Short Notes on Tax Free Income - Section-wise for all Taxpayee - Free Download

As per the Finance (No.2) Act, 2014,  Income Tax Free Income level is very high.  Apart from this we all known that Income is payable on all types of Incomes earned by Taxpayee in India even-though, there are some exceptions to avoid this rule and some Incomes have been specially exemption from Income Tax.  Such Income is referred to as Income Tax Free Income.  The most popular Tax Free Income is namely :-

• Agricultural Income (Section 10(1)).
• Amount received by a member of the HUF from the income of the HUF, or in case of impartible estate out of income of family estate [Section 10(2)]
• Share of profit received by a partner from the firm [Section 10(2A)]
• Certain interest to non-residents [Section 10(4)]
• Interest on notified savings certificates [Section 10(4B)]
• Leave travel concession [Section 10(5)]
• Remuneration received by specified diplomats and their staff [Section 10(6)(ii)]
• Salary of a foreign employee and non-resident member of crew [Section 10(6)(vi),(viii)]
• Remuneration of a foreign trainee [Section 10(6)(xi)]
• Tax paid on behalf of foreign company deriving income by way of royalty or fees for technical services [Section 10(6A)]
• Tax paid on behalf of foreign company or non-resident in respect of other income [Section 10(6B)]
• Tax paid on behalf of foreign Government or foreign enterprise deriving income by way of lease of aircraft or aircraft engine [Section 10(6BB)]
• Technical fees received by a notified foreign company [Section 10(6C)]
• Allowance/perquisites to Government employee outside India [Section 10(7)]
• Income of foreign Government employee under co-operative technical assistance programme [Section 10(8)]
• Remuneration or fees received by a non-resident consultant/its foreign employees [Section 10(8A),(8B)]
• Income of a family member of an employee serving under co-operative technical assistance programme [Section 10(9)]
• Death-cum-retirement gratuity received by Government servants [Section 10(10)(i)]
• Gratuity received by a non-Government employee covered by Payment of Gratuity Act, 1972 [Section 10(10)(ii)]
• Gratuity received by a non-Government employee not covered by Payment of Gratuity Act, 1972 [Section 10(10)(iii)]
• Pension [Section 10(10A)]
• Leave salary [Section 10(10AA)]
• Retrenchment compensation [Section 10(10B)]
• Compensation for Bhopal Gas Leak Disaster [Section 10(10BB)]
• Compensation on account of any disaster [Section 10(10BC)]
• Payment at the time of voluntary retirement [Section 10(10C)]
• Tax on perquisites paid by the employer [Section 10(10CC)]
• Amount paid on life insurance policy [Section 10(10D)]
• Exemption in respect of amount received from public provident fund/statutory provident fund/recognised provident fund/un-recognised provident fund [Section 10(11)/(12)]
• Payment from approved superannuation fund in specified circumstances and subject to certain limits [Section 10(13)]
• House rent allowance [Section 10(13A)] 
• Prescribed allowances or benefits [Section 10(14)]
• Interest on securities [Section 10(15)]
• Lease rent of an aircraft [Section 10(15A)]
• Educational scholarship [Section 10(16)]
• Daily allowance to a Member of Parliament [Section 10(17)]
• Awards [Section 10(17A)]
• Pension to gallantry award winner [Section 10(18)]
• Family pension received by the family members of armed forces [Section 10(19)]
• Annual value of one palace [Section 10(19A)]
• Income of local authority [Section 10(20)]
• Income of research association [Section 10(21)]
• Income of a news agency [Section 10(22B)]
• Income of a professional association [Section 10(23A)]
• Income received on behalf of Regimental Fund [Section 10(23AA)]
• Income of a fund established for welfare of employees [Section 10(23AAA)]
• Income of pension fund [Section 10(23AAB)]
• Income from Khadi or village industry [Section 10(23B)]
• Income of Khadi and Village Industries Boards [Section 10(23BB)] 
• Incomes of statutory bodies for the administration of public charitable trust [Section 10(23BBA)] 
• Income of European Economic Community [Section 10(23BBB)]
• Income of SAARC fund [Section 10(23BBC)]
• Income of Secretariat of Asian Organisation of Supreme Audit Institutions [Section 10(23BBD)]
• Income of Insurance Regulatory and Development Authority [Section 10(23BBE)]
• Income of North - Eastern Development Financial Corporation Limited [Section 10(23BBF)]
• Income of Central Electricity Regulatory Commission [Section 10(23BBG)] 
• Income of the Prasar Bharati [Section 10(23BBH)]
• Income of certain national funds [Section 10(23C)(i)/(ii)/(iii)]
• Income of National Foundation for Communal Harmony [Section 10(23C)(iiia)], Section 10(23C)(iiiad), Section 10(23C)(vi)
• Income of Hospital [Section 10(23C)(iiiac)/(iiiae)/(via)]
• Income of Charitable Institution or Fund [Section 10(23C)(iv)]
• Income of religious/charitable trust [Section 10(23C)(v)]
• Income of mutual fund [Section 10(23D)]
• Income of a securitisation trust [Section 10(23DA)]
• Income of notified investor protection fund [Section 10(23EA)]
• Income of Credit Guarantee Fund Trust [Section 10(23EB)]
• Income of the notified investor protection fund set - up by commodity exchange [Section 10(23EC)]
• Income of Investor Protection Fund set by a depository [Section 10(23ED)]
• Income of a venture capital fund or a venture capital company from investment in a venture capital undertaking [Section 10(23FB)]
• Income of a of a Business Trust [Section 10(23FC)]
• Distributed Income of a Unit Holder from the Business Trust [Section 10(23FD)]
• Income of a registered trade union [Section 10(24)]
• Income of provident fund [Section 10(25)]
• Income of the Employees’ State Insurance Fund [Section 10(25A)]
• Income of a member of a Scheduled Tribe [Section 10(26)]
• Income of a “Sikkimese” individual [Section 10(26AAA)]
• Income of an Agricultural Produce Marketing Committee/Board [Section 10(26AAB)]
• Income of corporation or other body or institution or association established for promoting the interest of members of Scheduled Caste, etc. [Section 10(26B)]
• Income of corporation established for promoting interest of minority caste [Section 10(26BB)]
• Income of corporation established for ex-servicemen [Section 10(26BBB)]
• Income of a co-operative society formed for promoting the interests of the members of Scheduled Castes or Scheduled Tribes [Section 10(27)]
• Income of coffee board, rubber board, etc. [Section 10(29A)]
• Subsidy from the Tea Board [Section 10(30)]
• Income of minor [Section 10(32)]
• Capital gains on transfer of US 64 [Section 10(33)]
• Dividends and interest on units [Section 10(34)/(35)]
• Income of a shareholder on account of buy back of shares by the company [Section 10(34A)]
• Income of an investor received from a securitisation trust [Section 10(35A)]
• Capital gains in case of compulsory acquisition of urban agricultural land [Section 10(37)]
• Long - term capital gains on transfer of equity shares or units of an equity oriented mutual fund or a unit of a business trust covered by securities transaction tax [Section 10(38)]
• Income from international sporting event [Section 10(39)]
• Grants received by specified subsidiary company [Section 10(40)]
• Income of certain non - profit body or authority [Section 10(42)]
• Loan in the case of reverse mortgage [Section 10(43)]
• Income of New Pension System Trust [Section 10(44)]
• Any notified allowance or perquisite paid to the Chairman/retired Chairman or any other member/retired member of the UPSC [Section 10(45)]
• Exemption of specified income of notified body/ authority/trust/board/commission [Section 10(46)]
• Any income of a notified infrastructure debt fund set-up in accordance with prescribed guidelines [Section 10(47)]
• Income received by certain foreign companies in Indian currency for import of crude oil etc. [Section 10(48)]
• Tax exemption to National Financial Holdings Company Limited [Section 10(49)]

Other important exemptions 

Apart from above discussed exemption of section 10 following is the list of other important exemptions:

• Section 10A provides for exemption in respect of income of newly established undertakings in free trade zone or electronic hardware technology park or electronic software technology park.
• Section 10AA provides for exemption in respect of income of newly established units in Special Economic Zones. 
• Section 11 and 12 provide exemption in respect of income of a public charitable or religious trust.
• Section 13A provides exemption in respect of income of a political party.
• Section 13B provides exemption in respect of income of an electoral trust. 

FREE DOWNLOAD SHORT NOTES (CLICK HERE)

Read More

Get Tax Relief u/s. 89 (1) of Income Tax Act on Previsous Years Salary Arrears

Friends, near about every state of India implemented 6th pay commission and thus the State Government is liable for 6th Pay arrears in Financial year 2011-12 and onwards. Due to arrears, income tax of employees in respect of financial year 2011-12 is going up and employee are receiving very less net amount after deduction of tax.

Therefore, employee unkown and unaware from taking of arrears which can be breakup in respective years and tax relief can be claimed u/s 89(1), but, most of them have no idea, how to calculate relief under section 89(1) of income tax act. We have prepared a 89(1) relief calculator for arrears received in 2011-12 and arrears related to financial year 2005-06 onwards. This calculator is under test condition so not available for download yet. For the time being you can use it online only.

Calculation Sheet

Download

Read More

Who is eligible to get relief on Income from House Property?

Always Taxpayee feel confused about income tax on house property whereas income tax laws are well defined on income from house property. Income tax on house property is well defined as any income from property which is let out on rent will be taxed under the head income from house property. The income will be deduct with any municipal tax paid, any interest re-payment on loan taken on the same property as well as standard deduction which is 30%.

In second condition if the house property is not rent out and used by him, then the value of the property will be deemed as nil while computing the annual value of property for tax purpose.

In third situation if the individual has his own property and he does not live in this house for any reason being employment or business or profession in another city, and he live in another house which is not own by him, the property which is in another city and which is not occupied by him will be deemed self occupied property and annual value will be treated as zero while computing the annual value for income tax.

Some judicial cases were also held that if an individual has his own property but doesn’t resides that property, the same will be deemed as his self occupied house and the annual value will be treated as zero. But this relief (not necessary as self occupied) is only available to individual tax payer and not to any other category of income tax payee. In income tax provision the term “his own residence” means the property should be of individual to claim this benefit. Companies and partnership firms are not living entities and cannot claim that relief as they cannot be called his own residence. The tern his own residence is for physical reside and not for fictitious entities.

One recent case was held by the honorable Gujarat High Court, the income tax assessee was HUF and not an individual. HUF made claim that relief on house property as self occupied property. The HUF firm getting income from house properties. The assessing officer denied the claim of relief on self occupied house as it is only available to an individual and not to fictitious entities.

The HUF firm applies the case to appellate level, where the case was rejected as the relief is not for HUF. The firm went to Tribunal and the Income tax Tribunal at the second level of appellate level gives the case in favor of HUF Firm and allowed to make claim of relief to HUF as well.

Income tax department read my decisions given on different cases and also analysis the cases other than income tax. One of the similar cases was of wealth tax in which exemption is only available to the individual for his residential purpose only. The department also studied the case in which the same relief was denied by the court in partnership firm. In one case the Gujarat high court ruled that HUF can reside in the house owned by it and is allowed to claim the exemption in wealth tax.

So in this case Honorable Gujarat high court ruled that HUF is the group of persons having blood relation and it is not a fictitious entity like partnership firm or company. HUF consist of natural people and only a group of natural people including men, women and children includes in it. So how can one dispute in it that only an individual and not a family can reside in a house. In India almost in every house family and not only an individual lives in the house.

HUF is the Hindu undivided family and a family consists of real persons and not artificial persons. The honorable court also ruled that his own is also called their own and owner can also be called owners for calculating the relief under income from house property.

So the court ruled that HUF can also claim the relief in income from house property if the family owns that house and resides in it. This is the big relief for the taxpayers who has ancestral property as well as to the persons who has the property in the name of HUF for the tax saving purposes.

Read More

Tips – On Individual Income Tax: Away from Tension and Pay Taxes

Friends, Today, there exist a number of income tax schemes in both the financial market and the employment arena. They vary in severity of their tax incidences. The tax chargeable on the entire income of individual employees or individual self-employed people is known as individual income tax. These taxes can be categorized as either being proportional, regressive or progressive. The base for taxable income for individuals is their total income.

Generally, individuals want to pay less and less tax, thus it is important for them to take charge of their tax affairs by being careful with their financially affairs. All expenses, incomes, savings, etc must be articulately recorded. This is for aiding the individual tax payer to arrive at the correct figure they owe to the tax man. There is no need to rush at the last minute so as to calculate the due individual income tax. This becomes very stressful and an individual might miscalculate their income tax leading to problems with the tax authorities. Below are some individual’s income tax tips to assist an individual to beat the taxman’s deadlines. * Be careful with both the taxable and allowable expenses when filing in for individual income tax. For example:

1. Traveling expenses

A schedule of distance traveled must be kept to aid in accurate calculations of an individual’s traveling deductions. Travel expenses such as, cost to conferences, seminars, airfare, taxi charges, parking fees, car rentals and other work related form of traveling expenses are deductible.

2. Expenses related to entertainment.

As from 1st March, 2002, the government declared that no deduction against the entertainment allowances is allowable for individual’s personal motives. So, all entertainments allowances must be declared to the employer by the individual employees for the allowances to be fully taxed.

3. Most Medical expenses are deductible.

Accurate records must be kept detailing all medical expenses which are not taken care by an individual’s medical cover. Reckoning on an individual’s gross income, health insurance which includes dental insurance payments must be registered as deductible. For non-deductible own medical expenses, they can be converted into a legal business expense.

* To beat the rush to the individual’s incomes tax department, taxable income must be calculated in advance. Failure to do so imply that an individual can not beat the income tax deadlines resulting to hefty penalties. The tax returns to tax bodies such as Internal revenue service must be submitted before the due date, failure to so, the tax man will be after your neck with all the due force, to enforce the tax payment.

It is an actuality that most people are quite worried when it comes to end of the year-the tax man is after their necks tax-wise. Thus, it is advisable to start the preparations of your tax affairs in advance so as to take advantage of any entitled tax escape.

Read More