act 2023 please be of it and that is subject to condition if that condition is not satisfied then whatever earlier limit was there that will be applicable and thec who is covered under Section 44 Ada if they are liable to pay Advanced Tax then they have to pay it in one installment on or before 15th March of the previous year then with respect to business if the assess is engaged in the business of goods carriages that is plying iring of leasing of goods carriages then at any time during the previous year if he doesn't own more than 10 Goods vehicle guys exactly 10 also fine but not more than 10 even for one day if he's owning more than 10 he is not eligible for the scheme so here the limit applicable is not thres turnover limit or gross reip it is number of vehicles so the number of vehicles owned by the assy if it is less than or equal to 10 Vehicles only then is eligible for this presumptive scheme and what is the presumptive income sir in case of heavy Goods vehicle whose vehicle weight is more than 12,000 kg or 12 tons guys what is the income is presumptive income is 1,000 rupees per turn or even if it a part of the turn you take 1,000 rupees of gross vehicle weight or unladen weight per month or part of the month C th see guys assume the vehicle weight is 13.5 tons so in that case you have to round it up to 14 so it will be 14 into th000 into number of months assume it is own uh two vehicles are there so assume it is wounded for full 12 months so in that case 12 months into how many vehicles two vehicles assuming both the vehicles weight is 13.5 13.5 yeah this how you have to calculate so even if it is a part of the turn you will consider it as full turn and apply 1,000 rupees okay so what if the vehicle is other than a Goods vehicle means whose weight is less than 12,000 kg or equal to 12,000 kg in that case presumptive income is not based on the weight it is straight away per vehicle 7,500 for for every month or part of the month per vehicle guys it is not per turn on all okay then guys as I told you all this presumptive schemes has been brought to reduce the complience burden to the assy all the deductions from section 30 to 38 will be deemed to be allowed you cannot claim sir I have got presumptive income of 5 lakh from that can I claim any expenditure and all no no no you cannot claim any other expenditure from your presumptive incomes clear yes sir so if you're following 44 ad Ada or AE once you have got presumptive income as the respective section please follow the same that will be your taxable business income you have to pay tax on it w wdb of the assets of the respective block will be calculated as if the depreciation is allowed means if depreciation was allowed what amount would have been allowed we will reduce it from the Block because we want to calculate the closing wdb at the end of each year assess opting for taxation on presumptive basis are not required to maintain books of accounts and get them audited but if they tell no no my income is less than basic essential limit and all then they may end up maintaining books of accounts and get it audited so if the assessive is following presumptive scheme if they're following presumptive scheme it's fine see even if they're following presumptive scheme they can disclose the income more than that the department is more than happy in that case okay but if you're disclosing the income lower than the presumptive income they're telling no no you have to maintain the books of accounts and get it audited okay in case of a firm who is covered under Section 44 AE the salary and interest paid to its Partners shall be be deducted from the income computed under Section 44 AE subject to the condition and limit specified in section 40p so guys this is only for the ass is covered under 44 AE if they are the firm if they are the partnership firm they're telling whatever presumptive income you will get as per section 44 a now from that you can claim only one expenditure what is it 40b that is interest salary bonus commission and all whatever is paid to the partner from the partnership firm that can can be claimed but obviously the limit as per 40b whatever we discuss that will be applicable this is the only expenditure they can claim nothing else who the firm which is covered under Section 44 a so what if it is a firm covered under Section 44 ad or Ada can they claim 40b expenditure no no they cannot only the form which is covered under y can claim it clear that is what I have mentioned in the last L you can see however the same cannot be deducted by thec covered under Section 44 ad and 44 ad clear yes sir next treatment of business losses guys for income tax purpose for only adjustment of loss businesses are categorized into three specified speculation and other businesses other businesses and all we will just name it as normal this only for adjusting loss not for tax rate purpose for any business income the rates are like same guys whatever rate is applicable to the ass depending upon the category of person now speculation business I already told sir what is speculation business if you buy and sell anything online without physical delivery we call it a speculation including intraday trading and all guys so if you have any loss from speculation business guys it can be adjusted only against the income from speculation business and it can be carry forward for maximum four years it cannot even be adjusted within the same head against other business income speculation business loss can be adjusted only against speculation business income maximum it can be Carri forward for four years then coming to specified business section 35 ad capital expenditure they allow so in that case normally in the initial years they will have huge loss so if you have a loss from specified business you can adjust it only against income from specified business sir can I adjust it one against the other for example loss from one specified business can it be adjusted against income from another specified business yes you can do it but loss from specified can be adjusted only against income from specified business yes sir and it can be carry forward for indefinite period guys that is unlimited years as usually in the beginning of the business in the when the businesses coming they will have huge loss because they are allowed to claim entire capital expenditure so they may take time some time to recover it or to break even so that is why they're telling okay you can take any number of years to adjust your loss but adjust it only against specified business income so any other business any other business falls under the last category so by chance in the exam if they have just mentioned business loss always assume that it is any other business guys okay if it is a current year business loss it can be adjusted against any business income including speculation and specified business income that that is if there is any loss from other businesses can I adjust it against specified business income or speculation business income yes sir but vice versa is not possible clear so laws from any other business can be adjusted against income from any other business including speculation and specific yeah but law from speculation specified cannot be adjusted against income from other businesses okay so that is intra we call it as this is intra next if intra is not possible can I adjust current year business loss against other eights of income yes you can adjust except salary except salary head you can adjust the business loss against other RS of income then if that is not possible then the third possibility is you can carry forward the loss for next 8 years and once you carry forward you can adjust it only within the same hit guys only within the same hit okay next impact of section 115 BAC under the head pgbp that is if the assess is following default scheme under Section 115 BAC which is eligible for individual h of EOP Boi and artificial judical person then they have to foro certain exemptions and deduction under the pgpp which are those additional depreciation which is given to new plant and missionary which is at 20% you cannot claim it not normal depreciation you can claim it but only additional depreciation which is given to new planted missionary installed in Factory that is not allowed okay then deduction for donation made to outsiders with respect to any research guys so whatever donations we saw under Section 35 to The Outsiders you can claim 100% of the donation as expenditure now but if you're following default scheme you cannot claim it for your own business if you are incurring any revenue or capital expenditure that you can claim but if you're contributing to Outsiders sorry you cannot claim next deduction in respect of a capital expenditure incurred for specified business so in that case even though you're doing any eligible specified business you cannot claim it in that case obviously on your capital expenditure you can claim depreciation but 358 capital expenditure deduction is not allowed for you guys clear so these are some deductions which are blocked under the head pgbp next coming to guys in few sections we saw we cannot make the payment in cash or we cannot receive it in cash sir in what mode can I make or in what mode can I receive CE so these are the sections where and all we saw see in 35 ad whatever deduction is given for capital expenditure there they are told you cannot pay more than 10,000 in a cash to a single person in a single day then 4083 and 3A they told you cannot Revenue expenditure this is all about Revenue expenditure so if you paying more than 10,000 in a single day to a single person it is disallowed if we payment is for goods carriages then it is 35,000 it is disallowed but certain exceptions are there for this next 43 subsection one also told which talks about actual cost for claiming depreciation if you you pay more than 10,000 in a single day to a single person to purchase any asset then they told the cost would be nil the cost would be nil then section 44 ad there are two points one is to claim higher limit just now we saw okay to claim the higher limit you can see of how much 3 CR at least your cash receipt should be within 5% of the total receipts agre now yes sir then same way at the end to claim 6% amount has to be received in any mode other than cash within the due date of filing the returns so in what mode should I receive so all that is what they mentioned here okay next 44 Ada also 50 lakh is the limit but it has increased to 75 lakh subject to maximum your cash reip is 5% okay so remaining 95% in what mode should I receive is the question mark which rule 6A BBA is answering then 43ca and 50c I will cover it and uh under the head capital gains 56 to 10 I would be covering it under other sources and 8jj and under the chapter deductions under chapter 6A guys okay for all the sections rule 6 ABBA is applicable where they told okay you can receive or make the payment in the following modes which are those modes sir account pay check or Bank draft credit card debit card net banking imps UPI rtgs nft or beam so these are the modes through which you can receive the payments okay they have told other than cash other than cash now so in what mode can you receive it or in what mode should you pay it is in the following modes clear so in simple we tell okay the following payments are not allowed if it is paid in cash so in what mode should should we make it or in what mode should I receive the receipts they told maximum in few sections they told maximum 5% should be in cash receipts so remaining 95% should be received in what mode sir in the following modes clear yes guys so this is all about the head pgbp I know this is the biggest head guys lengthiest head so still it is the most most important head why because guys once you guys qualify and start article ship most of your clients will be having income under the head pgp either business or professional income and day in day out you will be playing around with this Provisions so it is very important guys I know by now itself you guys would be tired your body is tired mind is tired guys yes I can understand if I am standing in your position I can see myself or when I was doing CA it is very tough to go through this days but guys something big is waiting for you something big is waiting for you please don't give up at this situation so every day at the night you will feel satisfied that yes this today I did so much so this satisfaction you will have even after achieving that CA qualification so once you guys get that CA qualification you will feel proud about yourself and you'll feel happy that you didn't give up you didn't give up even if I feel today if I have to look back like to my student journey and if I see now I'm very proud of myself that I didn't give up it was very tough for me it was very difficult for me to undergo the stady period managing College along with CA was very very tough and that to I did degree in a college where 85% attended this mandate so it was not possible for me to take leaves also so how to manage degree along with the ca I know most of you are undergoing the same scenario now but guys yes you have to give your best I know it is tough difficult it is tough for you guys to manage daily manage personal life studies college life everything but still Guys Somewhere push yourself something big is waiting for you in the future so just give that reason for you to push yourself every day so I believe in one thing if you are living your life few years of your life like others are not living then you can you can live your rest of your life like others can't live clear yes some of your friends might be enjoying they might be doing party around roaming around but you guys are sacrificing now yes guys everything is worth it clear so now you have to make some sacrifices for your goal if not your goal will become a sacrifice so yes now you have to sacrifice going to any family events get together or birthdays of your friends and all there will be a day where you guys will host a party your success party so then definitely that will be more more value adding for you Ag and now you just think if you're missing the events or family events birthday birthday parties of your friends and all that's fine but attending them with a failed result is very tough guys attending them with the failed result especially the family events and all because most of your family members will already be knowing that you are doing CA so they will always be asking what happened what happened what is the results on them so it's okay to foro few short period benefits guys okay whatever we are expecting means short-term benefits or short-term parties events functions and all it's good to sacrifice them because you will get some long-term benefits you will get some long-term benefits guys so trust me you can do it you will do it push yourself every day guys yes guys now we will revise the fourth head of income that is capital gains section 45 to section 55 talks about the capital gains provision section 45 being the charging section tells any profits or gains arising from the transfer of capital asset affected during the previous year or done during previous year shall be chargeable to tax in income tax under the head capital gains so for an income to be taxed under this head there should be three things guys that is transfer half Capital asset and during the previous year and previous year for you guys is what 2324 now what is capital asset is defined in section 2 Clause 14 Capital ass set means property of any kind held by the assess any Securities held by Foreign Institutional Investor ulip that is unit link insurance plan issued honor after 1st February 2021 which is not exempt under 10d that is only when in any year if the premium is paid more than 250,000 guys if you have single ulip more than 2 l50 even if you have multiple ulip then all aggregate limit put together for all you put together it is 2 l50 even in one year if you have paid more than 2 LH 50,000 then exemption under Section 1010 is not available then the ulip is Trad as capital asset next but it does not include stock in trade raw materials and consumables personal assets of mber nature held for personal purpose so whatever I have given in green color here that is not the capital assets guys exception jry archaological collection drawing painting sculpture work of art is a capital asset means even though this are the movable nature of the asset of personal which are of movable nature but still they are capital assets clear yes so then rural agriculture land gold deposit Bond or special bearer bonds which are issued by central government are also not Capital assets guys so whatever I have highlighted in green color are not Capital assets whatever I have given in red color are capital assets clear you should not get confused because in between they have given exception does not include and all so you should not get confused with it then transfer what is transfer in simple words sale guys but what is transfer is defined in section 2 Clause 47 in income tax law transfer includes sale exchange even I have sold I have given my asset to you you have given your so exchange or batter is also covered here then relinquishment that is surrendering of capital asset is also covered here then extinguishment means cancellation of any rate where my asset would have been destroyed by fire or whatever reason in that case insurance company will take back the asset and they may pay me compensation even that is considered as transferred then compulsory acquisition under any law even though I would not sold it willingly but still compulsorily acquired still it is a transfer under income tax law then conversion of capital asset into stock in trade if Capital asset is converted into stock in rate then whatever is the FMV of the capital asset on the date of conversion will be deemed to be the full value of sale consideration to compute capital gains means it is a transfer next maturity maturity or Redemption of zero coupon Bond so even zero cpon bond is a capital asset when it is matured or redeemed even it is am it amounts to transfer guys and what is not transfer are few transactions which are not amounting to transfer they have given in section 46 and 47 and I would be covering it with respective Provisions later guys next just a second yeah next the computation part is given in section 48 what is it we will see First Capital asset whenever it is transferred we will identify it whether the capital asset is longterm or shortterm guys because if there is a transfer of long-term capital asset we have to compute long-term capital gain and if there is a transfer of short-term capital asset we have to compute short-term capital again agre so it is very much important for us to understand whether the capital asset is shortterm or longterm for which we have to refer to period of holding so what is period of holding the time gap between the date of purchase till the date of transfer that is before the sale or before the transfer how long did the seller or did the ass hold that asset is called period of holding which is between date of purchase till the date of TR transfer guys so if the asset is held for more than 12 months 24 months or 36 months we call it as long-term capital asset and when we have transferred it we have to compute long-term capital gains so for which asset 12 months 24 months 36 months we will see it after this then if the asset is held for less than or equal to 12 months or 24 months or 36 months before the transfer then that asset is called short-term capital asset and when it is transferred we have to compute short-term capital gain guys so now if there is any short-term capital gain on the transfer of EFT that is equity shares Equity oriented fund or unit of business trust then it is taxable at 15% on the entire amount under section1 which is considered as special income tax then if there is a short-term capital gain on the transfer of any other asset like land Building jry and all it is a normal income taxable at normal rate as applicable to the ass it is not a special income then coming to long-term capital gain if there is any long-term capital gain on the transfer of EFT that is EFT means I already told you equity share unit of equity oriented fund unit of business trust in short I call them as EFT it is taxable at 10% but in excess of 1 lakh up to 1 lak it is not taxable but in excess of 1 lakh it will be taxable under Section 112a guys whereas if there is any long-term capital gain on the transfer of any other asset other than EFT then it is covered under section 112 and it is taxable at 20% there are different legs without indexation with indexation on but if nothing is mentioned always apply 20% guys always apply 20% so this three incomes whatever is covered under Section 11 year 112 year and 112 are the special incomes guys taxable at special rates and against the special income deduction Center chapter 6 is not available and Sir can I adjust my basic exemption limit guys yes if the assess is a resident individual s is a resident individual or HF in that case against the capital gains special income the basic exemption limit can be adjusted in any other case special income will always be straight away taxed at special rate let me just give an example assume guys the total income of the ass is 15 lakh 15 lakh okay sir in that long-term capital gain under section under section 112 is 12 lakh then remaining is normal income or else let me make it 14 lakh because yeah so long-term capital gain is 14 lakh remaining is normal income that is 1 lakh cash okay sir now assuming the ass is a resident individual or hgf and is following default regim guys what is the basic essenti limit applicable to the S depending upon the scheme basic exemption limit is 3 lakh so how much shot it is there because not income is taxable at normal rate so what is the normal rate up to 3 lakh nil which is basic limit so what is a shortfall or we call it as unexhausted basic exential limit is 2 lakh sir can I adjust this 2 lakh against my capital gain special income yes that means you can adjust 2 lakh you remaining 12 lakh is taxable at 20% guys remaining 12 lakh is only taxable at 20% so in simple not only 112 even if it is 112 111 you can still lest so now if the assess is a resident individual or HF if normal income is less than basic agen limit then whatever shortfall or unexhausted basic agential limit is there that can be adjusted against capital gains special income guys sir what if the same ass has all the gains for example he has gain under section 112 he has gain under Section 112a he has a gain under Section 11 then try to take the benefit there is no order of set up and all we have to plan our tax so in that case if there is any shortfall or unexhausted basic exal limit always adjust first against 112 why because the rate is highest the rate is highest guys try to adjust for this first then if at all if still something is there 111 year because the rate is 15% then still something is there then against 112 because the rate is 10% that to excess of one lakh yeah this just an order of adjustment if at all if the same ass has all the capital gain special income and if his noral income is less than basic agen limit that's all chances of having all three is less but still I'm just telling the order of setup where we can capitalize our tax benefit this is available only for Resident individual so what if in the same case the individual is a non-resident or if the ass is a partnership form or something else guys in case of partnership form and all you know the rates are flat rate there is no question of basic exential limit clear now sir what if the individual is a non-resident or what if the ass is aop Bo and all in that case entire special income will be taxable at special rate even though normal income is less than basic resen limit still entire special incomes would be taxable at special rate guys is that clear yes sir next sir here you told if the asset is held for more than 12 months 24 months or 36 months it is longterm if not shortterm for which asset what is the perod first one guys listed Securities Equity preference and debt on recognized Stock Exchange or unit of equity oriented fund or unit of unit rest of India are zero cpon bot if it is held for more than 12 months long term if it is held for less than or equal to 12 months short term then second category unlisted shares that is equity as well as preference listed is covered here so that is why unlisted is covered in second category okay so unlisted shares both equity and preference land or building or both which we call it as immobile property if it is held for more than 24 months longterm less than or equal to 24 months shortterm guys next all other assets all other assets which I have given few names but you try to remember this two category all other assets are covered in third category guys that is 36 months unlisted Securities other than shares okay that is because unlisted Shares are covered here okay any other unlisted Securities are covered in third category then unit of debt oriented fund unit of business trust or other Capital assets will fall in last category if it is held for more than 36 months longterm less than or equal to 36 months short term guys then if there is any capital gains arising from the transfer of Market link debentures or unit of specified mutual fund it will always be shortterm as per section 50a which is a new section added by Finance act 2023 okay so how do we compute the capital gains is there any format given under the law yes if it is a short-term capital gain format remains same with only one small change we have to take full value of sale consideration guys if by chance if this is not available then we have to take if fair market value or Stam Duty value and all if at all if it is not available then EXP expenses on transfer that is at the time of sale like brokerage commission if anything is paid then net sale consideration you will get from that you will reduce cost of acquisition which is nothing but cost of purchase and cost of improvement cost of improvement means any capital expenditure incurred after the asset is purchased to improve the asset then gross short-term capital gain you get if you're ready to make reinvestment and if you are eligible for exemption under Section 54 B and D for shortterm you have exemption only under two section that is 54 B and D you can claim the exemption the remaining will become taxable and most of the time the question might be silent about exemption in that case straight away gross will become taxable guys straight away you can there write there only taxable short-term capital gain and please be careful all short-term Gain Is Not Special only short-term capital gain on the transfer of EFT is special guys please be careful with it because sometimes you may miss out that point sir how do we compute long-term capital gains on the transfer of long-term capital asset same format you can see P value of sale consideration from that we will reduce expenses on transfer we will get net sale consideration from that we have to reduce indexed cost of acquisition and Improvement because here indexation benefit is given just because the asset is purchased long back and due to inflation obviously the value of the asset would have gone up we cannot allow only the cost Year we will allow you the indexed cost depends depending upon the cost inflation index which is fixed based on the inflation rate in India guys okay index cost of acquisition and Improvement you can claim you will get gross long-term capital gain from that various exemptions can be claimed under Section 54 54 b d e c and F for long term there are various exemptions available that to if the ass is ready to reinvest whatever gross gain he has got if he ready to reinvest he can claim exemption if not straight away gross will become taxable guys oh if question is silent about exemption assume there is no reinvestment made by the assy fine guys this is all about the format now let us get into the provisions year of chargeability capital gain is normally taxable in which year guys in the year in which the transfer has happened that is the previous year in which the transfer has happened but there are few cases where transfer would have happened in one year but that capital gains is taxable in some other year examples are like exceptions for General Rule Insurance compensation received on destruction of a asset is taxable when it is actually received guys assume in the year 20223 the asset is destroyed by fire sir so is it is there a transfer yes so should we compute capital gains yes so if the compensation is received in the same year full value of sale consideration is compensation we will receive it so it will be taxable in 2223 only but assume sir compensation was received in next year compensation was received in next year in that case taxability will come in which year 23 24 transfer will happen in 2223 capital gains will be computed in 23 2 2223 but it will be tax in the year in which the compensation is received because obviously asso doesn't have money to pay tax in 2223 you cannot ask him to pay there so it will be taxable in the year in which the compensation is received guys so in that case what is the full value of sale consideration sir the value of the money received or if the insurance company has given the new asset and all in that case whatever is the value of that asset will be the full value of sale consideration to compute capital gain on the destruction of the asset so destruction of the asset is also considered as transferred guys because you canceling your rate with respect to the asset which you have which is destroyed next conversion of capital asset into stock in trade is taxable in the year of sale of stock assume guys now in the year 2223 in the year 2223 our Capital asset is converted into stock so asset is moving from capital gain to pgbp head yes so so in that case on the date of conversion whatever is the fair market value of the capital asset is there whatever is the fair market value of capital asset is there that will be considered as what full value of sale consideration to compute capital gains so from this we will reduce expenses on transfer cost of acquisition everything and we will compute capital gain agina so transfer has happened in which year guys in 2223 so we have to compute capital gains in which year 2223 but it will be taxable in which year in the year in which stock is sold assume stock is sold in 23 24 guys stock is sold in 2324 in that case we have to compute the income under the head pgbp now yes sir what is it sale value of stock we have to take okay then Minus cost the cost of the goods but here Goods we didn't buy or stock we didn't buy it was Capital asset so in that case what is allowed as the cost is the fair market value of the capital asset on the date of conversion which was taxable under the capital gains will be allowed as cost to compute what pgbp income so this will be the pgbp income guys is that clear so this is taxable in which year pgbp income 2324 even capital gains income whatever you would have got here will be taxable in which year in the year 2324 transfer happened in 2223 capital gains has to be competed in 2223 even period of holding will end on the date of conversion so even indexation is only till the date of conversion but tax taxability will be most fund to the year of sale of stock clear so for example if I have to give numerical example assume guys on the date of conversion the fair market value of the capital asset was 50 lakh so in that case full value of sale consideration to compute capital gains is what 50 lakh okay sir then you will reduce expenses on transfer cost of acquisition everything assume that is coming to 40 lakh you will reduce it what is the capital gain 10 lakh so you will compute it in 2223 so even the period of of holding indexation everything is till the date of conversion but when is it taxable is when the converted stock is sold when the converted stock is sold guys assume the stock see if stock is sold in 22 23 only both pgbp has capital gains both will be taxable in 2223 but I am taking different way assume the stock is sold in 23 24 for 70 lakhs so cost of the stock is what the FMV as on the date of conversion so what was the FMV as on the date of conversion which we have considered to compute capital gains income 50 lakh reduce it remaining 20 lakh is your pgpp income so both should form part of total income of the assy so in the total income of the ass in previous year 23 24 will include both capital gains income of 10 lakh and pgbp of 20 lakh clear guys yes H so however period of old and indexation is up to the date of conversion guys next compulsory acquisition of capital asset is taxable in the year in which compensation is first received same way assume that compulsory acquisition happened in somewhere 2021 so transfer happened in which year 2021 so capital gains has to be computed in 2021 so period of holding indexation everything is still the date of compulsory acquisition clear yes but when it will be taxable if compensation is received in the same year it will be taxable in 2021 only but assume compensation is received for the first time in 23 24 even if they are paying in installment whenever you receive first installment it will be taxable so assume the compensation was received in the year 23 24 so transfer happened in 2021 capital gains has to be competed in 2021 but when it will be taxable is in the year in which the compensation is received clear yes next points on competition index cost of acquisition for assets acquired before first ail 2001 by the ass this is only when the asset is acquired before 1st April 2001 guys because they have brought some indexation for which the base year is 20012 so for base year 20012 they have kept the cost inflation index as 100 and for our previous year 23 24 the cost inflation index is 348 in between Years also for every year cost inflation index is there but you need not remember it if at all if there is any year in between for which you have purchased and all they will only give cost inflation index in the question but this two years please remember Bas year 100 and for current previous year 348 guys okay so so the base date for capital gains is 1st April 2001 that is before the year base year come base year is From 20012 so before that if the asset is purchased guys cost of acquisition will be actual cost incurred or FMV as on 1st April 2001 whichever is higher and indexation has to be applied on cost of acquisition whatever we get so cost of acquisition into cost inflation index for the year in which the asset is transferred normally the year in which the transfer has happened would be our previous year 23 24 because the calculations will be for previous years guys divided by cost inflation index for the base year 20012 means obviously the index cost will always be more than the actual cost of acquisition guys okay next in case of intangible assets we there is no question of considering M and all whatever is the actual cost we will straight away take it even though it is purchased before 1 April 2001 still you will take only actual cost no question of considering FMV guys next in case if the capital asset is a land or building or both then we have to check FMV along with Stam Duty value and take whichever is lower so compare FMV along with Stam Duty value as on 1st April 2001 take whichever is lower compare that with the actual purchase price and take whichever is higher as cost of acquisition and indexation for this apply indexation for this guys okay this is only for land and building purchased before 1st April 2001 where we have to consider not only FMV but also stability value for any other asset only FMV okay so what if the asset is purchased on or after 1st April 2001 obviously you have indexation for the respective year so the index cost of acquisition would be actual cost of acquisition whatever you would have purchased for into cost inflation index for the year of transfer that is not normally our previous year 23 24 divided by cost inflation index for the financial year in which asset was acquired acquired year is nothing but purchase B clear yes so cost inflation index is available only for long-term assets guys only for long-term asset but not for all long-term assets few in few cases where indexation is not available I have given here in purple purple color longterm capital gains taxable under Section 112a there only they have given how to calculate cost where there is no indexation applicable okay under Section 112a then long-term capital gains from the transfer of bonds and debenture any bond and debenture indexation is not available even though it is long-term but for Capital indexed bonds and soan Gold Bond yes indexation is available if they are longterm then capital gain on the transfer of depreciable asset which we compute under Section 50 when section uh 32 fails or in case of unit of specified mutual fund or Mar Market linked debenture for which we calculate gain under Section 50 a will always be shortterm guys will always be shortterm so whatever capital gain we compute under Section 50 and 50a will always be short-term irrespective of the period of holding for any other long-term asset indexation will be available next cost of improvement so first of all what is cost of improvement means any capital expenditure which is incurred by the ass after an asset is purchased for improving it so if the cost of improvement is incurred before first April 2001 we have to consider it as nil guys because we would have already considered it here while checking FMV FMV of the property has on 1st April 2001 we will take obviously that would consider the Improvement also because the value of the asset will include that Improvement also and accordingly on 1st April 2001 whatever FMV will be there it will be after considering that Improvement so again for improvement we are not giving any separate deduction this is only if the Improvement cost is incurred before 1st April 2001 what if cost of improvement is incurred on or after 1st April 2001 then whatever is the actual expenditure you can claim it if the capital asset is a Goodwill or right then the cost of improvement will always be nil guys then sir what if it is a long-term asset can I claim indexation even for cost of improvement yes so what is the formula cost of improvement into cost inflation index for the year of transfer divided by cost inflation index for the year in which Improvement took place not in the year of purchase that is for cost of acquisition for cost of improvement the denominator is cost inflation index for the year of improvement guys then cost of acquisition is normally the purchase price but in some special cases it might be different guys what is it we will see cost of improvement in some special cases or certain assets Goodwill if it is self-generated cost will always be nil if it is purchased Goodwill whatever is the purchase price if stock is converted into Capital asset then whatever is the FMV of the stock on the date of conversion will be taxable under the head pgbp and there I told same thing will be allowed as a cost to the capital asset yes so what would be the cost of the capital assments the fair market value of the stock on the date of conversion which was taxable under the head pgbp next asset become the property of the assy on gift will inheritance or distribution of assets of HF on partition or amalgamation or demerger guys if any Capital asset is given to the assess as gift Bill inheritance or it is distributed by HF on partition in that case it is not a transfer and hence we will not compute capital gains but if this asset is transferred by the assy in the future what is the cost to him what is the cost to him whatever is the cost to the previous owner okay assume a property is gifted to me my by my father in that case if this asset if I am selling it in the future what is the cost to me whatever is the cost to my father that is the cost to the previous owner and here period of holding should include both guys period of holding of a father as well as the son that is period of holding of the previous owner as well as the pre period of holding of the assy to check whether the asset is longterm or shortterm okay cost to the previous owner then where the cost of the property in the hands of previous owner cannot be ascertained the FM on the date on which the capital asset become the property of of the previous owner so next before I go further guys I will just tell few points covered under Section 46 and 47 which is not a transfer see if any asset is distributed by HF on partition to its member it is not a transfer but if the member is transferring this asset in the future what is the cost to him whatever was the cost to the hgf and period of holding will include both okay period of holding of HF as well as per per off holding of the member same way if any asset is received by an under a gift will or inheritance in that case it is not a transfer for the giver and it is not cap means it is capital gains is not taxable but if the receiver is selling it in the future what is the cost cost to the previous owner and period of holding will include the period of holding of the ass as well as the period period of holding of the previous owner is that clear yes then coming to amalgamation and de merger guys first I will talk about amalgamation assume maruti Motors of IND IND and Suzuki of Japan they got Amalgamated they got Amalgamated and they are now forming maruti Suzuki old example but still okay so they are forming maruti Suzuki okay sir so this are actually called amalga mating company guys maruti Motors and Suzuki is called amalgam mating company and maruti Suzuki is called Amalgamated company Amalgamated company okay now if there is any asset which is transferred from maruti Motors to maruti Suzuki or Suzuki to maruti Suzuki if any Capital asset is transferred sir is it a transfer as per income tax law they're telling no it is not a transfer should we compute capital gain sir no we need not so provided maruu Suzuki is an Indian company maruti Suzuki is an Indian company whatever asset has been transferred from amalgamating company to Amalgamated company is not a transfer is not a transfer okay sir next in the future if maruti Suzuki is selling this assets what is the cost to them whatever was the cost to the amalgam meting company whatever was the cost to the amalgamating company and the period of holding will include both the period of holding of the asset by Amalgamated company plus period of holding of amalgamating company of the same asset clear yes sir this is with respect to Capital asset which is transferred from amalgamating company to Amalgamated company now assume becauseas is a shareholder he was a shareholder in maruti Motors now as it is getting amalgamating for because they are allotting the shares of maruti Suzuki they will take back the shares of maruti motors and they will lot the shares of maruti Suzuki now when they take back the shares of amalgamating company is it a transfer for vikas guys no should we compute capital gains no next whatever shares has been allotted in maruti Suzuki in the future if the shares are transferred is it a transfer should we compute capital gains yes what is the cost of acquisition whatever was the cost of purchase of the shares in amalgamating company that is marui Motors whatever is the cost at which I purchase the shares in maruti Motors now that will be the cost of acquisition for the shares in maruti Suzuki and period of holding will include both the period of holding of the shares in maruti Suzuki as well as the period of holding of the shares in mariti Motors hope it is clear same to same if I'm holding the shares in Suzuki also same to same provision is that clear yes sir next let me come to D merger let let us take our am the big man of our country uh Reliance industry so Reliance industry got means one of the unit they demed one of the business they Demas as Geo Financial Services remaining all businesses will continue under Reliance only one of the business vertical they uh Demmer as Geo financial services so we call this as Demmer company and we call this as resulting company guys resulting company so so now Reliance Industries will transfer few of their assets not entire assets because Reliance Industries also will continue to operate clear so now Reliance Industries transferred few of the assets to geof financial services because now they will be operating as a separate entity so is it a transfer for Reliance industry sir no should we compute capital gains no now in the future if Geo financial services are transferring this Capital asset is it a transfer yes should we compute capital gains yes but what is the cost to them did they purchase it no so whatever asset Geo Financial Services has got from Reliance industry what was the purchase cost for Reliance Industries will become the cost of acquisition for geof financial services guys when they're further selling it and here also the period of holding will include both the period of holding of Reliance industry as well as the period of holding held by Geo Financial Services is that clear yes next with respect to shares this is with respect to transfer of capital asset by the Demas company to resulting company and one more condition is the resulting company should be Indian company that condition also is there okay sir next becauseas is a shareholder in Reliance Industries he will continue to hold the shares in Reliance industry in addition to that he Al is also getting shares in geof financial services actually how they allotted was for every one shares in Reliance industry they gave one share in Geo Financial Services now I was holding shares in Reliance Industries and as a result of Dem merger they also gave me the shares of Geo Financial Services obviously here there is no transfer and all okay sir now in the future if I transfer the shares off if I transfer the shares of Geo Financial Services is it a transvers or of course should we compute capital gains yes I have to now the thing is now the thing is Sir what is the cost of the shares of Geo Financial Services guys if I'm not wrong the percentage of Dem merger for geo Financial Services was around 4.68% so at whatever price you would have purchased the shares of Reliance industry out of that 4.68% will be the cost of shares of what Geo Financial Services remaining would be the cost of purchase of what Reliance Industries assume for example I had purchased the Reliance industri shares for 1,000 rupees after merger I also got the shares of Geo Financial Services in that case they will divide this between cost of shares of Reliance industry and cost of shares of Geo Financial Services in the ratio of Dem merg which is not important for you at inter level they will not ask question any any with respect to any of this provision or calculation guys yeah yes so if at all if the shares are transferred in the future capital gains has to be computed and cost of acquisition would be the proportionate calculation okay guys next where shares in an Amalgamated company which is an Indian company became the property of the assass in consideration of transfer of shares in Amala mating company I already explained cost of acquisition of shares in amalgam mating company that is for because what at whatever price he purchased the shares in maruti Motors will be the cost of acquisition of shares for maruti Suzuki guys next where the capital asset become the property of the ass on the distribution of capital assets of a company on its liquidation even if company has distributed its assets to the shareholder on liquidation for the company whatever asset they have distributed it is not a transfer but for the shareholder when he further transfer it should we compute capital gain yes but what will be the cost of acquisition for him fair market value of the asset on the date of distribution fair market value on the date of distribution will be the cost of acquisition for the shareholder next where the capital gain arises from the transfer of specified security or Equity shares referred to in section 17 subsection 2 in that case what is the cost of acquisition fair market value which has been taken into account for perquisite valuation we discussed in salary head guys now assume a company employer has allotted shares to the employee under esoft plan the fair market value of the share is 300 rupees but employee has paid only 200 Rupees to acquire this shares so the purchase price is 200 guys so it has been offered at 100 rupees discount per share so in that case under salary headit what is calculated as perquisite is FMV minus the purchase price as 100 so was taxable per share if number of shares is th000 so 100 into th000 so per share 100 rupees was taxable for the employee under the head salary as perquisite clear now in the future whatever shares the employee has got if he selling it what is the cost of acquisition guys it is FMV even though he has paid only 200 obviously remaining 100 was taxable under the head salary yes so they're telling okay FMV is allowed as a cost and one more twist is guys if the shares which is got which the employee has got as ESOP shares if is gifting it to someone it is a transfer if e of shares are gifted then it is a transfer it is a transfer we have to compute the capital gain in that case on the date of giving the gift whatever is the fair market value of the share is there that becomes full value of sale consideration from that we have to reduce cost of acquisition which is fair market value on the date of exercise of the option that is this fair market value on the date of exercise of the option again I rep guys assume I had got a shares as ESOP I'm gifting it to you is it a transfer yes gift exception is not applicable for ESOP as per section 47 okay so when ESOP Shares are gifted it is a transfer and we have to compute capital gain so what is the full value of sale consideration whatever is the fair market value of the shares on the date of GI that is the full value of sale consideration sir what is the cost of acquisition fair market value on the date of exercising the option by me that will be the cost of acquisition to compute capital gains yeah yes next where the capital gain arises from the transfer of such property which has been subject to tax under Section 56 to10 that is gift taxation guys so whenever any movable or immovable property is received as a gift or purchased for inadequate consideration we will refer to FMV or stamp Duty value under other sources as for Section 56 210 if at all if it is taxable under Section 56 210 then for the receiver he has to pay tax under the head other sources so in the future if he's selling it whatever is the stamp Duty value or fair market value which was considered at the time of receip of gift will be allowed as cost to him will be allowed as cost to him I will explain this again when I go to other sources next uh next to two points I will explain it it is connected to section 47 guys please listen to it assume I have a physical gold I don't have I am very poor okay I don't wish to have the gold or I don't wish physical gold digital gold yes okay so in Gold Bond is there okay so guys I have a physical gold assume 200 GS I am going and approaching a old manager telling sir I will deposit my physical gold in return you gold me give me gold receipt that is in the electronic form you will give me old receipt guys okay like however when you go and deposit the money into the bank they will give you the receipt that you have deposited s so amount like that guys so I will go okay so assume Vias will go and approach the old manager give the physical gold and get the gold receip from me electronic gold receip electronic gold receip so obviously electronic gold reip is issued by the old manager with respect to the value of the gold which I'm depositing so whatever is the value of the gold which I'm depositing 200 GRS with respect to that equivalent to that they will issue me the electronic gold receip and obviously for this the Vol manager will be charging some commission and on now this electronic gold reip can be traded in the recognized Stock Exchange guys means I can sell it to anyone so if at all if I sell it to anyone if at all if I sell it to anyone what is the cost is the question guys please listen different scenarios are there now I went and deposited physical gold and I got electronic gold re is it a trans for no sir should we compute capital gains no we need not okay now yes now I told you whatever electronic gold reip I have I can trade it in the market I can sell it to anyone in that case what is the cost of acquisition should we compute Capital again yes we have to compute it because it is a transfer assume I sold it to you guys you you means your name whatever is your okay okay CH now in that case what is the cost of acquisition for me is whatever cost I have incurred to buy this phys gold whatever is the cost I have incurred to buy this physical gold will be the cost of acquisition for this electronic gold receipts which I am selling it to you now clear yes sir next guys later no sir I actually didn't sell it I went back to again W manager and told sir I will give back your receipt electronic gold receipt you give back my physical gold you give back my physical gold in that case is it a transfer no should we compute capital gains no these are the transactions covered in section 47 it is not a transfer hence no capital gains okay sir so when I get back the physical gold what is the cost of acquisition for it whatever was the cost of acquisition for electronic gold reip that will be the cost of acquisition for physical gold it is just like a cycle guys yeah please listen here I will explain the cycle I went and deposited physical gold so assume cost of acquis position of my physical gold is like 10 lakh I'm randomly taking 10 lakh don't ask me so much or less than 10 lakh so 20000 G of physical gold I had purchased for 10 lakh now I went and deposited this physical gold with the Vol manager and I got for 200 g equivalent to electronic gold receipts now what is the cost of acquisition for this electronic gold receipts 10 lakh whatever is the cost for physical gold next so when I deposited the physical gold and got electronic gold receipt in is it a transfer is should be compute capital gains no next if by chance if I sell this in the open market to anyone it is a transfer we have to compute capital gain and what is the cost of acquisition means 10 lakh for whatever electronic gold reip I am selling clear yes sir next no no actually I didn't sell it after a few years I went and deposited back electronic gold reip I'm giving it back to the old manager and in return he is giving me 200 g of my physical gold clear so is it a transfer no should we compute capital gains no so in that case so I got back my physical gold what is the cost of acquisition of this physical gold which I got back whatever was the cost of acquisition for this electronic gold re what was the cost of acquisition for the electronic gold re 10 lakh which I had taken above so I gave back that that will become the cost of acquisition for physical gold which is 10 lakh it is just like a cycle clear so in simple if I go and deposit physical gold and get electronic gold re it is not a transfer and if I go back and again give electronic gold re and get back my physical gold again it is not a transfer and the cost will just go like a cycle clear yes that is what is given in the next two points guys that is this next right shares so right Shares are something which is offered to the existing shareholder at a discounted price so if the shareholder himself exercise the right and if he purchase the shares then whatever amount he has P paid to purchase the shares for example assume guys I'm holding the shares of infosis they have given me the option to buy the shares at 1,000 rupees at a discounted price so if I myself purchase the shares what is the cost to me 1,000 rupees next now no I'm not willing to buy the shares of infosis I already have enough shares I thought okay let me give my rate to someone else assume you guys are ready to buy the rate and and to sell the rate I'm charging you 100 rupees 100 rupees so you're buying the right from me for 100 rupees plus using that rate you purchase the shares of infosis for 1,000 rupees so what is the cost for you 1,00 what is the cost of acquisition for you 1,00 100 rupees for right 1,000 rupees for shares guys this is only when the right is renounced to a third party next coming to bonus shares if bonus Shares are allow oted before 1st April 2001 which is a base date then actual cost which will always be nil for bonus shares because when bonus Shares are alloted shareholder will not be paying any amount to the company it is just a capitalization of profit guys or FMB as on 1st April 2001 whichever is higher so St it away you can take FM guys because actual cost will be nil then bonus shares allotted after 1st April 2001 that is on or after 1 April 2001 then in that case actual cost you have to take actual cost you have to take but you have to refer to 112 also so if any bonus shares with respect to listed Equity Shares are allotted before 1st February 2018 on which St has been paid at the time of transfer you have to check 11 12 year what is the cost of acquisition means a year of two things actual cost of acquisition which will be nil for bonus shares and second one lower of FMV and FMV has on 31st Jun 2018 and actual sale consideration so straight away you will take whatever is lower you will get there now so that zero whichever is higher obviously second Point obviously second Point guys because actual cost for bonus shares will always be nil then long-term capital gains assets being that is EFT as per section 112a guys in that case if it is acquired before 1st February 2018 then cost of acquisition will be higher off whatever is the actual cost of purchase compare that with lower off FMV as on 31st January or act 31st January 2018 and actual sale consideration first do this take whichever is lower then compare that with actual cost take whichever is higher claim that as cost of acquisition no indexation nothing even though it is longterm okay sir what if EFT is purchased on or after first February 2018 then you will claim only cost of acquisition no indexation nothing no higher no lower nothing only cost of acquisition clear guys and what is the logic of bringing this provisions and all I have explained it in detail in my regular classes because before First 1st February 2018 long-term capital gain on this transfer of EFT was completely exempt but later they introduced section2 now it is taxed at 10% in excess of 1 lakh so how to calculate the cost for this they have given if there is any unrealized gain before 1st February they are not taxing it only the gain which is made after 1st February they trying to tax it guys as a fair policy next if no cost has been incurred the cost will always be nil then but still certain exceptions and all is there which we saw here like cost the previous own we have to take except that cases in any other case if you not incurred any cost it will be nil next no deduction shall be allowed in respect of Securities transaction tax paid so even though you are bought and sold the Securities which is a capital asset for you whatever Securities transaction tax is paid at the time of purchase or sale will not be allowed as expenditure you cannot claim it as cost of acquisition you cannot claim it as expenses on transfer you cannot claim at all only under the head pgbp it is allowed provided Securities is a stock and whatever you buy and sell is taxable under pgbp means they allowing you st under pgbp okay so not notional transfer of Goodwill on the admission or retirement or death of the partner and all is not chargeable to tax guys that is done only for books purpose next in case of gift will partition and all I already told you for the transferer it is not a transfer but for the receiver when it further transfer it is it transfer should we compute capital gains yes in that case what will be the cost cost to the previous owner and period of holding will include the period of holding of the ass as well as the period of holding of the previous owner guys and even indexation will be provided for both the perod next even if there is any conversion of preference shares or debentures into Equity shares guys preference shares or debentures if they are converted into Equity shares sir is it a transfer no should we compute capital gains no now if this Equity Shares are transferred in the future is it a transfer yes should we compute capital gains yes yes what is the cost of acquisition at whatever cost you have purchased preference shes or debentures which is now converted into Equity that will be the cost of acquisition for Equity shares guys because you didn't purchase Equity shares you purchase debentures or preference shares and now it is converted into Equity shares so period of holding will include the period of holding of both preference shares or debentures as well as Equity shares both will be included in Period of holding and indexation also will be provided from the date the preference shares or debentures was purchased till the date the equity Shares are transferred clear yes next any compensation or announced compensation received by individual or HF on compulsory acquisition of agriculture land in a specified area that is urban area is exempt guys if agriculture land is in rural area it is not at all a capital asset rural area sry urban area are me specified area for income tax purpose so if agriculture land is in rural area it is not at all a capital asset there is no capital gains but if agriculture land is in urban area it is a capital asset and if it is compulsorily acquired and if the owner is an individual or HF and if it was an agriculture land used for agriculture purpose at least two for two years before the compulsory acquisition then they're telling entire capital gains is exempt under Section 1037 then enhanced compensation received is chargeable in the year of receip and cost of acquisition will be sir assume there was a compulsory acquisition government fixed an compensation of 50 lakh so while Computing capital gain value of sale conation we took it as 50 lakh now assass went for a quot telling no no the compensation paid to be paid for me is 80 lakh not 50 lakh my property is worth 80 lakh so now the court gave a judgment that the compensation to be paid is 70 lakh so enhanced part is how much guys 20 l so that announced compensation will also be separately taxable for the ass in the year in which he receives it and again he cannot claim the cost of acquisition because for the compensation what he already took that is 50 lakh he would have already claimed the cost he would have already claimed the cost just a minute [Music] guys yeah little charged up next Redemption of preference shares amount to transfer and chargeable to capital gains but there will be capital gain only if the preference Shares are redeemed at premium if it is redeemed at face value and all then there might not be any gains guys then if any advanc money is received by the ass but if it is forfeit means he received the advanc money for the transfer of capital asset but transfer didn't happen so he forfeited the amount in that case if it is received and forfeited before 1st April 2014 then it shall be reduce from the cost of acquisition when it is actually sold when the asset is actually sold in the future whatever Advan money is received and forfeited we will reduce it from the cost of acquisition before indexation if the asset is longterm next if the Advan money is received and forfeited on or after 1st April 2014 then the amount whatever you receive will be straight away taxable under the head income from other sources and again it will not be reduced from the cost because it is already taxed in the year in which you have received and forfeited straight away it will be taxed under the head other sources as on today this provision exist then some special transactions guys buy back of Securities so we have to check who has bought back and what type of shares if ESOP shares has been bought back it is always taxable in the hands of shareholder it is always tax in the hands of shareholder so as per section 46 G so we have to compute capital G we have to check whether it is long-term shortterm so whatever is the sale value means whatever the company is paying that is considered as sale value and what would be the cost in case of ease of share FM as on the date of exercise of the option we have to take it so capital gains is taxable in the hands of shareholder as per section 46 yeah guys competition has to happen normal next any other shares if it is bought back by domestic companies whether both listed as well as unlisted capital gains is actually for the shareholder but still it is taxable in the hands of company at what rate company has to pay tax on whatever income they are earning Plus on whatever capital gains income the shareholder is having due to this buyback the company has to pay tax on it what what rate effectively 23296 per. actually tax rate is 20% Sarge 12% and health and education says 4% everything put together it is 2329 guys sir how come sir 12 20 + 12 + 4 sir it is coming to 36 you don't know the math no no no 12% has to be applied on 20 and 4% has to be applied on 12 that is 20+ 12% because sarge is always on tax not on income clear yes next so whenever the company has paid tax that is the domestic company on the buyback of Securities that is on the capital gains income on in the hands of shareholder it is exempt in the hands of shareholder under Section 10 34 EA guys sir what if the buyback is done by any company other than domestic company then whatever is the capital gains in the hands of shareholder on buyback will be taxable in the hands of shareholder under Section 46 a guys and to compute the capital gain what is the sale value means obviously the buyback price the company whatever they are paying to buy back the shares that is the full value of sale consideration in the hands of shareholders next section 50 section 50 will get attracted whenever section 32 fails guys section 32 talks about depreciation section 32 fails in two scenario that is when all the Assets in the block are sold or when there is no value in the block when there is no value in the block that is Sir only few assets are sold but for higher value so the wdv for the purpose of depreciation is nil or even if it is a negative also we'll consider it as nil in that case we have to always compute shortterm capital gain or loss under the head capital gains always you don't even check period of holding guys so what is the format it is the reverse of whatever we already discussed for the block of asset under Section 43 subsection 6 where we talk about wdb so what we do there guys opening wdv we take then we add the asset which is purchased during the previous year for more than 180 days less than 180 days both we will add then we will reduce the sale value then we will get the wdv for the purpose of depreciation from that we will reduce depreciation at the end we will get closing WD this is the format of calculating depreciation and wdb and here how do we compute the short-term capital gain or loss under section 15 we will take full value of sale concentration from that we can reduce three things expenses on transfer opening return on value that is as on 1st April 20223 then additions to the blocks if any so this for sure will be there guys B A and B if at all if it is given please reduce it then if the final figure whatever you get if it is positive shortterm gain if it is negative shortterm loss then AA which is a new section which is headed by Finance act 2023 please be alert with this if there is a short-term capital gain it is always shortterm okay don't even check period of holding for this if there is a short-term capital gain in case of transfer of specified mutual fund units or Market linked debenture where the returns depends on the performance of market index guys that is why we call it as Market linked debentures then it is always shortterm and it is always considered as normal income taxable at normal rate guys and there is no deduction for St paid on the purchase and sale so what is the format to calculate full value of sale consideration or Redemption value or maturity value you have to take from that expenses on transfer has to be reduced then you will get net sale consideration from that you will reduce cost of acquisition and Improvement normally Improvement cost will not be there but still they have given it if at all if it is there you have to reduce it at the end whatever you get is straight of a short-term gain or loss so please be careful under Section and under Section 50 and 50 daa we always compute short-term gain or short-term loss there is no question of checking period of holding guys next coming to slum sale Section 50b when the entire undertaking is sold or the unit is sold without assigning the values to the individual assets entire company is sold as a going concern so the purchaser or the buyer will continue the show but the ownership is changing there is a succession of business so when the entire undertaking or the unit is sold or the branch is sold without assigning values to the indidual assets and liabilities we call it a slum sale guys in case of Slum sale the undertaking itself is a capital asset if it was held by the transferer before transfer for more than 36 months we call the undertaking as long-term asset if not short-term asset so if it is a long-term asset we have to compute long-term gain and if it is a short-term asset we have to compute short-term gain guys okay so what is the sale full value of sale consideration which is an important Point here fair market value of the capital asset as on the date of transfer shall be deemed to be the full value of sale consideration but there are two FMV here we have to take higher of the two what is it sir FMV one being the fair market value of the capital asset transferred by way of Slum sale so whatever fair market value of the assets you have transferred of your business enter undertaking your soul whatever assets you have check the fair market value of all the assets put together then fm2 being the fair market value of the consideration whatever you are receiving as as a result of sale that is mon or non-monetary both received or occurring as a result of transfer by way of L some so FMV 2 is nothing but what is the purchase price the seller is paying to you sorry buyer is paying to you so I have assume I have transferred my entire undertaking for 50 lakh so what is fm2 50 lakh so sometimes I receive entire 50 lakh in money sometimes the buyer might give the shares of his company or some other asset in kind so in that case we have to Value whatever I have got in non monetary what is the value of that we have to check that will be the F mv2 clear yes sir what is FMV one Whatever undertaking I have sold what is the value of all the assets which I have sold that is fm1 in aggregate so I of this two we have to take it as full value of sale consideration guys see sometimes if by chance in the question if this is not given that is FMV one straight away take fv2 if both are given please consider please check both compare both and take whichever is AER guys then even though the undertaking is longterm that is before transfer if it was held for more than 36 months still there is no indexation available guys because the cost of acquisition will be the net worth of the undertaking as on the date of transfer based on Book value ignoring all the revaluations revaluation of assets shall be ignored so for example if I have to tell the calculation it is like this guys full value of sale consideration we have to take Which is higher of I of FMV 1 or FMV 2 okay then from this if at all if there is any expenses on transfer we have to reduce it you will get net sale consideration from net sale consideration you have to reduce cost of acquisition which is nothing but net worth of the business so what is net worth assets minus liabilities guys but it has to be valued at book book value no revaluation on okay so net worth as on the date of transfer whatever you get will be the capital gain that is either long term or shortterm there is no question of indexation here also next section 50c 50 c is with respect to only land Building are both guys so what are they trying to tell you is competition of capital gain in real estate transaction 50c important it has to be read along with 43 CA read with 43 CA that is under the pgb so what is it we will see guys in case of transfer of capital asset being land or building or both if actual sale concentation is more than stamp Duty value of that land or building then we will always take full value of sale conation as what actual sale concentation but if Stam Duty value is more than 110% of actual sale consideration means up to 10% difference is fine but if Stam Duty value is more than 110% of actual sale consideration then they're telling Stam Duty value has to be adopted as full value of sale consideration to calculate capital gains now when stab Duty value has to be considered there is there can be a scenario where the assy May object and in that case the Valu value can be referred to valuation officer then we have to compare the value given by valuation officer with Stam Duty value if Stam Duty value is more than the value given by the valuation officer then the value given by the valuation officers will be taken as full value of sale consideration so what if vice versa that is valuation officer's value is more than stamp Duty value so the ass objected the stamp Duty value and he told no my value is my asset value is less than that and the valuation was referred to the valuation officer but for the shock valuation officer gave the value which was higher than stamp Duty value then the assc will be like sir I will take Stam Duty value thank you I will take stamp Duty value has full value of sale consideration guys is that clear yes so normally this is this is what is applicable if by chance if the reference is made to the valuation officer then we have to compare St dity value with value given by valuation officer so whenever we are comparing Stam Duty value on what day should we take the stam Duty value because even that will be changing so stab Duty value on the date of transfer should be taken sir what if the date of agreement and date of registration is different date of agreement is different date of registration is different normally agreement date will come first then registration date then the stamp Duty value on the date date of agreement can be taken provided at least a part of the consideration is received in any mode other than cash whole of the consideration or part of the consideration is received in any mode other than cash on or before the date of agreement if entire consideration is received after the date of agreement or it is received before date of agreement but in cash then we have to take the stam Duty value on the date of registration clear I repeat if date of agreement and date of registration is different you have to date you can take date of St Duty value on the date of agreement provided at least a part of the consideration is received in any mode other than cash on or before the date of agreement guys if not we have to take the St Duty value on the date of registration normally Stam Duty value on the date of registration will be more than the sty value on the date of agreement clear yes sir same to same Provisions is applicable as per section 43ca if land or building is a stock for the assy guys okay simultaneously will not be applicable it is like this let me just draw a chart assume the asset is land Building or both guys so check for the ass C for the ass is it a stock or is it a capital asset if it is a stock then we have to check section 43 CA which is same as section 50c guys if it is a capital it then we have to check section 50c provision is copy paste same to same okay so in that case in that case so this will come under which head pgbp this will come under which head capital gains but why are you doing it together as it is connected I'm just trying to do it together guys okay so in this case to compute the income under the head uh pgbp what is the actual sale value because sale value we have to credit it to pnl account what is the sale value we have to take stamp Duty value only if Stam Duty value is more than 100 110% of actual sale consideration actual sale consideration same way here what is the full value of sale consideration we have to take Stam Duty value Stam Duty value only if it is more than 110% of actual sale consideration simple guys let me exam give an example listen listen listen assume in both the scenario in both the scenario sale value is 50 lakh guys sale value is 50 lakh so Stam Duty value Stam Duty value is assume 60 lakh 60 lak take 110% off 110% off sale value guys it comes to 50 lakh into 110% 55 lakh yes sir now come compare is Stam Duty value more than 55 lakh yes sir so what should be taken as sale value or full value of sale consideration 60 lakh what should be taken as the full value of sale consideration or sale value to compute pgbp or capital gains income 60 lakh and not 50 lakh so in that case why they have brought this provision is mean the asses can disclose lower income especially in real estate sector and all they do lot of manipulation that is why they have brought this Provisions clear yes sir sir what if by chance if Stam Duty value is assume 52 lakh Stam Duty value is 52 lakh so I should not straight away compare with sale value I have to compare that with 110% of sale value so 110% of sale value comes to how much 55 lakh so stamp Duty value is less than 55 lakh so in that case what is the sale value or what is the full value of sale consideration to compute pgbp or capital gains income it is 50 lakh since up to 10% difference means fine guys it is tolerable it is fine we can adjust but if it is more than 10% difference then you have to take stab Duty value clear so in my second example stab Duty value is 52 lakh whereas 110% of sale value comes to 55 lakh so Stam Duty value is less than 110% of actual sale value in that case what should we take to compute either the pgpp income or capital gains income actual sale value actual sale value guys and for both these sections rule 6 kba is applicable because stand Dy value if the date of agreement and registration is different they have told St Duty value on the date of agreement can be taken provided at least any part of the consideration is received in any modood other than cash now in what mode the amount can be received sir whatever uh mode has been prescribed in rule 6 ABA that is 6 a ba okay now coming to the treatment of losses we are almost at the end of this head come on guys please Focus I know you're are tired but still even I am tired please Focus yeah treatment of capital losses so there are there can be two kinds of losses long-term loss short-term loss guys if there is any long-term loss both 112 as well as 112 long-term loss can be adjusted only against long-term loss so one see long-term loss on sale of one asset can be adjusted against the long-term gain of another asset but long-term loss can be adjusted only against long-term gain guys so can I adjust it against short-term gain can I adjust it against other rates of income no even though it is a current year loss you cannot adjust it against other incomes and maximum you can carry forward it is to next 8 years then coming to short-term loss any short-term loss can be adjusted against either short-term gain or long-term gain whether it is current year loss or bro forward loss it can be adjusted only within the same hit you cannot adjust it against any other rates of income and if you don't have any gain then you can carry forward the short-term loss for maximum 8 years guys next 8 years clear yes sir then then so we discussed here so how to compute the capital gains so till now we are done with gross calculation now if the asset is ready to make a reinvestment of the gain whatever he has got in the new asset then they're telling we are giving exemption under Section 54 we are giving the exemption under Section 54 so normally what is the amount of exemption is gross gain or the cost of new asset whichever is lower guys but there are certain conditions that is they in each section they have told what is the asset you should have sold now what is the new asset you have to buy within what time you have to buy then whatever new asset you have bought you should not sell it there is some lockin period like three years and all whatever new asset you have bought you should not sell it within certain year if you do that then whatever exemption you have claimed will be withdrawn then what is the amount of exemption except one section they have told in all other section the amount of exemption is actual gross gain or the cost of new asset whichever is lower guys whichever is lower okay let us see one by one section I have given it in very short old asset should be what new asset should be what and the new asset should be purchased or constructed within what time do stands for date of transfer guys and what is the Quantum of exemption okay section 54 is available only for individual and HF what is the asset transfer long-term residential house what is the new asset to be purchased residential house and the purchase or construction should be done if if it is purchased one year before the date of transfer or 2 years after the date of transfer and if it is a construction within 3 years from the date of transfer and the maximum amount of exemption which is available under this section is for 10 CR which is a new addition guys as per Finance act 2023 then 54b available only for individual HF the asset transferred is agriculture land the new asset to be purchased is agriculture land the whatever agriculture land is transferred at least for two years before the transfer it should be used by for agriculture purpose either by the ass or his parents or case of HF any member of HF then a new agriculture land should be purchased within 2 years from the date of transfer then 54d available for any SSC if there is any compulsory acquisition of land or building which is forming part of industrial undertaking then whatever gain you have got if you're ready to invest in land or building which will again form part of industrial undertaking then you can claim exemption but the new land or building for industrial undertaking has to be purchased or constructed within 3 years from the date of transfer and there is one more condition that is whichever land or building is been compulsory acquired which belongs to the industry now that should be used by the ass before transfer at least for two years for the purpose of this business only then he is eligible to claim exemption year then 54 EC available to any s the asset transport is long-term capital asset being land or building or both and what is purchasing now is a specified bonds issued by Rec PFC irfc or nhi within 6 months from the date of transfer for all this section what is the amount of exemption means gross gain or the cost of new asset whichever is lower then 54f is bit different available to individual HF the asset transfer is any asset longterm asset but not residential house but the new asset what is purchasing is new residential house and it if it is purchased one year before the date of transfer or two years after the date of transfer it should be purchased if it is constructed within 3 years from the date of transfer and the maximum amount of exemption available under Section 54 f is 10 CR guys and the time limit is same for 54 and 54 if the time limmit is same next what is the amount of exemption is bit different here okay under 54f check the compare cost of new asset with net sale consideration if cost of new asset is more than net sell consideration then the entire gross capital gain is exempt if not if cost of new asset is less than net sale consideration then we have to apply the formula guys then we have to apply the formula what is it sir gross long-term gain long-term capital gain into into cost of new asset cost of new asset divided by net sale consideration divided by net sale consideration this is the formula whatever amount we get as per this formula is the amount of exemption okay so we have to plan our tax accordingly so wherever we have a benefit we have to get it okay because saving tax will make you rich it's not by only earning the income okay next important shortcuts to remember all this exemptions guys some of the exemptions like some of the shortcuts I have given you withdrawal of exemption means whatever new asset you have purchased guys you should not sell it within lock in thir means they have given three years and for one asset five years you cannot sell the new asset within that bill if you do that then what for Section 54 e andf if the new asset is sold within the specified bid in the respective section then the capital gain Exempted earlier is taxable in the year of transfer so when you have sold the new asset we have to compute capital gain on the transfer of new asset yes we will compute it separately then whatever amount of exemption you have claimed earlier for the purchase of this new asset will be now withdrawn and even that will be taxable as capital gains clear that means two capital gains will be there in the year of transfer of new asset then in case of section 54 54b and D if the new asset is sold within a specified perod in the respective section then the capital gains Ed earlier is reduced from the cost of new asset while calculating the capital gains on the transfer of new asset so if the asset purchased under Section 5454 BD if that is sold within the specified bu then whatever exemption you have claimed earlier will be reduced from cost of asset now when you sell new asset we have to compute capital g a full value of sale consideration yes sir from that we will reduce cost of acquisition yes so what you do is you will take actual cost from that you will reduce whatever exemption you already claimed if still some figure is there on that you will apply indexation if at all if the asset is longterm clear so here withdrawal of exemption is different for the purpose of section 54 54 B and D they're telling okay if you sold the new asset within the certain period given in the respective section then whatever capital gains you calculate on the transfer of new asset while Computing it from the actual cost we will reduce the exemption which was claimed earlier after reducing the exemption if still some positive figure is there only that you can claim if not nothing clear sir what is the time limit lock in period for a new asset which is purchased under Section 54 e to claim the exemption guys that is the bonds the bonds the lock in period is 5 years whereas for any other assets the lock in period is 3 years that is once you have purchase new asset to claim exemption at least hold it for 3 years after 3 years if you're selling it yes just compute the capital gains whatever exemption you have claimed earlier will not be withdrawn and cost also will be given For You full clear Yes means it's not like you will take the benefit you will Avail the benefit and later you will misuse it next applicability of sections so section 54 54 B and F is applicable only to individual HF the remaining sections are applicable to all the s that is nothing but the 54d and EC guys next type of asset to be transferred that is the old asset whichever you have transferred which asset should it be for Section 54 4 54 EC andf it should be only long-term asset which you have transferred whereas for other section it can be either short-term or long-term asset guys this is all about the capital gains head revision guys fine guys now we will revise the last head of income that is income from other sources section 56 to 59 talks about income from other sources section 56 being a charging section will specify certain incomes which are taxable under other sources guys but sir whatever is actually see under Section 56 subsection 2 there are some incomes which are list down which they are specifically mentioned that the following incomes are taxable under other sources but sir is this the end list which are taxable only under these sources no guys so section 56 is telling if there is any income which is taxable under income tax law but not covered under the first 48 it will always be taxable under other sources guys it will always be taxable under other sources so other sources is like miscellaneous head where if there is any income which is taxable but not covered under the first four it will be covered here and for computing the income under the head other sources we have to either follow acral system of accounting or cash system of accounting whichever the asss is regularly following same thing for pgbp also now let us see which are those items which are specifically taxable under the head other sources as per section 56 subsection 2 two guys one by one first one dividend income of the shareholder including deemed dividend under section 222 so whatever dividends declared by the company that is either the final dividend or interium dividend will always be taxable under the head other sources in the hands of shareholder guys and dividend here includes deem dividend also as per section 222 that is if the company has distributed the dividend in kind means they have not given it in the name of dividend but they have given it in kind for example someone benefit is given assets of the company are distributed either on the continuation of the business or even on liquidation if any asset is distributed or if any debenture or debenture certificate is is is issued to the equity shareholder or bonus is issued to the preference shareholder or if any loan or Advance is given to the shareholder in that case they're telling okay whatever is the value of benefit which the shareholder has received from the company that is the amount of dividend which is taxable for them under the head other sources guys then so against the dividend income if at all if the ass has taken any loan to invest in the shares okay crank investor he has taken the loan to invest in the shares on which he's earning dividend income so whatever interest expenditure you will be incurring to earn dividend will be allowed but maximum 20% of dividend income guys for example assume I have earned a dividend income of 10,000 I am earning a dividend income of 10,000 now for investing in the shares I have borrowed a loan for which I am paying an interest of I am paying an interest of assume 15,000 so can I claim full 15,000 interest no they're telling whatever is the your actual interest compare that to 20% of dividend income 20% of dividend income comes to how much guys 2,000 whichever is lower is allowed that is 2,000 or 15,000 whichever is lower is allowed not the entire expenditure clear sir what if actual expenditure is assume only 1,500 so how much you can claim 1,500 remaining dividend income would be taxable guys that is from dividend 10,000 you will reduce 1,500 remaining would be taxable and against dividend you cannot claim any other expenditure that to if you have taken any loan to invest in shares and if you paying any interest you can claim interest if you invested your own money even interest cannot be claimed then amount received under a keyman insurance policy including bonus if it is received by the legal a or the nominee then it is taxable here guys see in case of keyman insurance policy the maturity amount can be received by any of the three persons guys if employee has received it it is taxable under the head salary in the hands of employee if employer has received it then it is taxable under the head pgbp if by chance if employee has gone in whose name the policy is taken then the legal a or Nomine is receiving the amount then for them or family members for them it is taxable under the head other sources guys next any winnings from Lottery crossb puzzles races including R race card games and other games of any sort or form from gambling or betting of any form or nature we call it as casual income it is always taxable under other sources guys but it is special income it is special income please be careful with it and it is always taxed at what rate 30% 115 BB under Section 115 BB but a new section has been added with respect to online gaming that is BBJ that is is also casual but for online gaming alone they have added a new section now BBJ but the rate and all is same so the tax rate on casual income is always 30% it is special income in nature and against that income guys you cannot claim any expenditure you cannot claim any chapter 6A deductions you cannot even adjust your basic exemption limit sir I have only casual income 3 lakh no other income in that case is 3 lakh taxable yes at what rate 30% flat so even if normal income is less than basic essential limit sir can I adjust the shortfall or unexhausted basic essential limit like how we did for capital gains can we do it no you cannot do it for any categories of us clear so in simple casual income will always be taxed at 30% guys and you cannot even claim any expenditure against it sir I have won a lottery of 10 lakh for to purchase the lottery ticket I have incurred thousands together can I claim it as an expenditure no you cannot claim any expenditure you cannot claim any deduction you cannot claim any basic essential limit you cannot even adjust any loss against casual income so what if I have a loss from this sources and all gaming and all can I claim it can I adjust it can I carry forward it no only if you have income that straight away taxed at 30% means indirectly they're discouraging for you to have this income or to engage in this activity next income from Machinery plant or Furniture let on higher if the income is not chargeable under the pgp if letting is your business then whatever rental income you are getting will be taxable the head pgb if not other sources guys next interest on security or any other interest income if not taxable under the head pgbp so any interest income will be taxable under the head other sources guys but if Securities is kept as the stock Securities year means debentures or bonds because Securities include shares but on shares and all you will not earn interest so if Securities is kept as stock guys like bonds or debenture if you're earning interest on it that is taxable ENT pgbp whereas interest sir Securities like bonds debentures and all I have just made it as an investment then in that case whatever interest you ear will be taxable under other sources then interest on any deposits with the bank and all will always be taxable under other sources guys see dividend will always be taxable under other sources even though if you have kept the shares as stock or inventory or as an investment doesn't matter dividend is always taxable under other sources whereas Securities other than shares like bonds debentures and all if you have held it as Securities then interest income is taxable under pgbp if you have held it not as a stock or inventory but as an investment then it is taxable under the head other sources guys hope it is clear next interest from letting sorry income from letting out of machiner plant or furniture or building which is inseparable means if building is let out along with other assets where it is not separable means it is not possible for the owner to give breakup then the entire income will be taxable either under the head pgbp or under the head other sources guys if letting out itself is the assesses business then pgbp if not other sources next shares issued by the closely held company which is nothing but private company in excess of fair market value okay so we have to check face value and all but still here so what is taxable for the company under the head other sources means the issue price minus fair market value means only if the shares is issued more than the fair market value then it is taxable under this head guys then interest rece on compensation or announced compensation shall be taxable in the year in which it is received under the other sources but a flat deduction of 50% will be provided for the same then Advanced money received and forfeited for the transfer of capital asset where transfer didn't happen on or after 1st April 2014 is taxable under the other sources then family pension is taxable under this head for family member who is receiving it but they can claim a standard deduction of how much one3 of such pension are 15,000 whichever is lower and 15,000 is per not per month one3 of the pension are 15,000 whichever is lower guys and few exemptions are given for family pension which I will cover later then some received including bonus under a life insurance policy other than a ulip or keyman insurance policy which is not exempt under Section 1020 so what is it important guys because they have brought a change with respect to this and all in finance act 2023 I have covered this in detail even in my statutory update but still I'm doing it here also first of all when a like life insurance policy amount is exempt under Section 1010 we will see a some received under a life insurance policy is wholly exempt other than the following cases when is it see if it the policy is received on the death of the person guys it is always exempt if it is received on the death of the person always exemp if it is received on the expiry of the policy where insured is still Ali then we have to check the following points some received under Section 80dd means dependent has died so the assass has got the benefit your dependent has died but the ass has got benefit in that case whatever amount you are receiving from the life insurance policy is fully taxable because during the survival of the dependent who was disabled you already claimed the flat deduction under Section 80dd a flat deduction of 75,000 or 1 125,000 so on his death again you can if at all if you have taken any policy obviously you would have named yourself as a nom in that case entire amount would be taxable okay then some received under a keyman insurance policy will be taxable where it is taxable we already seen salary or pgb or other sources then for any other policy and even ulip guys even ulip it is not I have not covered here ulip if the yearly premium is more than 250,000 only then it is considered as capital asset and we have to compute capital gains if the yearly premium in every year is within 250,000 then it is not a capital asset yes it is not computed means capital gains is not taxable okay so for any other policy we have to check what is the date of purchase of the policy and accordingly what is the yearly premium on or after 1st April 2003 but on or before 31st March 2012 if you purchased the policy then the maximum yearly premium you pay is 20% of the Su assured or less than that if you have paid more than that 20% Then the exemption is not available okay on or after 1st April 2012 that is more than 10% of the sumur if you have paid in even in one year you are not eligible for exemption in every year you should have paid less than or equal to 10% then if the policy is purchased onor after 1st April 2013 and for the person who is covered under Section 80ddb that is specified dises or ATU that is ass himself is disabled so they are giving the high limit of 15% in any other case it is 10% guys so if you are paid within 10 15% that is less than or equal to 15% you can enjoy the exemption in every year even in one year if you have paid more than 15% you cannot claim the benefit now guys one new thing they have added in finance act 2023 is if the policy is purchased on or after 1st April 2023 then in addition to this percentages even monetary limit is applicable that is if aggregate amount of Premium payable in one year even in one year if it is more than 5 lakh you cannot claim exemption you cannot claim exemption so what if there are multiple policy then only for the policies whose annual premium is up to 5 lakh you can claim exemption guys you can claim exemption and for whatever premium you are paying during the term of the policy deduction is available under Section ATC but maximum 150,000 maximum 1 lakh 50,000 guys so for the policy whichever is taken on or after 1st April 2023 10% limit also is applicable with respect to percentage so whatever premium yearly premium you pay cannot be more than 10% of the sum assured every year plus you cannot cross monitary limit also 5 lakh per year even in one year if you have paid more than that when the policy matures it is taxable under the other sources if it is maturing on the death of the person fully exempt if it is maturing on the expiry of the term even in one year if you violated this condition we have to see it guys clear I've given few illustration here we'll quickly go through it guys all this is when the policy is maturing on the expiry of the term if the policy is maturing on the expiry of the insured that is the death of the insured no need to check any condition guys it is except for the family member who is receiving it okay you can see quickly so everywhere wherever I have given the illustration the date of policy is on or after 1st April 2023 guys okay obviously the policy will be maturing somewhere in the future but still in the exam they may ask with respect to Future also we'll see some assured 30 lakh 40 lakh 60 lakh yearly premium is 4 lakh 4 lakh 50 6 lakh you can see everywhere it is more than 10 percentage everywhere the percentage the yearly premium is more than 10% yes so if the policy is maturing on the expiry of the term will it will exemption be available no not available not available not available okay next we will see policy XY Z so for policy X suur is 50 lakh yearly premium is 4% 4 lakh so less than 10% no problem policy y 40 lakh less than 10% there also then policy said exactly 6 lakh but for policy Z you can see the yearly premium what you have paid monetary wise more than 5 lakh more than 5 lakh so on the expiry of the term if this policy is maturing exemption is not available okay now coming to X and Y individually if I check it is within 10% and also it is within 5 lakh but both the policies put together what is the total premium paid guys 750,000 sir can I claim the exemption for both no if the aggregate premium paid for both the policy is more than 7 lakh then exemption cannot be claimed for both so you can claim exemption for any one of the policy either X or Y where the premium is within 5 lakh so you check where the where you will get maximum benefit so wherever the amount you receive receiving is more now try to claim exemption there so I will Avail the exemption for policy X as the yearly premium monetary wise within 5 lakh whereas for y when I put together both X as well as y it will be more than 5 lakh individually yes it is within 5 lakh but when you want to claim exemption for both we have to check the aggregate limit we have to check the aggregate limit so in simple guys ass can either claim exemption for policy X or policy y but not for both so better is to claim for X is what my suggestion is okay next XY Z is there again policy X within 10% no problem within five L also no problem okay good then policy y within 10% within 5 lakh no problem then policy Z within 5 lakh within 10% no problem now sir can we claim exemption for all the three policies check the aggregate limit individually it is satisfied it is within 10% and it is within 5 lakh no problem sir next so when the policy matured you check the agregate premium guys 2 + 2 + 2 it will be 6 lakh obviously more than 5 lakh yes sir more than 5 lakh so can we claim exemption for all the three policies no so maximum is assassi can claim exemption for two policies so he will decide which are the two policies obviously as per the maximum benefit so what I suggest is as the sum assured for X and Y is more see ass may receive the amount more than some should in the form of bonus and all but wherever is getting maximum amount now try to to capitalize that so you can see for X and Y if I take aggregate premium also it is within 5 lakh so can I claim exemption for both X and Y yes now can I claim for Zed also no because aggregate will exceed 5 lakh the aggregate will become six lakh so for Z it is not available so alternatively can I claim y z can I claim x z yes possible but wherever it is maximum benefit try to go for it next last illustration you can see policy 70 lakh 80 lakh 60 lakh everywhere it is exactly 10% or less than 10% so percentage wise taken care but monetary wise you see everywhere it is more than 5 L everywhere it is more than 5 lakh so is exemption available no sir individually itself for each policy the yearly premium is more than 5 lakh so for none of this policies exemption can be claimed for any of this policy you cannot claim exemption percentage wise yes satisfied but monetary wise for each of the policy it is more than 55 LH so in that case all the three policies if it is expiring on the expiry of the term then it is fully taxable guys clear and Sir if it is taxable how is it taxable that is also important so other than ulip and keyman insurance policy if it is expiring on the term expire means if the policy is maturing on the expiry of the term and if at all if it is taxable it is taxable under which head other sources and how you can see here whatever is the sum you are receiving from the life insurance company you take it including Bon bonus from that we have to reduce what is the total premium paid but from the total premium paid for whatever premium we have paid we would have availed the deduction under Section ATC so from the total premium paid whatever deduction we have claimed under Section ATC during the term of the policy you reduce it remaining only we can take it as a reduction simple guys let me give an example assume the amount received under the life insurance policy including bonus is 50 lakh 50 lakh totally I have paid a premium of 40 lakh during the term of the policy I have totally paid a premium of how much 40 lakh now can I claim full deduction of 40 LH no guys why because in ATC there is a maximum limit of 150,000 so check during the term of the policy what is the deduction we have claimed or the assy has claimed under Section 8C for the premium fed how much deduction he has claimed let me take it as 15 lakh the premium he has claimed as deduction under Section ATC is 15 lakh because there is some maximum limit and all under ATC all items put together so what is the remaining amount guys 25 lakh so only remaining 25 lakh we will reduce it okay let me take it here 25 lakh so what is the amount taxable under the head other sources 25 L hope you understood the calculation is that clear yes sir so please be careful with this policies guys may be important for your exams next let me continue uh next gift again gift taxation is also important so gift can be received in three forms money specified movable property and immovable property so what if it is in the form of money if the aggregate amount of money received during the year if it is more than 50,000 whatever is the value of the money will be taxable under the head other sources for the recipient guys now assume 10 of you 10 of you gifted me after your results s we cleared because of you on each one of you has gifted 10 of you gifted me 10 10,000 so individually it is within 50,000 but for me as a recipient aggregate amount is how much 1 lakh is it taxable sir yes it is taxable guys as the aggregate amount of receip is more than 50,000 entire amount is taxable clear so you need not be I just gave it as an example guys if you just clear using all the resources provided to you and if you can possible if possible just inform that you guys cleared that is more than enough for me that is more than enough guys so please make sure whatever resources have been provided for you study material videos revision notes revision videos everything please make the best use of all this and clear your exam and in one go okay so next whenever you're writing whether in May or November this should be your best attempt give your best and clear it off guys because even after exams even after you qualify there are many other things for you guys to experience because this academic part you have to get out as early as possible even after that obviously studying will be there getting updated and all will be there gaining knowledge and all will be there but not for Marks but not for passing clear so please make sure that you come out of that bracket as early as possible don't ignore H still mon or two months is there still 6 months is there no guys time will just go like this from day one you should know what is your goal where you have to be and please work towards it work towards it okay so now coming to specific movable property all movable property not not covered you which are those shares Securities gelry archaological collections drawings paintings sculptures work of art and bullion even virtual digital asset is covered guys that is cryp uh cryptocurrencies or even if it is a Bitcoin and all it is covered but taxation of virtual digital asset is not a part of your inter syllabus yeah so specified movable property includes virtual digital also but taxation of that and all is not a part of your syllabus but still I have just mentioned it now there are there are two scenarios you haveed it without consideration means purely as a gift in that case check what is the fair market value of the property you have got if it is more than 50,000 entire fair market value will be taxable under the head other sources sir what if the fair market value of the gift what I have received is less than 50,000 nothing is taxable sir what if I have received two movable property whose value is 30,000 30,000 what is the aggregate value 60,000 is it more than 50,000 yes entire 60 would be taxable entire 60,000 would be taxable guys next inadequate concentation means I have purchased movable property but for a lower value in that case check what is the inadequate concentation that is fair market value minus actual purchase price fair market value minus actual purchase price check what is inadequate consideration if inadequate consideration is more than 50,000 then inadequate consideration will be taxable for the purchaser under the head other sources guys let me give an example asume I have purchased I have purchased jewelry I have purchased a jewelry for 2 lakh whose fair market value is 4 lakh whose fair market value is four lakh so what is inadequate consideration guys 2 lakh so is inadequate consideration more than 50,000 yes sir so in that case 2 lakh will be taxable in my hands because I have purchased at a lower value oh next immovable property what is covered under immovable property land Building or both if land Building or both is received as a pure gift without any consideration check Stam Duty value if Stam Duty value of land or building is more than 50,000 then entire Stam Duty value will be taxable guys if Stam Duty value is less than 50,000 nothing is taxable I guess nowhere now now especially stabul value of land or building will be less than 50,000 until and unless it is somewhere in the corner so stability value of the immobile property if it is more than 50,000 then entire amount if not nothing guys okay so what if I have purchased land or building but for a lower value but for a lower value in that case check inadequate conentration first calculate inadequate concentration what is it Stam Duty value minus actual concentration for immobile property we have to take Stam Duty value not F so find out inadequate consideration and check whether inadequate consideration is more than AER of two things that is 50,000 or 10% of actual concentation if inadequate consideration is more than e of this two then inadequate conation would be taxable guys clear let me explain with an example assume I have purchased actual consideration I have purchased a land for 50 lakh guys but Stam Duty value is 60 lakh so what is inadequate consideration 10 lakh check whether is it more than what 10% of actual consideration actual consideration is how much 50 lakh 10% of this is 5 lakh or 50,000 or 50,000 whichever iser guys 5 lakh 5 lakh so is 10 lakh more more than 5 lakh yes sir 10 lakh more than 5 lakh so 10 lakh which is inadequate consideration will be taxable under the headit income from other sources income from other sources let me give one more example assume actual consideration that is purchase value is 50 lakh Stam Duty value is 503 lakh 53 lakh how much is inadequate consideration guys 3 lakhs so check is it more than two first one at 10% of actual sale consideration which comes to 5 lakh okay then 50,000 whichever is higher 5 lakh so is 3 lakh more than 5 lakh no sir it is less than 5 lakh then nothing is taxable under other sources nothing is taxable under other sources guys means here also up to 10% difference they're allowing it up to 10% or 50 ,000 whichever is higher they're allowing the difference if it's more than that then the entire difference will be taxable and Sir Stam Duty value has on what day should I take same like section 50c and 43 CA guys Stam Duty value on the date of transfer has to be taken means for recipient point of you purchase if date of agreement and date of registration is different then Stam value on the date of agreement can be taken provided at least a part of the consideration is received on or before the date of agreement in any mode other than cash so rule 6 ABBA is applicable for this section also 56 to10 with respect to payment so here from recipient point of view it is payment if any part of the consideration is paid by the recipient on or before the date of agreement in any mode other than cash then he can take Stam Duty value on the date of agreement if not Stam Duty value on the date of registration guys clear so in case of this immobile property and all from seller point of view we have to check either section 50c for capital gains or if it is a stock we have to check 43 CA whereas from purchaser point of view we have to check section 56 to10 guys both will get attracted for seller as well as buyer and section 56 to10 is applicable only especially for movable and immovable property only whatever asset they have purchased or got as a gift it is applicable only if it is capital asset in nature so what if it is like for example assume for the purchaser land or building is a stock should we apply section 56 to10 no we need not whereas for seller we have to check section 43 CA but for the buyer we need not because obviously see guys when I'm dealing with my stock I will buy it at lower price and sell it at higher price there also don't come and tax me telling you are purchased at a lower price clear so in case of movable property and immovable property for the recipient only if it is in capital asset in nature 56 to10 is applicable if it is stock in nature then 56 to10 is not applicable clear but please be careful for the seller if is a land or building which is a stock we have to check section 43 CA but for the buyer if it is a stock we will not apply 56 to10 sir what if for the buyer if it is a capital asset we will check 56 to10 clear yes then exception is if any of this gift is received from any relative relative is a big list then on the occasion of marriage or under a will or by way of inheritance and all irrespective of the value nothing is taxable guys nothing is taxable one more important whenever section 56 to10 get attracted if at all if something is taxable in the hands of recipient especially for movable property and immovable property assume he has received it as a gift then what is taxable F MV or stamp Duty value if it is more than 50,000 if this asset is sold in the future what is the cost for the recipient sir it is FMV or Stam Duty value which was taxable at the time of receiving the gift under the other sources same way sir we have purchased it but for a lower value or for inadequate consideration in that case assume I have purchased for 50 lakh but stamp Duty value was 60 lakh so 10 lakh was taxable under other sources yes sir so in that case in the future if I sell this asset what is the cost of acquisition 60 lakh that is stamp Duty value yeah yes next so whenever guys clubbing get attracted whenever clubbing get attracted that is if I am liable to pay tax on someone else income like my wives minor childrens and all clubbing will always get attracted under the head other sources okay the irrespective of the nature of income so the nature of income for my wife or house might be salary income house property income or capital gains or other sources whatever it is we'll first calculate the income for them but clubbing will always get attracted for me under the head other sources when clubbing will get attracted and all we will learn it from section 60 to 65 clubbing Provisions are contained we will see it later but if at all if clubbing get attracted for the assy For Whom the clubbing is getting attracted it is always getting taxed under which head other sources guys irrespective of the nature of income okay next deductions not available okay that is while Computing the income under the head other sources the following deductions are not available guys means not allowed this allowed which are those any personal expenditure then any interest which is payable outside India on which TDs is not deducted then if any salary is payable outside India on which TDs is not deducted then if any payment is made to a resident on which TDs is not deducted then 30% will be disallowed same like pgb guys okay section covered is different that is 58 year and there it is different next any expenditure in respect of which a payment is made to a related person to the extent the same is considered excessive or unre unrealizable so unreasonable that is whatever is excessive is disallowed then any expenditure in respect of which a payment or aggregate of payment exceeding 10,000 is made to a person in a day in a cash then no deduction in respect of any expenditure incurred in connection with casual income whether the Casual income is covered under Section 115 bb or BBJ no expenditure will be allowed guys clear all this under other sources is given in section 58 but if you want I can just give the reference of the sections where it is covered similar expenditure are covered under pgpp also which are disel outed there so interest which is payable outside India on which TDs is not deducted this actually comes under ifhp also that is house property section 25 so this is SE section 25 under house property then any payment chargeable to tax under the salary if it is payable outside India this is like 40 A3 under whatever sections I am mentioning is under pgbp now then 30% of the sum payable that is 40a 1 year 401 one year then any expenditure unreasonable 48 if you pay unreasonably to your relative and all 8 hey a then any expenditure in respect of which a payment or aggregate of payment excess of 10,000 that is 4 A3 Cash Cash guys cash we'll start with c c is the third alphabet so A3 A3 okay good next no deduction in respect of any expenditure incur in connection with casual income guys next d income like whatever we learned under Section 411 same provision is applicable even under other sources so in the past if you have claimed any expenditure or losses under the head other sources while calculating the income and if that expenditure or losses is recovered in the future then that income will be taxable under the head other sources in the year of recovery then there are few exemptions which are available for the incomes to be taxed under other sources there are few exemptions available what are those we will see 1015 income by way of Interest premium on redemption or other payments on Securities and goods deposit bonds issued by central government shall be exempt if it is interest on post office Savings bank account then 3 3,500 in case of individual accounts and 7,000 in case of joint accounts would be exempt guys see for interest on post office Savings bank account even deduction is available that we will see under chapter 6 but exemption is up to 3,500 for example if you have earned 10,000 interest individual account from interest on Savings Bank sorry post office savings deposit then out of 10,000 1015 exemption you will claim 3,500 remaining is how much 6,500 will be included as income under the head other sources clear and later yes deduction is also available under Section 80 TDA which we will learn in deduction chapter clear so exemption has to be claimed before including that item under the head other sources guys and if it is a joint account 7,000 then scholarship scholarships granted to meet the cost of Education Whoever has given it and whoever has re it if it is given to meet the cost of Education it is always exempt guys see we have already learned in salary if it is given by employer also exempt if it is given by others also exempt next 1017 daily allowance constituency allowance of MPS and MLS is exempt but it is not allowed under default scheme if that MP MLA and all if they are following default scheme then for them even that daily allowance constituency allance and all will be taxable then 1018 family pension received of an individual who has been in the service of central government and has been awarded baram chakra or mahavir chakra or V chakra and other gallantry award if that person has died and if their family members is receiving any family pension it is fully exempt for them guys fully exempt okay 10:19 same way if any person who was a part of Indian army and if they have died during operational duties they have sacrificed their life for the country so if their family members are receiving any family pension from the central government they're telling it is completely exempt in the hands of the family members whoever is receiving it clear but the condition is the person should have died during operational duties like pulama attack and all clear yes guys in addition to this with respect to gift taxation they have also told if any amount is received for the medical treatment of covid related um covid related treatment if any amount is received by anyone from anyone including employer if any amount is received for the treatment of covid then it is completely exemp irrespective of the amount either the ass or any of his family members if they are tested positive due to covid now we have different names for it and all but still everything is part of covid-19 so whatever name we call or whatever part we call it as part one part two part three and all okay so in that case whatever amount is received for the medical treatment will be exemp same way sir the person who has been tested covid-19 positive has died and if the amount is received as a compensation is it taxable no if it is received by anyone else guys clear for example assume Assi was tested with positive covid positive and he has died and on his death a compensation is paid by whomever if it is paid by employer employer of whom the assass then for the family members it is completely exempt irrespective of the amount complete amount is exempt if it is paid by employer family p uh sorry for the family member whoever is receiving the compensation it is fully exempt compensation is fully exempt then if it is given by others if it is given by others like government or any other industrialist or any other famous person or charitable institution if compensation is given by them it is exempt up to 10 lakh guys it is exempt up to 10 lakh if is inexcess of 10 LH the difference would be tax so if it is given by employer of the assy who has died then for the family members whoever is receiving the compensation it is fully exempt irrespective of the amount if it is given by others up to 10 lakh exempt and in excess of 10 lak will be taxable this is compensation for medical treatment whatever amount is received for either the medical treatment of the assy or any of his family members who is tested positive of covid is completely exempt guys this is all about income from other sources guys so we are done with the heads of income yes guys now we will revise chapter four which talks about clubbing of income the provisions with respect to clubbing of income is covered in section 60 to 65 of income tax act 1961 first of all sir what is clubbing see when someone else income is taxable in the hands of the assassi we call it as clubbing off income means assassi has to pay tax on his own income plus whenever someone else income is clubbed with him he has to pay tax on that also and whenever clubbing get attracted it will Al always get attracted under the head other sources guys under the head other sources so examples guys like my spouse income that is wife's or if it is a minor children's income can be clubbed with me so in that case irrespective of what is the nature of income for the person who is earning it it will be clubbed with me when it is clubbed with me it will always be clubbed under the head other sources guys sir will it be always clubbed like for husband means for wife's income husband should always pay tax for minor children's income always parents should pay tax need not be okay here under this chapter we will be learning when exactly clubbing is applicable if at all if clubbing get attracted then the assy has to pay tax on his income as well as the amount which is clubbed with him and that amount which is clubbed will always be clubbed under the head other sources irrespective of the nature of the income so what is the first of all what is the purpose of this clubbing sir why this chapter has been introduced in the ACT sir guys see assume I am paying the tax at the highest rate 30% so I have a income more than 10 lakh or if I following default scheme I assume I am have an income of more than 15 lakh then whatever I income I have in excess of 10 lakh or in excess of 15 lakh depending upon which scheme I am choosing I have I will end up paying 30% tax highest rate highest slab rate yes so so what I thought is see if I keep the FD in my name whatever interest I will earn will get taxed at the highest rate because I already have a income more than than 15 lakh or more than 10 lakh so what I thought okay instead of keeping the FD in my name let me keep it in my minor children's name assume I have two three childrens so I am keeping the FD in their name in that case who will earn the FD interest my childrens's so we will assume that ah they don't have income more than basic exemption limit so they will enjo enjoy the basic exemption limit and they will not not pay any tax but is it true no so if any FD interest is earned by minor children not only FD interest any income without their efforts without their efforts if they have earned any income that will be clubbed with the parent guys that will be clubbed with the parent sir father or mother who is that everything we will learn one by one same way assume guys sir I have a house property so now if I earn a rental income from it it will get taxed at I rate because I already have a huge income so what I thought okay let me transfer this house property to my wife or to my childrens so that they will earn the rental income on which they may escape from tax because their income is less than basic ex limit or they may be eligible for rebate or even if they are paying tax maybe 5% or 10% if I pay tax on that rental income then I may end up paying 30% so we are trying to shift our income I'm trying to shift my income So to avoid this to curb this theyve introduced clubing of income provision guys so the person whoever is having highest income he may try to shift his income to his family members to his family members in order to curve this practice they have introduced the clubbing of income provision under income tax law so what is it we will see one by one section 60 guys first off all when income alone is transferred without transfer of asset clubbing is attracted so if I have earned the income who should pay tax guys me so in that case after earning the income if I transfer it to you if I remit it to you will it become your income no actually this will not make much sense with respect to clubbing because once I have earned the income and I have received it it is always my income if I remit it or if I transfer it to you that doesn't become income for you even we have learned this even in section P yes only the first receipt would be considered if I subsequently transfer it to someone else it will not be considered as their in so whoever is earning the income for them it is considered as income and it will be taxable in their hands guys after receiving the income if they transfer it to someone else or remit it to someone else it is not their income clear that is what section six then 61 revocable transfer of assets also attracts clubbing sir first of all what is revocable transfer guys revocable transfer means I have transferred my asset to you with a condition telling you have to give back the asset after 2 years or after 5 years you get you have to give back the asset to me or else I have transferred the asset to you telling whatever income you earn from that asset you have to give it to me or you have to give it to my childrens's or you have to give it to my spouse I have put a condition I have some right of gaining back we call that as revocable transfer so if there is any revocable transfer of asset then even though you are the legal owner still whatever income you are earning from that property will be taxed in my ads guys will be taxed in my ads exceptions to the above that is clubbing will not get attracted when section 62 is telling clubbing will not attract if the transfer is not revokable during the lifetime of the transfering so for example assume I transferred an asset to a person and I told sir if you die property has to come back to me if you die means the transfery if you die property has to come back to me in that case sir will the clubbing get attracted no assume guys I transferred an asset so it was within a transfer he earned the income for whom it is taxable for a transfer and when I am transferring the asset I had put a condition telling if transfer if you die property has to come back to me assum after 10 years transfer died and asset came back to me so in that case obviously after that whatever income is earned by me will be taxable in my hands only but during the term of the 10 years for whatever income is earned from that asset it will be taxable in whose hands transfer hands clear because clubing will not get attracted in that scenario same way clubbing will not attract if there is a transfer of assets to a trust and not revokable during the life time of the beneficiary now I have transferred an asset to a trust and I have told only if trust Clos Clos down asset has to come back to me or only if trust shut down asset has to come back to me even in that case when I transferred the asset to a trust so whatever income the trust will earn from that asset will not be clubbed in my hands guys it will not be clubbed if at all if in the future if the trust close down asset will come back to me in that case from that day whatever income I earn from the asset will be taxable for me itself hope it is clear next section 64 subsection 1 income of a spouse or son's wife income of a spouse or a son's s 64 subsection one guys so they are talking about clubbing the income of a spouse spouse means for husband wife for wife husband there like like that okay then our son's wife also is covered what is it we will see one by one first one income of a spouse by way of a salary commission fees or any remuneration whether in cash or in kind from a concern in which the other SP has a substantial interest will be clubbed guys simple assume now wife has a substantial interest in a company a limited okay she's holding more than 20% more than 20% Equity shares or profit sharing ratio okay sir so wife is said to have substantial interest in the company now yes sir now husband is working in that company's working as an employee in that company and he is drawing a salary he is drawing a salary from the company so in that case whatever salary the husband is getting from the company in which the wife has substantial interest that is more than or equal to 20% in that case the income will be clubbed with the hands of the wife who has substantial interest in the company provided the husband doesn't have any qualification experience or skill sir husband is Bud illiterate only in that case clubbing will get attracted clear sir wife has a substantial interest in the company but husband is getting salary from the same company but he's actually ched accountant sir is a company secretary sir or is any qualifi any other qualified person sir in that case clubbing will get attracted no clubbing will not get attracted salary will be taxable in the hands of husband only guys hope you understood so in simple if in any concern if one spouse is having a substantial interest in the same concern if the other spouse is working and if they any salary due to due to qualification experience skill then clubbing will not get attracted if they don't have any skill knowledge experience or qualification then the income will be clubbed in the hands of the spous who has substantial interest in the concern guys or company is that clear in that case assuming husband doesn't have any qualification experience nothing so whatever salary is getting will be Club down yes sir so first calculate whatever is the salary income for the husband we have to calculate allowing all the exemptions deductions whatever he is eligible for including standard deduction everything we have to allow and calculate taxable salary for husband but will it get taxed in his hands no it will get taxed in the hands of why under which head other sources clear so we have to calculate the income for the person who is earning it but the final figure we have to Club it with the other person so in that case will husband also pay tax on the same income no no no for husband it will not be included in the total income guys we will compute in the hands of husband but once we Club it with the income of the wife again it will not be taxable in the hands of husband guys clear so always not only in this scenario always it is like that whenever clubbing get attracted calculate the income in the hands of the person who has earned it allowing all the exemptions deduction whatever they are eligible for the final taxable figure you Club it clear and Sir entire total income of the husband will be clubbed no no only salary only but in salary we know we have some exemptions deductions and all available now so after claiming all that the taxable salary element will be clubbed guys not the total income please be careful a clear H yes don't misunderstand the provisions or don't misapply it okay CH clubbing exceptions clubbing will not get attracted if such remuneration is attributable to a technical or professional qualification or knowledge skill experience Etc of the sport so if husband is like qualified person then even though the wife is having substantial interest in the company still clubbing will not get attracted guys and one more important thing sometimes they will try to confuse you sir when this wife has purchased the share is it before the marriage or after the marriage doesn't matter whether she has purchased the share before the marriage after the marriage doesn't matter guys clear so during the previous year check whether wife is having substantial interest yes is husband getting salary from the same company now yes next does the husband have any qualification experience skilla yes or no accordingly decide the club we clear if he has the qualification then clubbing will not get attracted if he doesn't have it then clubbing will get attracted guys is that clear yes so when the shares are purchased doesn't matter here next when both husband and wife have a substantial interest in a concern and both are in the receip of by way of salary Etc from the same concern such income will be included in the hands of the husband or wife whose to income before clubbing is greater now sir assume Z Limited in which Mr Z and Mr Z both have substantial interest both of them are holding more than 20% you assume guys both of them are holding more than 20% okay so both have substantial interest individually yes sir individually I'm telling you okay now assume both of them are getting salary both both of them are getting drawing salary from the company both of them are drawing salary from the company in that case will cling it attracted sir yes whose income will be clubbed with whom sir guys it is like this check before clubbing who has highest income before clubbing who has highest total income whoever's total income is more assume husband's total income is more husband's total income is more in that case the salary income of Mrs zet what she's getting from Z Limited only salary income not entire thing not entire total income okay so the salary income of Mrs Zed will be clubbed with the total income of Mr Zed under which head come on guys under the head other sources agina yes this is when both of them has the substantial interest in the same company NeXT third one where in asset other than house property okay first two things is with respect to salary and substantial interest and all now asset where an asset other than house property is transferred by an individual to his or her spouse without consideration or for inadequate consideration income generated from such transferred asset attracts clubbing and taxable in the hands of transferer guys your house property is excluded I will let me explain it we already covered it but still good to recall again if assume husband to wife I will take wi vers of both scenarios are covered husband to wife or wife to husband assume guys husband gifted an house property to wife or he sold it but for inadequate consideration in that case sir in section 27 they're telling if asset is given house property is given as free of cost to the wife that is by one husband to wife or spouse okay sir in that case husband or the transferer is deemed to be the owner guys is a deemed owner even though the legal owner is wife even though the legal owner is wife after receiving the property whatever income she is getting from that property that is income from house property will she pay tax no it will always be taxable in the hands of husband sir is it clubbing no this is not clubbing because 27 is talking about house property only so straight away house property income will not be taxable in the hands of wife because she is not the owner for income tax purpose who is the deemed owner for income tax purpose husband so we have to the house property income not for wife for husband straight away and where is it taxable sir under the house property only not under other sources because this is not a clubbing part please be careful clear so if husband is transferring house property to wife or wife transferring it to husband without consideration or for inadequate consideration then the transferer is deemed to be the owner as per section 27 in that case whatever income or rental income or annual value of the property will be taxable under the head of property and obviously in that case it will be taxable under the head house property only so husband can claim whatever deduction is there that is Municipal tax paid standard deduction interest on housing loan everything he can claim the final figure would be taxable guys hope it is clear for you so in this case it is not clubing it is deemed ownership which is applicable clear yes next next scenario I will take sir what if husband has transferred any other asset any other asset to wife or wife has transferred any other asset to husband in that case will clubbing get attracted yes guys now assume husband has transferred any asset other than house property to a wife like shares debentures or any other asset guys now husband has transferred an asset to wife and whatever income the wife is earning from that asset will be clubbed with the income of husband as per section 64 subsection 1 it is clubbing part and under which head it will be clubbed sir income from other sources so whatever income the wife is earning or the receiver is earning from that asset which is transferred will be clubbed in the hands of the transferer guys hope it is clear for you clear yes then ah now see sir when asset is transferred they should be in a relationship relationship in the sense marriage relationship clear yes sir then even when income is earned by the wife maybe now or in the future whenever she is earning earning the income even then they should be in a relationship so now assume asset has been transferred by husband to wife so clubbing start get attracted after 2 three years something didn't happen between them and they got diversed okay worst scenario I'm telling they got diversed in that case from the year in which the they got diversed clubbing will not get attracted clubbing will stop there guys clubbing will stop there clear means when the asset is transferred as well as when the income is earned they have to be in a relationship that is marital relationship only then the clubbing will get attracted so after the transfer of asset even if someday in future if they get diversed in that case the day they get the divers the clubbing will stop the clubbing will stop guys hope you guys got it in case transfer of transfer is before marriage or in connection with an agreement to leave apart if the assass and his her her spouse is diversed so what if the property was transferred before marriage guys if the property was transferred before marriage means they still not come into the marital relationship in that case section 56 to1 will be applicable for the recipient sir I gifted something to my girlfriend or girlfriend gifted something to the boyfriend so is that covered here no because when they they clearly told transfer by a spouse to another spous clear sir we are already married by Art sir we already selected each other and we have decided that no matter what we will get married doesn't matter Guys Legally have you married no in that case if one person is giving the gift to the others then you guys are still not relative also in that case section 56 to 10 will get attracted to the recipient for the recipient section 56 to10 will get attracted because you guys are no more a relative so in that case you cannot enjoy the exemption also so 56 to 10 will get attracted clear yes sir sir what if any property is given after the marriage uh sorry after the divorce in that case also clubbing will not get attracted clubbing means sir as a compensation or whatever you call it as it has been given by one person to another person in that case clubbing will get attracted no guys next the income from the asset transferred shall not be included in the income of the transferer after the death of the spouse either the transferer or transfer with whom you will go and Club so assume either of the person has died so in that case clubbing will stop guys clubbing will stop clear and now so the ass may tell husband when he has gifted to wife a property or house property or any other asset sir without consideration he has given it as a gift now he may tell no no actually it is not without consideration I gave property to my wife in return she is giving me love care affection concern she's taking care of me every day so is it a adequate consideration is it a valid consideration no no guys the law is telling no okay so if husband has given any asset to the wife without any consideration even though in return he might not be receiving in money he might be getting in some intangible form love care affection that is not considered as adequate consideration in the point of law yes you may tell sir that is there without that we cannot stay peacefully and all yes definitely that might be there in the personal life but in the eyes of law it is not considered as adequate consideration guys that means clubbing will get attracted is that clear yes nice now so guys one thing which I would like to tell here as it is connected see please be very careful so now as you are still a student don't worry much about the relationship and all because handling both relationship along with CA might be tough for you I'm not telling impossible but it will become tough for you but if at all when you are choosing maybe in the future also please make sure that you choose a right person because 60 to 7 20% of your future success how peaceful you are everything depends on your partner on your partner guys that is very true okay ultimately whatever you are doing in your life whatever you have achieved in your life you you have to stay peaceful you cannot waste your time settling the dispute you cannot waste your time settling the marriage quarrels or the family disputes and all so better you have to focus on your life your career and all so all other things has to be taken care automatically so I suggest you guys so I'm not a relationship adviser but still okay so whenever if at all if you guys are getting into please don't hurry guys okay don't do anything in N because this is lifetime commitment for you this is a lifetime commitment for you so please make sure that when you are choosing a person it is they are not suitable only for you they should be suitable for your entire family because see me I got married so happily married in fact so in that case we liked each other actually but both of our family came together and they married us okay not even a single person told no for us that is where we feel that ah we were successful in choosing each other that is how it has to be now because ultimately our family is also very important for us and when we are marrying a person it is not like we are marrying only that person we are marrying the entire family so after that we will have two two families after marriage one is ours one is theirs both so we have to treat at par with whatever we do it with our families same thing with the other family also that is where that bonding we will get clear fine fine guys don't and now you go don't go in and okay for a search sir let me search for a better person everything will happen at a right time so please now you focus on your studies academics passing the exams okay so we'll continue fourth one income arising on transferred asset alone have to be clued income earned by investing such income arising from transferred asset in cannot be clubbed guys so simple income on income will not be clued assume guys husband transfered an asset to a wife and wife earned an income of one lakh from that asset will it be clubbed yes one lakh will be clubbed in the hands of husband okay now wife didn't go for shopping with this money she saved it and she invested it and on that investment again she earned 10,000 return guys means whatever one lakh income she earned from the asset transferred by the husband she invested it and she earned a 10 10,000 rupees income from it sir is that 10,000 also clubbed no guys that is wife's in okay we have to give credit for her R now because she would have spent that money by going for shopping but she didn't do it so she saved it and she invested it and she has earned some income out of it so it is taxable in the hands of wife it is taxable in the hands of wife guys is that clear yes h next so in simple income on income will not be cled next if asset is transferred to son's wife without consideration or for inadequate consideration income generated from as such transfer attracts clubbing and taxable in the hands of transferer so if father in-law what law father-in-law not income tax law father-in-law or mother-in-law if father-in-law or mother-in-law have transferred any asset to their daughter-in-law including house property because for house property there is no exception if father-in-law or mother-in-law have transferred any asset to their daughter-in-law and whatever income the daughter without consideration or for inadequate consideration clear so whatever income the daughter-in-law is getting from that asset will be clubbed in the hands of the transferer that is either the father-in-law or mother-in-law whoever transferred the asset clear yes sir so in simple if father-in-law or mother-in-law transferred any asset to a daughter-in-law without consideration or for inadequate consideration then whatever income the daughter-in-law is earning that is Son's wife daughter-in-law is nothing but son's wife so whatever income the daughter-in-law is earning from that asset will be clubbed in the hands of transferer that is either the father-in-law or mother-in-law whoever transferred the asset to daughter-in-law son you can do but not daughter in law see how they have made the law so childrens can inherit the property they can means parents can pass it on will and all nothing is taxable but when you are transfer in to son's wife don't what is the logic behind it fine next sixth one where an individual transfers some assets directly or indirectly to a person or Association of person without adequate consideration for immediate or deferred benefit of his or her spouse or son's wife all such income as arises directly or indirectly from such asset shall be included in the income of the transfer guys what is it look here sir if husband transfer asset to wife or if wife transfer the asset to husband clubbing will get attracted yes next if husband transfer the asset to Childrens or parents so if parents transfer the asset to Children's also it will get clapped so next if father-in-law mother-in-law if father-in-law or mother-in-law if they transfer the asset to daughter-in-law clubbing will get attracted okay sir so what they thought is okay let me transfer the transferer is transferring the to third party the transferer is transferring the asset to third party but for whose benefit for wife's benefit or for spouse benefit or for son's wife benefit means assume guys I have transfer asset to a third party maybe my friend but the I have put a condition for my friend telling whatever benefit you get from that asset or whatever income you get from that asset you have to give it to my spouse or you have to give it to my childrens or you have to give it to my son wife some condition I have put like similar to revocable transfer in that case if the asset has been transferred to a third party but for the indirect benefit of the spouse or son's wife in that case also clubbing will get attracted in the hands of whom the hands of transfer in the hands of transferer guys one thing to note here is when the asset is transferred to a third party if by chance if this third party is not a relative then for that third party 56 to1 10 will be applicable as a recipient the asset if it is a capital asset for third party when he receive the asset for him 56 to10 will get attracted if he is not at all a relative okay if he's not covered in exception then obviously 56 to10 will get attracted yes that is for the asset received whereas whatever income you will generate after receiving that asset will get clubbed in the hands of whom transfer in the hands of transfer this how the connections are there guys okay next uh done with spouse part or son's wife next is 641 year junior junior 641 year income of a minor child income of a minor child okay let me first explain guys if minor child is earning any income any income without their efforts without their skill without their talent in that case it will always be clubbed with the parent how they're earning that income is not at all a question mark sir did minor child earn the income from the money given by parent or grandparents or that person this person doesn't matter if minor child is earning any income without their efforts without their skill talent in that case it will always be clubbed with the parents income guys sir father mother who is great both are great clear so both are playing their own role in their life for their childrens so what they telling in income tax law is whoever's income is more before clubing either father or mother whoever is having higher income before clubbing the income of the minor child will be clubbed with that respective person guys that is either the father or mother whoever is having higher income before clubbing next sir what if minor child is earning the income from their own Talent like under 19 cricketers okay some of them in SAS Khan and all they played they were below 18 years and they want assume some man of the match or they get they get paid by BCC and all even in some TV shows are there like Sara junior or whichever show okay or some child artist also will be there so they are performing and for that they're getting paid and they're earning it so in that case also will it be clubbed no guys so income will be taxable in the hands of minor child only but as they don't have signing Authority parent will act as a guardian parent will act as a guardian but income will be taxable in the hands of minor child itself clear yes so please be careful whenever the minor child is earning any income irrespective from where they got that money how they are earning it and all doesn't matter if it is not without their efforts if it is not without their like talent and all it will always be clubbed with either the father or mother whoever is having higher income and whenever the income is clubbed with the father or mother assume the income of a minor child is clubbed with Mother guys because mother had the highest income in that case the mother will be eligible to claim exemption under Section 10:32 maximum 1,500 rupees per child not per month per child only that is per Anum clear that is the parent in whose income the minor child's income is clued will be eligible for an exemption under Section 1032 of how much actual amount Club are 1,500 per child whichever is lower whichever is lower guys okay let us see the provisions income of a minor child will be clubbed with the income of that parent whose income before clubbing is greater once the income of a minor is clubbed with one parent it will continue to be clubbed with the same parent in subsequent year also unless the assessing officer consider is the change in the necessary means when the income of the minor child is clubbed with the father assume for the first time it will continue to be clubbed with the father only until the assessing officer pitching and tell no no from now mother from now mother clear so every year we need not check who is having higher income and all for the first time with whose income the minor child income was clubbed assume father it will continue to be clubbed with Father only even in the future if at all if assessing officer feels any changes required only then change will be made if not it will continue to be same guys next income of minor is not clubbed if the income is derived from manual work skill Talent knowledge experience or if the minor child is physically or mentally handicapped if they're physically or mentally handicapped no matter how they have earned it it will not be cled in that case income will always be taxable in their hands but parent will act as a guardian guys next fourth one when section 641a get attracted that is clubing of minor children automatically exemption under Section 1032 can be claimed to the extent of maximum of 1,500 per minor child whose income is clued but this 1032 is not available for the ass who is following default regime what they're giving is 1,500 that also they're blocking under default regime let them enjoy now listen guys assume minor child income is clubbed with mother is clubbed with mother so section 641a get attracted automatically whenever section 64 one year is applicable even 1032 will be applicable guys clear so what is the amount of exemptions sir the amount clubbed are 1,500 whichever is lower guys assume the amount clubbed is 10,000 so how much exemption the mother can claim 10,000 or 1,500 whichever is lower 1,500 assume guys there are minor childrens's to one two two childrens are there both the incomes are clubbed with the mother both the incomes are clubbed with the mother in that case how much exemption the mother can claim Max ma500 per child means 3,000 as there are two childrens clear yes now please listen here now assume sir minor child's income which is clubbed is like this 2,000 Mr one and for second minor child it is 1,000 rupees so how much income is clubbed with Mother 3,000 rupees okay in that case how much exemption the mother can claim is not 3,000 the amount clubbed for one first child is 2,000 so Club exemption is 2,000 or 1,500 whichever is lower 1,500 then for second child how much Club days 1,000 rupees so 1,000 or 1,500 whichever is lower 1,000 so what is the exemption available guys means for first child 1,500 whereas second child only 1,000 rupees so don't check it cumulatively aggregate don't check it individually for each child you have to check the amount clubbed for each child or 1,500 whichever is lower it is like that clear and 1,500 is perom guys please be very careful with this clear and EAS it to remember guys clear 6418 Junior okay now there is a saying that government has promoting that is V2 hours to so in that case if you do 64 by 2 how much you will get 32 64 divided by 2 you will get how much 32 so exemption is covered under Section 1032 and there is no limit for number of child also there assume there are five minor child and all five minor child's income is clubbed so for each minor child can we claim the amount clubbed or 1,5 which is over yes you can claim it because you are clubbing now government is getting more benefit so they're telling even for exemption for whichever number of minor child income is clubbed for each minor child maximum 1,500 exemption you can claim enjoy No Limit we are not restricting you okay next we'll move towards section 64 subsection 2 income of HF guys it is like this H now assume a member of HF op is visible or else let me change that color okay the member of HF has transferred his asset to HF to HF without consideration or for inadequate consideration in that case who is the legal owner HF from now but still whatever income the HF is getting from that property will be clubbed in the hands of the member who has transferred it who has transferred it guys hope you guys got it if a member individual member in his individual capacity if he has transferred any asset to the HF without consideration or for inadequate consideration then whatever income the HF is earning from that asset which is transferred by the member will be clubbed in the hands of the member as per section 64 subsection 2 okay sir then they're also telling next point if the HF get partition tomorrow if the HF got partition and if this asset is been distributed to the members whatever HF had the asset they Distributing it to the member and the asset which the member has given if it is going to his spouse or her spouse then they're telling whatever income the spouse would be getting will be clubbed in the hands of the original transferer because this is like indir you are doing some transfer because what member if member transfer the asset directly to a spouse clubbing will get attracted under Section 641 yes so what he planned was okay let me transfer it to HF and let us parti the HF and from HF let the asset go to my spouse in that case if a spouse get the asset from HF on partition which was transferred by his another spouse that is by husband or wife in that case whatever the income the spouse is earning from that asset which was transferred by the original member who is their spouse husband or wife will be clubbed in the hands of original transferer that is the member clear yes indirectly de trying to track the person who is trying to shift the benefit indirectly to his or her spouse okay so where a member of HF converts or transfers self owned property means their own property into a property of the HF for inadequate consideration then the income will be clubbed in the hands of the transferer first case yes so next if after conversion that is after the conversion of asset from indiv uh me individual member to H partition takes place then income derived from such converted properties is received by the spouse on partition will be cloved being indirect transfer so after partition if it is going to the spouse of the original transferer then the income whatever that spouse will receive from that asset she got asset not from the member directly by HF but still who is the actual original transferer is or her spouse in that case income will be clubbed with them guys and easy to remember at least to form HF two members should be there to form a family or Huf at least two members should be there so 64 subsection two guys and 641 who is your close first relative spouse maybe parents and all but normally people after they marri they will tell no no sir my spouse is the first relative so 641 so for one person only one clear legally so yes so 641 is like Junior minor Childs okay huh next other points on clubbing some important points to be kept in mind income from asset transferred is clued and not income on income which I already explained guys if transferred asset is sold then capital gains are clubbed sir I transferred the asset to my minor child or to my wife and they sold the asset in that case they will get capital gains that capital gains will be clubbed capital gains income will be clubbed guys next in case of clubbing of income of spose the marriage shall subsist both at the time of transfer of an asset as well as at the time of earning the income means they have to be in a marial relationship both both at the time of transfer of asset as well as at the time of earning the income so at the time of transfer the asset they were in the marital relationship but after few years they got diversed in that case the day they get diversed the clubbing will stop guys income from clubbing purposes includes losses also sir I have transferred the asset to my spouse now she's suffering losses from it or she has sold it and she has a capital loss so even the loss will be Club down yes for clubbing purpose income includes losses also even loss if at all if there is it will also be clubbed guys now cross transfer even cross transfer they have covered try to cover that is if you're trying to give the benefit indirectly guys assume Mr a I will give an example Mr B Mr a Mr B they have transferred not the monies directly Mrs a Mrs B assume they brothers or whatever now Mr a has given some gift to Mrs B assume 10 lakh and Mr B has given the amount to Mrs a theyve exchanged the gifts so how much sir 8 lakh without any consideration in that case first check what is the common amount what is the common amount guys 8 lakh so on 8 lakh common amount we have to check always okay if the amount given is common then straight away take if different amount is given to the extent of common only we have to take now guys on 8 L whatever Mrs a will earn will be clubbed in the hands of Mr a and same way on 8 lakh whatever Mrs B will earn will be taxable in the hands of Mr B that is the clubing we call it as cross transfer clear yes sir now what if Mr a gave to Mrs B 10 lakh now assume she has invested entire 10 lakh and she has earned one lakh so will entire one lakh be taxable no you have to calculate the proportion one lakh is on an investment of 10 lakh so how much is the common amount 8 lakh so in that case only 880,000 will be cled guys okay so only to the extent of common amount clubbing will get attracted only to the extent of com common amount the clubbing will get attracted next the Supreme Court in case of CIT that is Commissioner of income tax versus kesab G moraj in 1961 observed that if two transactions are interconnected and are parts of the same transaction in such a way that it can be said that sub cautious method that is indirect method was adopted as a device to evade tax the implication of clubbing Provisions would get attracted guys clear yes sir so here you are trying to do indirect transfer and all so all this drama will not happen that law is telling clubbing will get attracted guys one more thing now assume Let me Give an example sir husband gifted 50 lakh money to wife and wife has invested this money into the business in that case whatever she earn from the business will be cled yes whatever profit she earn from the investment of this 50 lakh will be clued guys sir what this is not the only 50 lakh she has invested along with the 50 lakh she has invested her own savings also in that case we have to see okay what is the proportionate income she has earned on the capital of 50 lakh which was gifted by asend guys so in that case please listen here so balance sheet we have to check what is the opening Capital so so for our previous year if clubbing has to get attracted on 2324 we have to check opening Capital opening Capital means on what day first April 23 what is the opening Capital assume guys opening capital is 80 lakh opening capital is As on the opening date 80 lakh in that case how they telling the proportionate calculation is how much money is gifted by husband 50 lakh but what is the actual opening capital of the business as on the first April 23 80 lakh assume she has earned during the year 23 24 she has earned a profit from our business which is like 10 lakh she has earned how much 10 lakh profit in 23 24 which you will get to know only at the end of the year but for Capital purpose we have to always take opening Capital opening capital okay listen here sir 10 lakh profit is earned on 80 lakh Capital but how much was gifted by husband 50 lakh so only the proportionate part will be uh clubbed guys okay now so 10 so it comes to 6 lak 25,000 only that much will be clued 6 lakh 25,000 will be cloved with the income of the husband whereas remaining remaining will be taxable so for example remaining is 375,000 will be taxable in the hands of whom wife only will be taxable as wife only guys under the bgb clear so even this 625,000 will be clubbed with the income of the husband under which head other sources even though it is a business income still clubbing will always happen under the head other sources hope it is clear for you yes sir so please be careful when considering you have to take opening Capital sir what if the husband has gifted the money to the wife in between the year assume on 30th September 23 in that case in the year of gifting the money even if she has invested in the business as we are supposed to take opening Capital clubbing will not get attracted in 23 24 guys because if I take opening Capital as on 1 April 23 that will not include the amount gifted by hband so they're telling in 2324 clubbing will not get attracted on the profit but from 2425 okay we have to check what is the amount gifted by husband what is the total opening Capital so simple guys so in 2425 clubbing will get attracted yes so what we have to take profit earned from the business divided by total capital or opening Capital into what is the amount gifted what is the amount gifted by aset clear so if the amount is gifted in between the year and if it is invested in the business in that year clubbing will not get attracted as we are supposed to take opening Capital but opening Capital will not include the amount gifted because it is given in between the year so in that case clubbing will get attracted only from the next year guys is that clear yes sir so this is all about the clubbing Provisions guys so especially the tax burden has to be bor by the entire family especially husband or wife along with their children's guys so this is all about clubing guys yes my brothers and sisters now we will revise the set off and carry forward of losses section 70 to 80 talks about the provisions with respect to set off and carry forward of losses guys see this losses I have already covered headwise also now I will be covering it all together guys all together see there are two mainly there are two categories of losses that is current year loss and carry forward loss current year loss is the loss which we have suffered in the present year that is the current previous year if I cannot set off in the current year then we will carry forward it to the Future year which is called carry forward loss so first we should always set uh see current year can I adjust it so in case of current year the loss can be adjusted within the same head or even outside the head when I can adjust it within the same head we call it as intra head adjustment guys when I can adjust it outside the head we call it as interhead adjustment even in GST we have something called as intrastate Supply Interstate Supply Whenever there is a supply within the state we call as intrastate Whenever there is a supply outside the state we call it as interstate same way guys so if I have to give simple one more example now so assume we are organizing a cricket match within CA inter batch only we are making two three teams and we are playing against each other in that case what do we call it as intra class match intra class match same way sir what if it is like CS inter students playing against CS executive students or CA Foundation students so in that case we are like inter class we are playing the match against the each other means against the other class so in that case we call it as what inter class match clear so why this example because I a cricket lower clear so as a cricket lower so I would like to give more of the example connected to Cricket and also guys to remember the sections also wherever possible if you are also a person who love to watch cricket or who love to play cricket or football whichever try to connect it to the jersey number or try to connect to something which or more you can feel that you are connected for example if I have to tell see I have given some example I hope so so now 7 section s deemed to be received in India Don's J number so D deemed to be received yes sir then section 10 so exemptions it talks about exemption so it is a jersey number of Sachin tandar god of the cricket so like he's been given some exemption here and there so section 10 also of income tax law talks about exemption then coming to section 17 AB deers okay a deers okay now section 17 in income tax law talks about what deductions under salary head so deers to deductions same way section 45 which is a charging section for capital gains so section 45 is a charging section for capital gains same way guys who is the Indian Captain RI Sharma what is his jersey name for jersey number 45 clear so he's a captain of Indian team same way under Indian income tax law section 45 is the charging section for capital gains capital gains is that clear these are some ex example guys so likewise which whatever field you like to try to connect the section numbers to the respective field so that you will be able to remember it maybe over a long period of time clear yes guys fine fine so we'll continue uh first current year loss we will check whether can I adjust it against the same head if I have have any income or can I adjust it against other rates of income both are possible guys both are possible but there are certain exceptions but there are certain exceptions which are those we will see intra adjustment allowed means if you have a loss under the same hit can I adjust it against the income of the same head yes but there are certain exceptions speculation business law specified business loss long-term capital loss loss from activity of owning and maintaining resources guys this losses can be adjusted against the income of the same nature only against the same income you can adjust it you cannot even adjust it within the same hit for example speculation business loss can be adjusted only against speculation business income sir can I adjust it against any other business income no you cannot same way specified business loss specified business loss can be adjusted only against specified business income then long-term loss can be adjusted only against long-term loss not even against short-term gain okay then loss from activity of owning and maintaining resources guys if you are engaged in the activity of owning and maintaining resources whatever you earn from that will be taxable under other sources and if from the same Source if you suffered loss then the loss from activity of owning and maintaining resources you can adjust it only if you earn the income from the same activity sir can I adjust as it is under other sources can I adjust it against my dividend income interest income or can I adjust it against casual income and all no you cannot and moreover this is not a casual income the person is not participating in the race okay is maintaining the is owning and maintaining the race also so he is not engaged in the race and all guys clear he's just maintain owning and maintaining thees clear so in that case whatever is earning will be taxable under other other sources as normal income not special income normal income but if he suffer loss you can adjust that loss only against the same income guys okay next intered adjustment if inted is not possible then the second opportunity you can see I have given the numbers also you will look into the second opportunity what is it inter rate adjustment it is allowed except what the following cases same Four Points covered under intra hit because this you cannot even adjust within the same hit so obviously you cannot adjust it outside the head also yes same way loss under the head bgbp against salary income loss under the head bgbp except these two businesses except these two businesses you can adjust it against any head except salary except salary next shortterm loss see short-term loss can be adjusted against short-term gain or long-term gain but it cannot be adjusted outside the at okay whereas long-term loss can be adjusted only against long-term gain whereas short-term loss can be adjusted against shortterm gain or long-term gain clear yes sir so so now this is with respect to current year loss and Inter rate adjustment is allowed only in case of current year loss if it's a carry forward loss you cannot do it guys okay next carry forward loss inter intra head adjustment is it allowed sir yes it is allowed except the Four Points what we discussed except the Four Points which we already discussed guys within the same head yes you can adjust it even though it is a carry forward loss but except the Four Points which we discussed here which we discussed here guys is that clear yes then sir if I have carry forward the loss can I adjust it outside the Ed not at all allowed once you carry forward the loss intered adjustment is closed you cannot do it clear only for current year loss yes you can do interet adjustment but such subject to exceptions hope it is clear this is just like a summary guys now each of them we will see individually each one of them we will see individually set up of current year losses section 70 and 71 first sir first a we will go a wise here okay first it is income from salary is there any chance of having loss under that head no guys employer may suffer loss but employee will never suffer a loss clear and even sir what if I have earned salary but employer has not not paid in that case we will not treat it as salary you have not lost anything out of yours now okay so and moreover in salary it is taxed on due or re basis whichever is earlier even though you're not received you may end up paying tax on it clear there is no question of bad date and all in case of salary guys clear you will not lose anything out of your pocket is what the law is telling clear yes so second it of income in loss from house property if I have a loss from house property then I can adjust it against income from any other house property within the same in TR it sir what if I don't have can I adjust it against other rates of income yes even inter rate adjustment is allowed you can adjust it even against any other R of income that is inter rate up to maximum 2 lakh the maximum amount of house property loss which can be adjusted against other eights is 2 lakh all it put together not like sir against salary I will adjust 2 lakh against pgb I will adjust 2 lakh against cap no no no no all that put together maximum in a year you can adjust it 2 lakh that a current year loss but The Twist is if you're following the default regime then house property loss even though it is a current year loss you cannot adjust it against other rates of income maximum is you carry forward and adjust it it within the same hit clear yes then guys with respect to business that is pgbp head for income tax purpose there are two special businesses guys for income tax purpose we have two special business just a second for income tax purpose there are two special business which are those speculation and specified this is only for adjusting loss rates and all is same okay for business income it is always normal rates there is no special rate and all for specified and speculation it is like normal income only but only for adjusting the loss we will treat it as special so you can see loss from speculation I'm reading this loss from speculation business can be adjusted only against income from speculation business same way loss from specified business can be adjusted only against income from specified business even sir speculation laws can I adjust against specified specified can I adjust against speculation no no no you cannot but laws from one specified can be adjusted against another specified loss from one speculation can be adjusted against another speculation but in uh inter adjustment between businesses is not possible guys speculation cannot be adjusted against specified specified cannot be adjusted against speculation and speculation specified cannot be adjusted against any other business is that clear and speculation what is speculation guys if you buy and sell anything online without physical delivery especially the main important example here is intraday trading where at the end of the day the position would be square off it will fall under speculation sir what if it is future options derivatives and all guys that will not come under speculation that will come under normal business only okay that is the clarity given by the cbdd also if it is future options derivatives and all it will not come under speculation it is treated as normal business only it is treated as normal business clear yes then SP specified business we already learned under Section 35 ad what and all is there like warehousing facility coldain facility then hospitals have at least 100 beds then uh h of at least two star or more those thing infrastructure facility all those things are covered under 35 ad so for which capital expenditure deduction will be given so you may have a use loss they're telling you can adjust it only against the income from specified business and you can carry forward for indefinite per okay how long we can carry forward the losses and all we will see later then in case of any other business or profession which we treated it as normal which we treated it as normal you can adjust it against income from any other business or profession sir can I adjust my normal business law against speculation are specified yes you can do it but wi vers are not possible then any other head of income except under the salary if it's a current year business loss you can adjust it against other AIDS also but against salary you cannot okay this are with respect to pgbp guys next capital gains so short-term loss can be adjusted only against short-term gain or long-term gain but if it is a long-term loss you can adjust it only against long-term gain guys clear so in simple if I have to tell loss under the hit capital gains can never go outside the hit even though it is a current year you will have to adjust it within the same hit only long-term loss only against long-term gain short-term loss again short-term gain or long-term gain guys okay then loss from activity of owning and maintaining resources okay this is if at all if you have income it is taxable under other sources if you have loss from the activity of owning and maintaining resources then you can adjust it only against income from activity of owning and maintaining resources that is with the same income clear one thing you always keep guys okay I have made it as simple as possible this four incomes will always sorry if you have loss under any of this four items you can adjust it only against the same nature of income clear yes sir next so we are done with the current year loss now we will move towards carry forward loss carry forward loss carry forward and set off of losses broad forward so this is only when this is also not possible this is also not possible then what you will do you will carry forward or else sir yes I did intra or intered adjustment but even after that I still have huge loss in that case you will carry forward that is the third option which is left to you okay so here also I'm going headwise salary there is no chance of having loss so straight away house property loss from house property income from house property in the following eight years means house property loss when once it is Carri forward you can adjust it against only income from house property in the next 8 years guys so assume you have suffered a loss so wherever they have given the period the period will exclude the year in which you have suffered the loss assuming 23 24 I have loss so we will check intra is it possible maybe no inter is it possible maybe no in that case you will carry forward so once you carry forward you can carry forward for 8 years and few loss for four years and all so 8 years or four years Peri from where should we counted sir you have to leave the year in which you have to leave the year in which you suffer the loss because in that year we call it as current year loss so eight year will start from next year or four years will start from next year guys that is in my example from 2425 is that clear yes so loss from house property can be adjusted only against income from house property in the next 8 years same way coming to pgbp loss from spe a business or profession that is normal guys income from any business or profession in the following eight years sir can I adjust it against other rates no inter rate is not at all possible then loss from speculation you can adjust it only against the income from speculation but within the four four years within the next four years then loss from specified business can be adjusted only against income from specified business indefinitely there is no life for it there is no end for it okay then short-term loss can be adjusted against short-term gain or long-term gain in the following 8 years if it is a long-term loss you can adjust it only against long-term gain in the following 8 years then if it a from activity of owning and maintaining resources you can adjust it only against the income from the activity of owning and maintaining resources in the following four years so wherever the years is given that years has to be counted excluding the year in which you have suffered the loss clear and if by chance in the exam if they simply mentioned business loss please assume it is always normal guys not specials for the adjustment of loss clear yes so here I have given losses can be Carri forward for how many years shortcut loss under the head income from other sources you cannot carry forward it if you have any loss under the head other sources you cannot carry forward maximum is you can adjust it within the same uh year clear you can adjust it within the same year but only one exception is the loss from the activity of owning and maintaining resources only that loss you can carry forward for maximum four years okay unobserved depreciation and specified business loss unobserved depreciation means when the profits of the business is not sufficient to observe the depreciation you can carry forward the depreciation for any number of years so when ever you have a feeling that you will suffer loss from your business always keep the depreciation as a last line item so check before depreciation do you have profit or loss if you already have a loss that loss yes treat it as business loss then the depreciation whatever you have you can carry forward it for any number of year and you can adjust it against any other any head except salary except salary guys oh so this two can be carry forward for any number of years then loss from activity of owning and maintaining resources and speculation business loss can be carry forward for maximum four years then any other loss means 8 years so this is just a shortcut for you to remember other points to be considered is unobserved depreciation can be set up against any except salary and against casual income you cannot set up any loss guys not only unobserved depreciation you cannot set off any loss against casual income clear so against casual income you cannot set off any loss guys please be careful with it C expressively it is actually not mentioned everywhere but it is under understood that no loss can be adjusted against casual income clear because when we read casual income the tax rate applicable on that is 30% under Section 115 BB and BBJ they they have clearly given we cannot claim any expenditure we cannot claim any deductions under chapter 6A against this and we cannot adjust any loss also you cannot even claim the benefit of basic exemption limit against this sir what if I have casual loss casual income is you are taxing me at 30% I have done some betting where I have lost my money can I adjust that loss no there is no question of having loss from cash guys clear even though you have it we completely ignore it under the income tax law yeah so under casual actually they're not even allowing you to adjust the expenditure so what if you have a loss they don't care they don't care so there is no question of having any loss from betting gambling and all guys okay see you will have it practically but under income tax law there is no benefit given to that loss clear yes so unobserved depreciation already explained which is a part of pgb so unobserved depreciation whenever assume guys I will just give you the example uh now assume the sales of the business is 100 lakh and you already have an expenses of 120 lakh in that case you already have a loss of 20 lak yes business loss you know intra intered or if you carry forward maximum 8 years in that case assume this expenses is other than depreciation depreciation also is there which is 30 lakh in that case we call it as unobserved dep depreciation when the depreciation is not able to be observed by the profits of the business we call it as unobserved depreciation you can carry forward it for any number of years and you can adjust it against any hits except salary and Casual income except salary and Casual income and you cannot even adjust against undisclosed income also okay actually against undisclosed income and Casual income you cannot adjust any loss guys including unobserved depreciation clear yes sir what I will just give a different example now assume sir I have 100 lakh sales 100 lakh sales okay then expenses 90 lakh and depreciation is 30 lakh in that case only 10 lakh depreciation you debit in that case your profit or loss is zero so 10 lakh we will debit remaining is how much guys 20 lakh we call it as unobserved depreciation can we carry forward yes clear yes so if by chance yes proportionately only uh a part of the amount I can claim means yes you claim it remaining you keep it as unobserved depreciation and you carry forward it any for any number of years CH next loss under the head income from other sources cannot be carry forward for further years except loss from the activity of owning and maintaining resources then no loss can be adjusted against casual income taxable under Section 115 bb or BBJ which is a new section and undis income tax section 115 BB very important guys because this may not be given everywhere but this is what is the provision is please be very careful against casual income and undisclosed income is is taxed at a flat rate okay undisclosed income 60% plus Sarge 25 plus Health indications is 4% effectively the rate is 78% as per section 115 BBE clear against this income against this two income guys which are those casual income and undisclosed income always have it in your mind can you claim any expenditure no sir can you claim any chapter 6A deductions no sir can you adjust any loss no sir yeah sir can you see no first of all you cannot adjust any loss only okay sorry you cannot claim any expenditure only especially from casual what if I have a loss I already told you cannot adjust it you cannot carry forward it then loss from a source which is exempt cannot be set off with taxable income sir now agriculture income is exempt under Section 101 but I have a huge loss this year due to low rainfall or heavy rainfall both are a problem for the farmers actually so due to heavy rainfall or no rainfall there is a huge loss on of agriculture in that case can I set up that loss against any income which is taxable under income tax law no guys when there is any income from a source which is exempt under income tax law if by chance if in any year if you have a loss from that Source you cannot adjust that loss against any taxable income next to carry forward the loss filing loss returns is mandatory guys even though you don't have an income still you can file loss returns and what is the due date to file loss returns is same as income returns whatever due dates are there it is same for both income returns as well as loss returns guys so loss returns shall be filed under section 139 subsection 3 within the due date mentioned under section 139 subsection 1 okay loss return is given in section39 subsection 3 but what is the due date is given in section 139 subsection one guys clear there are three due dates which we already discussed depending upon the type of assy to claim the benefit of carry forward of loss so if you want to carry forward your loss you have to file your returns sir I have not filed my returns can I carry forward the loss no or else sir I have filed the return but belated return you can still file you will wish your friends now once you have forgot you say see their post on Instagram or Facebook and then you will recall oh is birthday was there yesterday I forgot you wish them belated birthday same way in income tax law also they have given the opportunity to file the returns late belated so if I file belated returns can I carry forward my loss no you can't you have to within the due date given under Section 1391 only then you can carry forward but there are two exceptions for it guys that is house property loss and unobserved depreciation so house property loss and unobserved depreciation can be carry forward even though if loss return is not filed clear only this two laws whereas in any other case if you have not filed the loss returns within the due date you cannot carry forward them that's all Gam there next impact of section 115 BAC default tax regime so on last chapter does it have any impact sir yes it has what is it we will see following broad forward losses or depreciation is not allowed to be set off while Computing the total income under the default regime under Section 115 BAC what are those broad forward law from self-occupied house property guys under default regime for self-occupied property interest is not allowed now assume in the past you were following okay whatever example I am giving is like in 2324 assess is following default scheme assume in the last year and all 20223 is following optional scheme previously it was called World scheme but now now as per Finance act 2023 we have to call it as old scheme so in the past he was following old scheme so then interest was allowed yes and he has a loss from house property income from house property which is a self-occupied property you have a loss and that loss is due to what guys interest now sir can I carry forward that loss once I come under default risk scheme no why because the interest on self occupied property is blocked under default default regime and if you have any loss relating to that interest which is with respect to loss from self-occupied property please don't bring it under default regim please don't bring it under default regim see if you're containing it under the optional scheme yes you can do it but if you're coming under default regime no sorry leave that loss and come same way brought forward specified business loss of under Section 358 guys under default regim 3558 is not at all allowed capital expenditure is not allowed now sir in the past I was carrying on the specified business I had had a loss so now I'm continuing to carry but for specified business I would like to go under default reging so you can go but in the past even if you are following optional scheme if you have any loss from specified business please leave it there and come please leave it there and come next brought forward business loss on account of deduction under Section 3512 2A 3 and 2aa guys this is with respect to contribution to Outsiders if contribution is given to the outsider and due means you can claim that also under the pgb yes due to that you have a loss in the past assume in the past you have given contribution to an approved institutions college or Association and all and you have claimed deduction inter section pgbp and due to that you have business loss sir can I carry forward that business loss now I am going under default regime can I carry forward that loss and adjust no because under default regime contribution to Outsiders is blocked clear yes last one unobserved depreciation attributable to additional depreciation under Section 3212a guys assume sir there is an unobserved depreciation of 30 lakh can I carry forward it yes for any number of years and you can adjust it against any income except casual undisclosed income and salary income okay sir now assume in this additional depreciation that is on new plant and missionary is 5 lakhs remaining is normal depreciation 25 lakh now I wish to follow in this year default regime can I carry forward entire 30 lakh unobserved depreciation no you can carry forward only 25 lakh whatever unobserved depreciation is there with respect to additional depreciation you cannot carry forward it you cannot carry forward it why sir because under default regime additional depreciation on new plant and missionary is not allowed guys only normal is allowed clear so in that case what they telling is they also given the explanation telling this F lak would have already been reduced from the block of the asset so what you have to do is as you cannot carry forward this F lak add it to the block of the add it to the block of the asset with respect to as per section 436 whatever is the value of the block please add this p lak and you can carry forward and adjust only how much 25 lakh only 25 lakh guys is that clear yes and what is the reason behind all this is simple guys because this items whatever we discuss now is blocked under default regim and in the past if you had followed optional scheme and if you had any of this losses now if you are starting fresh under default regime please start completely fresh leave all those things there only and come never bring your past year is what they telling if that is blocked under default regime please don't bring that here clear yes sir so same way guys even in your preparation there will be a gain one day there will be a loss one day guys clear so every day you may not be a profitable like every day may not happen as you wished for C so every day assume you kept a target of studying 8 hours 10 hours 15 hours whatever time you have set a Target as maybe few days you may go short clear so assume you kept a target of 10 years but you you could study only maximum 8 hours or 6 years or someday you couldn't study at all due to any reason maybe you had College exams or maybe you were not well anything guys but still if something has happened which is not in your favor but still don't worry about it try to overcome that in the next day or next week clear so don't trip around what has happened in the past okay we cannot change it so every day may not be profitable for you guys every day may not be as per your wish clear so every day may not be your day so there might be some bad days which have to accept it so as a CS students you have to be emotionally strong also don't be weak thinking sir I couldn't study today you what we'll do so that Panic will not take you anywhere clear yes even in the stock market if you guys are like following stock market you know every day we will not see green there will be days green there will be a days red but still which is the maximum guys which is the majority definitely if you see five years Mark 10 years Mark and all you will see the upside of the market on same way you guys also if you take 65 days or if you take 6 months of your preparation the number of good days will definitely be more than number of bad days and that is what is more than enough enough for you because majority you have to score here above 50% means good sir so if number of good days is more than the number of bad days means guys you done well you have done well because in CA exam the passing is more than 50 majority that's more than enough agina so please don't worry about what you're losing and what you're not able to do it and all yes try try to overcome them in the next days okay in the upcoming days but don't worry about what has happened guys okay that will not take you anywhere so please focus on what you can do how many days are left how many months are left what you can do what best you can give how can you prepare please put a proper timetable and work towards it just preparing the time table will not take you anywhere will not help you guys yeah because everyone of you wish to become a CA but how many are working towards that only who are working towards their dream will achieve it guys if you just wish I want to become CA I want to get 60 marks I want to get 80 marks just wishing will not happen you have to work for it clear hope you guys are working hard I know that but still give more better give better but don't worry about few things which are not in your control and all there are many external factors which may have an impact on you guys but still you cannot control them those things are not in your control the maximum the ultimate thing which is in your control is your preparation your mind bring your mind into control please make sure that you do not get deviated and focus only on studies that the maximum thing all other things is common for every student guys every student what sir paper will be tough exam will get postponed or that will happen this will happen they don't care because that is common for all the students they will not do it only for you clear so those things are common for all the Cs students what is special is how well you are you preparing that will only make you guys outperform the others clear so please make sure that guys you are choosen we should always be in that less crowed place so CA is like around four lakh maximum 5 lakh people are there as on today in the population of 150 crores in India we have around only maximum four to five lakh of Ted accountants exact number I don't know but still around in between four lakh to 5 lakh so assume when you guys are a part of it so in a population of 150 CR country you are on among that four lakh months just imagine where are you you are in the very less crowded place so there might be lacks together people who have done degree that degree this degree and all guys you have to outperform all of them so I always feel that we have to be in a place where it is less crowded there is a less competition so in that case we have we can shine ourself we can outperform the other guys clear yes so the last Point here note also current year house property law cannot be set off against other HS of income so that is under default reg in the current year if you have any house property loss maximum you can adjust 2 lakh now yes we saw there only I had mentioned if you are following default regime you cannot set off current year house property law against other heads of income R maximum is you can adjust it only within the same and here what LW they are talking about is only the let out property or deemed to be let out property because under default regim there is no question of having loss from self-occupied property because the interest is blocked for self-occupied property guys fine so this is all about the loss chapter guys fine guys now we'll start with chapter six deductions from gross total income so chapter 6 of income tax law or Income Tax Act talks about the deductions and deduction is covered from section 8C to U guys see there are few set of deductions which the assass can claim under income tax law one is under the respective head guys so whenever we are Computing the income under the respective head there only we can claim the in for example while calculating the income under the head salary we have deductions provided in section 17 three deductions are there same way while calculating the income from house property we can claim deduction for municipal tax paid we can claim for standard deduction under section 24 and interest on housing loan agena same way under pgbp we can claim deductions from section 30 to 37 same way while Computing the income under the head capital gains we can compute we can claim the expenses on transfer cost of acquisition cost of improvement as deduction and other sources we have seen what can be claimed cannot be claimed and all if you have incurred any expenditure against casual income and all you cannot claim any expenditure but against other incomes and all if you have incurred any expenditure you can claim it but subject to certain exceptions guys yes so these are the deductions available under the respective head which you can claim while Computing the income under the respective head the next set of deduction is under chapter 6A guys under chapter 6A so under chapter 6A also there are few kind different category of deductions few deductions are given based on investment or the payments you make or the donations you do few deductions are given based on the income income based deductions we call it as then there might be few deduction which is under Section 10aa that is like profit based business uh profit based deduction for a particular business which is 10A deduction so this chapter whatever we will be seeing is chapter 6A deduction which can be claimed against gross total income guys so just a recap of whatever we have done till now so after Computing the income under each it we will take the taxable figures here then if at all if clubbing is get attracted getting attracted we have to take that also and clubbing will always get attracted under which head other sources guys I have given it later because this we have learned it as a separate chapter but whenever clubbing will get attracted it will always get attracted under the head other sources then set up and carry forward of losses we have to do it under the respective head or against the other head so whenever you are adjusting the loss please adjust it while calculating the income only clear means loss adjustment will happen either within the same head or outside the head so at this stage only at this stage only guys once we do all this we get a figure called gross total income and again gross against gross total income we can claim chapter 6 a deduction that is from section 80c to U 8C to U but the amount of deductions can never be more than gross total income okay means the deduction whatever I claim assume that gross total income is 10 lakh maximum deductions again uh under chapter 6A which I can claim from section 80c to 8 all put together is maximum 10 I cannot claim more than 10 lakh sir what if grass total income I don't have nil or if it is a loss can I claim any deductions under chapter 68 no guys even though you are eligible to claim deduction under the respective section still you cannot claim it because there is no figure against which you can claim it sir if I don't have enough income can I carry forward my deductions no no no no that is not like a loss so deductions can never be carry forward guys maximum is you can claim it in the same year if at all if you can so once we claim deductions we get a figure called total income or taxable income and this is the figure on which the assess is liable to pay taxs and we should also round out round it off to the nearest 10 Rupees this figure as per section 2888 total income has to be rounded off to nearest 10 rupe I'm just mentioning this point clear so now what we are discussing in this chapter is all about the deductions under chapter 16 so there are two types of deductions which are allowed against the gross total income one is chapter 6A deduction and the another one is section 10 daa deduction this is for the who is engaged in the business in sez guys that is special economic zone unit okay both this we will be discussing in this chapter next as per section 8A the aggregate amount of deductions shall not exceed the gross total income of the ass that is what I told you so if gross total income is 10 lakh all the sections put together maximum deduction you can claim is 10 lakh and not more than 10 lakh even though you're eligible for more than 10 lakh it is restricted to 10 lak you cannot claim the deductions more than the cross total income then as per section adaa subsection 2 the deductions from gross total income are available only to the asses where the gross total income is a positive figure so what if it is a nil or if it is a negative figure you cannot claim any deductions which already mentioned guys next guys one important thing if that gross total income of the ass includes capital gain special income or casual income which is taxable at a special rate first you have to reduce it okay means you need not literally do it but you cannot claim any chapter 68 deductions for it for example guys please listen please listen assume your gross total income is 10 lakh and your capital gain special income which you have included is 5 lakh and there is no casual income at all so in that okay assume casual income is 2 lakh so in the gross total income of 10 lakh there is a special income of 7 lakh in that case what is the maximum deduction you can claim is against 7 lakh you cannot claim any chapter 6 deduction you can claim maximum deduction under chapter 6 how much 3 lakh so you have to ensure sure that okay you should ensure that whenever you are solving the problem if your gross total income includes any special income please make sure that after claiming the deduction whatever total income figure you get total income figure you get that should be more than or equal to special income means at least you should have the total income which is equal to special income guys or more than that but it can never be less than that clear because against special incomes we cannot claim any chapter 68 deductions guys is that clear so this is one way you can check or else what you can do is from gross total income means as a working note don't do it in your main answer in the working note or note you can tell okay if gross total income is assume 20 lakh in that if there is any special income first check how much is that reduce special income assume guys it is 8 lakh okay so remaining is how much 12 lakh taxable at normal rates so what is the maximum deduction you can claim under chapter 6 a 12 lakh you can just do this calculation by way of a note or working note in the main answer you need not show it okay because that will become lendy yeah yes guys so so the deductions are not allowed against the following incomes which are those any long-term capital gains under Section either 112 or 112 any longterm is always special then short-term capital gains under section1 year only EFT because if any other short-term capital gain it is not a normal income so it is taxable at normal rate sir against short-term capital gain which is taxable at normal rate can I claim any chapter 6 deduction yes you can claim then casual income which is taxable under Section 115 BB and BBJ at 30% you cannot claim any deductions guys next as per section 80ab deduction specified in chapter 6A under the Hing C deduction in respect of certain income shall be allowed only to the extent such income computed in accordance with the provisions of the income tax act 1961 is included in the gross total income of the ass and the return of income is filed on or before the due date specified under section 139 subsection 1 as per section 80 AC guys please pay attention now if there is any income based deduction income based deduction means you earn some income on which deduction is given under chapter 6A first that income has to be included under the respective head first include that income under the respective head and then claim the deduction and then claim the deduction in simple guys for interest on deposit the savings deposits and all deduction is given assume first you have an interest include it under the other sources assume you have 20,000 interest include it then claim deduction clear so in simple if there any income based deductions first include them under the respective head while calculating the cross total income and then claim deduction and deduction is actually there is some specified limits you cannot claim more than the so much limit like maximum limits are there so in that case whatever is the amount first included then deduction is always restricted to maximum limit clear yes and one more thing to claim income based deductions under eding c eding c talks about the income based deduction you should file the return within the due date only then you can file it sir what if I am filing belated return can I claim heading SE deductions that is income baseed deduction can I claim no you cannot even though if you eligible for just due to the default of not filing the return within the due date you are not eligible to claim income based deductions clear yes sir so guys now we will start with the deductions see before we start with the deduction guys few points which you have to be careful with respect to deduction is deduction is available for whom section obviously you have to remember try to remember the sections you can remember guys okay wherever required I will also give the shortcut who is eligible for the deduction and deduction is for what so is it for an investment is it for a interest or is it for a loan or is it for a donation for what deduction is given for what and how much because most of the section has a maximum limit even though you would have paid more than that you would have earned more than that but the deduction is restricted to maximum certain limit so you can maximum claim only that much so these are the few things which you have to know while answering the questions with respect to deductions please be careful with this okay so I have covered all this in the form of table let us see one by one section ATC one of the important section applicable to only individual and HF whether they are resident or non-resident doesn't matter deduction is for what life insurance policy premium paid or deposit in ppf SPF RPF Suk Sami account pension fund set up by an mutual fund fixed deposit for 5 years senior citizen savings scheme tuition fee speed principal repayment of housing loans subject subject to conditions then stamp Duty registration fee Etc so all this are the deductions which are given based on investment deposit or contribution guys even for life insurance policy there are some percentage limits as well as monetary limit maximum monitary limit is 5 lakh even in agregate also then percentage wise 10% of the sum assured as on today before it was 20% Then if the policy is taken honor after 1st April 2013 in the name of the person who is covered under like disability and all or specified disas then instead of 10% they have made it as 15% guys C all this I have already covered under other sources when I was discussing about the taxation of the policy we already discussed this clear same same percentage limit is applicable even for claiming deduction under Section ATC so what the maximum there are number of items covered here everything put together maximum is 150,000 deduction guys that is the googly year then atcc available to individual contribution to Pension funds of the LC or any other insurer approved by irda that is Insurance regulatory Development Authority of India maximum is 150,000 then at CCD subsection one available for individuals that is for what employee or assy contribution to a national pension scheme of government guys or central government pension scheme we call it as so for assesses contribution how much deduction he can claim if he is an employee 10% of salary even if he is a self-employed and all still he can open NPS account contribute but maximum how much sir 20% of GTI 20% of GDI for self-employed persons guys okay but now the twist is all these three sections put together individually they have a limit ATC 1 l50 at CCC 1 l50 and at CCD subsection one 10% or 20% clear individual limits are there but all this put together 80cc is telling maximum 150 so all the is put together maximum you can claim is 150,000 per year per s okay then at CCD subsection 1B it is outside the limit of 150,000 and individual for his contribution additional deduction he can claim 50,000 and this 50,000 is over and above 150,000 that is for ass's contribution clear next employer contribution CCD subsection two indivis in case of indivis contribution made by Central or state government to NPS which we call it as Employer contribution guys to The NPS account of the employee 14% of salary can be claimed as maximum deduction then that is for government contribution if government is the employer then contribution by any other employer to NPS account then which we call it as Employer contribution but other than government in that case 10% of the salary guys and even this is not within the limit of 150,000 it is over and above 150,000 okay then CCH which is a new section which is added due to the agnipath scheme individual who is called AGN ass contribution and central government contribution to AG Corpus fund Whoever has been appointed on under this akip scheme for them whatever is the amount of contribution both ass's contribution as well as central government contribution both for because for them the employer is whom central government both is allowed as deduction guys but under this two section we can claim deduction for both employer as well as employee contribution employee contribution for NPS we have covered here as well as year so you can see you under this two section deduction can be claimed even for employer contribution but employer contribution should be first included under the head salary and then you claim deduction year and then you claim deduction Year guys and one thing to be noting here is see with respect to employer contribution that is whatever is covered in subsection two under salary head whatever is the employer contribution you have to include it under the head salary clear and that 7 lh50 thing also is applicable that is employer contribution in excess of 750,000 to recogniz Provident fund NPS and so approved superation fund indexes of 750 will be taxable as salary for employee that will also be applicable first of all first employer contribution has to be included and salary hit then that 750 also we have to check please be careful okay next ATD again one of the important section guys ATD is applicable to individual and HF wherever I have mentioned only individual HF it is understood any individual and HF guys including resident as well as non-resident okay first let me see this chart guys here see section 80d gives deduction for two that is medical insurance premium as well as medical expenditure but for the same person you cannot claim both that is what the condition is here okay guys so here there are two categories of people guys assassi and family and parents and here family includes whom I have given it family means spouse and dependent children and in case of HF any member of HF okay so assy and family means assy spouse and children assassi spouse and children children ASC okay and parents obviously father mother both FM father mother both okay so for assassi and family if they have taken any health insurance premium health insurance policy and if they have paid any premium it is allowed maximum 25,000 even for parents in the name of parent if the ass has taken any health insurance policy or medical insurance policy and if they have paid any premium whatever premium is paid is allowed but maximum 25,000 if the premium paid is less than 25,000 only that much will be allowed but if it is paid more than 25,000 only 25,000 maximum is allowed and it is 25 plus 25 guys for each category clear and in this 25,000 up to 5,000 can be incurred for preventive L checkup and for preventive L checkup you could you would have paid it in cash whereas the premium you cannot pay it in cash if you have paid it in cash no deduction clear yes sir now if by chance the person in whose name the policy is taken that is health insurance policy not life insurance policy if the person in whose name the policy is taken if they are the senior citizen 60 or more resident senior citizen guys in that case not the ass the person in whose name the polic is taken if they are the resident senior citizen then instead of 25,000 the limit applicable would be 50,000 in both the cases in both the cases 25 25 is there but the person in whose name the policy is taken if they are the resident senior citizen then instead of 25 it would be 50 clear so assume Assi and his family are less than 60 so for the maximum how much we can claim 25,000 now any of the parent is senior citizen in that case assuming the policy is taken in their name and we are paying the premium what is the maximum limit they can claim 50,000 they can claim 50,000 guys is that clear yes sir next just a second next coming to Medical expenditure medical expenditure and medical expenditure is allowed only for those For Whom the expenditure is in whose name the policy is not there and the patient patient should be resident senior citizen aged 60 or more not the assass we are not checking the age of the assass who is the patient either so in case of assass and family who is covered assass spouse children and dependent children in case of parents father or mother FM clear yes so For Whom the medical expenditure is incurred they should be resident senior citizen and in their name there should not be any policy the logic is because when you have a policy obviously who will be incurring the expenditure the insurance company they will be bearing it or they will be re ursing it you cannot claim the benefit because we are giving already the deduction for premium again we cannot give the deduction for medical expenditure clear so this is only for the patient who doesn't have the policy in their name in that case if any medical expenditure is incurred for assass and his family maximum 50,000 or for parents any father or mother whoever it is maximum is 50,000 but please please be careful the patient should be resident senior citizen sir assume now in my name there is no policy I'm not a senior citizen hope you guys are aware of okay so less than 60 years assume we have incur some medical expenditure can me or my parents claim deduction for it no guys why because I'm not a resident senior citizen aged more than 60 years is that clear so all the criteria has to be satisfied only deduction only then deduction will be allowed and here is straight away 50,000 not 25 straight away 50 clear yes and at the end they have also told both put together that is premium as well as expenditure both put together for Assi and his family both put together you cannot claim more than 50,000 maximum is 50,000 because see for example s might be covered here we have taken the policy whereas this spous might be covered in expenditure assuming they're senior citizen in that case if you're claiming deduction for both but for different person that is three category of persons are covered in ass spouse and children assume ass is covered in like here or their childrens are covered under premium in that case both put together maximum you can claim how much 50,000 same way for parents guys so premium as well as expenditure both put together maximum you can claim how much 50,000 there can be a possibility now for example mother for mother you might be claiming premium whereas for father there is no policy you are claiming expenditure in that case both put together maximum you can claim how much 50,000 sir it is given 25 + 50 yes but again there is aggregate limit maximum is 50,000 for each category in simple for each category including both premium as well as expenditure if different Power persons are covered under different category still for parents maximum 50,000 and for assassi and his family maximum 50,000 guys okay you can see here deduction in respect of medical insurance premium and medical expenditure for ass and family note family means spous and dependent children in case of individual that is one category then uh in case of HF any members of HF then maximum deduction under this section is for 50,000 for ass and his family the last Point what I told and for parents how much maximum 50,000 in case of preventive checkup up to 50,000 you can pay in cash so this 25 will include up to 5,000 in cash which you can pay for preventive he check it is not 25 + 5 25 already includes 5,000 guys please be careful okay in any other case payment should be should not be made in cash guys means the health insurance premium or medical expenditure you cannot incur it in cash if at all if you have incurred in cash no deduction thank you sorry okay so this is what I already explained medical insurance premium 25,000 each for assoi and family that is for one ass and family 25,000 and for parents 25,000 then see 25,000 each in the sense not for assy spouse and children for each 2025 no no all put together for each category it is 25 okay then medical expenditure 50,000 each per assass and family 50,000 and parents 50,000 maximum clear yes so we'll move forward and D easy to remember guys when do you take policy when do you take health insurance policy or medical insurance policy whenever you are scared of a disease so ATD is disease so whenever you are scared of disease or whenever you have encountered the disease you may incur medical expenditure so in order to overcome that in advance you would have taken medical insurance policy and all so that is why ATD is all about disease then atdd depend disable resident individual andf this is only available for Resident individual andf any expenditure incurred for medical treatment of dependent disable if assass is taking care of his dependent who is suffering from disability then assass can claim that flat deduction of 75,000 if the dependent is suffering from severe disability then 1 lakh 125,000 irrespective of the actual expenditure flat deduction of 75,000 or 1 lak 125,000 or not both either 75 or 1 l25 so what if assass himself is a disable ass himself is a disable means he can claim who assy can claim deduction under Section U you yourself is disabled you yourself is disabled in that case person suffering with disability himself how much deduction same 75,000 flat or 1 125,000 whichever whichever is applicable not both s disability means 125 normal disability means 75,000 clear now when ass himself is claiming deduction under Section U Can the assy means the person on whom he is depend depent can claim deduction under Section 80dd no no no both cannot happen because ATU is applicable only when the ass is independent he is like not dependent on anyone even though he disabled still he is not dependent on anyone in that case ass himself will claim in that scenario someone else cannot claim deduction for the same person under Section 80dd telling ah that disabled person is dependent on me no clear and to claim the deduction under both the section a proof of medical certificate also should be attached along with the income tax returns guys and one more thing connected to the insurance life insurance premium for this guys assume the assess was taking care of a dependent who was suffering from disability he had taken on policy in his name and the person died and when the person died normally the ass would have named himself as a nominee yes sir so assess received the policy amount can he enjoy the exemption under Section 1010d no 1010d is telling no you cannot enjoy the exemption clear because during the survival of the dependent you already the exemption under Section uh deduction under Section 80 DD of a flat 75,000 or 125,000 again when the person die you are done with your responsibilities again don't come and claim exemption under 1010 D for the policy amount what you have received it will be taxable guys it will be taxable in the hands of the ass who has received it under the head other sources next so DD means dependent disable assass himself is disable and if he is independent then it you you yourself is disabled okay ddb specified dis resident individual and HF medical treatment of any specified disas for the ass and its dependents maximum 40,000 or 1 lakh so this is available see 40,000 is there but if the ass is means the patient not the ass patient if the patient is a senior citizen or a super senior citizen then instead of 40,000 it is 1 lakh 40,000 is the normal limit or if the patient is a resident senior citizen or super senior citizen then it is one lakh Cas so what we have to do is actual expenditure we have to comp compare with the limit and whichever is lower is allowed as deduction and if by chance if there is any reimbursement by insurance company and employer and all we have to reduce it only remaining amount would be taxable sorry allowed as deduction for example actual expenditure you will compare with what guys 40,000 or 1 lakh either of the two not both okay you will take whichever is lower from that if there is any reimbursement by employer or by insurance company you will reduce it only remaining if still some positive figure is there you'll claim that much as deduction under Section 80ddb next at e is like education loan if the ass has taken any uh loan for the purpose of higher education then whatever interest they are paying not principal only interest is allowed as deduction here guys you can see repayment of Interest or loan taken for higher education that is after plus two in India that education should be done in India so in that case the deduction can be claimed only for the interest on the repayment of education loan but here there is no uh threshold limit with respect to monetary but maximum you can claim it is 8 years St sir what if I have repaid the loan within 8 years then you can claim only for that many years if you still repaying the loan even after 8 years maximum deduction is given for 8 years then 0a is available for individual for housing loan taken guys additional deduction for interest on housing loan borrowed between 1st April 2019 to 31st March 2022 for acquisition or construction of self occupied property only purchase or construction no repairs renovation and all and it is which property self occupied property please be careful so how much maximum deduction 150,000 and this is over and above 24p in for self-occupied property under section 24b under optional scheme if the is following optional scheme already for him 2 lakh or maximum 30,000 is allowed yes so there normally would have claim 2 lakh because if it is for purchase or construction if the construction is completed some conditions are there if that is satisfied 2 lakh Guys and this 150,000 is over and above that 2 lakh that is under the head house property and this is in deductions chapter clear and please be careful here they clearly told the loan should be taken for self occupied property and Loan should be taken for what acquisition or construction only then and Loan should be taken in between 1st April 2019 to 31st March 2022 and they also told what should be the Sham Duty value of the some conditions are there St Duty value of the property should be within so and so limit and all all the conditions has to be satisfied only only then and this is like when ass is paying so much of Interest so assume ass is paying only 3 lakh interest in that case claim 2 lak under 24b and 1 lakh under 80 sir what if the ass is paying only one lakh interest claim fly first under Section 24b clear first under 24b if still if you have more than that then you check whether you're eligible under Section 80a and claim it maximum 150,000 clear guys and there is also one section called at which again talks about interest on housing loan only maximum 50,000 but that is for the loan which is taken in section uh in the year 1617 guys clear so maximum is 50,000 but as on day is not relevant but if loan was taken in 1617 if it is still repaid now also allowed but as on today not so relevant clear yes then e individual interest on loan taken for the purchase of electric vehicle electric vehicle during 1 April 2019 to 31st March 2023 the period is already over but still if the loan is taken during this time for the purchase of electric vehicle whatever interest you are paying is allowed as deduction so e is all about interest guys e is all about interest then atg any ass is eligible to claim deduction under this donations okay that is for donation givers 80g series is all about givers clear yes givers like sleep well then takers eat well there is a saying donations to certain funds charitable institution Etc depends on the purpose and category but you cannot give more than 2,000 in cash if you give also no deduction within 2,000 yes you can give it in cash but more than 2,000 you cannot give it in cash gas now sir what exactly is this guys listen along with the example I will explain assume actual donation actual donation for each category there are totally four category a b c and d guys too much space I have taken a b c and d okay sir assume for each category the ass has contributed 1 one lakh for each category the SS has contributed how much guys one one lakh and you should know actually under each category what are the funds covered guys okay roughly at least you should know because sometimes in the exam they will use the name of the fund for which the contribution is given simple under a category all the national thing prime minister thing chief minister then swbat clean ganga all those funds are covered under a a category top category then B category under B category only one is there that is dra Relief Fund so in Canada we call it as Bala so B category B is for What dra Relief Fund prime minister dra Relief Fund guys so dra is nothing but Bala what we call so B for Bala okay CH Bala fund next C if any company C for company if company has contributed anything for the infrastructure development of sports or development or games that is for any Indian Olympic Association for any other sports or games infrastructure development then they can claim it under this including Family Planning including Family Planning guys so C is about that C is about that yeah see try to remember Contrition by company for infrastructure development of sports and games Okay Plus Family Planning okay then D is all others like contribution to any church mosque or gurudwara for their Redevelopment then any contribution to any fund or authority other than Family Planning all those things are covered under D category guys okay at least roughly you should know what will fall under which category now assume for each of this category the ass has contributed one one lakh then how much deduction he can claim sir see for a category 100% for B category 50% whereas C category 100% but subject to limit D category also 50% but subject to certain limit clear for this there is some limit clear yes how is it I will tell you guys please listen now deduction under section 0 g how much so for a category whatever amount you have given you can claim it full one lakh okay sir good then for B category whatever you have given you can claim only 50% B category okay draw Relief Fund so 1 lakh you contributed how much you can claim only 50,000 okay now coming to CN D now coming to CN D you cannot claim fully first aggregated guys how much you contributed for C and D both put together 2 lakhs okay compare that with 10% of adjusted total income 10% of adjusted total income assume guys adjust oh first let me tell what is adjusted total income sir adjusted total income is the income of the assass after all the deductions from section ADC to you okay let me take like this take gross total income from that if there is any capital gains special income reduce it then you reduce all the deduction from section ATC to U but except atg because atg we are now calculating now I repeat from you take gross total income reduce all the capital gain special income and all the deduction from section ADC except ad that is what is called adjusted total income adjusted total income assume guys ass is adjusted total income is 18 lakh take 10% of that 10% of that which comes to 1.8 lakh okay now actual contribution under C and D category has to be compared with 10% of adjusted total income which comes to 1 180,000 whichever is lower guys whichever is lower how much 1 lak 180,000 1 lak 180,000 so now this is the deduction you can claim but not full please listen out of 1H 180 first allocate it to C category how much 1 lakh can you claim 1 lakh sir for C category yes now how much is left 1 lakh 180 minus 1 lakh 1 lakh 180 minus 1 lakh how much is left guys 80,000 now can you claim fully 80,000 no 50% of that 40,000 so under c d category how much you can claim 80,000 into 50% hope you understood I will repeat this last category guys CN aggregate what is the actual contribution given under CN which comes to l in my example and compare that with 10% of adjusted total income which in my example is 1 l80 take whichever is lower and we got 1ak 180 first allocate it to C category full whatever you contributed full you allocate okay still something is remaining yes sir 1ak 180,000 minus one lakh how much is that 80,000 50% of that give it to D category 50% of that give it to D category hope you guys got it I'm slightly changing the scenario now so resume instead of 18 lakh it was only 8 lakh possibility is there so 10% of that is coming to 80,000 10% of that is coming to 80,000 in that case what should we do here yeah so we'll compare 2 lakh the aggregate of contribution made by made to category C and D compare that with 10% of adjust total income which is 80,000 whichever is lower is 80,000 so so first allocate entirely to C category how much fly 80,000 because what actual contribution to C category is 1 lakh but maximum amount which is available is 80,000 so what about D nothing thank you nothing is allowed for D category is that clear guys so it is like that so whichever lower you get first allocate it for C category how much ever is there so if it is in excess of C category then give it to D category but only 50% of it only 50% of that okay this is all about EDG then GG G GG individual can claim deduction under this section for the rent paid and here obviously the condition is you should have not received H from your employer because if you have received H you will claims exemption section 1033a and there is also condition telling you should not own a house you should be actually paying a rent and if your spouse or children should not be owning the house in the same locality the conditions and all is there how much is deductions are least of the following actual rent paid minus 10% of adjusted total income then 25% of adjusted total income are 5,000 per month per month so per a year it will be maximum 60,000 and here what is the adjusted total income sir gross total income minus capital gain special income minus all deductions under SE under chapter 6 a from section ATC to U except at GG except at GG sir what for the same both GG and G G both are applicable then the calculation is different guys by using simultaneous equation and all we have to do but from exam point of view that is not important then at this is available only for the who is not having any income under pgbp if he has made any donation for scientific research social science or statistical research if he has pgb income you can claim deduction under Section 35 now okay contribution to Outsider but if he doesn't have he can claim it here and I had mentioned it when I was explaining section 35 or for Rural Development or for National Urban poverty eradication fund then in that case 100% of whatever amount you have contributed you can claim deduction under Section 80g GG sorry GGA okay sir but not more than 2,000 you should have given in cash up to 2,000 you can give it in cash more than 2,000 means even if you have given in cash no deduction guys okay then ggb GGC talks about political contribution ggb is for the contribution given by Indian companies to any political party or electoral trust 100% of the amount whatever is contributed is allowed then GGC any other assy other than the company and other local authorities and all who are backed by government they also cannot claim it you know contribution made by any person to a political party or electoral trust electoral trust is like a middleman you will give contribution to them not electoral BS now there is some cases going on against electoral bonds and all that is different electoral trust is like I want to contribute to a political party but I don't have any direct connection with them I can contributed to electoral trust in return they will give that money to the political parties okay so contribution to any other by any other person to political parties or electoral trust 100% of the amount contributed in both these cases you cannot give any contribution in cash not even 2,000 not even 1,000 you cannot give any money in cash if you give no deduction thank you clear and here political parties means the political party which are registered under the representation of people's act guys only them clear and also political contribution includes both direct as well as indirect you would have given the money directly or you would have incurred the expenditure for the rally conducted by the political parties or they are asking you to print the pmates on behalf of them for that you have incur the cost all this will be considered political contribution then deductions in respect of certain income which we call it as income based deduction guys income based deduction too many are there but everything is not a part of your syllabus everything is not a part of your syllabus guys so whatever is your part of syllabus we will be covering it it jjw actually this is not income based deduction but still they have given it under income based deduction because income based deduction is something for which the deduction is given for income and here deduction is actually not given for the income it is given for the wages paid or salary paid okay ass should be engaged in the business of manufacturing and whatever additional employee cost in respect of employee employment of new regular employee whatever they pay 30% of additional employee cost for three years guys so simple assume last year your number of employees were 80 in 20 to 23 so in 23 24 you appointed 24 20 more employees 20 more employees who are regular employees and all who is regular employees some classification and all is there depending upon salary and all number of days and all guys how many days they have worked like 2 40 days classification is there okay all that we already covered in regular class in detail so I'm straight away going with the explanation of the provision now in 2324 if you appointed 20 new workers whatever salary you pay to them is allowed under the head pgbp yes you can debit it to your pnl account assume the salary paid to them is 20 lakh so 20 lakh you will debit it to your pnl account plus 30% of this you will claim it in three years in 23 24 2425 and 25 26 you will claim it 30% of this 30% of that that is 6 lakh 6 lakh 6 lakh you will claim it in three years guys this just to promote the employment to be created by the asses who are engaged in manufacturing especially the lower level employees are actually engaged in the work that is the manufacturing work guys okay qqb and RB gives the deduction for royalty income qqb resident individual royalty income of the author or a joint author of any book other than textbook okay so textbook deduction whatever royalty you earning deduction is not allowed okay yes so royalty income of an author or a joint author like of any autobiography or any fiction books and all guys those things are covered here what the maximum amount of deduction three lakh clear so now assume I am earning any royalty income from my books can I enjoy the exemption here no guys clear because that will fall under the category of textbooks now first of all actually I don't charge okay so whenever it comes to the material I feel that students has to be given it so I feel I would be sharing I don't mind sharing the soft copy also with the students that is why I told you even this updated revision material is already available in my telegram channel so you guys can take it and make use of it okay so assuming if by chance if I have if I am publishing my books or textbook so whatever royalty income I am earning from publication of the book will it can I claim the deduction under this section no guys you cannot H sorry I cannot okay then resident individual under Section 880 rrb royalty income of a patent who is registered as a true or first inventor in respect of the invention maximum amount is 3 lakh Guys easy to remember qqp see in the books normally there will be questions okay so books with respect to books qqb clear books qqb means questions then patent copyright trademark and all so you are registered you have registered your pay or you are right so in that case RRP clear yes sir then TTA TTP guys only these three sections are a part of eding c are a part of eding C income based deductions we saw actually at and ttb actually are income based deduction but they are not part of eding C they're not a part of eding C but they both are connected guys please be careful at and dtb at is available for individual and H the deduction is for interest on savings account deposit with any bank or cooperative Society or post office maximum 10,000 But first you have to include it under the head other sources and then claim the deduction guys especially if it is a post office even exemption is available so for example assume you are earning 15,000 interest from a savings deposit with post office so under the head income from other sources take 15,000 claim exemption under Section 1015 so how much maximum 3,500 if it is a joint 7,000 so remaining is how much 11,500 so include it in your salary uh in your income calculation so this will form part of gross total income so in your gross total income 11,500 will be included yes sir then deduction under Section ad how much I can claim 10,000 maximum 10,000 clear remaining will be like indirectly taxable is that clear yes sir now assume now assume please list sir what if this amount was only 5,000 the interest what you have earned on the savings deposit kept with post office is only 5,000 in that case guys so exemption you will claim 3,500 yes sir so how much you will include it in your gross total income calculation 1,500 so how much deduction I can claim here is it 10,000 no because how much income is included in gross total income with respect to what I am claiming deduction it's only 1,500 so you can claim only 1,500 deduction clear because if your income is less than th uh 10,000 obviously you will claim only that much deduction you will claim only that much deduction hope you guys got it so if you got only 3,000 interest 4,000 even on the bank deposit assume on Bank savings bank deposits Savings Bank deposit you have got an interest of 3,000 5,000 6,000 7,000 how much interest you will claim as a deduction only whatever is your actual interest if the interest is more than 10,000 then maximum is 10,000 C yes next TTP important resident senior citizen interest on any deposit with any bank or cooperative Society or post office if the account is in the name of Resident senior citizen guys that is 60 or more then the maximum deduction they can claim is 50,000 and it is any deposit including fdrd anything whereas 8ta gives deduction only for savings deposit interest whereas TTP is giving for any deposit please be careful who is eligible for TTP cannnot claim deduction under TTA also either a or b not both clear and TTA please be careful open to anyone any individual or HF whether resident or non-resident he is less than 60 or more than 60 doesn't matter but ttb is restricted only to resident senior citizen so you can see here deduction for interest on savings deposit under Section 80 TDA available for all individual and HF maximum 10,000 but deduction for interest on any deposit under Section 80 ttb available only for Resident senior citizen maximum how much 50,000 cannot claim deduction under both the section sir I a resident senior citizen can I claim both dtp as well as TTA no no if you're covering under ttb TTA is not available for you thank you clear yes guys very important because many of the time in total income calculation or U tax calculation and all they would have given this points which you may miss please be very careful with this first include it under the head other sources and then give deduction and deduction for whom how much please be very careful and try to remember the sections also ATU we have already covered then sir what is the impact of section 115 BAC default can we claim all the deductions no so the ass whoever is following the default regime can claim only three deductions under chapter 6A guys that is at CCD subsection two with respect to employer contribution to pension scheme then atcc subsection 2 that is central government contribution to an Corpus here actually CCH gives deduction for both but ass contribution you cannot claim only central government contribution you can claim then at jjwa guys that is with respect to salary paid to regular work man whatever deduction is given 30 30 30% that you can claim only this three you can claim any other deduction is blocked under default scheme under Section 115 BS clear so try to remember what is allowed CCD subsection two only employer contribution even CCA subsection two that is only central government contribution so what about s contribution we cannot claim then ajj only this three you can claim any other deduction you cannot claim even for the Cooperative Society who is following optionals scheme for them it is called optional scheme under Section 115 bad or Bae they can claim only 0jj they can claim only 0jj because for Cooperative Society CCD CCH and all not at all applicable that are applicable only for individual so they can claim only jjw nothing else then coming to the last deduction year 10 this actually we don't call it as exemption deduction guys this deduction is given to an entrepreneur who has begun or begins to manufacture or produce articles or things or provides serves in special economic zone between 1st April 2005 and 31st March 2020 means if you have started your operation in SS in between this date you can claim deductions for your eligible profit that is export profit for the first 15 years of your operations guys your business should be started between this date so assume I have started business in 2018 so from 18 I can claim it for 15 years l means you should have started before 31st March 2020 but deduction can be claimed even after 31st March 2020 okay section 10 daa provides deduction to the assass who derive any profits and gains from export from of Articles or things or services including computer software subject to fulfillment of prescribed conditions so first we will see what is the eligible profit how do we calculate it simple guys whatever is the total profit of SZ unit that divided by total turnover into export turnover that we call it as eligible profit which is nothing but export profit you can see profit eligible for deduction is nothing but uh total profit of sez unit see s might be having units even outside the scz for that and all you cannot claim deduction only for the profit of sez unit which is attributable towards export business so take the profit of sez unit orz Branch into export turnover ofz unit divided by total turnover ofz unit clear yes sir so in that okay once we get eligible profit is it entire eligible profit no for the first 5 years 100% of eligible profit whatever is the respective year eligible profit 100% of that you can claim obviously profit will keep on changing from year to year so every year we have to do this eligible profit calculation for the first five year 100% then for the next 5 years that is from 6th to 10th year this is 1 to 5 next five consecutive assessment year 50% of the eligible profit so for each year we have to calculate eligible profit 50% of that then from 11 to 15th Year guys 50% of the eligible profit are the amount which is transferred to special economic zone investment Reserve whichever is lower and even after claiming this deduction you cannot run away from sez because whatever amount you transfer to special economic zone reinvestment Reserve you have to use it to buy new plant and machinery for your business in it yeah if you violate it if you do some like I have purchasing some assets outside India I'm Distributing dividend I'm doing some drama in that and all then whatever deduction you have claimed earlier will be withdrawn and it will be taxable for you guys in the year in which you violate the condition is that clear yes next what is the amount of deduction amount as competed above or gross total income whichever is lower means even the deduction whatever you claim under Section 10A can never be more than gross total income but the thing is guys when you're claiming 10aa deduction obviously whatever is your business income just a second I will clear this okay now whatever income you have calculated from your business that should be included in the pgpp first and the ass might be having unit in some units outside the S and all whatever profit he has earned you have to include it here and then it will be a part of your gross total income and deduction under Section 10aa will you will claim where against gross total income not under the pgpp only it is against gross total income but deduction under Section 10aa is only for the export profit of s unit you may have many other income also but against that and all you cannot claim deduction under Section 10aa guys so please be careful and what is the maximum deduction you can claim under Section 10A is the amount whatever we calculated or gross total income whichever is lower clear so what if the ass is claiming both chapter 6A deduction as well as 10A both put together actually you cannot cross cross total income both put together chapter 6A deduction all ATC to at plus 10 both put together cannot be more than gross total in is that clear yes chill just a minute let me finish this we are not done with this chapter note FR telecommunication charges and insurance expenses attributable to the delivery of the Articles or things outside India or expenses incurred in foreign exchange for rendering services including computer software outside India are to be excluded both from export turnover and total turnover means few expenses they telling exclude it both from export turnover as well as the total turnover while calculating this guys clear yes and the deduction under Section 10aa would not be available if the ass pay tax under the default regime so under default regime 10A is blocked clear even chapter 6 deduction everything is blocked except this three sections fine yes guys this is all about the deductions chapter yes guys now we will revise chapter 7 which talks about the provisions of TDS TCS and advaned tax so three different topics are covered in this chapter we will be going in the order that is TDS first then TCS and then Advanced Tax and out of this three TDs is the most important topic guys yeah first of all what is TDS what is the concept of TDS who should follow it we will understand and then we will go through so on which all payment T TDs is applicable and at what rate guys payer as the responsibility of TDS always whenever he is paying any expenses to the pay means the person for whom the payment has to be made is called pay or the person who has earned it so now whenever payer is paying any expenses he has to check it is his responsibility whether whatever nature of payment is making is it covered under TS any section is applicable if is what rate and accordingly he has to deduct so much and remit it to the government remaining only he has to give it to the pay guys so it is the responsibility of the payer now assume payer is paying one lakh is supposed to pay one lakh to the pay on which 10% TDs is applicable so what he will do is on one lakh he will deduct TDS of 10% assume 10% is applicable different rate is applicable on different payment I'm just taking 10% so assume guys TDs is 10% which comes to 10,000 so you will deduct that and give remaining 90,000 to the pay you will give remaining 90,000 to the pay okay sir sir what does the payer does with uh 10,000 what he has deducted will he keep it in his pocket invest somewhere no no no so he has to deposit it to the government within 7th of next month full ,000 whatever he has deducted he has to deposit it to the government within 7th of next month C different dates are there guys but standard date is 7th clear so whatever TDs is deducted assume in the month of April he has to deposit it within 7th May so what if he has deducted in August he has to deposit within 7th September on any day of the month if he has deducted or he is liable to deduct he has to deposit within 7th of next month only for the month of March the date is actually 30th April guys it is not 7th April 30 April only for March month whereas for every other month it is 7th clear and if the deductor is Office of the government and all then they're telling we have it depends on whether they're depositing the TDS with income tax Chon or without income tax Chon but the due dates to deposit TDs is not a part of your inter syllabus but if at all if by chance if you answer it if you want to answer it with any question please mention it as 7th of next month which is a standard date guys is that clear yes sir now payer will deduct whenever TDs is applicable and deduct at whatever rate and deposit the same amount to the government within 10th of next month and pay the balance to the pay but pay while he is calculating his income he should always consider the gross amount guys that is one lakh clear that is before TDS even sometimes if net amount is given guys you have to cross it up so how will we cross it up this simple how do we calculate gross amount if net amount is given in the question net amount or amount received is given means simple guys net amount divided by 100% minus TDS rate you minus TDS rate just a second yes is not looking like a yes let me correct it so TDS rate or TDS percentage if you do that you will get gross amount simple assume let let me apply it in my same example what is the net amount received by the pay 90,000 100% minus TDS rate is how much 10% so how much you will get 90% clear so in simple amount received is always after the TDS net of TDS clear so whatever percentage is there like 100 minus uh TDS rate okay for example how much the pay he has received in my example guys 90% of what he has earned so 90,000 divided by 90% if you do you will get one lakh which is nothing but gross amount and in the income calculation of the pay we should always consider gross amount even in your total income calculation and all guys if there is any amount given after TDS please add the TDS and take it or if the amount is given of TDS please calculate the gross amount and that amount has to be considered while calculating the income very important okay and for that you should know the TDS rate and all if not then you may not be able to tackle that kind of questions guys yeah now sir then what about P how will you get the benefit so it is like this guys so while calculating his total income he has to take full gross income that is one lakh what he has earned not what he has received so assume after considering all other income is total income is coming to lakh because this is not the only one lakh he's earning now he would have earned from different sources assume his total income including one lakh what he has earned he's coming to 15 lakh on that we have to calculate tax liity guys assume I'm just randomly taking tax liity is coming to 150,000 or else okay 250 let me take so this is not a allocated figure random figure so tax liity is coming to 250,000 yes so will he pay entire 250,000 to the government no guys so if any TDs is already deducted on his income we will reduce it okay so now how much payer deducted TDS 10,000 likewise you would have received the amount from number of people correct now still 14 lakh he has earned from different people different sources on that also TDS would have been deducted yes sir assume totally TDS deducted under all sections put together is 150,000 so you will get a credit of it only remaining one lakh he will have to pay to the government guys only remaining one lakh he has to pay to the government is after reducing the TDS so whatever TDs is deducted by the payer pay will get the credit of it provided payer is deposited the amount to the government clear yes and pay can claim the credit of the scene sir what if by chance if TDS deducted is already at the higher amount in that case assume this is 2 l50 3 lh50 TDs is already deducted more TDs in that case one lakh can be claimed as refund guys means if excess amount is already paid then refund can be claimed but for claiming refund filing returns is mandatory okay CH so let me repeat once again payer whenever is dep whenever he's paying any amount to the pay he has to check whether it is covered in TDS chapter or TDS sections and he has to deduct it if at all if TDs is applicable and pay that whatever TDS he has deducted to the government within 7th of next month and after that he has one more responsibility he has to file TDS quarterly returns he has to file TDS quarterly returns sir in what forms 24q 26 q and 27 Q he has to file it in form number 24 q 26q and 27 Q sir I will just discuss about that 24 Q 26 q and all year so 24 Q is for whom whenever payer has deducted TDS on salary salary on salary TDS has to be deducted as per section 192 whenever TDS has been deducted by the payer on salary whether the employ is resident or non-resident doesn't matter all this details he has to give in TDS return form number 24 Q then any other payment made to resident except salary except salary means pay is a resident anything paid to him is other than salary in that case all these details has to be given in form 26 Q by the payer then any payment made to non-resident except salary on which TDs is deducted under any section that details has to be given by the payer in form 27 Q then TCS is 27 EQ okay I have given it together so that it will be easy for you to study but T 27 EQ is TCS returns clear yes TCS we will discuss later so simple guys so payer once he has deducted and remitted to the government you should also file TDS returns where he has to give the details with respect to Sir what amount he has paid to whom who is the pay what is his pan he should have collected the pan of the pay and when the what is the amount of payment he has made how much TDS he has deducted on what day did he deduct when did he deposit it to the government all these details has to be given in this TS returns Cas okay next and for this also there are due dates within what time it has to be filed then coming to issue form 16 16aa and 16a for whom to the pay this as a proof of this is a certificate issued to the pay as a proof based on which the pay will be able to claim credit clear now because when you have deducted the amount from P pay will be like what did you do with my amount why did you deduct agree so what you have to tell you have to give him a proof telling CC whatever amount I have deducted from you I have deposited to the government I was supposed to do it I done it it is not like I have deducted and I have kept it in my pocket CLE so all that proof telling how much I deducted when did I deduct when did I remitted to the government all the details will be given by the payer to the pay in the form number 16 16 and 16a guys is that clear yes sir why should payer do all this payer is busy in his own business he has to carry on his business or should he help the government to collect the revenue now see actually it is not the job of the payer but still in income tax law they have kept the responsibility on whose head payer head so if he doesn't do it then whatever amount he is paying to the pay then it will be disallowed guys it will be disallowed disallowed where under the pgb if the payment is made to non-resident or foreign company or outside India 100% will be disallowed if TDs is not deducted or deducted but not remitted within the due date of filing income tax returns 100% disallowed then if the payment is made to Residents then 30% will be Lo if TDs is not deducted or deducted but not remitted to the government within the due date of filing the income tax return correct yes sir and here what they have told is not the due date of TDS due date of filing the income tax return sir what if it is deposited after the due date of filing the returns you can claim it in next year whatever is disallowed in the current year you can claim it in next year and ass will be given a tag line called ass in default if you violate the provisions of TDS and in that case whatever is the loss to the government in the form of TDS what you are supposed to give you have to make it good to the government means payer has to give it from his pocket along with interest clear so what is the consequences we'll see so I will just cover it first guys then we will see the TDS sections and all consequence in the event of default sir payer has to follow all this responsibil now what what if he doesn't do it what if he doesn't do it then he will be called as what assassin default plus whatever tedious amount assume in my example how much I was supposed to deduct and give it a payer 10,000 so now that 10 ,000 payer has to pay out of his pocket plus interest on the 10,000 plus interest okay what is it where TDs is not deducted not at all deducted how much TDS I was supposed to deduct 10,000 pay that that is a loss of Revenue to the government pay that out of the payer pocket PR interest on it if TDs is not at all deducted interest at the rate of 1% per month or part of the month on the amount of tax from the date on which tax was supposed to be deducted till the date it is actually deducted clear so on what Daye TDS has to be deducted is given under each section guys like that is the date of payment or the date of credit or date of payment whichever is earlier so if you have not deducted the TDS on that day from the date on which you are supposed to deduct TDS till the date you are actually deducting the TDS interest will be 1% per month or part of the month even 15 days 20 days or 10 days 12 days 5 days in the month will be considered as full month and interest is how much 1% and 1% is on what tedious amount not on the entire amount in my example sir 1% is on 1 lak 10,000 10,000 yeah yes next where TDs is not deducted sorry TDs is deducted but not remitted to the government that is you playing around with government money so payer has deducted 10,000 and kept it in his pocket he saw no one is seeing pay also didn't ask so he kept it in his pocket in that case you are playing around with government money so that is why the interest rate is more you can see interest at the rate of 1.5% per month or part of the month on the tax from the date on which such tax was deducted to the date on which such tax is actually paid to the government so from the day you actually deducted till the date you actually pay to the government interest on the amount which you have deducted as TS assume 10,000 10,000 is deducted by the payer but he has kept it in his pocket in that case on 10,000 1.5% per month or part of the month till he give it to the government or till he remit it to the government clear next penalty which may be as high as the amount of TDS and in case of default and also rigorous impress guys as per the amount involved clear yes sir so this is what the consequences if the payer fails to comply with the provisions of TDS and moreover when relaxation is given whenever payer fails to deduct TDS or deducted but not remitted to the government you will be called as what assassing default now what they told is where is the pen yeah now payer payer has not deducted the TDS for the amount paid to pay pay who is the resident who is the resident so he has paid full one lakh to the P assume full one lakh he has paid he has not at all deducted TDS but pay is a obedient taxpayer he disclosed the income whatever one lak he has earned from the payer he paid the tax on it and he filed the Returns on the date the pay filed the return the payer will get the relaxation payer will get the relaxation means from that day he will be removed from the tag line called assassine default clear so even when payer is liable to uh pay interest on the TDS which is not deducted it is only till the date the pay file the returns by disclosing this income and pay tax only till that date guys only till that date okay clear yes next so I have already told you this also we just discuss tax deducted is an income received so for the pay what is the income is it 90,000 or 1 lakh it is one lakh so even TDS whatever has been deducted will be considered Ed as income to the P so the gross speaker we have to take always not the net clear same way credit for tax deducted at source so whatever TDS has been deducted sir in income you told one lakh what about the TDS 10,000 we will get a credit so from your final tax liability you can reduce whatever TDS has been deducted on your income so you will get a credit of that is that clear yes so these are the provisions with respect to TDs guys now we have to understand sir on which all payments TDs is applicable and before I start with guys it is mandatory for you to remember or must for you to remember section number what is the payment covered what is the threshold limit what is the rate of TDS it is a must guys CLE because we don't know on which question what kind of things they may ask with respect to on which section or which question we'll have the provisions with respect to TDs or you may have a separate question altoe on TDS or TCS even on TCS there is some changes which has been brought especially with respect to conversion of Indian currency into foreign currency and all which might be important for your exams guys upcoming exams fine CH we'll see the TDS first section 192 requires the every employer to deduct TDS on whatever salary they are paying to the employee whether the employee is resident or non-resident so that is only if the salary income of the employee is more than the basic agen limit even if the employees are eligible for a rebate employer will not deduct TDS Cas so only if the salary income whatever employee is earning if it is taxable then what EMP employer will do is they will calculate the tax liability of the employee and check okay so assume considering the income they will ask go as they will means employer will also ask the employees to submit what all investment they have what all proof they have with respect to any deductions to to be claimed after considering all that they will calculate the tax liability of each employee assume it is coming to 2 lak one of the employee so what they do is they will divide this by total income guys total tax liability divided by total income assume the total income is coming around 12 lakh 12 lakh so they will calculate the average rate they will calculate the average rate which comes to 2 lakh divided by 12 lakh 16.67 this we call it as average rate correct yes so every month when employer is paying salary to the employee he will cut the TDS or deduct TDS at what rate 16.67% is that clear yes next so TDS has to be deducted here at the time of payment and average rate will it remain same for all the employees sir no from employee to employee it will change because obviously for each employee tax liability and total income would be different and total income means if employee has not given any information about any other income salary income will be considered as total income for the employee guys clear yes and obviously if there is any difference in tax amount the employee will pay it before filing the returns because TDS deducted is not the final tax tax even if there is any excess amount to be paid the can pay it before filing the returns then 192a 192 a premature withdrawal from employees Provident fund if the aggregate payment is more than 50,000 then 10% is the rate of TDS at the time of payment guys this is with respect to unrecognized Provident fund or even in case of recognized Provident fund if you are withdrawing the money uh within 5 years then it will be taxable so in that case if the amount withdrawn is more than 50,000 TDS has to be deducted guys see please be careful whenever TDs is applicable TDS has to be deducted only if the amount is taxable in the hands of P if the amount is exempt are not taxable in the hands of P then payer need not deduct TDS guys C yes next section 193 interest on Securities Securities means bonds debentures like that you Securities include shares also but on shares you will not earn interest guys okay if it is more than 10,000 for % or 7.75% of savings taxable bonds or more than 5,000 for interest on debentures paid by public company to resident individual or HF so who is the person who has invested in the Securities resident individual or HF who is the payer public company by what they paying by an account paycheck then the threshold limit is 5,000 in any other case there is no threshold limit guys so what is the rate of TDS 10% and when TDS has to be deducted at the time of credit or at the time of payment whichever is earlier guys let me explain this see at the time of payment means whenever you are paying the amount to the pay TDS has to be deducted so what is this fancy at the time of credit or at the payment at the time of payment whichever is are clear they're trying to attract TDS even on credit transactions guys so observe here assume I am paying any expenses any expenses on which TDs is applicable because majority of the section will tell at the time of credit or at the time of payment whichever is earlier we will try to understand what is it so assume guys I'm paying an expenses on 1st October so what is the entry I will pay uh pass immediately I paying it okay expenses account debit to bank bank account so I'm making making the payment immediately so on what day should I deduct TDS guys on 1st October on what day should I deduct TDS 1st October which is the date of payment clear yes next second kind of transaction assume on 1 October I have incurred an expenditure but I have not paid so I have passed the entry in my books EXP account debit to assume pay is Rocky B pay is a rocky B so I am recording to Rocky for whom I am liable to pay agina so Rocky will appear as a liability till I pay him assume guys I'm making the payment on 25th October 25th October what is the entry Rocky Bo to bank Hina so now TDS has to be deducted on what day the date I am recording the expenses or the date I making the payment simple guys so majority of the sections are telling at the time of credit or at the time of payment whichever is earlier sir what is credit here at the time of giving credit to the pay so in the books of accounts of the payer this entry is passed in whose books guys payers book okay when did you give credit to the pay on 1st October and when did he make payment 25th October whichever is earlier is what 1st October 1st October so when TDS was supposed to be deducted 1st October hope you guys understood is that clear Yes actually here it will not make any difference because TDS whatever is deducted in October whether it is 1st October or 25th October it has to be deposited within 7th November sir what if by chance if it is 25th November payment is made on 25th November in that case TDS has to be deducted in October or November October October that is first October and it has to be remitted on or before 7th November sir but still payment is not made in that case payer has to deposit TDS out of his own pocket and later when he's making the payment he will deduct the TDS and keep it in his pocket because he has already paid TDS out of his pocket so the responsibility of deducting the payer is on the date of credit giving credit to the account of whom pay in his books or the date of payment whichever is this is normally only in case of credit transaction guys if it is like sir payment is already done in the obvious in that case date of credit there is no question of having date of credit here so straight away we'll take date of payment is that clear and many sections will tell only date of payment and few section not many section few sections in that case straight away we have to take this date guys even though the transaction is credit few sections will tell TDS has to be deducted on the date of payment in that case straight away you will take the date of payment even though the transaction is credit clear for example salary TDS has to be deducted when at the time of payment even 192 TDS has to be deducted when at the time of payment so whether the transaction is credit or not we will don't care when the payment is made TDS has to be deducted then whereas in 193 you can see TDS has to be deducted when at the time of credit or at the time of payment whichever is earlier at what ratees are 10% so wherever we see at the time of credit or at the time of payment guys whatever I have explained now will hold good yeah and one more important thing whenever they have given threshold so if the amount is within the threshold no TDS if the amount paid by the payer is more than threshold limit on the entire amount TDS has to be deducted guys for example assume the threshold applicable is 10,000 so now the payer has paid 12,000 so TDS has to be deducted on 12,000 or 2,000 on entire 12,000 on the entire 12,000 clear one or two section exceptions are there which we will see later but in majority of the sections whenever threshold is there if the amount is within threshold no TDS if it is above threshold on the entire amount TDS has to be deducted okay 194 dividend that is on the shareholders whatever dividend Equity or preference if it is more than 5,000 for individual shareholder whereas shareholder is any other person like company firm and all guys there is no threshold limit what is the rate of TDS 10% when the TDS has to be deducted at the time of credit or payment whichever is earlier then 194a interest other than interest on security like deposits on loans and all guys clear so because Securities are covered here any other interest if you are earning then the payer if he is paying any other interest other than interest on Securities he has to deduct TS as per section 194 a so how much what is the threshold limit more than 40,000 in a financial year in case of interest paid by a bank Cooperative Society or post office see if the payer is the following people if the pay is the following people for example I have taken the loan from bank I am paying interest should I deduct TDS no no if the following people are the pay you need not deduct TDS but if they are the payer they will deduct TDS only if the interest is more than 40,000 but if the pay is a resident senior citizen limit under Section for limit is 50,000 guys why because they tried to connect it to ATB because ATB they are eligible to claim deduction up to 50,000 but if the amount of interest is more than 50,000 on the entire amount TDS would be deducted please be careful with it okay in any other case the threshold limit is more than 5,000 guys and wherever threshold limit is there most of the places threshold limit is per anom guys so so in that case even if the payment is made in multiple installment we have to check the aggregate limit in a year aggregate is it crossing the threshold limit ifs on the entire amount TDS has to be deducted okay so TDS at what rate 10% at the time of credit or payment whichever is earlier then 194b ba and BB you guys have to study together okay now guys we already learned in income from other sources as per section 115 BB what is the tax rate on casual income 30% on online game winnings BBJ new section what is the tax rate 30% now this sections also talks about the same but tedious so whatever is the tax rate applicable on casual income entire amount they deducting as tedious because they know that the person who win it may not have it till the assessment year you may spend it you may go for Goa trip and spend it or you may go for a treat to give treat to their friends and fullam by the time assessment year comes so that is why they asking the payer payer before you pay this amount please deduct 30% and give it to us we don't trust this person who has won that you guys please do it for us okay casual income other than ARR more than 10,000 30% TDS at the time of payment sir what about ARR it is covered in a separate section more than 10,000 same again there is no purpose why they should have two different section for both because the rate is same threshold limit is the same time limit is also same so rate is 30% at the time of payment now with respect to B BBJ whatever they have added even in TDS they have added a new section this is a new section guys 194 ba winnings from online games whoever is organizing it on the net winnings they are supposed to deduct teds guys on the net winnings means the person would have bet assume 50 rupees but he has won 500 rupees he has bet 50 but won 500 so how much will be paid for him net winnings is how much 450 so that means the amount which you have bet they're allowing it as an expenses clear okay so assume you 1450 on that TDS would be deducted on that TDS would be deducted okay sir so how much 30% when at the end of the financial year or if you are withdrawing the money in between the year at the time of withdrawal only that is from the account if you're withdrawing the money in between the year at that time if not if you not withdrawing the money amount is still in the account only in that case at the end of the year guys okay so all these are with respect to Casual income guys so it's all about betting so wherever it is betting gambling and all it is connected to B okay 115 BB BBJ and even TDS 194b ba a BB clear yes so try to connect and study next 194 C contract payment contract payment to whom contractor C for contractor okay payment to contractor if a single sum is more than 30,000 or aggregate sum if you have made multiple payments if aggregate is more than one lakh during a year then TDS has to be deducted at 1% if the pay is an individual or HF if pay is any other person then the TDS rate is 2% please be careful careful very important section 194 C then TDS has to be deducted at the time of credit or payment whichever is earlier guys important section next 194d insurance commission more than 15,000 in a financial year what is the TDS rate if the pay is a domestic company 10% any other person 5% at the time of credit or payment whichever is earlier then da 194 da any sum under a life insurance policy more than or equal to 1 lakh in a financial year 5% is the TDS at the time of payment guys if exemption is available under Section 1010d then obviously it will not be taxable or TDS will not be applicable clear if the person who is receiving the insurance amount if he is eligible for exemption under Section 1010d the payer that is the insurance company they will not deduct TDS so when this TDS under Section 194 da will be applicable is only when the amount is taxable in the hands of the pay that is when he cannot enjoy the exemp under 1010 which is again important we already discussed 1010 and all in detail guys okay even in my statut update they have given in detail explanation through statut update we have covered everything okay so only if it is taxable in the hands of pay we will consider it okay so then 194d also is there insurance commission who will pay to whom the insurance company will pay to the insurance agent guys so D somewhere when will you take insurance policy when you're scared of death when you're scared of death dep correct now D for death so all these are connected guys 101t is with respect to exemption for insurance policy amount including bonus then D is with respect to insurance commission and da is with respect to insurance policy amount are some assured whatever you are receiving on that is it TDS applicable if yes 194 D so D is somewhere connected to This Life policies or life insurance policies clear yes next g k g g gambling Commission on sale of lottery tickets more than 15,000 in a financial year 5% is the TDS rate at the time of credit or payment whichever is earlier so G is like gambling Lottery and all is gambling so if an agent whoever is selling the tickets for them whoever is organizing the lottery so in Kerala and all it is legal even today so assume the Kerala government is organizing it so when Kerala government is paying commission to the lottery agent for the ticket sold through him so that government has to deduct TDS if the amount is more than 15,000 guys the organizer clear yes next 194 H guys see D covers insurance commission yet sorry D covers insurance commission G covers Commission on lottery ticket all other commission and brokerage is covered under 194 H in the exam if they simply use the word commission brokerage paid please always apply H if they have clearly given insurance commission 194t if they have clearly given Commission on sale of lottery ticket 194 G if not H guys okay so commission or brokerage and all will be paid normally for a middle man or broker Brokers so if it is paid more than 15,000 in a financial year 5% TDS at the time of credit or payment whichever is earlier okay I is also important rent if any rent is paid by a tenant to the owner more than 240,000 in a financial year then TDS has to be deducted if the rent is paid on plant and missionary or equipment TDS has to be deducted at 2% if rent is paid for land Building furniture or fixture then the TDS rate is 10% guys next IA C yes so payment on transfer of immobile property other than agriculture land whether the agriculture land is in rural area or urban area TDs is not applicable if it is sold so if a land or building is sold so the sale value or the stam Duty value we have to compare guys the sale value or Stam Duty value we have to compare whichever is higher you take and see whether is it more than or equal to 50 lakh again I repeat the actual sale value or purchase value compare that with stty value of that property whichever is higher you take check is it more than 50 lakh or equal to 50 lakh if s TDS has to be deducted who should deduct to whom buyer before paying the amount on whatever amount he's paying he has to deduct TDS at how much 1% 1% when at the time of credit or payment whichever is earlier but this is not applicable for agriculture land guys and easy to remember immovable property so I a immovable property other than agriculture land other than agriculture land guys it is like this listen listen assume actual purchase value or sale value is 60 L actual sale value then Stam Duty value is 70 lakh whichever is higher we have to take what 70 lakh so TDS has to be deducted at 1% 1% of what sir 70 lakh 70 lakh so guys now buyer will pay how much 60 lakh buyer will pay 60 lakh on that he has to deduct TDS under Section 194 IA how much 70 lakh into 1% not 60 lakh into 1% 70 lakh to 1% remaining you will pay to the seller remaining you will pay to the seller is that clear yes so please be careful we have to check whether this is more than 50 lakh let me change the scenario assume guys this is only 50 l or else 40 let me take why not 50 40 just a second okay now stability value let me take it as 40 lakh whichever is higher is how much guys 60 lakh is it more than 50 lakh yes sir so is TDS applicable yes so what amount the buyer is paying to the seller 60 lakh on that he has to deduct TDS so what is the amount of TDS 60 lakh into 1% whichever is higher is there now on that 1% we have to take it is that clear yes sir next 194 IB payments of rent by individual and HF who is not covered under section 4 4 AB see guys I is not applicable for the payer who is an individual or HF for whom tax audit was not applicable in the last year so that person are covered under a new section IB so this is only for the tenant who is an individual or HF who is not covered under Section 44 a means tax audit okay last year if they are paying rent more than 50,000 per month or part of the month huge house in that case TDS has to be deducted at 5% when last month of the previous year or last month of tency whichever is earlier guys assume I am paying 60,000 rent per month I am paying I am an individual not subject to tax audit let us assume I'm paying 60,000 rent per month so in that case every month should I deduct TDS no guys so 60,000 into 12 you do it will come to 720,000 yes so now in the last month so assume I have occupied the property for the full 12 months so in the last month that is in March how much rent I will pay 60,000 so on that TDS has to be deducted on the entire rent paid in a year 720,000 into 5% guys which comes to 36,000 yes sir remaining only you will pay in March remaining only will pay it in March hope you guys got it clear this is when the tenant has occupied the property for full year sir what if the tenant so only in March whatever rent is been has to be paid paid on that TDS has to be deducted but TDs is on the entire rent whatever is paid throughout the year clear yes sir sir what if by chance propert is vacated in December on December 31st is's vacating so he occupied totally for 9 months clear so what is the total rent he has paid for 9 months 60,000 into 9 months correct 5 lak 40,000 5 lakh 40,000 yes sir so which is the last month for which he's paying the rent now December so in December how much he will pay 60,000 rent but will he pay everything no sir he has to deduct tus how much sir what is the rent he has paid during the current year till that month including December 5 lh40 on 5 lakh 40 what is the rate of TDS 5% which comes to 27,000 27,000 only remaining amount you will pay clear so as for this section TDS has to be deducted in the last month of the financial year or last month of tency whichever is earlier guys that last month of tency will come only if the property is vacated in between the year okay 194 J again important where you guys we are covered you in the future not now as of now 194 J fee for professional or Technical Services royalty non-compete fee director remuneration for each payment for each category of payment the threshold limit is 30,000 in a financial Year guys but if the payment is made to a director there is is no theal limit if any amount director fee or sitting fees is paid assume 10,000 5,000 15,000 TDS should be deducted yes it has to be deducted because for director's payment that limit is not applicable guys please be careful here whatever payment you are making to a director which is not in the form of salary is only covered here because if assume the director is a oldtime director you are paying salary TDS has to be deded under Section 192 so what payment covered here is what you are paying to a director who is not an employee or even if is an employee you would have be paying sitting fee or you might be paying uh director fee which is taxable for the director under the other sources those payments are covered here clear now assume guys a company is paying to the same person professional fee 20,000 technical fee sorry fee for Technical Services 20,000 should they deduct TDS no because for each category the limit is 30,000 clear so individually when I check both are within 30,000 so no TDS clear so if TDs is applicable what is the rate sir 2% if the pay is engaged in the call center or fees for Technical Services or royalty in the nature of consideration for the sale of films or distribution of films in any other case 10% and TDS has to be deducted at the time of credit or payment whichever is earlier then 194k okay what is it income in respect of units of mutual fund or specified undertaking or company if it is more than 5,000 in a financial year see income and income year is not in the nature of capital gains you not sold it you invested it and you earning something in the form of dividend or income or something like that if that is more than 5,000 then TDS at the rate of 10% at the time of credit or payment whichever is earlier next 194 La compensation on acquisition of certain immovable property means property has been compulsorily acquired guys see even IA talks about the transfer of immovable property but here you yourself has sold it whereas La is talking about compulsory acquisition so if any mobile property has been compulsory AC except agriculture land except agriculture land then if the compensation paid by the government or government Authority is more than 250,000 in a financial year then TDs is not 1% year 10% at the time of payment clear so please be careful try to study IA and La together IIA is for normal transfer whereas La is for compulsory acquisition both are actually transfer as per income tax law as per section 247 but here they have kept two different sections guys clear and la so normally assume sir my land has been acquired they will tell clear land has been acquired the land includes building also here but I'm just giving a shortcut acquired that is land acquired next y payment to contractors commission or brokerage or fee for Professional Services guys see this payments are already covered under Section 194 CH and J but there under all three sections CG payer will not include individual or HF for whom tax audit was not applicable in the last fin Financial year so now they introduced later okay this is not a new section now but it was introduced later okay so in the past few years it was introduced so this and all came later guys when I was a student at inter level and all I never studied this sections they kept on adding it every now and then new new sections so you guys are lucky you're learning more and more okay now so if the payer is covered in section 194 chj their payer will not include individual and HF who was not subject to tax audit last year for them they added a new section called 194 em so if the payment to contractors or commission or brokerage or fee for Professional Services is more than 50 lakh in a financial year then the TDS will be deducted under Section 194 a.m at the rate of how much 5% at the time of credit or payment whichever is earlier next 194 Yen guys this is one of the special section actually your TDs is deducted on the amount which is withdrawn by the person from his own account account holder actually TDs is applicable only for the pay for whom it is an income agree whereas this is something special here when the account holder is withdrawing the money from his own account TDs is leid so when I am withdrawing the money from my own account is it an income for me no it is already earned it is already credited to my account now I am withdrawing for my own purpose or for my own expenditure still TDs is deducted why because the government still want to track your money what are you doing with so so big amount only that for that purpose that TDs is deducted guys so please be careful this is one of the special nature where for the pay even though it is not in the nature of income still TDs is deducted okay cash withdrawal withdrawal of how much more than one CR in a financial year if you are withdrawing within one CR they're telling no TDS okay and one CR is the normal limit but if the ass if the assy has not filed the return in the last 3 years then the threshold limit is 20 lakh then the threshold limit is 20 lakh okay sir next if the person who is withdrawing the money is a Cooperative Society then it is 3 CR normal limit is 1 CR if the person who is withdrawing the money has not filed the returns in the last 3 years then the limit applicable is not 1 CR it is 20 lakh whereas the person who is withdrawing the money is a Cooperative Society then what is the threshold limit 3 CR guys what is the rate of TDS even this is interesting important 2% of the sum exceeding 1 CR or 3 CR or 20 lakh and when has to be detected at the time of payment means when you're withdrawing the money from your own account okay now and guys if the assess is falling in this category if he's withdrawing more than one CR then it is 5% then it is 5% s what is this let me explain with an example guys assume I am covered I am an account holder who has filed the returns in the last year and all so I'm covered under one CR category I'm withdrawing 80 lakh 60 lakh 50 LH will TDS be applicable no assum in a year I withdrawn multiple times but all put together together is coming to 1.3 CR will TDS be liid yes on how much sir 1.3 CR minus 1 CR so that is 0.3 CR on this it is 2% guys only in excess of one CR it is 2% not on the entire amount which is a special thing here till now I already told you for all the section if you cross the threshold limit on the entire amount TDS has to be deducted but this is different clear so on the amount exceeding 1 CR 2% clear yes sir what if it is a Cooperative society and threshold limit is 3 CR now please listen the person who is withdrawing the amount has not filed his return in the last 3 years in that case is Creed a special person for him the threshold limit is applicable 20 lakh so if he's withdrawing more than 20 lakh what is the TC TDS rate 2% if the same person is withdrawing more than one CR then it is 5% please listen here interesting now assume guys I am the person who is withdrawing the money I am withdrawing 1.8 CR from my bank and I have not filed the returns in the last last 3 years then how the TDS has to be deducted what is the threshold limit applicable for me 20 lakh so you have to do like this 1 CR minus 20 lakh which comes to 80 lakh on that 2% here in excess of 1 CR how much is there 1.8 CR minus 1 CR which is again 80 lakh on that 5% clear so if 20 lakh limit is applicable to the account holder who is withdrawing the money who has not filed the returns in the last 3 years then more than than 20 lakh up to 1 CR 2% more than 1 CR 5% is the TDS rate guys clear so totally both put together whatever amount we get that much TDS has to be deducted by the P who is from where I am withdrawing the money okay so 194n is telling if you are withdrawing huge amount they're telling no you cannot withdraw so much even if you withdraw we will deduct TS y means you're huge withdrawing huge amount government is interested to know what will you do with it so that is why they're just asking the bank or the cooperative bank and all to deduct the TDS from where you are withdrawing the money yeah and in this case also guys even though for the account holder it is not in the nature of income still whatever TDS has been deducted now it will be given as credit to him because obviously from your own money TDS has been deducted so whatever amount is deposited by the payer after deducting the TDS and section 194n credit will be given to the account holder or the P next 24 P again P for pension pension see if a person who is a senior citizen aged 75 or more see Senior is 60 or more but what is covered here is 75 or more okay if a person who is aged 75 or more if he's getting pension as well as interest from the same bank then they have given the responsibility for the bank telling see the pension plus interest whatever you are paying to this resident senior citizen are specific ified senior citizen if it is more than basic agential limit then whatever is the amount of tax which they supposed to pay now you calculate it who back you calculate it and deduct it as TDS deduct it as TDS so that's all clear so in simple if a person is earning only pension income and interest income from the same bank they have kept the responsibility to the bank under Section 194 P telling sir you please calculate the income of that senior citizen considering both pension as well as as um this interest check whether that total income is it more than basic ass limit if yes check what is this tax liability whatever his tax liability is coming now deduct that much as TDS before paying pension or interest to him deduct it as TDS and remit it to the government and they've also given exemption for this person from whom the TDs is deducted under Section 194 P that person need not file his income tax return exemption is given already is a senior person and whatever amount he is supposed to pay as tax is already deducted by the Bank in that case that person need not file the income tax return guys okay next 194 q q q you have purchased Goods in a large quantity you have purchased the goods in a large quantity so the quantity is huge so what is it we will see purchase of goods more than 50 lakh in a previous year so guys it is like this please listen y so I am a purchaser in the previous year 23 24 I have purchased the goods whose value is more than 50 lakh need not be in one shot all aggregate put together from a one seller from a single seller I have purchased the goods worth more than 50 lakh in that case section 194 whatever we are discussing now that is 194 Q what they tells is I will repeat once again 194 q q means large quantity okay if the buyer has purchased the goods worth more than 50 lakh from a single seller in a year then check what is the turnover of the buyer in the last year what is the turnover of the buyer from business in the last year if it is more than 10 CR if the buyer's turnover is more than 10 CR in the last year then in the current year buyer is covered in payer payer list and payer has to deduct TDS payer year is nothing but buyer buyer has to deduct TDS under Section 194 Q guys clear yes so please be careful all the condition has to be taken care you can see purchase value more than 50 lak in a financial Year from the same seller okay buyer means who not all the buyers buyer means a person whose business turnover is more than 10 crores during the immediately preceding Financial year sir buyer has purchased the goods more than 50 lakh but in the last year his turnover was not more than 10 crores buyers turnover in that case you need not deduct TDS under Section 194 Q now even though the purchase value is more than 50 lakh if you are not covered under buyer category what what is given here you need not deduct TDS clear yes sir so what is the rate of TDS 1 0.1% of the sum exceeding 50 lakh again special nature it is not on the entire amount only on the amount exceeding 50 lakh 0.1% you have to deduct when at the time of credit or payment whichever is earlier guys please listen assume I am the buyer who has purchased the goods worth 60 lakh in the current year and my turnover in the last year is more than 10 CR should I deduct TS yes how much 50 lakh minus you have to do so 10 lakh on that 0.1% TDS has to be deducted this again just to make sure that seller is disclosing the sales and he is uh disclosing the income yeah he is disclosing his income and paying the tax because when you deducted the TDS you would have given the details to the government telling sir I have purchased the goods worth 60 lakh from so and so person and I am depositing it to you yeah so you have given the details of the seller what is the value of the sales he has made to you so it becomes obligatory for the seller to disclose this income and pay tax on the same under income tax law okay guys and please be careful entire 60 lakh may not be the income for the seller because it is a sales obviously will be eligible to claim expenses that is why the rate is very kept very lower and that to inexcess of 50 LH clear not on the entire amount now guys assume sir in the previous year I have purchased the goods worth 60 lakh I am the buyer from the same seller I have purchased the goods worth 60 lakh but in the last last year my turnover was lost not more than 10 CR sir it was less than 10 CR in that case 194 Q will not be applicable 194 Q will not be applicable but we have to check TCS from seller point of view we have to check TCS from seller point of view guys clear yes next 194r if any benefit or perquisite if any benefit or perquisite which is not taxable under salary head guys because if it is taxable under salary head obviously TDs is applicable under Section 192 so if any benefit or perquisite is given to a person who is not an employee of a company if it is more than the value of the benefit or perquisite if it is more than 20,000 in a financial year then TDS has to be deducted at 10% before providing such benefit or bisit so TDS I already told you TDS has to be deducted only if the amount is taxable in the hands of receiver of B guys clear yes and other provisions and all I have already covered so this important guys so tax deducted is always an income to the pay yes whatever is deducted we will always consider for the pay gross income even in case of Sir if tax is paid by the employer under Section 1921a on non-m monitary perquisite so will employee get the credit of it no why because it is see here I will just see however the following tax paid or deducted would not be deemed to be the income received by the ass why because for employee whatever tax has been paid by employer on non-monetary perquisite it is tax perquisite but exempt under Section 101 CC only on non-monetary perquisite clear so even though if tax is paid by employer himself on non-monetary perquisite it is a perquisite in the hands of employee but exempt so accordingly it will not be considered as income for him which is taxable same way 194 y also whatever TDs is deducted on the amount withdrawn it will be given as credit to him but that will not be considered as income for the person that is the account holder who has withdrawn the money clear guys yes so this is all about the tedious part this is all about the tedious part guys yeah now we will learn the concept of tax collected at source in short we call it as PCS guys so now who will collect TCS let us first see that tax collection at source as the name says means collection of tax at source at a prescribe rate here also different rates of TCS are there by the seller or collector from the buyer of the specified goods or services so who will collect TCS is the seller guys from whom we will collect this buyer okay now in TDS we already learned so the responsibility of TDs is on whom the payer whenever the payer is paying the amount to the pay he has to check whether the payment is covered under TDS if yes he has to deduct the certain percentage of that and pay only the balance to the pay and remit the TDS to the government agrea yes and also he has to file TDS quarterly returns issue certificate to the pay everything we have learned in detail so the responsibility of TDS was on whom the payer the payer now coming to TCS different concept guys this is collected not deducted the concept of TCS is telling seller whenever is selling any goods or services normally Goods even few services are also covered not many transactions are covered under TCS guys so whenever seller is selling goods or services on which TCS is applicable on which TCS is applicable so in addition to whatever the seller is collecting from the buyer for his goods or services he should also collect TCS for example assume seller is has sold the goods to the buyer and he is charging 10 lakh Rupees to the buyer for the goods for the goods or services what he has given he has rendered he is charging 10 lakh Rupees sale value so what the TCS provision is telling in addition to this you also collect TCS assume the TCS rate applicable is 1% so on 10 lakh you also collect 1% so the TCS whatever you collect you deposit it to the government you deposit it to the government here also the due date is 7th of next month guys standard due date is 7th of next month okay sir so whatever TCS is collected it has to be remitted to the government within 7th of next month then the seller whatever he collect is totally 10 lakh plus 1% TCS so 1 lakh he will put it in his pocket which is his Revenue whereas 1% TCS whatever he collect at whatever rate TCS is applicable he will collect it and remit it to the government so seller has to collect over and above sale value the amount of TCS if it is applicable guys if it is applicable okay so when should he collect the TCS means at what time tax shall be collected at the time of debiting the amount to the amount account of the buyer or at the time of receip of amount whichever is earlier guys very few cases of TCS are there where they're telling it is like this so there are two types of transaction guys assume cash Sales and Credit sales now in case of cash sales when I have made a sales to you assume and you have paid me immediately what will be the entry I will pass in my books bank account or cash account but even though the name is Cash sales guys it will be used as bank account only because the amount and all will be received through banking channel so bank or cash account debit to what sales assume this entry is passed on first August so when I I supposed to collect TCS on the date of receipt of payment on the date of receipt of payment which is that date 1 August this is in case of cash sales okay so next we will see credit sales in case of credit sales guys there will be two entry which will be passed agre so on the date of sale we will pass the entry on date of sale I will pass the entry you means whatever is your name to sales okay now so let me just use the name datas datas to sales datas account debit to sales actually I have to use the name of you but as I am not aware of your name as well as number of people are more so I'm just taking data to sales then assume on 20th August I am receiving the payment what would be the entry bank account debit to Dear account so now the asset will go out because the data as the amount is received it will move out of the balance sheet whereas the bank balance will increase guys clear if this is the case on what date it has to be collected guys that is TCS has to be collected that is whichever is earlier on the date on which the account of the buyer datar year is nothing but the buyer you guys agree on what day your account is debited in my book or the date on which I have received the payment whichever is earlier whichever is earlier clear so which is earlier here 1 August but here both will fall in the same day so what if it is 20th September date of payment in that case TCS has to be collected in August only sir I have not yet collected the money seller means I have not yet collected the money from you in August but still I have to pay TCS out of my pocket and later when I actually collect it from you I can keep it in my pocket ET I can keep it in my pocket guys hope you understood so when TCS has to be collected is the date on which the account of the buyer is debited in the books of accounts of the seller or the date of receipt of payment whichever is earlier whereas TDS was reversed because TDS we have to check from payer point of view clear there it was date of credit in the account of means date of credit in the books of accounts of the payer whose account pay's account correct but here it is different clear so this date of debit or credit and all will be relevant only in case of credit transaction whereas if it is a cash straight away on whatever date is there you would have received the payment on that day only you have to collect the TCS guys okay but there is a certain exception for this two cases where they are telling tax shall be collected at the time of receipt of payment of such amount under section 206 c1f and 206 c1h guys so in this two cases whenever TCS is applicable they're telling TCS has to be collected at the time of receipt of payment there is no question of credit and all clear means you need not check on what date was debited and all there is no relevance for credit transaction even though it is a credit sale still on whatever date the payment is collected on that day the seller is supposed to collect TCS guys so now we will see which are those scenarios when TCS is applicable guys one by one section 26 all TCS scenarios are covered under section 206 C subsections guys there are various subsections each case is covered in different subsections so subsection one is telling if there is a sale of alcoholic click off for human consumption TCS has to be collected at 1% scrap 1% mineral being coil or liite or iron War 1% then tendu lives at 5% Timber or any other Forest produce 2.5% TCS rates and TCS would be applicable only if the buyer is a Trader guys who has purchased the above goods for further sale if I have purchased the above items for further sale only then TCS will be applicable to the seller only then he will collect it sir what if you have purchased this for personal consumption will TCS be applicable no sir what if you have purchased all this to use it as a raw material in my manufacturing process will TCS be applicable no so if buyer is buying this goods for personal consumption or to use it as a raw material in the manufacturing process then TCS will not be applicable guys so it is applicable only in case of like manufacturer to wholesaler or wholesaler to retailer sales okay next 206 c 1 C Grant of lease license of parking lot toll plaza Mining and quaring other than Mining and quiring of mineral oil petroleum and natural gas so whatever I have mentioned in bracket on that TCS is not applicable so other things like like Grant of lease or license of parking lot or toll plaza or mining or quiring other than whatever is given in the bracket p is at 2% then 206 C 1f sale of Motor Vehicle of the value more than 10 lakh ex shroom price we have to check ex shroom price if it is more than 10 lakh then TCS is applicable at 1% TCS is applicable only in case of sale of Motor Vehicles in retail sales that is when we customers when we go and buy the car who showroom price is more than 10 lakh then the showroom or the dealer will collect TCS clear so now sir tataa Motors they are Distributing the cars which are manufactured by them for their dealers or for their showrooms will they collect TCS no guys they need not collect TCS so in this case sale of Motor Vehicle it is only in case of a retail sales that is when the customers are buying it clear yes sir next easy to remember 1f is like you can remember Formula 1 or Ferrari car something like that then 1G when you're going outside India 26 c1g you're going outside India so you want foreign currency that is for whichever country you are going in that country whatever is the currency of exchange is there so you have to use that so in that case you are converting Indian rupees into foreign currency so you're approaching the authorized dealer or you are going there for a trip for now you are gone and approached any authorized dealer to purchase any Foreign Tour package in that scenario guys see for whatever service they are giving they would be charging commission but TCS is not applicable on commission TCS is actually applicable on the value of Indian currency which is converted into foreign currency on that value TCS is applicable clear because whenever we approach authorized dealer to buy any uh foreign tour package or whenever we approach authorized dealer to convert our Indian rupees into foreign currency obviously for their service they will be charging commission but here the TCS is not on commission it is on the value of the currency exchanged even in case of purchase of Foreign Tour package whatever is the value of the tour package we have purchased on that TCS rate would be applicable guys clear yes we will see 206 c1g provides for collection of tax by every person being an authorized dealer who receives amount under the liberalized remittance scheme of the RBI for remittance from a buyer being a person remitting such amount that is you are converting Indian rupees into any foreign currency next being a seller of an overseas tour program progr package who receives any amount from the buyer who purchases the package okay so the example is like Thomas CP guys okay rate of TCS so please be very careful I feel somewhere this is important for your exams because there is a change in this rates in between the year in between the previous year there is a change in rate guys so please be aware of this and be careful with this I feel somewhere they may ask question on this okay we will see amount is for the purchase of the overseas tour program package so when a person has gone and purchased the overseas tour package including travel accommodation everything with a person in that case what is the rate of TCS which they have to collect if the package is bought on or on or before 30th September guys then 5% of such amount without any threshold limit if it is onor after 1st October then 5% till 7 lakh and 20% thereafter guys different possibilities there I will just give you you assume sir I have bought the Foreign Tour package before 30th September for 5 lakh for 5 lakh what is the TCS rate 5% so assume I have purchased Foreign Tour package before 30th September for 15 lakh what is the TCS rate 15 lakh into 5% is that clear yes sir next next assume sir I have purchased the Foreign Tour package on or after 1st October 2023 assume for 5 lakh so in that case what is the TCS rate 5% assume I have purchased for 15 lakh in that case they're telling you divide it up to 7 lakh it is 5% then in excess of 7 lakh how much is there 8 lakh on that 20% on that 20% and please be careful 7 lakh is a limit per R so there can be a possibility like this also which I will tell you please listen guys please listen here listening now yes shallo let let us see now assume you already exchanged sorry you have already purchased one tour package in the first 6 months assume for 3 lakh in that case what is the TCS collected already 5% and again in the second half maybe somewhere in December or for New Year you're going again outside you have purchased a tour package for how much assume 7 lakh 7 lakh so in that case what is the TCS rate applicable sir for second guys we have to check the aggregate limit in a year how much package you have purchased totally 10 lakh so when you purchase the package from a first dealer you have to inform that to the second dealer also whenever you are going to buy a uh tour package and it is the duty of the person whoever is purchasing the that tour package he has to inform it to the second dealer guys it is his responsibility okay so I will give the information to the second dealer telling sir I already purchased one package for 3 lakh so on which already TCS is collected in at 5% in the first half of the year so in that case what the second dealer will do or even if you're approaching the same dealer again what he has to do is already in aggregate in year how much you have taken 10 lakh on that already on 3 lakh TCS is collected yes now how much you are buying the package for 7 lakh so now on this guys please be careful on 4 lakh 5% because with this both put together 7 lakh aggregate limit you can see 3 + 4 so in that case when you go and buy the second package only on 4 lakh it is 5% remaining 3 lakh it is 20% remaining 3 lakh it is 20% hope you understood please be careful with all this guys next assume sir what if it is this package is 17 LH what if this package is 17 lakh then this will be 17 yes so out of 17 lakh first 4 lakh 5% remaining 13 lakh 20% remaining 13 lakh 20% guys sir what if this package is only 2 lakh only 2 lakh in that case entire 2 lakh guys will be at 5% entire 2 lakh whatever 2 lak is there at 5% hope you understood so please be careful 7 lakh is for a year if at all if you are buying any second package during the year then the details of first package has to be disclosed by the person okay next amount remitted is for the purpose of Education now this is with respect to conversion all this three put together again the limit is 7 lakh please be careful all this three put together not individually okay sir so this second third and fourth point is with respect to converting Indian rupees into foreign currency and here what is the rate of TCS depends on for what purpose you have converted for what purpose you have converted guys okay amount remitted is for the purpose of Education or medical treatment outside India in that case 5% of the amount in excess of 7 L guys assume you have exchanged 5 lakh no TCS you have exchanged 10 lakh only on 3 lakh 5% only on 3 lakh 5% then amount remitted out is education loan see previously you are converting your own money into foreign currency but now you have taken the loan from where foreign in sorry financial institution as defined in section at in that case the TCS is not 5% it is 0.5% 0.5% of the amount in excess of 7 lakh assume we have taken a education loan in India and we are converting it into foreign currency to have education outside India in that case if it is 5 no TCS sir what if it is 10 lakh on three lakh 0.5% sir what if the amount of loan we have converted is 15 lakh then up to 7 lakh no TCS remaining 8 lakh 0.5% 0.5% next next amount remitted is for the purpose other than above mentioned thing means other than education medical treatment or it is not an education Lo in any other case like for example I am going by my own for a trip there I am so to do shopping there and all or to spend there I'm converting my Indian rupees into foreign currency or I I I have my parents or sisters settled abroad I'm just going and visiting them so for that whatever Indian rupees I'm converting it to foreign currency then if the amount is exchanged on or before 30th September then up to 7 lakh no TCS guys if it is in excess of 7 lakh only on the difference 5% clear yes sir what if the exchange is made on or after 1 October then up to 7 lakh no TCS and in excess of 7 lakh it is 20% and here also please be careful sir 77 lakh is per off year no 7 lakh is per random limit in a financial year it is please be careful same story like whatever examples I gave for overse store package now similar things will be applicable even in the last scenarios guys clear for example in the first off only if you have exchanged 5 lakh no TCS sir what if I have exchanged 15 lakh 8 lakh into 5% 8 lakh into 5% okay now coming to second half sir I have not I have not exchanged anything in first half in the second half I have exchanged 5 lakh no TCS sir what if I have exchange 15 lakh 15 - 7 8 lakh 8 lakh on 8 lakh 20% is the TCS on 8 lakh 20% is the TCS guys now coming to different scenarios please listen y now assume in the first half I have exchanged P lak I have exchanged P lak other than this two other than this two okay fine because for this two there is no different rates for the entire year the rate is same only so no confusion there so assume in the first half I have exchanged 5 lakh and in the second half I have exchanged 10 lakh guys then sir what is the rate of TCS to totally I have exchanged how much in a year 15 lakh then when did I cross 7 lakh in the second half so they're telling okay on 7 lakh there is no TCS totally whereas on the remaining 8 lakh 20% clear means it is like this guys when I exchange the money in the first half there is no TCS when I exchange the money in the second half 10 lakh they will see okay up to 2 lakh because in aggregate 5 lakh I have already exchanged now up to 2 lakh no TS okay remaining how much 8 lakh on 8 lakh 20% it is like that clear so please be careful so 7 lakh limit whatever is there is peran not per off year clear even though there is a change in the rate in between the year exactly after 6 months still 7 lakh limit is per random guys clear and Sir this 7 lakh is all three put together please be careful whenever you are converting your Indian rupees into foreign currency to go outside India irrespective of the region irrespective of the re reason still the TCS rate applicable would be for whatever purpose you exchange the currency but the threshold limit would be guys 7 lakh only 7 lakh itself hope it is clear for you yes sir however TCS under section 206 c1g would not be applicable to a person being a buyer who is a non-resident in terms of section 6 and does not have a permanent establishment in India guys so if you are a non-resident who does not have any permanent establishment in India even if you are converting any Indian rupees into foreign currency no TCS would be applicable even if you are buying any Foreign Tour package no TCS would be applicable then the last one 206 c1h this has to be read along with Section 194 Q guys guys please listen here first time I will explain 194 Q whenever buyer so we have to check 194 Q which is a teds always from buyer point of view whenever the buyer is purchasing the goods when the purchase value is more than 50 lakh in a year in the previous year when he has purchased the goods from the same seller whose worth is more than 50 lakh in a previous year and the buyer's turnover in the last year is more than 10 CR then buyer has to deduct TDS under Section 194 Q at 0.1% of the consideration exceeding 50 lakh and 50 lakh whatever amount I'm telling you is excluding GST clear for example assume guys 60 lakh is the sale value okay now on that the seller is supposed to charge GST is charging GST I'm just randomly taking a 10 lakh so totally seller has raised the invoice for how much 70 lakh seller so now buyer be paying how much to the seller 70 lakh now when we are checking whether the purchase value is more than 50 lakh should we consider 60 lakh or 70 lakh 60 lakh that is the value of the goods clear is it more than 50 lakh sir yes so in that case T TDS has to be deducted on what amount 60 lakh minus 50 lakh on that 0.1% on that 0.1% guys is that clear yes so this is from B year point of view clear both the conditions has to be satisfied that is he has purchased during the year more than 50 lakh worth of goods from the same seller and the years turnover in the last Financial year is more than 10 CR only then TCS would be sorry TDS would be applicable clear when TDs is not applicable under Section 194 Q when TDs is not applicable under Section 194 Q for like for example buyer turnover was not more than 10 crores in that case TDS will not be applicable yes so what we have to do we have to check TCS under Section 206c 1H from whose point of view seller point of view guys please be careful it is from seller point of view if seller has sold the goods to the same buyer whose value is more than 50 lakh sale value is more than 50 lakh and also sellers turnover in the last year not buyers seller turnover in the last year is more than 10 CR only then TCS would be applicable under section 206 c1h and same story now assume seller is selling the goods at 60 lakh on that he is charging GST at 10 lakh so totally he's collecting 70 lakh from the buyer so while checking the 50 lakh limit we have to compare 60 lakh or 70 lakh 60 lakh is it more than 50 lakh yes sir so how much TCS should seller collect 60 lakh minus 50 lakh you will get 10 lakh on that 0.1% guys on that 0 1% sir for the same transaction if buyer as well as seller both assume both the turnover is more than 10 CR both will be applicable no first we should always check TDS first we should always check TDS 194q from whose point of view buyer point of view your purchase value would be more than 50 lakh but assume turnover of the buyer is not more than 10 CR in the last year in that case TDS will not be applicable only then check TCS clear next sir assume buyer turnover is more than 10 CR in that case TDS would be applicable and when TDs is applicable for the same transaction we will not apply TCS from the sellers point of view for the same transaction both TS as well as TCS will not be applicable guys clear so which should we check first is TDS and then TCS only if TDs is not applicable then check TCS if TDs is already applicable then no need to check TCS and Sir what if the purchase value or sale value is less than 50 lakh then both is not applicable you need not even check both clear because the purchase value or sale value purchase value is from buyer point of view sale value is from seller point of view if it is less than 50 lakh there is no question of TDS and TCS guys with respect to the sections what I discussed hope it is clear for you okay so this two has to be read together yeah a seller who receives consideration for sale of any Goods of aggregate value more than 50 lakh and 50 lakh will not include GST guys please be careful in the previous year other than the goods being exported out of India are Goods covered elsewhere if the goods are covered in any other section like in subsection one scrap and all is covered or alcohol is covered if it is already covered in other section that will not be covered here and if the goods are exported on that there is no TCS okay collect from the buyer TCS at 0.1% of the sale consideration exceeding 50 lakh only on the some exceeding 50 lakh whatever is the difference 0.1% excluding GST guys okay sir guys in case of like per and all there are few exceptions also given that is if the buyer is central government state government or public sector undertaking or if it is a foreign Embassy conselor or legation and all then if the buyers are the following people then TCS is not applicable then TCS is not applicable guys clear yes s huh so so when this two has to be read together so Q is for like quantity when you have purchased more quantity or else H H is like heavy sales okay H is like heavy sale huge sales we we call it as then only we will check the TCS okay now coming to guys whenever whenever payer is deducting TDS he has to collect pan of the pay he has to collect the pan of the pay if pay doesn't give his pan then the payer will deduct TDS at the highest rate at what rate and all we will see same way whenever the seller is supposed to collect TCS from the buyer buyer has to give his span to the seller guys because he has to communicate the same to the government in his returns that sir I have collected or deducted TDS on behalf of this person please give the credit of to so and so person means credit of what TDS or TCS clear because the payer is deducting TS on behalf of pay and giving it to the government this credit has to be given to whom pay and pay name sir pay name and are we bothered no income tax department is not bothered about the names they are bothered about the pan Which is a unique number for income tax purpose okay same way whenever seller is collecting the TCS from the buyer he will deposit it to the government against the pan of the buyer so for the buyer the credit will be given based on this clear now even if buyer doesn't give his pan what should happen seller should collect the TCS at highest rate guys clear at what rate and all we will see now okay yes is rate of TCS for non-filers of income tax return and non- furnishers of pan section 206 CCA and CC guys okay first as per section 206 CC if pan is not intimated tax shall be collected at twice the normal rate means whatever rate we saw up double of that 2x of it okay or at the rate rate of 5% whichever is higher but if the person is covered under section 206 c1h then instead of 5% here it will be 1% 1% or twice the actual rate what is the actual rate here 0.1% twice of that 0.2% so 0.2 or 1% whichever is higher 1% clear so if the buyer is not giving the TCS sorry pan as per section 206 c1h then the seller will collect TCS at what rate guys twice the normal rate that is 0.2% or the 1% rate whichever is higher so which comes to 1% clear yes in any other case in any other case guys twice the actual rate or 5% whichever is higher okay next 26 CCA requires tax to be collected at Source by a person from a specified person that is the buyer at higher of the following rate that is that twice the rate are 5% whichever is higher guys now who is specified person means buyer when is a specified person so who is specified person I have given it to you and specified person is same for both from TDS point of view as well as tdcs point of view guys spe ified person is same okay a person who has not filed a return of income for the previous two assessment year he has not filed the returns for the last two years for which the time limit of filing the return under Section 1391 has expired over time gone and the aggregate of TDS and TCS means the aggregate adding both TDS as well as TCS in this case is 50,000 or more in each of the two previous years means in the last two years he has not filed the return and in both the years TDS plus T TDS plus TCS deducted or collected on his income under any section both put together is more than 50,000 or 50,000 or more guys both put together in both the years in that case in the current year we treat treat him as what specified person we treat him as specified person okay in that case what is the rate of TCS or TCS has to be collected twice the actual rate or 5% whichever is higher guys however the maximum rate of TCS under both the section shall not exceed 20% for example guys assume the assess is falling in this category already TCS applicable is 20% so in that case twice the actual rate would become how much 40% or 5% whichever is higher so here also twice the actual rate means 40% or 5% whichever is higher so TCS will be collected at 40% no no they're telling maximum is 20% maximum is 20% clear even if you're taking twice the rate it should not cross 20% even if it cross 20% we will restrict it to 20% maximum is that clear yes sir next section 26 CCA is applicable to a specified person who have F failed to file the return of income same person covered under section 206 a for TDS provision guys which just now we saw in case of provisions of section 206 CC are also app appable to the specified person then tax is required to be deducted at higher of the two rates provided in section 206 CC and section 206 CCA simple guys now assume buyer has not given his pan also and is also specified person great Lord okay great Legend Ultra Legend now buyer has not given his span to the seller plus he's also a specified person who has not filed the returns in the last two years and in the last two years TDS plus TCS on his income is 50,000 or more guys in that case both the sections will be applicable yes so seller should follow both the section yes sir so what should you do first apply section 26 CC so let us see the transaction is covered under sale of Motor Vehicle okay let us take sale of Motor Vehicle 1% clear yes sir so twice that normal rate is how much much 2% because 1% is the rate into 2 2% or 5% whichever is higher whichever is higher is how much guys 5% okay sir then should we apply section 206 CCA also yes so what is the actual rate 1% twice of that is coming to 2% so 2% or 5% whichever is higher is 5% and same section is same person both is applicable so what we have to take whichever is higher which is again 5% which is again 5% clear if both the sections are applicable first individually check whichever is higher then apply whichever is higher amongst both the sections clear yes sir now coming to TDs guys I have covered both this together so that it will be easy for you to connect and study now in case of TDS sir what if pay has not given a span pay has not given his span then the TDS has to be deducted as per section 206 EA guys section 206 AA provides if P doesn't provide a span then TDS has to be deducted at 20% or rate as per the respective section whichever is higher guys whichever is higher so rate as per the respective section whatever is the section no twice and all no 2X and all straight away what is the actual rate or 20% whichever is higher whereas for 194 Q highest is 5% so if TCS sorry the pan is not given then the T s maximum to be deducted is 5% guys same like here they told here for 206 c1h maximum 1% same way here they are kept an exception 194 q that is from whose point of view buyer point of view so if for buyer if seller is not giving the pan what the maximum rate of TDS you will deduct 5% same way here under section 206 c1h if TCS is applicable if buyer doesn't give his span what is the maximum rate of TCS which the seller will collect 1% clear yes so for that respective sections they have limited the highest rate so whichever is higher okay then section 206 AB requires tax to be deducted at source by a person to a specified person means if the pay is a specified person who has not filed the returns in the last two years TDS plus TCS is 50,000 or more in both the years then is called specified person in the current year yes and at the highest of the following that is the twice the actual rate or 5% whichever is higher twice the actual rate or 5% which is higher and it is the duty of the person who is deducting or collecting the TCS to check whether the seller sorry whether the pay or whether the buyer is a specified person or not whose responsibility is to check whoever is deducting the TDS that is the payer or whoever is collecting the TCS that is the seller they have to check whether the other person is a specified person or not they have to cross check okay guys however however section 206 AB that is what we are talking about is not applicable in case of tax deductible at source under Section 192 192 a b ba BB IIA IB M and N guys so for this sections even though the p is a specified person still section 206 AB will not be applicable will not be applicable only for other section section 206 AB will be applicable sir what if for the same person if both the sections are applicable sir buyer is again ultr legent sorry not buyer pay sir pay is an ultral legent he has not given his pan also and is also a specified person now payer has to apply both the section of 206 AA as well as a both he has to apply yes so assume guys TDS was supposed to be deducted under Section 194 H 5% 194 H I am taking so payer was supposed to deduct TDS under Section 194 h at 5% but pay didn't give span and also p is a specified person now what what rate should we deduct TDs is the question let us see so actual rate is how much 5% or 20% whichever is higher so we have to take what 20% okay sir then coming to section 206 AB twice the actual rate which comes to 10% or 5% whichever is higher 10% Okay so as per section 206 EAB 10% now take whichever is a year 20% so the payer has to deduct TDS at what rate 20% this is only when for the same pay both the sections are applicable payer has to check individually both the section first and take whichever is higher among both the sections is that clear guys yes next specified person we already seen and specified person will not include guys a non-resident who does not have any permanent establishment in India clear so this Provisions whatever we discussed will not be applicable if he is a non-resident who does not have any permanent permanent establishment in India okay sir now guys one more thing I would like to mention with respect to this three section 194 IIA IB and M which are not recurring in nature which are not recurring in nature they told the provisions like this 194 I 194 I I and 194 M guys like I am MB or IBM something like that you can remember in sh so whenever TDS the payer has deducted under any of these three sections he has to deposit it within 30th of next month guys he has to deposit it within 30th of next month whichever month he has deducted the due date is not 7th it is 30th of next month 30th of next month so in whichever month he has deducted the T under Section 194 IIA IB or M he has to deposit along with Chalan come statement along with Chalan come statement within 30th of next month and in this three cases he need not file TDS returns under section 24 Q 24 26 q and 27q but he has to file a Chalan come statement which is in the form of 26 QB 26 QC and 26 just a second yeah so 26 QC and 26 QD so for the respective session for 194 IIA you need to file 26 QB for IB then 26 QC then 194 M 26 QD guys okay within when sir this Chalan come statement along with the money has to be deposited within 30th of next month within 30th of next month and within 15 days from year Within 15 days from here he has to issue a form to the pay in form 16b 16 C and 16d for the respective sections guys clear that is for the P he has to issue the certificate to the pay in form 16b 16 C or 16d as with respect to respective section that is with respect to IIA 16b IB 16 c yeah 194 M 16d clear and this is for the government yes to deposit it the amount along with Chalan come statement within 30th of next month and within 15 days from that whatever is the due date to deposit TDs is there now within 15 days from that he has to issue the certificate to the P clear yes these are some special Provisions with respect to TDs fine guys so we are done with TDS TCS we'll move towards Advanced Tax the last topic advanced level topic oh in advanced payment of tax the assass has to pay tax in a financial year on estimated income income which is to be assessed in the subsequent assessment year it follows the doctrine known as pay as you earn scheme it is a kind of mandatory payment of tax assessed by the assy himself on income before completion of the financial year so liability who should pay whenever a person's Advanced Tax payable is 10,000 or more is supposed to discharge it in the previous year itself guys in the form of Advanced Tax in for four installment in four installment that is quarterly okay exemption from payment of Advanced Tax to a resident individual if ass is a resident individual who does not have any income under the head pgpp and if he age 60 or more then for them Advanced Tax provision is not applicable you need to pay tax but in the assessment here as self assessment tax guys clear yes now see what is the concept of this I will explain you and then we will go through guys in the previous year so which is our previous year 23 24 so standing at the beginning only the ass has to estimate it total income estimated total income he will calculate on that whatever is the rate of tax applicable for him tax rates and all will not change whatever we already discussed same rates he has to apply depending upon whether he's an individual h of aop aop Boi or the company or partnership form depending upon that he has to apply whatever is the tax rates applicable to him okay then calculate estimated tax liability okay sir assume the estimated tax liity is coming to three lakh guys okay and on this income if if he's expecting any TDS to be deducted or TCS to be collected reduce it assume he's expecting 2 lakh to be collected and deducted on his income what is the remaining amount he are supposed to pay 1 lakh is it more than 10,000 yes sir is it more than 10,000 yes so in that case he's supposed to pay this one lakh as Advanced Tax in for installment in the previous year itself guys and it is purely based on estimation clear yes so due dates for payment of Advanced Tax on or before 15th June guys it is always on quarterly basis so before the quarter end not after the quarter end before the quarter end so each quarter will end with the month now so last month of each quarter whatever is there take 15th of that month 15th of the last month of each quarter is the due date to pay Advanced Tax guys okay first quarter will end when June so take 15th June on or before 15th June of the previous year up to 15% of the Advanced tax due then on or before 15th September of previous year up to 45% of advanced tax due 45% is cumulative guys means by 15th September you should have at least paid 45% so even if there is any short payment in the first installment at least that can be compensated or overcome in the second installment minus amount paid in earlier installment same way on or before 15th September of previous year up to 75% of the advanced tax due minus amount paid in earlier installment onor before 15th March that is the last installment up to 100% of the advanced tax due minus amount paid in earlier installment so second third and fourth uh second third and fourth installment you can see the whatever percentage they have given is cumulative percentage guys clear means up to 35 sorry up to 45 75 or 100 you should have paid by that date so they're taking whatever is your Advanced tax liability take 45% of that or 75% of that or 100% of it deduct whatever you already paid pay the balance in that installment clear why they have kept like this is when you paying first installment your estimation would have been different now by the time you pay second or third installment your estimation would have changed so in that case whatever is now the increased or decreased amount on that you have to apply the percentage cumulative percentage from that you reduce whatever you already paid pay the balance in that installment clear so even if there is any change in the estimation in between the year in any quarter that can be overcome by paying the amount at least in the next installment guys so what if the is covered under Section 44 ad or Ada presumptive scheme and if is liable to pay Advanced Tax he has to pay in one installment whatever tax is supposed to pay guys on or before 15th March of the previous year he has to pay it in one installment clear in both these cases even though the due date last due date is 15th March they're telling anything paid before 31st March also is considered as Advanced Tax so in simple anything you have paid in the previous year itself will be treated as Advanced Tax then interest for non- payment or short payment of Advanced Tax assume guys in the assessment year actually you got to know you already paid Advanced Tax 1 lakh you have estimated the tax liability you got three lakh from that you will reduce TDS TCS and all and Advanced Tax which you have paid is 1 lakh but actually in the assessment year you got to know your tax liability is 5 lakh and TDS TCS collected or deducted on your income is 3 lakh so how much was remaining 2 lakh so how much you are supposed to pay as Advanced Tax only uh 2 lakh but how much you have paid one lakh so what is the difference what is the total shortfall 1 lakh so on the total shortfall if it is within 10% if the shortfall is within 10% they are not charging any interest if it is more than 10% then on the entire shortfall they're charging interest from 1 April of the assessment Year guys first April of the assessment year means this we will get to know only in the assessment here when we do the actual competition so we'll compare what was the Advanced Tax payable to what is the Advanced Tax paid if there is any shortfall and if that shortfall is within 10% then fine if it is more than 10% on the entire shortfall interest will be charged at 1% from the 1 April of the assessment year as per section 234b guys interest under Section 234b is attracted for non-payment of Advanced Tax or payment of Advanced Tax of an amount less than 90% of the assets tax assets tax is nothing but your actual tax liability after reducing TDS TCS or if you are eligible for any relief and on okay now 90% of assess tax means even if you have paid 90% guys assume your asset tax is coming to how much 2 lakh so 90% of that coming to how much 1 180,000 even if you have paid 1ak 180,000 also fine up to 10% difference we are allowing sir but now how much you paid only 1 lakh that means the difference is more than 10% or whatever you have paid is less than 90% of what you are supposed to pay what you have paid is less than 90% of what you are supposed to pay in that case on the entire difference interest would be charged okay at what rate 1% per month or part of the month from 1 April following the financial year up to the date of determination of income under Section 143 subsection one means the interest will be from 1 April of the assessment year till the day you got this figure till the day actually you computed this figure or this figure clear yes guys so difference guys the difference is nothing but what you are supposed to pay what you have paid what you have paid if it is more than 90% of what you are supposed to pay still fine small difference we are allowing because obviously Advanced Tax is purely based on estimation you can we cannot ask you to do the accurate payment accurate calculation there there will will be a possibility of differences so 10% difference is fine up to 10% if it is more than that we are not accepted clear yes such interest is calculated on the amount of difference between assessed tax and Advanced Tax paid assessed tax is nothing but your actual tax liity what you were supposed to pay as Advanced Tax so for that we will not take entire 5 lakh clear from that we will reduce TDS TCS or if is eligible for any relief and all we will reduce all that the remaining amount which you are supposed to pay this is like payable how much he has actually paid as Advanced Tax 1 lakh so what is the short fall 1 lakh on this interest would be charged fine sir this is 234b 234b interest is for total shortfall which will be starting from when first April of assessment year now sir what if there is a shortfall in the installment 234 c will be applicable in case of all ass other than who is covered under Section 44 ad or Ada in case of non-p payment or short payment of Advanced Tax simple interest at 1% per anom for the period specified below shall be paid by the assess so if there is any shortfall in the installment amount in the first installment how much you are supposed to pay 15% so you take 15% of the tax due on the returned income tax due on the returned income is nothing but like assess to tax whatever we discussed now so in my example it is nothing but 2 lakh clear that is what I was supposed to pay as Advanced Tax minus what I have actually paid assume I am paid I have paid guys 15,000 but I was supposed to pay sorry I was supposed to pay how much 30,000 how much I have actually paid assume only 15,000 in the first installment so what is the shortfall 15,000 on that interest would be charged at 1% for 3 months guys clear like this for each installment they will calculate second installment 45% of the tax due on the return income minus Advanced Tax paid up to 15th September assume guys 45% off what I was supposed to pay comes to 2 lakh correct now 45% of 2 lakh 90,000 what I actually paid both the installment put together assume I have paid in first installment 1 lakh of 15% second installment 1 lakh into 45% minus whatever I already paid so I would have paid only 45,000 as per my estimation yes so so what is the shortfall 45,000 so cumulatively we have to check on this 1% interest for 3 months guys same with third and fourth installment so 75% of what I was supposed to pay minus what I have paid up to third installment if there is any shortfall interest is 1% for 3 months so automatically the interest will become 3 months sorry 3% 1% is per month so obviously for 3 months means it will be 3% guys then last installment up to 100% of tax due on returned income minus Advanced Tax paid up to 15th march on that interest is 1% only for one month that is only till 31st March even if it is a part of the month they are considering entire month sir why not after 31st March because after 31st March from 1st April section 234b will take over guys will take over so 234c will be applicable only till 31st March so for the last installment interest is actually charged only from 16th march to 31st March which is which is less than one month but still part of the month also will be considered as full month yeah so only 1% for the last installment clear yes sir so this is the interest for the shortfall or nonp payment of in installment amount guys in the first installment and second installment you can see the percentage is 15 and 45 but it will be difficult to foresee the future in the first and second installment only there's High chances of underestimating the income in the first in first or second quarter so they told even though the percentage what you are supposed to pay is 15 and 45 we are still accepting if you have paid 12% or 36% by first and second quarter means they're not changing the percentage of liability percentage of liability is 15 and 45 only but under Section 234 C they telling in the first installment even if you are paid up to 12% even if there is a 3% difference we are still allowing no interest but if the difference is more than 12 uh 3% means you have you paid but less than 12% of your assessed tax then on the difference interest would be charged on the entire difference same way in the second installment how much you are supposed to pay 45% but even if you have paid up to 36% also or more than that okay means if you have paid more than 36% but within 45% still no interest sir what what if I have what I have paid is less than 36% then on the entire difference interest would be ched guys hope you understood I repeat in the first installment you are supposed to pay 15% of the assist tax but even if you have paid more than 12% like 13% or 14% no interest but if you have paid less than 12% on the entire difference the interest would re then in the second installment you are supposed to pay 45% but even if you have paid more than 36% no interest for the difference but what you have paid is less than 36 months per means on the entire difference interest would be chared and this benefit is given only for the first two installments guys not for the third and fourth okay that is what the first point is second point however no interest is leviable under Section 234 C if the shortfall in payment of Advanced Tax is on account of under estimation or failure to estimate the amount of due to capital gains casual income or income acures or arises for the first time under the bgp or divid deemed dividend income under section 222 ABCD e is not there only ABCD okay and the assc has paid the tax on such income as a part of remaining installment of Advanced Tax which are due or if no installment is due by 31st March of the financial Year guys so in simple what they're telling is under Section 2 34C whatever interest is livid for the shortfall in the installment amount it will not be livid if the underestimation of income is due to the following items because this items and all we cannot predict it well before or we cannot estimate assume all of the sudden I thought in third quarter to sell my asset I got capital gains or casual income and L one estimated agree or else I had started the business for the first time so I cannot predict exactly how much I will earn so they told okay in the following four cases even if you underestimated your income no problem problem but you make sure that assume any of this income you earned in third quarter so by the time you pay next installment you should have considered this income and pay the Advanced Tax clear yes next tax due and returned income so they have used the word tax due and returned income here or assessed tax sir what is it it is actual tax liability guys in simple tax due on the returned income or assessed tax means tax calculated on the total income declared in the return furnished by the ass this figure the ass will get to know only assessment here the actual figure Les TDS TCS any relief of tax under Section 89 or any tax credit under Section 194 JD guys if at all if it is there clear we have to reduce TDS TCS will be there remaining to if at all if it is there we have to reduce remaining whatever figure we get is actually called Advanced Tax payable that we have to compare with what is the actual Advanced Tax paid and see what is the shortfall clear yes sir sir what about the ass is covered under Section 44 ad and Ada will there be any interest charged for the shortfall in the installment amount he has to pay only in one installment now so they telling under Section 234 C interest would be charged at 1% on the amount of shortfall only for 1 month that is only for March because we are asking him to pay entire amount entire amount on on or before 15th March clear so for all if he has not paid or he has paid but he has paid short in that case in interest would be leid on the shortfall at 1% only for one month guys whereas from 1 April as usual 234 P will take over 234b is common for everyone whereas 234 C they have given separately for the assess is covered under 44 ad and Ada why because for him four installment is not there only one installment that is why it is only 1% for one month guys clear yes so this is all about TDS TCS and Advanced Tax guys yeah now we will revise chapter 8 which talks about assessment procedure or returns everything with respect to returns guys now first we will see who is supposed to file income tax returns who is supposed to file income tax returns compulsorily filing of Return of income under section 139 subsection one the following people it is mandatory for them to file guys now if you are a person who is not covered in any of these points still you can file the returns voluntarily but if you are covered in any of this this point it is mandatory for you to file so which are those assy for whom return filing is mandatory sir companies and firms for every previous year irrespective of whether they have income loss or whatever amount they have to file their returns okay then person other than company or a firm if their total income during the previous year exceeds basic essential limit whatever is the basic essential limit applicable for them if their total income is more than basic exens limit then they have to file the returns guys clear actually we had only this two Provisions before at the earlier stage but they kept on adding other other points we will see see if a person is covered already in first or second point they need not check third fourth fifth point because third fourth and fifth point is only for those who are not covered in one and two clear yes because if you're already covered in one and two it is mandatory for you to file file it no need to check the other points next if the ass is a ordinary resident if such person at any time during the previous year hold as a beneficial owner or otherwise any asset including financial interest located outside India or has a signing Authority in any account located outside India or any of this two guys is a beneficiary of any asset including any financial interest located outside India so if a person who is an ordinary resident if he's covered in any of this point if he is like having any beneficial owner of any asset outside India or he has any signing authority of any account outside India or he is a beneficiary of any asset in including financial interest outside India then for him irrespective of his income he has to file returns in India okay next every person this bit interesting every person being an individual HF or aop or Boi or artificial judical person in simple slab ratey guys in simple slab ratey whose total income or total income of any other person in respect of which he is accessible that is with respect to clubing and on without giving effect to the provisions of chapter 6A or section 54 54b ECF exceeds basic essential limit guys this is scenario like this assume my total income is only one lakh only one lakh so the basic essential limit assume I'm covered under optional scheme basic ex limit applicable for me is 250,000 basic exential limit applicable for me is 2.5 LH guys okay my total income is 1 this is after claiming chapter 68 deductions so chapter 68 deductions I have claimed all sections put together assume three lakh assume three lakh guys so what they're telling is now you need not pay tax on 3 lakh but you add back three lakh you add back three lakh how much you will get 4 lakh check is it more than basic extension limit if yes please file the returns please file the returns and this figure we are calculating only to determine whether the person is covered to file returns that's all we are not asking him to pay tax total income of him is only one lakh he need not pay any tax clear this only to determine whether he's covered in filing returns or not guys same way if he has already claimed any exemption under Section 54 54 B EC or F under capital gains H please add back that and check whether the amount okay let me give an example assume the total income of the assess is 2 lakh Guys and he has claimed exemption under Section 54b of 20 lakh after claiming exemption everything he has got the total income as only 2 lakh okay sir so what they're telling is add back that exemption how much you're getting 20 lakh assume the same person is already also claimed chapter 68 deduction he has also claimed chapter 68 deduction how much sir uh let us take it as three lakh so how much this figure is coming to 25 lakh is this more than basic essential limit yes you should file that he should file the return no doubt his total income is 2 lakh you may not pay tax assuming entire amount is normal income and it is less than basic limit he will not be liable to pay any tax but here is covered under this point and is supposed to file returns guys he supposed to file his returns clear so in simple if he has claimed any chapter 6A deduction or exemption not all exemption only 54 54 B EC and F please add back that and check whether that figure is more than basic exens limit if s he has to file returns mandator then any other person any other person other than company or firm because company or firm anyway always covered okay is required to file the return if during the previous year if such person so this is applicable to any person other than company and firm guys okay if they are deposited an amount of more than one CR in one or more current accounts maintained with a banking company or a cooperative bank so if a person has deposited more than one CR in his current account then he has to file his returns mandatorily as per the fifth Point sir I have two current accounts in one I have deposited 70 lakh in another one I have deposited 60 lakh so aggregate is more than one CR yes in that case also you have to file your returns mandat as incurred foreign travel expenditure of more than 2 lakh for himself or any other person that is in a year then as incur electri electricity expenditure of more than one lakh again in a year because Electric electricity bill and all will be paid monthly in a year is it more than one lakh if yes then they have to mandator file the returns guys okay now this is what was covered under section 139 subsection 1 but by now by adding a new rule guys rule 12 a they have included some more people for whom return filing is mandatory means if you are a person who is covered in any of these points even for you return filing is mandatory and guys you have to check this only if a person is not covered in the first five points if it's already covered in the first five points given under section 139 subsection one again no need to check the rule because rule is applicable only for those who are not covered above C yes what is it we will see and guys for whomever they're applying the rule irrespective of their income no matter whether you have income or loss we are trying to cover you based on some other criteria some other criteria okay so if you are satisfying this criteria which is given here then for return filing is mandate okay guys we will see a person carrying on the business okay sir company now any person can carry on even individual can carry on the business clear yes because company and all is mandatory for them guys which we already seen even you can see like rule 12ab is applicable to any person other than company and firm because company and firm is always covered above only a person carrying on the business if his total sales or turnover or gross reip in the business is more like more than 60 lakh during the relevant previous year okay then a person who is carrying on the profession if the gross receip in profession is more than 10 lakh during the relevant previous year then a person individually AED 60 or more at any time during the relevant previous year if the aggregate amount of TDS plus TCS is more than or equal to 50,000 during the relevant previous year same way in any for any other person means who is aged less than 60 years or who is a non-resident for them the aggregate amount of TDS and TCS is more than or equal to 25,000 means they have made it as half 60 or more resident individual means 50,000 any others 25,000 next a person having a savings bank account the deposit in one or more Savings bank account of the person in aggregate is more than our 50 lakh during the relevant previous year guys C sir what if I have multiple savings account if all the accounts put together if I have deposited more than or equal to 50 lakh during the relevant prev year and in all these cases guys relevant previous year means for your exam 2324 clear so if ass is covered in any of this point as per the rule return filing is mandatory for him clear yes so next so we understood who should file the return sir when they should file the return within what time is there any deadline of course if the government allows the people to file as you wish okay file whenever you can in that case definitely people will not do it that so that is why they kept some deadlines or due dates sorry 30th November of assessment year for the assess was required to furnish transfer pricing report under Section 992e guys transfer pricing and all you will be learning as a part of your final syllabus that is applicable for the ass who are engaged in international transactions and all so for the ass whoever is supposed to furnish his transfer pricing report as per section 992e for him the due date to file income tax return return is 30th November of assessment year next for a company or a person other than company whose accounts are required to be audited under Section 44 AB or a working partner of a firm whose accounts are required to be audited 31st October of the assessment year is the due date guys clear yes so in simple company and any other assess whose books of accounts are subject to tax audit as per section 44 AB which be covered in pgbp for them the due date to file income tax return is 31st October and for this people as audit is also applicable when they have to submit the audit report as per section 44 a means 1 month prior to the due date of filing the returns which is what is the due date for them 31st October so one month prior to that means on or before 30th September guys clear yes by a chared accountant tax tax audit report has to be done by Char chared accountant in practice next 31st July of assessment year in case of any other assess like ass who is having only salary income house property income or anything who who are not covered in A and B case for them the due date is 31st July guys clear yes and please be careful this is also important from pgbp point of view and all because in pgbp chapter more places they have given reference to this that is due date of filing the income tax return under section 139 subsection 1 for example 40a 1 40a 1A 43b in all the sections they have given reference to the due date of filing the returns guys now sir only I have income should I file the returns no even if you have a loss and if you want to carry forward that loss you have to file the loss returns exception is house property loss and unobserved depreciation so to file loss Returns what is the due date same due date whatever we have discussed whether you have income or loss the due date to file the returns are same guys as per section 139 subsection 3 clear and if you want to carry forward the loss return filing within the due date is mandatory sir what if I file loss returns after the due date belated return you cannot carry forward the loss exception is house property and unobserved depreciation then belated return sir can I file belated return yes you can do it a return which has not been furnished within the time allowed under section 139 sub section one whatever we'll saw here okay if you have failed to do it still they are giving you the opportunity to do it but obviously you are liable for late fee and interest but you can file belated return within what time sir before 3 months prior to the end of the relevant assessment year that is for previous year 23 24 guys for previous year 2324 what is the assessment year 2425 when is the assessment year ending 31st March 25 they're telling 3 months before that that means the deadline is 31st December 24 the deadline is 31st December 23 so the belated return for previous year 2324 can be maximum filed within what date 31st December of assessment here in simple they have not mentioned the date in the section but they have told three months prior to the end of relevant assessment year which is nothing but 31st December of the assessment Year guys okay or completion of assessment means whenever you have completed the assessment whichever is earlier normally completion of assessment will change from person to person so standard due date is 3st December of assessment Year guys so what about Revis return I have already filed my return within the due date or belated return now there was some mistake or Omission which I have to change can I do it sir yes you can do it and how many times sir any number of times within what time onor before 31st December of assessment year or completion of assessment whichever is earlier guys the date for return and revision return is same sir can I revise my belated return Yes but within the time you would have filed belated return and you are also revising it before 31st December only then you can do it clear then updated return return which is one of the new thing what is that they're giving the opportunity for you to correct your mistake if you already done if you already filed your return still you can correct it you can update it if any person may fish an updated return if is income or the income of any other person in respect of which he is assessible for the previous year at any time within 24 months from the end of relevant assessment year whether or not he has furnished the return means even if you have not filed any return you can update see obviously updating of return will come only if you already filed it and now but they're telling whether or not you have you have filed return return under Section 1391 you can file updated or belated return return or revised return return so if you have filed return return or not filed the return or if you have filed belated return or revised return all these returns can be updated okay the provisions of updated return would not apply if the updated return of such person for that assessment year is a loss returns that is you already filed the income return now you want to update that return by filing loss return that is not possible as the effect of decreasing the total tax liability now assume guys you already file The Return by disclosing your tax liability as 2 lakh now you want to update your return by disclosing the tax liability of 1.5 lakh can you do it no if you are updating the return where it is leading to decrease of your tax liity they're not allow it then results in refund or increase in the refund due to now assume sir in the original return what you have filed you have disclosed the tax liability of 1 lakh but now in your updated return you're are claiming a refund of 50,000 can you do it no then another scenario is in the original return what you have filed or revised or belated return you claimed a refund of assume 2 lakh now you're in the updated return you're claiming a refund of 3 lakh means you increasing your refund can you do it no guys so in simple if updated return return will cause loss of Revenue to the government or decrease of Revenue to the government they are not allowing you to file updated return only if updated return can bring them more money they're telling okay we are happy you can file updated return clear and when you are filing updated return you have to pay additional tax and all you have to pay additional tax as per section 140b which we have discussed in detail in our regular classes and all guys okay no updated return can be furnished by any person for the relevant assessment year where an updated return has already been furnished by him now if you already filed your updated return for one year again for the same year you cannot file updated one more updated return means for one year only one updated return or any proceedings for assessment or reassessment or recomputation or revision of income is pending so if any assessment or reassessment or recomputation or revision with respect to that respective year is pending means for that year you cannot file updated return guys clear sir updated return can be filed within what time sir within 24 months from the end of relevant assessment here guys so in simple for previous year for our previous year we will check the time limit what is the assessment Year guys 2425 so when is the assessment year ending 31st March 25 they're telling within 24 months from here means 31st March 27 so what is the deadline for you to file updated return return for the previous year 2324 maximum by 31st March 2027 maximum by 31st March 2027 guys is that clear yes next defective return return section 139 subsection 9 if an assessing officer considers that the return of income furnished by the assess is defective he may intimate the defect to the assy and give him an opportunity to rectify the defect within 15 days from the date of such intimation or within such further period as may be allowed by the assing officer on the request of the ass this is only in case of genuine case if not the standard time is 15 days if the ass fails to rectify the defect within the offer set per the return shall be deemed to be invalid and further it shall be deemed that the assy had failed to furnish the return of income guys now income tax department have access of all the information there is something called as AIS TI everything means whatever has been credited to my bank account now everything has been reported to the department income tax department now anything which has come in or gone out out of my bank account they will already have an information now assume in my bank account total credit during the year is around 20 lakh but I have disclosed my income as only 5 lakh in that case they will send a notice telling sir you have disclosed only a 5 lakh income and you have paid the tax as per your return but we have found a defect in your return We have got an information that total credit to your bank account is 20 lakh so please um Rectify your mistake in your return you have to respond to it and rectify the mistake within 15 days if you don't do it then they will consider it as if you have not filed the return they will consider it as if you have not filed the return that is like a defaulter okay next self assessment tax section 1408 self assessment tax means a tax paid by the assass on the basis of self assessment before filing the return of income guys that is in the previous year you would have already paid something in the form of TDS TCS advanced tax and all now in the assessment here you have to do the actual calculation and if something is still pending you have to pay that and file the returns so what if you already paid more you can claim a refund clear so any tax which you will pay okay for example guys assume in the assessment here you got to know your tax liity actual tax liity is 5 LH from that you reduce Advanced Tax paid assume 3 lakh then TDS TCS everything you reduce as asse this is 1.5 lakh so after reducing both this still an amount is there are 50,000 correct this you have to pay and then file the returns and this when you will be paying it in assessment year we call it as what self assessment tax and income tax is purely based on self assessment only if ass doesn't do that then the department will pitch in to do the assessment yeah the total tax payable is calculated on the total income of the ass after considering the following income this is the actual calculations not estimated the amount of tax already paid under any provisions of this act the tax deducted or collected at source any relief of tax claimed under Section 89 and any tax credit claimed to be set off in accordance with the provisions of section 115 JD we call it as like EMT credit guys after reducing all this if you still have any amount you will pay it as self assessment tax so what if I already paid more for example assume guys this is 2.5 clear so already you have paid 5.5 lakh so 0.5 lakh you can claim it as a refund and re for refund obviously you have to file the returns and it will be processed and when it is processed it will be processed along with the interest and now actually the income tax department has improved really well they have uh reduced the processing time of the refund as less as possible now guys okay when compared to the Past in case of delay in Furnishing the return of income self assessment tax shall also include interest for delay under section two 234 a and for delay that is the late fee for the delay and section 234 F both will be there if there is any delay in Furnishing the return I told you belated return and all you can do obviously that will include interest and late fee what is it we will see later such determined value of tax along with the interest is paid before Furnishing the return and the proof of payment of such tax is attached with the return guys where the amount paid before Furnishing the return of income is known as called self assessment tax where the amount paid by the assy falls short if by chance the amount So Paid shall first be adjusted towards the fee payable and thereafter towards interest and balance if any should be adjusted towards the tax payable guys assume the person was supposed to pay one lakh interest sorry one lakh tax we will take one lakh tax on that interest under Section 234a because he has filed the returns late assume is coming to 15,000 I'm just randomly taking the figures and late Fe is coming to 5,000 so totally is supposed to pay how much 1 lak 120,000 1 lakh 20,000 now assume guys he has paid only 1 lakh so he has paid only one lakh so one lakh will be adjusted against what first they are telling we will adjust it against late fee 5,000 then we will adjust against interest how much 15,000 remaining towards tax remaining towards tax how much 80,000 that means still 20,000 tax is outstanding still 20,000 tax is outstanding this is only when it is short paid guys clear so whenever the amount is short paid first we will adjusting towards what the fee payable and then towards interest and last whatever amount is there towards tax clear this is only when something is short paid if everything is paid then well and good next sir what is what if the return is filed after the due date so on whatever amount of tax you are supposed to pay it will also include interest guys for example the tax liability of the person was assume 5 lakh so same let me take Advanced Tax assume 3 lakh then TDS TCS everything put together assume is only one lakh so what was the amount he was supposed to pay as self assessment tax guys one lakh so he has to pay this and file the returns but he has not filed it within the due date so in that case on this one lakh interest has to be charged guys interest has to be charged means he has to pay one lakh even though he's filing belated return one lak plus interest plus late clear so how do we calculate that interest we are seeing now okay income tax return late filing interest calculation okay when failure to file return of income before the due date or does not file furnished return of income at all you have filed the return but after the due date or you not at all file the return of income in this scenarios would be charged guys how much sir 1% per month or part of the month even if it is 10 days 15 days 20 days it will be considered as entire month guys okay period return of income furnished after the due date due date to date of filing the return of income means interest sir I have filed the return but vate it in that case from the due date till the actual date of filing the returns clear if the due date is 31st October you assume guys leave 31st October calculate interest from first of next month till what date sir till the actual date of filing the returns clear sir what if return is not at all fished then due date from the due date due date means exactly due date you don't take next dat that is the first of next month two the date of completion of assessment who will complete the assessment now assessing officer so from the due date till the date of completion of assessment interest would be charged so interest is on what amount interest has to be calculated on the amount of tax on total income as reduced by an amount of Advanced Tax if paid any TDS TCS any relief under Section 90 or 98 this relief is like with respect to double taxation relief guys that is if I have paid any tax in any foreign country relief under Section 89 or any other tax credit so interest is not straight away on five lakh we will calculate the tax liability of the person from that we will reduce whatever he has already paid or if he's eligible for any relief or credit we will reduce it remaining what he was supposed to pay on self as self assessment tax on that interest is 1% per month or part of the month clear plus late view also is there plus late lat we will see and guys this interest try to study along with 234 B and C 234 B and C is for non- payment or short payment of advaned tax 234b is in total which starts from 1 April of the assessment year 1% per month or part of the month till the date of actual assessment then 234c is 1% for the first three installment three for 3 months whereas for the last installment one month and this is for the shortfall or non-payment of Advanced Tax in installments clear yes so next fee for delay in Furnishing the return of income section 234 F so a fee of rupes 5,000 shall be lived if the return of income is not filed within the time allowed under section 139 subsection 1 so whatever is the time limit we saw you if the return is not filed within this time even if you're filing belated return you have you you are allowed to file it but along with the late fee and interest so what is the late fee 5,000 rupees shall be livid if the return of income is not filed within the due date okay but in cases where the total income does not exceed 5 lakh the fee amount shall not exceed 1,000 rupees so if the total income of the person is up to 5 lakh they're telling maximum late p is 1,000 rupees in any other case 5,000 rupees in any other case how much 5,000 rupees guys is that clear guys and many of the assesses of the notion that especially like individuals and all if our income is within 5 lakh or within 7 lakh that is when we are eligible for rebate we are not supposed to file the return no guys they're wrong clear so even if you have any of your friends parents or friends are like relatives Uncle aunties and all suggest them because what they have thought is anyway our tax lib is nil so we are eligible for rebate so we need not file returns no if a person's income is more than basic isum limit they're supposed to file the returns mandator guys return filing is mandatory and even you can see this points and most of the people would be covered here also either in second point or fourth point and they feel that no no our tax liability is zero so we need not file the returns any day they may invite invite the notice from the Department where they will end up paying late fee interest and all so better interest is they may Escape because the tax liability is zero so on when the tax liity is zero interest also will be zero but late fee would be lied guys late P would be limited so please be careful so if at all if there is anyone from your circle please suggest them whenever the income is more than basic ESS limit the return filing is mandatory return return filing is mandatory guys is that clear yes sir so this is all about the assessment procedure chapter guys yes guys so now we will revise chapter 9 which talks about the computation of total income and tax liability nothing much in this chapter but very important because see revising this chapter is like again revising the entire syllabus very important why because at least there will be a question on this at least one question at least I telling you at least one question would be there in your exams guys clear and that to preferably mandatory question in descriptive so please be very careful for solving the question on total income and tax liability you have to have a knowledge of entire syllabus guys clear and whenever the question is on total income the main target normally would be on pgbp guys main target would be on pgbp definitely they may cover other HS also but the main target is who pgbp the biggest a so we'll just see the steps whatever we have already learned whatever we have already uh followed so what all steps has to be followed while Computing the total income and tax liability guys determination of residential status as per section six okay then classification of income under the different EDS as per section 14 so there are five different EDS of income so for each it there is a specific charging section that is the first section under each head will tell what income is taxable under that head if there is any income which is not taxable under the first four head then that income will always be taxable under the last head guys that is other sources then computation of income under each head after considering the exemption because if there is any income which is exempt guys we will claim it under the respective head only so the income which is exempt will never be a part of gross total income so before calculating gross total income you would already claimed the exemption under the respective head and it is good if you remember the section please mention that show the amount in the inner column amount received is so and so less exemption and section 101 what is the amount and if after claiming exemption if something is still taxable take it to the output column clear yes clubbing of income of spouse or minor child guys first once we calculate the income under each head of income and if at all if there is any exemption we will adjust it there only see clubbing and set of laws I have given it separately here but whenever clubbing get attracted it is always under the head other sources guys C irrespective of the nature of the income clubbing will always get attracted under the head other sources next set off or carry forward and set off of losses so whether it is a current year loss or broad forward loss everything the treatment we already discussed so whenever there is a set off of loss Aton whether it is intra or inter it will happen with the respective hits only guys there only clear once we do this clubbing and set off of losses what figure we get get is called gross total income I have given here as a separate step but loss and all we know whether we do it INRI adjustment or intered adjustment we will do it here itself clear against the respective incomes depending upon whether it is a current year loss or it is a carry forward loss and is there any exceptions for it can I adjust that loss everything you have to cross verify please be careful especially with the some special category losses guys okay next computation of gross total income so once you do all this you will get what gross total income guys next competation of total income after claiming the deductions under chapter 6A so once we check the deduction Center chapter 6A from section 8cu then we will get total income or taxable income guys you have to be careful see all the sections we already given I have given the list of sections in the first page now so all the sections now we have covered with guys yeah that is all the it then clubbing of income set off and carry forward of loses all the sections we have covered and section 65 is nothing but when clubbing is attracting for example if my wife's income is clubbed with me again on that income my wife didn't pay tax she didn't want to pay tax clear means she need not pay tax in simple clear assume salary income of my wife is clubbed with me should she also pay tax on that income no guys when it is clubbed with me I will pay tax it will be clubbed with me under the head other sources again for the same income she need not pay tax tax that is what is given in section 65 okay so after doing all this we get gross total income and we will claim deductions from section 8C to please be careful under default regime only three deductions allowed that is for employer contribution for pension scheme and employer contribution to agnipath scheme and only ad jjw that is with respect to new regular Workman whatever salary is paid to new regular workman by a manufacturer okay guys so once we get total income total income should always be rounded off to nearest 10 Rupees as per section 288 yeah guys please be careful rounding off is not for each head of income it is only for the total income guys and please be careful with it because by mistake sometimes you may miss it so first what you do if by chance assume you got total income as 10 lakh 18, 898 first write what you have got in the next line you write tax total income rounded off under Section 288a to 10 lakh 18,000 how much how much you round it up to 898 means next 10 Rupees is what 900 clear next 10 means obviously nearest 10 we have to do here it comes to how much 9900 guys clear so you should always for five or more round it up to next less than five previous 10 guys for example last three digits I am taking assume it is 816 what do you do you will do 820 so what if it is 800 8812 you will do it as what 810 so what if it is 818 you will do it as 820 so what if it is 815 you will do it as 820 clear guys yes work next few points you have to keep in mind guys so few points you have to keep in mind whenever you are solving the question on total income or tax calculation some highlight points I just given it you I'm not like see total income is all about problem solving guys so I would be solving RTP also whatever RTP has been released by our ICI for May 2024 exams I would be solving it as a separate video later so there so you guys also practice more and more questions on total income calculations and all so if I have to revise total income it's like I have to revise entire syllabus again clear so but still I would give some important points which you guys have to keep in mind which are those one by one if salary received or salary earned is given standard deduction of 50,000 under Section 161 way should be provided guys so many of times they would have simply given monthly salary of becauseas or salary received by him per month is like that please provide for standard deduction guys and standard deduction under both the scheme whether it is optional or default scheme standard dection is available under both now clear and many of times they may tell ass is in receipt of monthly pension of 20,000 or 30,000 per month even pension is taxable under the head salary even for that please don't forget to give standard deduction guys clear and sometimes they may mention in the question already income from salary computed or taxable salary in that case it is already computed figure again don't give any other deduction next if rent received or rental income is given straight away guys in that case if only rent received or rental income is given assume that only as gav and if nothing else is given at least provide 30% standard deduction even if the question is silent about Municipal tax paid interest and all you will not allow that because we don't know the figure whereas that % of standard deduction at least you have to give it clear that is if rent received or rental income is given standard deduction of 30% under Section 24a should be provided if age and residential status of the ass is not given guys if age is not given assume less than 60 if residential status is not given assume is a resident and please be careful whenever it is given in the question it may play a role guys it may play a role please be careful with respect to tax calculation or even deductions and all age and residential status some play a major role you have to be careful with it when you are solving the answer then restriction and maximum limit with respect to deductions and all so even when it is like marginal relief when it is S charge when is when it is a rebate and all you have to be careful whether it is applicable or not so especially whenever you are calculating or Computing the tax liability please be careful with repay such charge and relief guys and even that aggregation with respect to agriculture income and non- agriculture income because in the question directly they may not give any information or in you how to understand from the information given in the question guys clear even in deduction chapter most of the section has some Maximum limits so you have to be very careful many of times what they will do is they will give the amount which is more than the maximum limit and they want you to test whether you know the limit so please be careful with that then whether the total income includes any special income taxable at special rates that is 10 15 20 30 so whenever they have asked you to calculate tax liability first check whether total income includes any special income if at all if there is any special income they have to specifically mention in the question guys if nothing is given about special income assume the entire total income is a normal income and apply the normal rates and Sir what about the scheme if see guys normally they will give it in the question you have to calculate as per which scheme and if they are not mentioned assume the ass is following default scheme and do the calculation as per default scheme and give a note for it telling it is assumed that the ass is following default schem if they clearly mentioned in the question that ass is following default scheme or he has opt out of default scheme and following optional scheme please do the calculation as per the respective requirement next applicability of rebit for Resident individual whose total income is up to 5 lakh or up to 7 lakh and under default regime even if it is more than 7 lakh but within 7ak 28,000 still is eligible for rebate guys please check it by applying the steps then applicability of such charge if the total income exit specified limit so all this you have to be careful guys please check the total income if it is more than like 50 lakh one CR 2 CR 5 CR and 10 CR and all you have to add sear charge by mistake what you will do now sometimes in a hurry you will do the calculation by not including such charge but later you will realize oh you so again you will do scratching again rewrite it so avoid scratching and all guys so when you are reading the question itself please be very attentive 15 minutes time will be given for you to read the question paper so please read each and every line each and every information given in the question and try to connect okay what are you supposed to do for each of this clear and when you start answering also don't straight away start answering again when you're answering that is during that 3 hours of time please read again quickly again the question especially in descriptive guys again read the question again quickly and then start answering it clear and without reading the complete question please don't start answering because sometimes the twist might be given in the last line of the question guys clear so even by seeing the length of the question don't panic because if you feel the question is very lengthy then answer might be easy also who knows clear just because the question is lengthy doesn't mean that the answer also will be leny or complicated clear guys don't judge the question just by seeing its length so please what I suggest is in the 15 minutes time don't look into the McQ question guys look into the descriptive question so decide which question will you answer first which question will you take it as a choice in that 15 minutes all this judgment you have to do it t t t Tu so in that 15 minutes you have to read all the descriptive question select which you will take it as a choice because except first question first question would be mandatory out of the remaining question one question you will you will take it as an option which one is that and see if you are prepared really well then you might be knowing all the question in that case which question will you choose as an option means whichever question is more time taking which you feel that is more time taking try to take that as an option guys clear and whenever you are presenting the answer in your descriptive type your first and second answer should be your best answer guys you need not go in the order like first question only first second question only first nothing like that but make sure that your first one or two answers whatever you're presenting should be your best answer if you go wrong or if you just written half of your answer in the first question itself or in the second question itself you are giving a wrong opinion to the evaluator that you are not prepared well guys so please make sure that whichever questions you know really well present them first but once you choose a question guys all the sub questions or all the sub questions whatever is there please answer them in the order it is not like 2 a I will answer here 2 B somewhere else no guys everything should be in order sub questions clear and try to answer all the answers from a fresh page means new new con whatever you are starting like 2 a 2B or three and all please always start with a fresh page even if you have a space in the previous page it's okay you have paid examination fee make use of it start answering the next question from the Fresh page CLE take care of your presentation which you can improve only by way of practice guys start writing start solving even MTP questions okay so try to take a test for yourself from in between 2 to 5 okay so whatever is the examination time or if you're taking only Direct Tax you can take it for one and a half hour so you guys try to test yourself so try to answer independently under the examination condition during the exam time only that is from 2: to 3:30 or from 3:30 to 5: choose your time so try to answer during that time and then cross check your answer guys presentation is very very important many students feel that when they have studied yes we have studied everything is there in our mind we will reproduce the same in the exam but in the exam somewhere they get stuck somewhere they get stuck this you can improve only by way of practice guys not only for my sub any subjects so please practice practice practice that is the only Mantra guys please don't only study don't only audit your books studying is a must but once you study please cross verify whether you are able to put down everything in the paper so please do take it seriously guys next applicability of marginal relief if total income is little bit more than uh specified limit that is whenever your total income is marginally crossing the threshold limit applicable for sub charge you have you have to check for the marginal relief also guys so these are some important points which you have to keep in mind whenever you are solving the questions on total income and tax liability guys yes guys now we will revise the last chapter that is chapter 10 which is alternate minimum tax or in short I call it as AMT I know by now already you guys might be tired but still guys we'll together do it the last chapter left fine so what is the a it is a special Provisions guys not applicable for all the ass in every year it is applicable only subject to certain conditions when is it applicable first we will see then we will see what we have to do when EMT is applicable the provisions of EMT shall apply to all person other than a company who has claimed deduction because for a company there is something called as Matt guys which will be applicable and Matt is not a part of your inter syllabus you will be learning it at final level so for a assy who is other than a company who has claimed any of this deduction any of this deduction not all three any of this deduction am is applicable clear so what are those deductions are under Section 80 I a ib IAB I ID i e jja JJ l a m qqb and rrb which you call it as heading C or part C of chapter 6 income based deduction guys but except ATP even ATP will come under heading C only which is available for Cooperative societies but if Cooperative Society has claimed deduction under Section ATP for them a is not applicable clear so I repeat even ATP is a part of eding C or part C of chapter 6A guys but if the ass has claimed deduction under Section ATP then they are telling no no EMT is not applic clear so any other section from AIA to rrb if the ass has claimed any of this deduction not all any of this deduction then for them a is applicable clear and Sir what are those section what is elig means who is eligible to claim deduction under this section and all you need not worry because guys this sections are not covered in your syllabus except few section JJ is covered for you then qqb and rrb is covered in your inter syllabus other sections and all if at all if the ass has claimed deduction they will straight away give deduction is claimed under which section and how much accordingly you take care of the EMT then under Section 35 ad that is capital expenditure of specified business then under Section 10A export profits of as units so if ass has claimed a deduction under any of this category guys a b or c then for him AMT is applicable therefore for every assessment year two parallel compettion are required to be made the first being compettition of total income as per the normal Provisions whatever we have discussed till the last chapter and the other being computation of adjusted total income as per section 115 JC guys means when AMT is applicable we have to do two competition one is as per the normal provision normal provision means here we are not discussing about default scheme optional scheme and all no no here normal provision means whatever we have learned till the previous chapter normal provisions of income tax law and this is something like special provision if a is applicable we have to do two separate calculation one is as per normal provision and the another one is as per EMT guys and whenever the assess that is individual HF oop Boi and artificial judical person if they are following default scheme under Section 115 BAC guys EMT is not at all applicable AMT is not at all applicable why simple logic is they for them all these deductions are blocked for them under Section 115 PSC all these deductions are blocked obvious except at jjwa yes at jjwa they can claim except that all other deductions are blocked even 35 ad and 10aa so obviously in that case they are not at all eligible to claim this deduction so here no there is no need to tell if you have claimed this deduction then a is applicable clear so simple for the ass who is following default scheme under Section 115 BAC the provisions of AMT will not have applicable guys even if they have claimed 80 JJ deduction still for them EMT provision is not applicable clear so in simple when 1005 BS is applicable then the AMT Provisions is not at all applicable guys okay fine guys so here we have to do the calculation when aimed is applicable in different steps what is it sir step one it is as per normal Provisions guys whatever we have learned till now what is it sir compute the total income as per the normal provisions of the act that is as if like in the previous chapter we have learned the same calculation Computing the income under each head then checking the clubbing and losses then deduction Center chapter everything you finally derive the figure called total income this is as for normal Provisions okay then compute the tax at the rate applicable to the assy so special income special rate normal income normal rate everything you have to take care okay okay if the total income includes special income normal income obviously calculate the taxes separately so get you will get the tax liity then sear charge as applicable only if the total income is more than certain limit that is like 50 LH 1 CR 2 CR 5 CR 10 CR and all if at all if sub charge is applicable add it then health and education say will always be there at 4% then you will get tax payable under normal Provisions guys let us give a notation a for it step one done this is nothing special this is a normal Provisions whatever we have learned till now now what we have learned in this chapter is step two whatever total income we have got as per normal provision guys we will take it as a base here whatever the total income we have got as per step one that is as per normal provision we will take it as a base year for that we will add whatever deduction the ass has already claimed guys now not everything only this three category of deduction so now we already learned when am is applicable is when the ass is other than company who has claimed any of these deductions correct now so so he has claimed any of this deductions that is why it is his total income has come down yes sir so there was a gr total income from which he has claimed deduction under chapter 6A or even 10A or under the head pgb would have claimed 35 a deduction for capital expenditure clear yes so so 35 ad would have come before gross total income or if it is a deduction under chapter 6A under heading C or under 10 so adding C of chapter 6A or 10A guys you would have claimed it against gross total income so because of this your total income has come down yes sir so first step you will do the tax calculation on your total income only but in the Second Step you will take the total income as per the normal provision for that you will add back whatever deduction you have claimed under this respective three category whichever you have claimed either of the three okay you can see deduction claimed under part C of chapter 6 except ATP okay or deduction under Section 10 that is against your export profit of SZ unit then deduction under Section 35 ad as reduced by depreciation allowable under Section 32 as if no deduction under Section 35 ad was allowed in respect of that asset this is one special thing which I will tell that's simple remaining two we will see assume 35 ad deduction you have claimed 30 lakh so in that case in the Second Step what we have to do assume total income we have got 50 lakh guys for 50 lakh we have to add 30 lakh what is your adjusted total income 80 lakh clear or else assume 10A deduction you have claimed from gross total income gross total income of 60 lakh you have claimed 10A deduction 10 lakh so you got total income 50 lakh so in the first step you have to do the tax calculation on 50 lakh only whereas in the second step for total income we have to add back 10A deduction we will get gross total income how much 60 lakh clear yes sir next last example assume guys you have claimed under the head pgpp 35 ad deduction 35 ad deduction you have claimed okay so uh 35 ad deduction you have claimed 30 lakh you have claimed 30 lakh I guess the first one I told that only yeah fine still I will reframe this please listen 35 ad deduction you claimed 30 lakh guys and after all this you have got a total income of 60 lakh total income of 60 lakh please listen here okay sir now what you do in the step one you do the tax calculation on 60 lakh okay sir in step two what you have to do is you have to add back whatever deduction you have claimed under Section 30 LH but after reducing depreciation after reducing depreciation the logic is simple guys when you have claimed 100% of your capital expenditure as deduction under Section 35 ad for the same expenditure section 32 depreciation is not allowed but now when they are adding back please reduce if at all if depreciation was allowed how much would have been allowed you reduce it so for example guys assume the expenditure what I have claimed is on building 30 lakh expenditure capital expenditure so in that case on building what is the depreciation rate 10% assuming it is used for more than 180 days so what you have to do minus 10% which comes to how much 27 lakh so we have to add only 27 lakh so adjusted total income comes to how much guys 87 lakh clear on this we have to apply the EMT rate hope you understood that is only for 35 ad deduction for 35 ad deduction whatever is the amount of deduction claimed under Section 35 ad we have to take from that we have to reduce depreciation if it was allowed how much we would have claimed depreciation under Section 32 as per the respective rate under wdb method we have to reduce it remaining we have to add back in step two whereas if the ass has claimed deduction under deductions not under chapter 6 aing C or 10A in that case simply add back whatever is the deduction claim no need to reduce any depreciation and all simply add back whatever is the deduction claimed guys clear so please be careful with it so if it is chapter 6 a part C whatever is amount of deduction you will add back even if it is a 10A whatever is the amount of deduction you have claimed you will add back whereas if 358 take what is the amount of deduction claimed from that you reduce whatever would have been allowed as depreciation remaining net amount you add back to the total income we get a figure called adjusted total income on this we have to calculate EMT guys and what is the AMT rate 18.5% on adjusted total income and here don't worry about normal income special income nothing and who is the partnership for individual HF default schema nothing it is always 18 5% and we already discussed for the ass who is following default scheme there is no AMT clear so irrespective of the category of the assy we have to apply 18.5% on adjusted total income guys see in step one as per normal provision everything will matter is my total income includes any special income normal income and for normal income what is that rate of tax slab ratea flat ratea depends on the category of person yes in step one we have to follow all that but whereas in step two irrespective of Who is the in step three we have to apply 18.5% of what adjusted total income and if adjusted total income is more than the threshold limit like for example more than 50 lakh or more than 1 CR or more than 2 CR or 5 CR then we have to add Sarge also whatever Sarge we already learned in tax ratees chapter now if total income crosses certain limits but now what we have to check is if adjusted total income exceeds the respective limits then we have to add sub charge also here clear for example assume the ass is an individual adjusted total income is 60 lakh in that case what is the sub charge rate applicable 10% sir what if adjusted total income is more than 1 CR 15% like that guys clear then health and educ say is always 4% then you will get alternate minimum tax payable which we denote it by B now compare A and B whichever iser the ass has to pay tax as per normal provision tax as per EMD whichever iser the ass has to pay to the the government guys so you can see a of A or B shall be tax payable under section 150 JC okay now if B is more than a guys because normally we are supposed to pay taxes for normal provision now you have brought some special provision and telling you pay tax on that if tax as per special provision or tax as per AMT is more then to the extent of difference that is B minus a b means what tax as per EMT a minus one tax as per normal provision so if B is more than yeah they're telling we will give a tax credit for you which is called EMT credit which is called em credit guys let me numerically explain it please listen assume tax as per noral provision is coming to 8 lakh tax as per AMT is coming to 10 lakh whichever is higher has to pay how much 10 lakh so as has to pay how much to the government 10 lakh okay sir now guys assume uh am credit first of all what is AMT credit 2 lakh ass is eligible for an AMT credit of 2 lakh sir what does he do with this credit whenever the tax as per normal provision is more you will adjust this credit guys for example assume in the next year tax as per normal provision and AMT I will take tax as per normal provision is 12 lakh whereas tax as per AMT is 11 lakh sir can you adjust yes only to the extent of the difference sir he has a credit of 2 lakh but can you adjust entire credit of 2 lakh no guys because after whenever the tax as per normal provision is more if the assy has any AMT credit he can adjust it but how much maximum to the extent of difference what is the difference between tax as per noral provision and AMT 1 lakh how much credit he has 2 lakh how much he can adjust one lakh or 2 lakh whichever is lower clear yes so first what you have to do is whichever is higher whichever is higher is how much guys 12 lakh should he pay entire 12 lakh no he can adjust credit of 1 lakh so how much he will pay 11 lakh means minimum he has to pay EMP guys that is the understanding minimum he has to pay empt clear yes so what is the remaining credit which he can carry forward next one lakh because 2 lakh he had one lakh he has adjusted remaining one lakh he will carry forward assum in the next year guys again in the coming year tax as per normal provision is 15 lakh tax as per EMT is 10 lakh whichever is higher is how much 15 lakh can you adjust the credit yes but maximum how much credit 5 lakh but does he have so much credit no he has only one lakh credit he has he's left with only one lakh credit so maximum he can adjust how much one lakh so simple how much credit can be adjusted is the credit available or the difference between the AMT and normal provision whichever is lower guys and credit can be adjusted only when the tax as per normal provision is more if AMT is more then you will get more credit clear yes so how much you will pay to the government now 14 lakh and after this the credit will become zero clear okay guys this one scenario next scenario we will see so 2 lakh credit he has assum in the next year again as per normal provision and AMT whichever is higher we will take okay so assume next year as per normal provision it is 15 lakh and as per AMT it is 18 lakh which is higher is 18 lakh so how much he has to pay 18 lakh so what about credit he has a credit of 2 lakh which is calculated here but can you adjust it no why because AMT is more here so he has to pay entire 18 lakh but again he will get a credit of three lakh here correct already he had a credit of 2 lakh plus he now got a credit of three lakh so total credit which is available with him is how much 5 lakh clear guys so in simple minimum he has to pay AMT if AMT is only higher pay that if AMT is less than the tax as per normal provision if ass has a credit he can adjust it but how much credit he can adjust is the credit available or the difference between tax as per normal provision or EMT whichever is lower guys whichever is lower assume next year assume next year now he has a total credit of 5 lakh now yes assume next year the tax has for normal provision is 20 lakh and AMT is 15 lakh whichever is higher is how much guys 25 lakh how much credit he has 5 lakh maximum how much credit he can adjust 10 lakh the difference but he has only 5 lakh so how much credit he can adjust 5 lakh so how much he has to pay to the government now 20 lakh so in simple always remember even after adjusting the credit whatever tax the assy pay to the government can never be less than EMT clear so when AMT credit is available guys when AMT is more than tax as per normal provision clear so when AMT credit is available means it is when AMT is more than tax as per normal provision correct yes when EMT can be adjusted is when tax as per normal provision is more than EMT clear but only to the extent of difference only to the extent of difference so you can see here tax credit for alternate minimum tax section 115 JD tax credit when is it available alternate minimum tax paid minus tax payable under normal provision that is whenever EMT is more you would have paid that only so the difference between AMT and tax as per noral provision is available as credit so how long can I carry forward this credit for next 15 years guys leave the year in which you have got the credit you can carry forward for the next 15 years and adjust it whenever the tax as per normal provision is more than tax as per em okay tax credit to be set off when regular income tax payable that is as per normal provision minus alternate minimum tax so whenever you are adjusting the credit guys one thing you have to keep in mind how much credit you can adjust is the credit available or the difference between EMT and tax as per normal provision whichever is lower clear and the final tax to be paid after the set off should never be less than alternate minimum tax because the name itself is telling minimum you have to pay this much to the government so even if you have a credit after adjusting the credit whatever amount you pay minimum should be EMP amount okay some notes every person to which this section applies shall obtain a report before the specified date before the specified date means 1 month before the due date of filing the income tax returns SP for whomever the audit is applicable under Section 44 AB the due date to file return is 31st October 1 month prior to that means 30th September okay before the specified date referred to in section 44 AB from an accountant accountant means Char accountant certifying that the adjusted total income and the alternate minimum tax have been computed in accordance with the provisions of this chapter and furnished such report by that date guys that date means one month prior to the due date of filing the returns which is nothing but 30th September of the assessment Year all other provisions of the act like advance tax interest under Section 234 ABC shall apply to the assass who is liable to pay EMT even if EMT is applicable if the ass's tax Li it is more than 10,000 he has to pay Advanced Tax in four installments guys clear if he don't pay then interest would be charged EMT shall not apply to an individual or a IND undivided family or an association of person or body of individual whether incorporated or not or artificial judical person that is cbate asses guys if adjusted total income of such person does not exceed 20 lakh please be careful am is applicable even for partnership firm and all but year exception is given only for flab ratec telling if their adjusted total income does not exceed 20 lakh then even though they have claimed deduction under any of this category still a is not applicable guys let us assume the total income of the assy just a second let me clear all this so assume I am an individual I am an individual I'm an individual my total income is 10 lakh and I have claimed deduction under which section we will take B section we will take 0 qqb I have deduction claimed I have claimed the deduction under section 0 qqb assume 3 lakh so in that case what we have to do 10 lakh plus 3 lakh we have to add so adjusted total income how much we will get 13 lakh guys it is within 20 lakh it is within 20 lakh in that case even though I have claimed deduction under section 80 qqb under heading C of chapter 6A still a is not applicable because adjusted total income is less than 20 lakh they're telling no em is not applicable em is not applicable guys hope it is clear for clear so for laborate s for total income after adding back the deduction claimed by them under the respective sections under this three category if the adjusted total income is less than 20 L then they're telling no em no em sir what if it is partnership form what if it is like any other ass who is not a slate whoever is not covered there then for them even if adjusted total income is still within 20 lakh also still em would be applicable guys still am would be applicable like partnership form LLP and all okay then for the Cooperative societies who are following optional scheme under Section 115 bad or bae or for the Slate s who is following the default scheme under Section 115 BAC for them there is no provisions of a applicable guys am is not at all applicable for them clear sir what assume I was an individual last year I was following EMT so last year I have an EMT credit of 5 lakh and in the current year 23 24 I want to follow 115 BAC default scheme can I come yes but leave your credit there only and come we learned that credit can be carry forward for next 15 years and adjust it whenever the tax as per normal provision is more but what the income tax provision is telling us if you're are coming under default scheme now if at all in the past if you have any credit please leave it there and come please leave the credit there and come inside the default scheme okay guys so we are finally done with the revision of income tax portions guys yeah so I know the students expectations will be like sir you have to cover maximum portion entire portions but with a short span of time guys I have tried to do my best to cover everything including the Amendments and all so I hope I have done Justice for whatever time you have invested in watching this video so please make sure that you'll make use of this and study well and clear your exams with good marks guys and I will definitely be very happy to hear from you that you have passed so once you guys get your results please do let me know so I would be also feeling happy about your results along with your parents friends and your close Circle and guys so please make sure that if at all means after watching one time if you still have an opportunity or time to watch it again try to watch it or if you want to watch any particular section of any particular chapter and all please do watch and try to make the maximum utilization of resources provided to you fine guys so all the best for your preparation do well you will definitely pass with good marks thank [Music] you