Extra Cultivation

Life Story of Mark Zuckerberg

noreply@blogger.com (Unknown) — Wed, 15 Apr 2026 21:39:00 +0530

Do you use Facebook, Instagram OR Threads any one of them then you are part of the Meta who actually own by Mr. Mark Zuckerberg his full name is Mark Elliot Zuckerberg.

Mr. Zuckerberg was born on 14-May-1984, White Plains, New York, U.S.A. his father name is Dr. Edward Zuckerberg who was dientist & his mother name is Mrs. Karen who was Psychiatrist he is one of the 4 children & other are the sisters whose names are Arielle, Randi & Donna. In his early age he attended Ardsley High School later he went to the Phillips Exeter Academy.

He learned computer programming from his childhood at the age of 11, he created "ZuckNet", a program that allowed computers at the family home and his father's dental office to communicate with each other. During Zuckerberg's high-school years, he worked to build a music player called the Synapse Media Player which learn to the user's listening habits, which was posted to Slashdot and received a rating of 3 out of 5 from PC Magazine. While still in high school, he attended Mercy College taking a graduate computer course on Thursday evenings.

Due to the his passion & love towards the programming his father appointed a personnel tutor who teach him about the coding & other technical concepts about these backend things. So, when he was in Harvard University in 2002 where he studied computer science even before he had already achieved a "Reputation As A Programming Prodigy". When he was in 2nd year of his graduation he wrote a program that was called "CourseMatch," which allowed users to make class selection decisions based on the choices of other students and help them form study groups.

In January 2004, Zuckerberg began writing code for a new website which later launched "Thefacebook", originally located at thefacebook.com with the partnership of his roommates Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes. An earlier inspiration for Facebook may have come from Phillips Exeter Academy, the prep school from which Zuckerberg graduated in 2002. It published its own student directory, "The Photo Address Book", which students referred to as "The Facebook". Such photo directories were an important part of the student social experience at many private schools. With them, students were able to list attributes such as their class years, their friends, and their telephone numbers. Zuckerberg's Facebook started off as just a "Harvard thing" until he decided to spread it to other schools, enlisting the help of roommate and co-founder Dustin Moskovitz. They began with Columbia University, New York University, Stanford University, Dartmouth College, Cornell University, University of Pennsylvania, Brown University, and Yale University.

Whereas if we know about his life then Mr. Zuckerberg met to the Priscilla Chan at a frat party during his second year at Harvard, they began dating to each other in 2003 after 9 years in 2012 on May-19 they both married. They both have 3 children & all are daughters.

From his life we understand that if you passion about something which has future then you can go with that to make your life in that career.

In the case of Mr. Zuckerberg he had a passion of technology & coding from childhood which has upcoming future which decided him to go with that & make a career in that & become a billionaire by launching to the Facebook.

World's Countries Name & Capitals

noreply@blogger.com (Unknown) — Wed, 1 Apr 2026 18:42:00 +0530

There are 195 countries in the world, according to the United Nations. This includes 193 member states and 2 non-member observer states: Vatican City and Palestine.

Now let's know all the country's name and their capitals in the Alphabetical ascending order.

S.No.	Country's Name	Capital
1.	Afganistan	Kabul
2.	Albania	Tirana (Tirane)
3.	Algeria	Algiers
4.	Andorra	Andorra la Vella
5.	Angola	Luanda
6.	Antigua and Barbuda	Saint John's
7.	Argentina	Buenos Aires
8.	Armenia	Yerevan
9.	Australia	Canberra
10.	Austria	Vienna
11.	Azerbaijan	Baku
12.	Bahamas	Nassau
13.	Bahrain	Manam
14.	Bangladesh	Dhaka
15.	Barbados	Bridgetown
16.	Belarus	Minsk
17.	Belgium	Brussels
18.	Belize	Belmopan
19.	Benin	Porto Novo
20.	Bhutan	Thimphu
21.	Bolivia	La Paz
21.	Bolivia	Sucre
22.	Bosnia And Herzegovina	Sarajevo
23.	Botswana	Gaborone
24.	Brazil	Brasilia
25.	Brunei	Bandar Seri Begawan
26.	Bulgaria	Sofia
27.	Burkina Faso	Ouagadougou
28.	Burundi	Gitega
29.	Cambodia	Phnom Penh
30.	Cameroon	Yaounde
31.	Canada	Ottawa
32.	Cape Verde	Praia
33.	Central African Republic	Bangui
34.	Chad	N'Djamena
35.	Chile	Santiago
36.	China	Beijing
37.	Colombia	Bogota
38.	Comoros	Moroni
39.	Congo, Democratic Republic Of The	Kinshasa
40.	Costa Rica	San Jose
41.	Cote D'Ivoire ( Ivory Coast )	Yamoussoukro
42.	Croatia	Zagreb
43.	Cuba	Havan
44.	Cyprus	Nicosia
45.	Czech Republic (Czechia)	Prague
46.	Denmark	Copenhagen
47.	Djibouti	Djibouti
48.	Dominica	Roseau
49.	Dominican Republic	Santo Domingo
50.	East Timor	Dili
51.	Ecuador	Quito
52.	Egypt	Cairo
53.	EL Salvador	San Salvador
54.	Equatorial Guinea	Malabo
55.	Eritrea	Asmara
56.	Estonia	Tallinn
57.	Eswatini (Swaziland)	Mbabane
58.	Ethiopia	Addis Ababa
59.	Federated States of Micronesia	Palikir
60.	Fiji	Suva
61.	Finland	Helsinki
62.	France	Paris
63.	Gabon	Libreville
64.	Gambia	Banjul
65.	Geogria	Tbilisi
66.	Germany	Berlin
67.	Ghana	Accra
68.	Greece	Athens
69.	Grenada	Saint George's
70.	Guatemala	Guatemala City
71.	Guinea	Conakry
72.	Guinea-Bissau	Bissau
73.	Guyana	Georgetown
74.	Haiti	Port Au Prince
75.	Honduras	Tegucigalpa
76.	Hungary	Budapest
77.	Iceland	Reykjavik
78.	India	New Delhi
79.	Indonesia	Nusantara
80.	Iran	Tehran
81.	Iraq	Baghdad
82.	Ireland	Dublin
83.	Israel	Jerusalem
84.	Jamaica	Kingston
85.	Japan	Tokyon
86.	Jordan	Amman
87.	Kazakhstan	Astan
88.	Kenya	Nairobi
89.	Kiribati	Tarawa Atoll
90.	Kosovo	Pristina
91.	Kuwait	Kuwait City
92.	Kyrgyzstan	Bishkek
93.	Laos	Vientiane
94.	Latvia	Riga
95.	Lebanon	Beirut
96.	Lesotho	Maseru
97.	Liberia	Monrovia
98.	Libya	Tripoli
99.	Liechtenstein	Vaduz
100.	Lithuania	Vilnius
101.	Luxembourg	Luxembourg
102.	Madagascar	Antananarivo
103.	Malawi	Lilongwe
104.	Malaysia	Kuala Lumpur
105.	Maldives	Male
106.	Mali	Bamako
107.	Malta	Valletta
108.	Marshall Islands	Majuro
109.	Mauritania	Nouakchott
110.	Mauritius	Port Louis
111.	Mexico	Mexico City
112.	Moldova	Chisinau
113.	Monaco	Monaco
114.	Mongolia	Ulaanbaatar
115.	Montenegro	Podgorica
116.	Morocco	Rabat
117.	Mozambique	Maputo
118.	Myanmmar (Burma)	Nay Pyi Taw
119.	Namibia	Windhoek
120.	Nauru	No Official Capital
121.	Nepal	Kathmandu
122.	Netherlands	Amsterdam
123.	New Zealand	Wellington
124.	Nicaragua	Managua
125.	Niger	Niamey
126.	Nigeria	Abuja
127.	North Korea	Pyongyang
128.	North Macedonia (Macedonia)	Skopje
129.	Northern Ireland	Belfast
130.	Norway	Oslo
131.	Oman	Muscat
132.	Pakistan	Islamabad
133.	Palau	Melekeok
134.	Palestine	Jerusalem
135.	Panama	Panama City
136.	Papua New Guinea	Port Moresby
137.	Paraguay	Asuncion
138.	Peru	Lima
139.	Philippines	Manila
140.	Poland	Warsaw
141.	Portugal	Lisbon
142.	Qatar	Doha
143.	Romania	Bucharest
144.	Russia	Moscow
145.	Rwanda	Kigali
146.	Saint Kitts and Nevis	Basseterre
147.	Saint Lucia	Castries
148.	Saint Vincent and the Grenadines	Kingstown
149.	Samoa	Apia
150.	San Marino	San Marino
151.	Sao Tome and Principe	Sao Tome
152.	Saudi Arabia	Riyadh
153.	Scotland	Edinburgh
154.	Senegal	Dakar
155.	Serbia	Belgrade
156.	Seychelles	Victoria
157.	Sierra Leone	Freetown
158.	Singapore	Singapore
159.	Slovakia	Bratislava
160.	Slovenia	Ljubljana
161.	Solomon Islands	Honiara
162.	Somalia	Mogadishu
163.	South Africa	Pretoria (Executive)
		Bloemfontein (Judicial)
		Cape Town (Legislative)
164.	South Korea	Seoul
165.	South Sudan	Juba
166.	Spain	Madrid
167.	Sri Lanka	Sri Jayawardenapura Kotte
168.	Sudan	Khartoum
169.	Suriname	Paramaribo
170.	Sweden	Stockholm
171.	Switzerland	Bern
172.	Syria	Damascus
173.	Taiwan	Taipei
174.	Tajikistan	Dushanbe
175.	Tanzania	Dodoma
176.	Thailand	Bangkok
177.	Togo	Lome
178.	Tonga	Nuku'alofa
179.	Trinidad and Tobago	Port of Spain
180.	Tunisia	Tunis
181.	Turkiye (Turkey)	Ankara
182.	Turkmenistan	Ashgabat
183.	Tuvalu	Funafuti
184.	Uganda	Kampala
185.	Ukraine	Kyiv or Kiev
186.	United Arab Emirates	Abu Dhabi
187.	United Kingdom	London
188.	United States of America	Washington D.C.
189.	Uruguay	Montevideo
190.	Uzbekistan	Tashkent
191.	Vanuatu	Port Vila
192.	Vatican City	Vatican City
193.	Venezuela	Caracas
194.	Vietnam	Hanoi
195.	Wales	Cardiff
196.	Yemen	Sana'a
197.	Zambia	Lusaka
198.	Zimbabwe	Harare

These are 198 Countries From which we mention 195 countries starting to the table, so what about extra 3 countries.

Well these are:-

Wales is a constituent part of the sovereign state of the United Kingdom. Although not fully independent, it is widely referred to as a country.

Scotland is a constituent part of the sovereign state of the United Kingdom. Although not fully independent, it is widely referred to as a country.

Northern Ireland is a constituent part of the sovereign state of the United Kingdom. Although not fully independent, it is widely referred to as a country.

India's States & Their Capitals With Union Territory

noreply@blogger.com (Unknown) — Wed, 25 Mar 2026 18:25:00 +0530

There are 28 States and 8 Union Terrotories in India. Let's know their names & their capital's name.

Firstly know to the India's State names and their Capitals.

S.No.	State Name	Capital
1.	Andhra Pradesh	Amaravati
2.	Arunachal Pradesh	Itanagar
3.	Assam	Dispur
4.	Bihar	Patna
5.	Chattisgarh	Raipur
6.	Goa	Panaji
7.	Gujarat	Gandhinagar
8.	Haryana	Chandigarh
9.	Himachal Pradesh	Shimla
10.	Jharkhand	Ranchi
11.	Karnataka	Bangalore
12.	Kerala	Thiruvananthapuram
13.	Madhya Pradesh	Bhopal
14.	Maharashtra	Mumbai
15.	Manipur	Imphal
16.	Meghalaya	Shillong
17.	Mizoram	Aizawl
18.	Nagaland	Kohima
19.	Odisha	Bhubaneshwar
20.	Punjab	Chandigarh
21.	Rajasthan	Sikkim
22.	Sikkim	Gangtok
23.	Tamil Nadu	Chennai
24.	Telangana	Hyderabad
25.	Tripura	Agartala
26.	Uttarakhand	Dehradun
27.	Uttar Pradesh	Lucknow
28.	West Bengal	Kolkata

Let's know the Union Territory's name & their capitals.

S.No.	Union Territory	Capital
1.	Andaman & Nicobar Islands	Sri Vijaya Puram
2.	Chandigarh	Chandigarh
3.	Dadar & Nagar Haveli and Daman & Diu	Daman
4.	The Govt. of NCT of Delhi	Delhi
5.	Jammu & Kashmir	Sringar in Summer & Jammu in Winter
6.	Ladakh	Leh
7.	Lakshadweep	Kavaratti
8.	Puducherry	Pondicherry

There all are the India's states & their capitals with Union Territories and their capitals.

SpaceX Ipo One of The Biggest Ever in 2026

noreply@blogger.com (Unknown) — Tue, 3 Mar 2026 17:16:00 +0530

We are in the year of 2026 & this year is the most important for all of the people who directly or indirectly related to the primary & secondary stock market, because in this year many companies are going to launch their IPOs which will raise trillion of dollars amount in the worldwide.

The most important IPO is SpaceX's IPO which is Mr. Elon Musk company known as Space Exploration Incorporation whose current private market valuation is nearly $ 800 billion and the company is going to raise $30 billion from their IPO through that the valuation will hit nearly $ 1 Trillion in the future as the company grow & stock price increases.

Let's understand what is the SpaceX is actually & what are the revenue sources to make profits. SpaceX is a private American aerospace manufacturer & space transportation company which was founded by C.E.O. of Tesla Elon Musk in 2002. Its' core mission is to reduce space transportation costs through reusable rockets, enabling the colonization of Mars, while also operating the Starlink satellite internet network.

So, how this company make profit, the reason is by providing internet services by Starlink product, commercial launch services, Government & NASA contracts, Rideshare Program and much more other things which SpaceX do for the individuals to government.

List Of The Biggest IPOs Of All Time
S.No.	Company Name	Amt. Raised in U.S.D.
1.	Saudi Aramco	$ 25.6 Billion
2.	Alibaba Group	$ 21.7 Billion
3.	SoftBank Corp.	$ 21.3 Billion
4.	NTT Mobile	$ 18.1 Billion
5.	Visa	$ 17.86 Billion
6.	AIA	$ 17.78 Billion
7.	Enel SpA	$ 16.45 Billion
8.	Facebook	$ 16.45 Billion
9.	General Motors	$ 16.01 Billion
10.	ICBC Bank	$ 15.77 Billion

Well not only the SpaceX is going to offer their shares but there are also other companies who will launch their IPO in 2026.

Company's Going To Launch Their IPO in 2026
S.No.	Company Name
1.	Minimax
2.	Z.ai (Zhidu Ai)
3.	Anthropic
4.	OpenAi
5.	Databricks
6.	Bitpanda
7.	Raisin
8.	Helsing
9.	Quantum Systems
10.	Celoni
11.	GetYourGuide
12.	Mobile.de
13.	SumUp
14.	KNDS
15.	Kraken
16.	ConsenSys
17.	Revolut
18.	Monzo
19.	Starling Bank
20.	Visma
21.	Stripe
22.	Bolt
23.	Canva
24.	Dataiku
25.	Discord

Most important companies which we should have to look into the market is SpaceX, OpenAi and Anthropic whereas there private market valuation is $ 800 Billion, $ 500 Billion and $ 350 Billion approximately.

Let's wait & know how all of the above company's IPO will perform in 2026 due to the current political situation & geo-politics situation which we are facing right now.

Source: reuters, cnbc, capital.com , Barron's, Trending Topics.eu and dealroom.net .

How Adani Enterprises was formed?

noreply@blogger.com (Unknown) — Mon, 26 Jan 2026 09:36:00 +0530

What comes in your mind when I ask from you about "Adani", being an investor, trader & person who know what's going in current business world then only 1 man will strike in your mind and that person is Mr. Gautam Adani the Chairman of the Adani Group and his networth is $5,150 Crores.

Now observe his life how he become to the billionaire & the richest person in the world from childhood to the current age, what did he do & what are those things which brings him to expand his Adani Group at the international level which make his networth .

He was born on 24-June-1962 Banaskantha Village, Ahmedabad, Gujarat, India his father name is Shantilal Adani & his mother name is Shantaben Adani. Mr. Adani has 7 brothers & sisters whereas his father worked as a small textile merchant.

In his early life he study in Sheth Chimanlal Nagindas Vidyalaya school in Ahmedabad, but dropped out when he was 16. He was more interested in business even in that age but not in his father's business. So later in the age he moved to the Mumbai in 1978 and worked there as diamond sorter for Mahendra Brothers.

In 1981, after 3 years moving to the Maharashtra his elder brother Mr. Mahasukhbhai Adani bought a plastics unit in Ahmedabad and invited him to manage the operations. This offer from his brother brings new opportunity for his towards the global trading aspect. That unit import Polyvinyl Chloride (PVC). After involving into the business nearly 4 years later in 1985 they become the trader where he import to the PVC & sell to other small-scale industries & that company name was Adani Enterprises. Later in the upcoming years many new policies introduced by government but 1 policy which was in his favour & that is the L.P.G. (Liberalization, Privatization & Globalizaion) which was represented by Mr. Manmohan Singh in the Parliament then after the launching to this policy in 1991 he started to expand his businesses into many segments from trading of metals, textiles to agro products.

In 2006, Adani Enterprises entered into the power generation business. From 2009 to 2012, he acquired Abbot Point Port in Australia and Carmichael coal mine in Queensland.

From his life story we understand that even if anything is taken from you by life then it provides you to an opportunity which can change your life but it's your responsibility & decision to take that opportunity then change your life direction.

As Mr. Adani left to the school due to the economic condition but later he got an opportunity from his brother to work in his plant which change his life direction & get knowledge about import & export and business.

Mental Health As Important As Physical Health Then Use TELEMANAS

noreply@blogger.com (Unknown) — Wed, 21 Jan 2026 10:53:00 +0530

As we know Health is Wealth. But which one Physical or Mental ? Well actually both but in India wealth has been decreased too far because in the terms of Mental & Physical health India has lose its' wealth. Especially in the Mentality terms because when the government started initiative to handle with mental stress by launching to TeleMANAS Programme on 10-October-2022 at that time we need to be aware about the Mental Health well that's all about after the Covid-19.

To tackle with the Mental Health of the people government launched TeleMANAS. Let's understand what it is & how does it help to those who are facing the mental health problems in their life.
TELEMANAS launched on 10-October-2022 By Mr. Nityanand Rai The Minister Of State For Home Affairs at that time it was an helpline number which is 1800-89-14416 which are available in more than 18 languages. Later they launched an application or App on World Mental Health Day in 2024 for the video consultation.

The TELEMANAS has 53 cell across India with over 600 trained counselor 5 Regional Co-ordinating Centerss which provide you help related to your mental health 24/7. These help you related to the anxiety, depression, stress, emotional disturbances, work pressure, family & financial responsibility, health issues, addictions, exam stress concerns about relationships and much more.

You can access to telephone-based counselling, psychotherapy, psychiatric consultations, and referral services, including urgent care, without the barriers of distance or cost.
It has also collaboration with 23 Mentoring Institutes that provide expert guidance and support to you related to your problem.

Although the Mental Healthcare Act of 2017 enshrines access to mental health as a statutory right, over 11 crore people in India still suffer from mental health disorders.

Till January-2026 it has received nearly 31,80,743 + calls related to the Mental Health, which means nearly 2,700+ calls everyday after launching since October-2022.

To use this make a call on 1800-89-14416 for that 1st select to the language and then select to the state then your call directly transfer to the consultant. So, how does TELEMANAS work actually which helps you related to the Mental Health.

Base level	53 cells	10–20 trained counselors per cell providing 24/7 support Specialist Layer Psychiatrists, Clinical Psychologists, Psychiatric nurses
Mentoring Institutes	23 Centers	Backup support when specific expertise is needed
Regional Hubs	5 Zones	Coordinated escalation support
APEX	NIMHANS (National Institute Of Mental Health And Neuro-Sciences)	Training, data governance, quality control

Tele-MANAS does not record your calls. Your calls are not audio recorded.

Here’s how it works:

Your phone number is masked. Counselors and even backend teams don’t see it unless legally authorized. You are assigned a unique Tele-MANAS ID, separate from your phone number. For every demographic question, there is a “prefer not to say” option. You can receive complete care without revealing your name, gender, location, or any personal identifier.

Crisis Protocols — Anonymity with Accountability

A common misconception is that anonymity might limit emergency response — especially in cases of self-harm or suicide ideation. Tele-MANAS has built a “crisis relay protocol” into its system.

Within the first few minutes, counselors conduct a structured risk assessment. If there is immediate risk to life, Tele-MANAS activates district-level emergency links — connecting with local DMHP teams, police, or medical officers.

Only the minimum necessary information is shared to enable rescue or medical support.

The data surprised us. The male–female call ratio has consistently held at around 45:52, and that stability over three years tells us something important—men are calling almost as much as women, which is unusual in mental health services.

Click On TeleManas to visit the actual government site related to this. TeleManas

Data we collected and analyzed from the The Economic Times, Mental Health First Aid India, Edinbox, PIB AND TELE MANAS.

Life Story of Water Man to Become Richest Person

noreply@blogger.com (Unknown) — Sun, 26 Oct 2025 10:34:00 +0530

There are many industries in the world which make people and their family billionaire but the Bewerage Industry which has lots of competition and many brands launch every year so it's difficult to become a billionaire but just by selling to the Water how someone can become a billionaire in the Bewerage Industry segment ?

But that's true there is person in China who become a billionaire by selling to the water to the people and get rich & his name is Zhong Shanshan

Mr. Zhong Shanshan was born on December-01-1954 in Zhuji, Shaoxing, China and he also soon turning to the age of 71. His childhood was not normal as today's child life or others who did not face any type of revolution in their childhood. When he was just 12 years old at that time there is Revolution in China which forced him to left his elementary school. The revolution is all about to stop the Capitalist in China.

His family faced money problem due to the revolution therefore he also went to do the job as like other family members in the Construction Industry, as the time goes the revolution settled down then he continue his study and got the admission in the college and choose to pursuing the Journalism Degree. After getting to the degree he worked 5 years in media company from various roles and one of the role was Journalist.

Later in 1995, he started his own company whose name was Sea Crystal which was related to the Pharma but that company also shutdown after the few years due to the High Debt and shutdown to that company. Later he started a Grocery Business from the money he had in the Tourist Island which was good to earn & save money because he learnt too much from the past experience he had with the business.

Later he analyzed the tourist mostly drink the water from the Bottles also the China's people which brings an idea to start a business and enter into an Bewerage Industry but he entered at that time it was mostly dominated by the foreign companies. Still he consider this industry as upcoming big industry due to many diversifications. He started his company and name is NONGFU SPRING and he knew that selling to the water is not enough to increas his business then he started to adding the minerals, vitamins & much more nutritional value to increase the sales, which brings more sale to his business but that's is not enough for him to capture the market. Then he promoted his water brand at International Level which means whenever there is International Conference OR Confrences where Foreign People will be there at those places he promoted his brand from various sources of advertising.

Which brings his brands more value and capture the market but it is not sufficient for him so later he diversify his products from Water segment to Juice, Cold-Drinks & other Bewerage Segment, which brings the more sale and market dominance in the China & also at International Level. But the main reason to reach at this position in the Bewerage Industry which mostly dominated by the Foreign Companies was "The Most Efficient Way of Distribution". Now in 2025 his networth is $ 7,780 Crores (Rs. 68,498 Crores) this networth is also increased by investing into the Beijing Wantai Biological Pharmacy

He mostly stay out from the media & other online media platforms and kept his life as private as he can.

From his life we can learn that "Revolution & Poverty is not the reason to deny your Commitments & Vision to convert your idea & problem you solve to get what you want and overcome from the situation which is not good Neither for your family Nor for You."

Faced Financial Depression Then Become to the Billionaire

noreply@blogger.com (Unknown) — Fri, 15 Aug 2025 17:11:00 +0530

Do you know what is the Depression or Financial Crisis? If you know ever you faced that problem and set back and build to those things back which you lost in those financial crisis when it happened and effect to the each person in this world.

Today you will know how a boy and his family faced financial crisis which convert to that boy who had happy childhood which force him to take responsibilities to sell whatever he can.

You are going to learn about the Warren Buffett whose full name is Warren Edward Buffett who was born on August-30-1930 in Omaha, Nebraska, United States of America (U.S.A.). His father name was Howard Buffett and mother name was Leila Stahi Buffett and his sister name was Doris Buffett. They were living happily in the Omaha but later in the times when his father was the stock brocker in the company and making their lives but in 1930s there are crisis which we called Great Depression where his father lost his job and started to find other work to raising their family.

He was good in mathematics and understanding to the patterns while he was child as like you can understand this thing by knowing when he saw the cars which were passing to their house he notice their number plates and brand's name which he wrote at the night in the notebook which somewhere raised his memory skill.

So as his father worked as the stock brocker so he bought 3 to 6 shares and later sold to them with little profit but sooner that share price were increasing day by day which forced him to thought why this happen which eventually force him to enter into the share market.

But due to the Financial Crisis which changed his family situation so he started to work at selling to the soft drinks by purchasing from his Maternal Grandparents shop where they were hesitating to them either allow him to sell or not but due to his behavior and asking again & again allowed him to sale. Where the Mr. Buffett started to sell the soft drinks to his neighbourhood and later added to the other things as like magazines, newspapers and much more.

While doing all these things he never left his school or compromised with studies and later when his graduation completed he wanted to start his business but his father Mr. Howard Buffett told to pursue to the Master's degree because at that time his father also got good job and told him to get the admission into Harvard Business School but he got rejection from there but somewhere he thought which was good for him because he already read to the book called \\ Intelligent Investor which was written by Benjamin Graham and got the information that he is working as professor in the Columbia University so he took admission in that university and started to learn so many things related to the investing under his guidance.

After completing to his Masters he want to the job but instead of searching he got an offer to doing the job in Mr. Graham's company which was given by Mr. Graham himself which he did not reject and accepted to work there as Research Analyst after doing many things investing into many companies which brings him profit. During working with Mr. Graham he learn 2 important rules related to the investing which was

Rule no. 1	Never Lose Money
Rule no. 2	Never Forget Rule no. 1.

then he decided to started his own company where he and other 6 people started to the company related to the investment firm where he and his team provide more than 20% annual return but later during that time he acquired to the Berkshire Hathway where he also met his long term partner Charlie Munger where they both run to the textile company which eventually was it's core business but later they decided to close it's core business and convert into the diversified holding company which invest and buy to the other companies share.

The things which we learn from his life is to study and do whatever you get to earn and for living also choose a mentor who can change your life and most importantly discuss with your parents before making decisions.

As if Mr. Buffett overruled his father's decisions to pursuing the Masters and started his business then we are unable to see an experienced person who has knowledge of investing and saving.

Life Story of Child Inventor from Childhood

noreply@blogger.com (Unknown) — Thu, 7 Aug 2025 21:35:00 +0530

You know the value of the education but do you know what makes you successful with the help of that educaion? You will get this answer to know the life story of Larry Page.

The Larry Page the person we know as the founder of the Google Application and company called Alphabet Incorporation (Inc.) his full name is Lawrence Edward Page and his networth is $15,260 Crores or I.N.R. 13 lakhs Crores.

Larry Page was born on March-26-1973 in Lansing, Michingan, United States his father name is Carl Victor Page Senior a PhD in Computer Science from the University of Michigan and also the professor of the computer science in the same university & his mother name is Gloria who an instructor in Computer Programming at Lyman Briggs College at the same institution he has also an elder brother whose name is Carl Victor Page Jr. He got an Edixy Scorcerer when his age was 8 years.

Edixy Scorcerer was a home computer system. During his childhood and his adult life he was fully surrounded from the Computer Science related magazines and technology related toys and other things. He read to those magazines and also do little bit engineering work with those things and observe how the things work, how does that operate and much more. Which develop his mind to innovate new things and also use that to convert into something useful.

While surrouding from the magazines and things related to the technology which nurture his mind to pursure Computer Science so he done his schooling in Okemos Montessori School and also done PhD in Computer Science from the Standford University where he met his upcoming business partner whose name is Sergrey Brin Sergrey Brin and they both were in the same PhD project called World Wide Web. Where he and Sergrey Brin work together and develop a website to rank the pages on the basis of their quality and backlink, which later become their idea convert them into a company which they both took $ 10, miilions and started to the company called Blackrub which later changed his name to Google and become very popular because as like Yahoo who rank to the pages on the basis of number of words most you searched on it instead of the information related to that you searched which brings Google more popular day by day.

Later the Google become the part of the Alphabet Inc. (Incorporation) which owned by Larry Page and Sergrey Brin . In 2007 he married with Lucinda Southworth which brings his life a new meaning and more value.

You also want to become successful and valueable in your field which you are pursuing then be surrounded by related to that from magazines to people, listening to the interviews to the watching to their shows also listen to them on radio. Then your mind will nurture and 1 day you will be more valueable person in your field.

Life Story of Sergey Brin

noreply@blogger.com (Unknown) — Sun, 29 Jun 2025 22:13:00 +0530

Do you watch videos on YouTube OR search anything on Google OR go somewhere with the help of Maps OR view to the best places on this world with the help of Google Earth, OR collect & analyze data with the help of Google Sheets OR any other most advance tasks with improve your daily & professional life, these all come under 1 incorporation called Alphabet Inc.(Incorporation) which founded by 2 person Larry Page and Sergey Brin .

In this part you are going to learn how Sergey Brin created this most advanced technology for human that dominate to the search engine market.

Sergey Brin whose full name is Sergey Mikhailovich Brin with the current net worth of $ 13,840 Crores (Rs. 11,896 Billion).

He was born on August-21st-1973 in Moscow, Russia. His father name was Michael Brin who was the Mathematician Professor & his mother name was Eugenia Brin who worked as scientist in N.A.S.A.'s (National Aeronautics and Space Administration which is U.S. government air & space related science & technology) Goddard Space Fligh Centre. When he was the 6 years old with his family he moved to the U.S.A. (United States Of America) where he lived in Maryland, U.S.A.

Things did not change from here but when he was 6 years old and suffered from Dyslexia (Dyslexia is the learning disorder where the child has difficulty to read). He defeated to that thing become the best student in studies. When he was pursing his graduate he selected to study Mathematics and Computer Science from University of Maryland. After completing to his studies he did his master and then to the P.H.D. from the Standford University.

His decision to pursuing the P.H.D. which changed his whole life when he met with Larry Page in the year 1996. During the P.H.D. they both worked for the same project which was related to the search and it's name was Blackrub . Their main focus was developing to the search engine that analyzing to the relationship between website based on their backlinks.

Where they both created an algorithm called Page Rank which assign the number to the websites based on their quality of links that appointing to them. From this project they got an idea to convert this project into the company. Where they named their company called "BlackRub", after working in their company in September 1998, they renamed BlackRub to Google and received their FIRST funding to launch that and the amount was $1,00,000, from Andy Bechtolshiem who was the co-founder of Sun Microsystem .

After that all the things changed and then the Google launched multiple products to services as like Gmail, Docs, Maps, Classroom, Meet and so on, the list which provide to the multiple valuable resources and increase to the productivity from everyday life to the big coporates (corporations). Later the Sergey Brin restructured to the Google and make it to the Alphabet Inc. (Alphabet Incorporation) where he served as the President of the biggest company who dominates to the search engine market share of all the world.

From his life we understand and know that to convert an idea to the big corporation you need to study and get education which provides to the value of your life and provide an idea through which you can change many people's life over the world.

The Story of The ORACLE

noreply@blogger.com (Unknown) — Sun, 25 May 2025 09:12:00 +0530

How much customers needed to make billions of revenue annually millions of customers or much more but if told there is a company whose client base is than 1 million and make huge profit each year and the company name is ORACLE which was mainly founded by LARRY ELLISON and we are going to know how he made his fortune from less customer base but through the implication of project after getting done too many things in life.
Let's learn more about him in detail from childhood to the CEO of the biggest technology (tech) company.

Mr. Larry Ellison who was born on August-17-1944 and bought up in the South Side of the Chicago, United States. When he was 9 months old suffered from Pneumonia but soon he recovered from that health issue and managed to get well very soon. He grew in life and learn so many things when he reached his age at 21 everyone wants him to be a Doctor but he was not interested that much so he dropped his college and went to the Brooklyn, California, United States. In 1960s the people in Brooklyn are against the Vietnam War where he joined Sierra Clu and become the environmentalist & worked as a river guide, rock climbing instructor but he was not paid much well.
As a enviromentalist he learned and too much from people who arrive there and experiment many different activites also he observed & feel to the nature & it's beauty very closely which enhanced his enlightnment towards the enviroment which clean his mind from different thoughts then he started to live in the present moment and make better decisions. But due to the monthly payment which he got was not much satisfactory then he quit his job.

Later he joined a company called Ampex in 1973 as a programmer. He did not love to that job but as a programmer this job was good for him and bring to the fun in the job. Because earlier in his life he was good to play the chees & solving to the Mathematics (Maths) problems which bring him more interested towards the programming which bring fun to him during his job. As a programmer in the Ampex he got research paper which was related to the database where the IBM company was not interested in that database idea but Mr. Larry Ellison saw biggest upcoming opportunity in the future. So, he decided to start a company whose name after discussion considered as Software Development Laboratories in 1979 with Lorence Joseph, Ed Qates & Bob Miner. Where firstly he launched database product to whom they called ORACLE and it was the first SQL based relational database system. After launching it company started to attract many clients & in 1982 they officially changed to the company name Oracle Systems Corporation but this period of time Bob Miner left to the Oracle but Mr. Larry Ellison kept to the company's foundation and represent it as a strong database company. The main motive to create an Oracle was to create a perfect job for him whose environment he can fully control.
The year-after-year company was making profits and that profit was higher than the previous year soon they decided to go publicly and the Oracle shared listed on stock exchange at the price of $15 where he raised nearly $194 Millions in 1987. After so many efforts the Oracle became the world largest database company but they are not satisfied here so they decided to launch their new idea which was the NC or Network Computer where the things done in the Oracle network.

In 1990s the Oracle's competitor arrived and the name was Informix but in 1997 the Informix adjust in the scandal & Oracle got an opportunity to done marketing & through acquisition where they decided to acquire Sun Microsystem that is the company who developed the Java language and MySQL. So Oracle bought that company in $7.4 billions.
After so many years being in the company Mr. Larry Ellison steped down from the post of the CEO in 2024 where he served 37 years of his life & still now he owns upto 35% stake of the company. He is also own the Yacht racing team where he is also the board member of the Tesla (Automobile company).
The Oracle customer base is less but the revenue is very high because the Oracle's services are used by the Multinational Corporations (MNCs) & big companies. All from his life we can learn that you can make your fortune & the biggest company from an idea from someone or from anywhere which rejected by the biggest player in that sector still you can make money & execute to that idea into the biggest company by being knowledgable about the sector & need, continuing research & the team.

noreply@blogger.com (Unknown) — Wed, 30 Apr 2025 23:09:00 +0530

Today we are going to learn about that female whose current networth is $ 8,040 Crores and owns the world's biggest company who has biggest presence in the field of cosmetics and fashion industry. Their products sold across the globe in multiple categories.
Yes, you guess right we are going to learn about Francoise Bettencourt Meyers. and her company L'Oreal.
She made her fortune through selling to the cosmetics products and services. But these are products which manufactured by her earlier generations people and that was Eugene Schueller who was her maternal grandfather. Before we go further and know more about Francoise Bettencourt Meyers, we should have to know firstly how Eugene Schueller laid to the foundation of the L'Oreal.

Eugene Schueller full name was Eugene Paul Louis Schueller who was born in paris in 1881, his parents were pastry workers, he was good in studies and got top grade in all subjects, also he helped to his parents for their work. And in 1990 he went to the Institute of Applied Chemistry & completed to his graduation in 1904, take position as laboratory assistant at the Sarbon which were seem like university researcher, then 1 day large barger shop owner visited to the lab and ask for the help to make synthetic hair dye and at that time dye was not used much by the French women due to its toxicity but soon he left his technical advisor post from the barber but GET an idea and started to work by own in the rented property nearly Tuileries gardens he was experimenting his own hair dye but failed again & again BUT got succeed after 2 years.
In 1909 he started to the company name called The Societe Francaise De Teinteures Inoffensives Pour Cheveux which means as safe hair dye company of france, and soon changed company's name to the Loreal. The company which established from 2 bedrooms appartment where Dying room was served as Demonstration room & Bedroom room was served as Laboratory. As a solo entreprenuer he did all the work in the night he manufacture to the product & in the day he completed to the orders. Soon his day & night work bring the results to him and converted his rented bedroom company to the biggest company.
In 1910 he sold to the product in Italy & Austria and in 1914 he soon captured new markets and those are Hungary, Germany, Belgium, Netherlands, Switzerland & Russia. But soon he also take acquisitions decisions but after World War 1 and soon diversify and make investments in Hair Lotions & Lipisticks.

But the every company face ups & downs and the company soon faced to be the Great Depression where he came up with new idea which we called now THE PROPORTIONAL SALARY where the salary of the worker should be proportionate according to the Production. This was the way to survive in the depression and soon the company launched to the nw product which they called Ambre Solaire a sun's cream which boosted their sales because French people were heading towards the beaches more & more.
But every person left to this world and he left to this world in 1957 at the age of 76 So we can tell that that Eugene Schueller was the man of action & creative spirit. after his death all the things which he own get by his daughter through heritage and whose name was Liliane Bettencourt who was born on 1922 and she was the only child of the Eugene Schueller where she joined Loreal at the age of 15 and done apprenticeship where she done labelling & mixing to the products and many things in the company and own life. But at the age of 35 after losing to her father she got the Loreal's Empire. She was hardworker & creative lady and known for the discipline, when she was in 80s she suffered from Demensia to cure that disease she walk many kilometers and keep to the body in shape. But she also left to this world at the age of 94.
Francoise Bettencourt Meyers who was born on July-10-1953 in France, she is the only daughter of the multi-billionaire businesswoman Liliane Bettencourt & French politician Andre Bettencourt, she was the introvert child which brings her love towards books, literature & history. But the things not settled here she also loved to play Piano and stay out from the glamourous parties which her parents mostly organized & joined. She spent most of her time to study & learn mythology, religion scriptures. She studied geneology in college.

After completing to their studies she joined to the L'Oreal Labs where she spent so much time in those labs also learn so much from their. Later she joined International Union for Conservation of Nature for the exhibition and organizing to the library where she also spent her 5 years of life, where she met so many people and connect with them.
From her life story we learn that even the ancestors laid the foundation of the biggest upcoming company which is going become very valuable in the future, still the person need to be able to handle and control to the company to make that foundation more stronger than it was laid otherwise the strong laid foundation can also bring down.

Employee Who Become The Billionaire Before Leaving To The Company

noreply@blogger.com (Unknown) — Wed, 30 Apr 2025 23:01:00 +0530

I have question for you that how much networth of a company's employee after resigning from that company after doing job more than 15 years specially when the employee's starting salary was $50,000 a year. It can be $1,00,000 or $1 millions or $ 10 millions what if told to you that there is an employee who is billionaire after left to that company.
There is person who is billionaire right now and his name is Steve Ballmer he is the former employee of the Microsoft Corporation. He joined to the microsoft when it was startup and able to making the profit and left to the microsoft when it survived Dot com bubble & many more events. He was the person who make microsoft a big corporation from the startup with Bill Gates.

Steven Anthony Ballmer who was born on March-24-1956 i Detroit, Michigan, United States but he grew up in Farming Hills, Michigan, United States, his parents name was Frederic Henry Ballmer & Beatrice Dworkin. From the childhood he was good in studies & sports where loves to play football and done very well in mathematics & basketball. He also managed to the basketball team. From the schooling time he bring his interest towards mathematics mostly which give him more value & able to get scholarship which provide benefit to him in the future. Also he got scholarship when he was in the school.
After completing to the schooling he went to the Harvard University where he chooses Magna Cum Laude Degree which is for Applied Mathematics & Economics. After completing to his studies he joined Procter & Gamble (P&G) company as an Assistant Manager and spent 2 years, later he decided to get admission in Standford University where he was pursuing Business Degree but later he left to the Standford and join to the startup and whose name was Microsoft in 1980.
Bill Gates accept his proposal without thinking to the another second because Bill Gates knew to the Steve Wallmer when they were both in the Harvard and the Steve Wallmer was the 30 employee of the Microsoft when it was the startup. In the Microsoft at that time Steve did accounting work, hiring to the another people and prepare food for the other executives, he did not have much big position at that time, but his salary was $50,000 a year at that time. That was his early days in the Microsoft but that not long too far because he was the educated person so somewhere he has need to the company and that value where Steve Wallmer show his value and education to the Microsoft when the Bill Gates was trying to make the deal with IBM but he was not getting to the deal than the Steve Wallmer show his skill and completed to the IBM's deal, which bring huge profit and market share to the Microsoft but Steve Wallmwer completed to this deal when he will get 10% profit from Sales. This where Steve Wallmer grab to the opportunity.

The same strategy he used with all upcoming deals but as time is completing to it's circle the Microsoft's revenue and goodwill was increasing day by day so it was impossible to provide 10% for every deal to the Steve Wallmer. So, later the investors decided that we should have to provide the company's share to the Steve Wallmer, so the shareholding pattern changed and new shreholding pattern was 84% share to the both Bill Gates & Paul Allien and 8% share Investors will hold and remaining 8% of the Microsoft as shareholding will be transferred to the Steve Wallmer. As the company growing he got positions in the company according to the heirarchy from Senior Vice President of Sales Support to System's Software & Vice President of Marketing and President in 1998 after giving his 18 year's of life to the company he finally became to the CEO (Chief Executive Officer) of the Microsoft in Januanry-2000 when Bill Gates step out from the CEO's position and kept his position as the CEO in the Microsoft more than a Decade.
But the tough is ahead because he needed to face the DotCom Crash but he handle to the Microsoft very well and he launched many things at that time when he was the CEO as like Windows XP, Windows 7, Microsoft Office Suite & much more but later he sold his 4% stake of the Microsoft and now he only owns 4% of the Microsoft also apart from the shares he own he also own a Basketball Team and own N.P.O. (Non-Profit Organization) and name is USA facts whose purpose is to make government data more accessible and understandable to the public.
As we learn from his life that as an employee you can be a billionaire if you grab opportunity with wisely decision & education and whatever you can do in the company or startup to earn.
Also from reaching to the heirarchy's top position you need to be put efforts and have patience because nothing can get so fast, if you get so fast then be careful to handle that if you are not able to handle that then it will Go as fast as If came to YOU.

THE STORY OR INSPIRATIONAL LEADER DHIRUBHAI AMBANI

noreply@blogger.com (Unknown) — Sun, 26 Jan 2025 18:03:00 +0530

Do you know what the profit after tax of the Reliance company in Financial Year(F.Y.)2023-24? The Value was Rs. 79,022 Crore ($9.5 Billion). The huge profit. One of the best company in the whole world who operates in multiple sectors.
The biggest company foundation led by the Mr. Dhirubhai Ambani. The Man who leads to the people and through ideas, run multiple business and become a business tycoon.

You are now going to learn about his ideas through his life journey and their businesses, through all of them learn from him, how he thought differently from others.
Welcome to you in the journey, how the Reliance's company foundation was laid by Mr. Dhirubhai Ambani.
His full name was Dhirajlal Hirachand Ambani and one of the 4th child from Hirachand Gordhanbhai Ambani who was the teacher and Jamnaben who was the housewife and was born on 28th December, 1932 in Chorwad, Junagarh District, Gujarat. During the early life, his family faced money problem, so he decided to sell chai and pakoda (tea & pakoda) to cover the family expenses, he started this business by using his savings, but this business started by him near the religious place, but that business only make profit during the festive seasons, and other months he was not able to make much profit. Then on father's recommendation, when the business was not doing well he started to do job and went to the Yemen at the age of 17. In the Yemen, he worked at the petrol pump and within 2 years he became the manager because he tried to sell more petrol to every person whoever come to that petrol station through this technique and convincing skill, he become the manager.
After becoming to the manager, he had extra time so he decided to do the extra work. Then he started to do clerical work in the Transcontinental Trading firm, where he learnt so many things from book keeping to accounting and much more.
Not only these things forced him to build the biggest company but was his habits, whenever he got payment, he went to the restaurant to drink the tea which costs him Rs.1 instead drinking tea at the price of Rs. 0.25 or 25 paisa, just not because he wanted to waste money or showoff. He went to the restaurant to learn from those people, who came restaurant for different purposes, to know how they eat, how they talk, how they behave, what they talk and much more ettiquettes. One day he got the result and benefit, which he paid every time, because when he was drinking to the tea, he listened to the conversation between 2 person, where they were discussing that Yemen's silver coin value is more than its face value of the coin. It means, if the coin is Rs. 2 and its real value because of silver become Rs. 2.5 or 3. or may be different.
They he got an idea, why he not started to melt these coins and start to sell the silver to others and make profit. He executed this idea and melted Yemen's silver coin to the silver and sell to the businessman and others and make profit. There was the time when Yemen was fighting for their own freedom, which effects to the people who was living there. Then Dhirubhai Ambani came back to India, with money which he made in Yemen. Then in India he started to the spice's business, but in the Yemen their currency Rial was falling down after knowing this they started an investigation and found that there was a boy who coverted his salary's silver coin into silver and sell to others and that boy was Dhirubhai Ambani, but they were unable to capture him, because he left to Yemen.
In India he started the spices and sugar import-export business which with Champklal Damani, who was his cousin brother, they started their business with 350 sqrft. office in Bombay (now Mumbai) and company name was Reliance Commercial Corporation, with 1 telephone, 1 table and 3 chairs and 2 co-workers and mostly sell to Gulf countries and business model was low profit, high volume & high quality which makes their business profitable, but soon they also shift their focus towards the polyester and yarn. But in 1965, they both seperated because their business styles, Dhirubhai Ambani was the risk taking person. During his import-export business he got the best knowledge related to the yarn, polyster and clothes. Then he setup his 1st clothe's factory in Amhedabad in 1966, where they used polyster thread to make clothes and the brand name which he named which was VIMAL, but during the clothing business he faced problems which was related to the selling, that there was less wholesaler who was buying their product and most of the wholesaler was not selling their product because of new entrance and less people know about their brand. Which become the problem because production was running in the factory, stock was increasing and selling was not doing well.
Then, he decided what to do next. To run the business, which makes his different from others at that point of time, so he started to sell his stock directly to the retailer. Through this move, VIMAL brand start to get value in market. He also flew from Bombay to Ahmedabad every weekend only for checking the establishment of the factory and fix problem if any faced by the workers.
From that point of time, the business started to grow day by day, now the most important time comes in his company's life, where he was going to launch the company's IPO, where more than 58,000 people subscribed at that point of time, the reason he went to the villages for the IPO subscription instead going to the cities. Soon his sons Mr. Mukesh Dhirubhai Ambani and Mr. Anil Ambani his 2 sons joined to the business and replaced old machines to the new upgraded machines. After that the Reliance company did not look back, they enter into multiple sectors from petrochemical, it, telecommunication, energy, electricity, retail, textile, infrastructure to logistics and much more. After that, the Reliance company never look back after that.

Therefore the long period of hardwork he reached his networth to $2.9 Billions in 2002. Whereas he also got health problems and got heart attack but he recovered from that by changing to the lifestyle & through exercise. But there was a day which was not good neither for the Reliance nor for us, and day was June-24-2002, when he got the heart attack and need to be hospitalized and on July-06-2002, he left to us and left the company's foundation which provide 85,000 workers employement in 2012.
So, his life story brings to you some insight about his life and how the foundation laid to the Reliance Company, through his life story and risk taking initiatives and decisions which he made in Yemen, to seperate from his partner at particular point of time, which he started when he came back to India from Yemen.
These scenario of somenone's life teaches you that sometime you should have to take hard decisions to laid the foundation of something that can provide jobs to more than 85,000 workers at one point of time.

Amancio Ortega - Who Changed the industry of the fashion.

noreply@blogger.com (Unknown) — Sun, 15 Sep 2024 20:21:00 +0530

Have you ever heard about any one of the brands : Zara or Pull & Berar or Bershka or Massimao Dutti or stradivarius any of them. These all brand own by 1 company and the name is Inditex, which own and founded by AMANCIO ORTEGA.

Today we, are going to know how he build this brand and make company profitable in the business's corporate world, you will also know about his life story and other facts regarding to the company. Which force us to know how and through which strategy, these brands become popular among the latest design, style lover people around the world.

His full name is Amancio Ortega Gaona and was born on March 28th, 1936, in the village of Spain, where he lived with his parents and siblings, his father worked at local railway station and his mother was housewife. They were not rich at that time, sometime his mother lend to the goods from the shopkeeper for the food, but one day she got rejected and criticized by the shopkeeper and he was also there and show that whole incident,and also they did not eat nothing in that night which effect his soul, heart and mentality fully and decided to support the family. Due to the poverty he left his study at the age of 14 and started to work as delievery person in GALA company, who work as the shirt maker. Later he learned to use the sweing machine and work on that, slowly-slowly he learned other works of the shirt making and become senior manager.

He was the creative person from the early stage of life, during the learning stage, he make baby wear and night gown from waste clothes and sell to the locals and this idea turn his life from normal life to business life.

During the selling to the clothes and work as senior manager, he got married with Rosalia in 1966.

After selling these clothes and its success, he got high demand which force him to start company in 1972 with his brother Antonio Ortega and sister Josepah Ortega, but they were got trouble to sell, so they decided to hire salesperson. After hiring to the saleswoman named Rosalia, who later become his wife in future. For the expansion of the company he took 2000 Pesetas loan from the Bank of Bilbao and start to sell gown and also do the work for others as a contractor. After starting his first company and work day and night to start his FIRST own retail store in 1975, and they selected the name which was Zirba, his and his wife's favourite movie, but after they changed their name and replaced with the ZARA.

After opening his first retail store, the company make good sales and within 8 years, the showroom chain fully covered to the Spain. But he was the creative person from the learning stage, so he decided to take the brand as at International level. In 1988, he opened his first international showroom in Portugal and then in London.

After the International expansion, the ZARA become the biggest fashion brand in the world. So, after the company become international fashion brand in premium segment, so the company changed its strategy.

Now, let's know what are their strategy in the fashion industry :- -- Limited stocks production -- Stock change after every 15 days -- Fast Fashion strategy
There is also fun fact regarding to the fashion lover of the clothes, whoever either go or buy once from ZARA and buy oftenly or continously that person averagely go the ZARA showroom 17 times a year.
After making brand popular at the international level, but the biggest expansion for ZARA, was the ASIA, to make it more bigger and valuable.
After building to the fashion industry he avoid to face the media and mostly stay out from the lights of the trends.
To know more about people who build the companies or other things... then share to this blog and make sure you learn something from these stories to make your life better and valuable, where you help others and promote something, that you actually observer that people around you need to that.

Partnership Firms - Income Tax Notes Part - 08

noreply@blogger.com (Unknown) — Fri, 2 Feb 2024 15:21:00 +0530
INCOME TAX NOTES PART - 08 PARTNERSHIP FIRMS

INCOME TAX NOTES PART - 08 PARTNERSHIP FIRMS
Scheme of taxation of partnership firms
1. Any salary, bonus, commission or remuneration (by whatever name called), paid/ payable to partners is allowed as deduction to the firm subject to some restrictions in the hands of firm. The amount which is allowed as deduction to the firm is taxable in the hands of partners.
2. The firm can claim deduction in respect of interest paid to the partners subject to a maximum of 12% p.a. This amount of interest, allowed as deduction in the hands of the firm, is taxable in the hands of partners.
3. The income of the firm is taxed at a flat rate of 30% plus surcharge @ 12% (if taxable income is more than Rs. 1 crore) plus cess @ 4%.
When remuneration/ interest is deductible
Payment of remuneration and interest is deductible if the following conditions are satisfied –
1. Conditions of section 184; and
2. Conditions of section 40(b)
In other words, it can be said that if conditions of section 184 and 40(b) are not satisfied, then nothing is deductible in the hands of firm on account of payment of salary and interest to partners.
Optional to claim deduction on account of interest on capital and remuneration to partners – Even if conditions of section 184 and 40(b) are satisfied, the assessee-firm may or may not claim the deduction in respect of payment of remuneration and interest to partners. In other words, the Assessing Officer cannot enforce deduction of remuneration and interest to partners, if the firm does not want to claim this deduction.
Conditions of section 184
The five conditions which a firm has to satisfy under section 184 are as under:
1. A firm must be evidenced by an “instrument” (i.e., partnership deed).
2. Individual share of partners in profits of the partnership firm must be specified in such instrument or partnership deed.
3. Certified copy of the instrument should be submitted. It should be certified in writing by all the partners (other than minors).
4. Revised instrument should be submitted whenever there is change in the constitution of firm/ profit-sharing ratio. It is to be noted that even if there is a change in remuneration/ payment of interest to partners but there is no change in profit-sharing ratio, a copy of revised instrument should be submitted.
5. There should not be any failure as is mentioned in section 144 [Best Judgement Assessment].
Conditions for claiming deduction of remuneration of partners under section 40(b)
1. Remuneration should be paid/ payable only to a working partner. For this purpose, a “working partner” means an individual who is actively engaged in conducting the affairs of the business or profession of the firm of which he is a partner.
2. Remuneration must be authorised by partnership deed and it should also be in accordance with the terms of partnership deed.
3. Remuneration should not pertain to the period prior to partnership deed.
4. Remuneration should not exceed the permissible limit:
If the above three conditions are satisfied, remuneration to partners is allowable as deduction in the hands of the firm. However, the maximum amount of such payment to all the partners during the previous year should not exceed the limits given below – a. If book profit is negative:
Rs. 1,50,000
b. If book profit is positive:

- On first Rs. 3,00,000 of book profit, Rs. 1,50,000 or 90% of book profit, whichever is more

- On remaining balance of book profit, 60% of book profit
Computation of book profits
“Book profit” means net profit of the firm as per profit and loss account after every adjustment as per sections 28 to 44DB but before deducting remuneration to partners.
Notes –
1. Income chargeable under the heads “House property”, “Capital gains” and “Income from other sources” is not part of “book profit”.
2. Brought forward business losses are not to be deducted from “book profit”. However, brought forward unabsorbed depreciation can be deducted from “book profit”.
3. Deductions under section 80C to 80U shall be ignored for computing “book profit”.
Conditions for claiming deduction of interest to partners under section 40(b)
1. Payment of interest must be authorised by the partnership deed and it should also be in accordance with the terms of partnership deed.
2. Interest should not pertain to the period prior to partnership deed.
3. Rate of interest should not exceed simple interest @ 12% p.a.
Notes –
a. If interest payable exceeds simple interest @ 12% p.a., then the excess amount is not deductible.
b. Where an individual is a partner in a firm on behalf of (or for the benefit of) any other person, interest paid by the firm to such individual (otherwise than as partner in a representative capacity) is not taken into account, for the purposes of section 40(b). For example, X is a partner in a firm on behalf of his HUF. He has given a loan of Rs. 1,00,000 in his personal capacity @ 14% to the firm. The HUF has also given a loan (or capital contribution) of Rs. 4,00,000 @ 14%.
In this case, Rs. 14,000 (being interest @ 14% on Rs. 1,00,000) paid to X in his personal capacity is deductible without applying the provisions of section 40(b). However, interest of Rs. 56,000 paid to X for the benefit of HUF will be governed by section 40(b).
c. Where a firm pays as well as receives interest from the same partner, interest received by the firm will be chargeable to tax in the hands of firm. Interest paid to the same partner will be allowed within the four-corners of section 40(b).
d. The above provisions are not applicable in respect of interest paid to a person before becoming partner.
Miscellaneous points
1. A firm can claim deductions under the following sections from its gross total income: section 80G, 80GGA, 80GGC, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, 80-IE and 80JJA.
2. Share of profit received by a partner (including a minor admitted for the benefit of the firm) from the firm is exempt from tax under section 10(2A).
3. Remuneration and interest received from the firm by the partners is taxable under the head “Profits and gains of business or profession” in their individual hands.
4. The amount of remuneration which is allowed as deduction to the firm is taxable in the hands of partners in the ratio of remuneration of partnership deed.
5. Any expenditure incurred by the partner in order to earn salary/ interest income can be claimed as a deduction under sections 30 to 37 from such income.
TOTAL INCOME AND TAX LIABILITY OF INDIVIDUALS, LEADING COURT CASES AND RETURN OF INCOME
Introduction
The chapter discusses some leading cases of Supreme Court on the matter of taxation and concepts related to filing of returns. The chapter also discusses the problems on computation of total income and tax liability of an individual.
Leading cases of Supreme Court
Agricultural income [CIT v Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC)]
As pointed out in this judgement, ‘Agriculture in its primary sense denotes the cultivation of land in the strict sense of the term, i.e., tilling of the land, sowing seeds, planting and similar operation on the land’. Bhagwati, J. laid down the following principles to serve as a guide in the determination of the scope of the terms, “agriculture” and “agricultural purposes”. The land is said to be used for agricultural purposes where the following two types of operations are carried out on such land:
1. Basic operations:
Prior to generation, some basic operations are essential to constitute agriculture. These involve cultivation of the ground, in the sense of tilling of the land, sowing of the seeds, planting and similar operations on the land. Such basic operations demand the expenditure of human labour and skill upon the land itself and further they are directed to make the crop sprout from the land.
2. Subsequent operations:
After the crop sprouts from the land, there are subsequent operations which have to be rescued to by the agriculturalists for the efficient production of the crop such as, weeding, digging the soil around the growth, removal of undesirable growths, prevention of the crop from insects and pests and from depredation by cattle and tending, pruning, cutting, etc.
Mere performance of these subsequent operations on the products of the land (where such products have not been raised on the land by the performance of the basic operations described above) would not be enough to characterize them as agricultural operations. Where, however, the subsequent operations are performed in conjunction with and in continuation of the basic operations, the subsequent operations would also constitute part of the integrated activity of agriculture.
Some connection with land not significant:
The mere fact that an activity has some connection with or is in some way dependent on land is not significant to bring it within the scope of the term “agriculture”. For instance, breeding and rearing of livestock, dairy farming, cheese and butter-making and poultry farming would not by themselves be agricultural purposes.
In computing the annual value of a house property, expected rent cannot exceed the standard rent [Shiela Kaushish v CIT (1981) 131 ITR 435 (SC)]
Standard rent is the rent which a person can legally recover from his tenant under a Rent Control Act. The Supreme Court has observed in this case that a landlord cannot reasonably expect to receive from a hypothetical tenant anything more than the standard rent under the Rent Control Act.
Where property let out is governed by the Rent Control Acts, the standard rent fixed thereof (or even not fixed but provision thereof is applicable to the area in which the property is situated) will have to be taken for determining the bonafide annual value. In the case of the property governed by the Rent Control Act, its annual value under section 23(1)(a) [i.e., expected rent] cannot exceed the standard rent (fixed or determinable) under the Rent Control Act.
Expense on issue of bonus shares is revenue expenditure [CIT v General Insurance Corporation (2006) 156 Taxmann 96 (SC)]
In this decision, the court has said that issue of bonus shares does not result in any inflow of fresh inflow of funds or increase in the capital employed. Issuance of bonus shares by capitalization of reserves is merely a reallocation of company’s fund. The total funds available with the company will remain the same and the issue of bonus shares will not result in any change in the capital of the company. The expenditure incurred in connection with issuance of bonus shares is therefore revenue expenditure.
Preparation of return of income
Preparation of return of income through software
There are two ways of filing income tax return electronically. One way is to prepare the income tax return offline on your computer and then upload it on the website www.incometaxindiaefiling.gov.in. Another way is to directly prepare income tax return on the website www.incometaxindiaefiling.gov.in. Second way of filing income tax return requires less time in preparing and submitting the return as compared to the first way.
Preparing Income Tax Return offline and then submit (one way of filing income tax return) –
To Upload ITR (Income Tax Return), following steps are to be followed –
1. Open the above website and click the heading “Downloads” and then download the relevant form.
2. Prepare the return with the help of following information –

a. All information regarding your personal details, income, tax payments, deductions etc.

b. Enter all data and click on 'Calculate' to compute the tax and interest liability and final figure of Tax Refund or Tax payable

c. If Tax is payable – remember to pay immediately and enter the details in appropriate schedule. Repeat above step so that tax payable becomes zero

d. Generate and save the Income Tax Return data in XML format in the desired place on your Computer.
3. Login to above website with User ID, Password, Date of Birth and enter the Captcha code.
4. Go to e-File and click on "Upload Return".
5. Select the appropriate ITR, Assessment Year and XML file previously saved in Step 2 (using browse button).
6. Click on "Submit" button.
7. On successful submission, ITR-V will be generated automatically which needs to be verified. On submission of return, option of ‘e-verify’ automatically comes on the screen. Under this option, verification can be done electronically either through Aadhar number, internet banking, bank account number, etc. After this electronic verification, the process of income tax return filing will be treated as completed.
However, if you do not want to verify ITR-V electronically, download the ITR-V. ITR-V is also sent automatically to the registered email. ITR-V form should be printed, signed and submitted to Central Processing Centre (CPC) by post at the address written on ITR-V within 120 days from the date of e-Filing. The return will be processed only upon receipt of signed ITR-V. After receipt of this ITR-V at the CPC, the process of income tax return filing will be treated as completed.
Preparing and submitting Income Tax Return online (another way of filing income tax return) –
To Prepare and Submit ITR Online, following steps are to be followed –
1. Login to above website with User ID, Password, Date of Birth and enter the Captcha code.
2. Go to e-File and click on "Prepare and Submit ITR Online" (only ITR 1 and ITR 4 can be filled online).
3. Select the Income Tax Return Form ITR 1/ ITR 4 and the Assessment Year.
4. Fill in the details and click the "Submit" button.
5. On successful submission, ITR-V will be generated automatically which needs to be verified. On submission of return, option of ‘e-verify’ automatically comes on the screen. Under this option, verification can be done electronically either through Aadhar number, internet banking, bank account number, etc. After this electronic verification, the process of income tax return filing will be treated as completed.
However, if you do not want to verify ITR-V electronically, download the ITR-V. ITR-V is also sent automatically to the registered email. ITR-V form should be printed, signed and submitted to Central Processing Centre (CPC) by post at the address written on ITR-V within 120 days from the date of e-Filing. The return will be processed only upon receipt of signed ITR-V. After receipt of this ITR-V at the CPC, the process of income tax return filing will be treated as completed.
Note:
Preparing the return online and submitting the return online is available only for ITR 1 and ITR 4 whereas preparing the return offline and submitting the return online is available for all the forms.
Note: The summary of Income Tax Notes Part-08 PARTNERSHIP FIRMS summarise from the content of Book of School of Open Learning. © School of Open Learning.

Basic Concepts
Salary
House Property
Profits and Gains From Business or Profession
Capital Gains
Income From Other Sources
Set Off And Carry Forward Of Losses
Partnership Firms

Set Off and Carry Forward Of Losses - Income Tax Notes Part - 07

noreply@blogger.com (Unknown) — Fri, 2 Feb 2024 15:18:00 +0530
Income Tax Notes Part - 07 SET OFF AND CARRY FORWARD OF LOSSES
INCOME TAX NOTES PART - 07 SET OFF AND CARRY FORWARD OF LOSSES
Steps to be applied for set-off and carry forward
The process of setting off of losses and their carry forward is covered in the following three steps:
Step 1: Inter-source (Intra-head) adjustment under the same head of income.
Step 2: Inter-head adjustment in the same assessment year (Step 2 is applied only if a loss cannot be set off under step 1).
Step 3: Carry forward of a loss (Step 3 is applied only if a loss cannot be set off under step 1 and 2).
Inter-source (Intra head) adjustment
If the net result for any assessment year, in respect of any source under any head of income, is a loss, the assessee can set-off this loss against his income from any other source under the same head of income for the same assessment year subject to the following provisions –
House property
Loss from a house property can be set-off against profits of other house properties.
Profits and gains from business or profession Speculation business:
Loss in a speculation business can be set off only against the profit in a speculation business.
Specified business under section 35AD:
Loss of any specified business under section 35AD can be set-off only against profits of any specified business under section 35AD.
Non-speculation business:
Loss from a non-speculative business (including depreciation) can be set off against income from speculative business, non-speculation business as well as against specified business under section 35AD.
Capital gains
Long-term capital loss can be set off only against long-term capital gain. However, shortterm capital loss can be set off against STCG as well as LTCG.
Income from other sources
Activity of owning and maintaining race horses:
Losses from the activity of owning and maintaining race horses can be set-off only against the business profits of owning and maintaining race horses.
Casual income:
1. Expenses incurred while earning casual incomes (i.e., lotteries, crossword puzzles, etc.) are not allowed to be adjusted even against casual incomes. For example, if expense of Rs. 2,000 is incurred in purchasing a lottery ticket and later on, Rs. 1,00,000 prize of lottery is earned, the assessee has to show Rs. 1,00,000 as lottery income (Rs. 2,000 expenses on purchasing lottery ticket is of no consideration).
2. Losses of gambling nature cannot be set off against winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature.
Other incomes:
Losses under the head “Income from other sources” (excluding income from the activity of owning and maintaining race horses and gambling incomes) can be set-off against the income from the activity of owning and maintaining race horses as well as other incomes under the head “Income from other sources” but not against gambling incomes.
Inter-head adjustment
Where the net result of computation made for any assessment year in respect of any head of income is a loss, the same can be set off against the income from other heads subject to the following provisions:
House property
Loss under the head “Income from house property” can be set off against income of any head except gambling incomes (i.e., it can be set off against salary, business or profession, capital gains, and income from other sources) but only up to Rs. 2,00,000 per year. However, there is no restriction on the amount for carried forward house property losses of earlier years.
Profits and gains from business or profession
Speculation business:
Inter-head adjustment is not allowed in speculation business loss.
Specified business under section 35AD:
Inter-head adjustment is not allowed in specified business loss covered under section 35AD.
Non-speculation business:
Loss from a non-speculative business (including depreciation) can be set off against income of any head except salary and gambling incomes (i.e., it can be set off against house property, capital gains and income from other sources).
Capital gains
Inter-head adjustment is not allowed in capital loss.
Income from other sources
Activity of owning and maintaining race horses: Inter-head adjustment is not allowed in case of losses from the activity of owning and maintaining race horses.
Casual income: Neither inter-head adjustment nor intra-head adjustment is allowed in case of losses of gambling nature viz., lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature.
Other incomes: Losses (not being from the activity of owning and maintaining race horses or gambling nature) can be set off against income of any other head except gambling incomes (i.e., it can be set off against salary, house property, business or profession and capital gains).
Carry forward and set-off of losses
If a loss cannot be set off either under the same head or under the different heads, because of absence or inadequacy of the income of the same year, it may be carried forward and set off against the income of the subsequent year. Under the Act, the following losses can be carried forward:

1. Loss under the head “House property”

2. Loss under the head “Profits and gains of business or profession” whether speculative or non-speculative or from specified business under section 35AD

3. Loss under the head “Capital gains”

4. Loss from the activity of owning and maintaining race horses
Following are provisions related to carry-forward and set-off of losses of earlier years:
Type of loss to be carried forward to the next year(s) Income against which carried forward loss can be set off in the next year(s) For how many years loss can be carried forward
House property loss Income under the head “House property” 8 years
Speculation loss
Non-speculative business loss:
1. On account of unabsorbed depreciation, capital expenditure on scientific research and family planning Speculation profits
Any income except salaries 4 years
No time-limit
2. Loss from a specified business under section 35AD
3. Other remaining business loss
Income from a specified business under section 35AD
Any business profit (whether from speculation or otherwise)
No time-limit
8 years
Capital loss:
1. Short-term capital loss
2. Long-term capital loss

STCG as well as LTCG
Long-term capital gains

8 years
8 years
Loss from the activity of owning and maintaining race horses Income from the activity of owning and maintaining race horses 4 years

Note:
Losses under the head “Income from other sources” cannot be carried forward to the next year except loss from the activity of owning and maintain race horses.
DEDUCTIONS FROM GROSS TOTAL INCOME
Certain investments or deposits [Sec. 80C]
1. Deduction under section 80C is available only to an individual or a Hindu undivided family.
2. Deduction is available on the basis of specified investments/ contributions/ deposits/ payments made by the assessee during the previous year. However, investment in Indira Vikas Patra, Kisan Vikas Patra and National Relief Bonds are not eligible for deduction under section 80C.
3. Deduction is available on actual payment basis. Payment made during the previous year is qualified for deduction under section 80C, regardless of the fact whether the payment relate to the previous year or preceding years or subsequent years.
4. The maximum amount deductible under sections 80C, 80CCC and 80CCD(1) [i.e., contribution by an employee (or any other individual) toward national pension scheme] cannot exceed Rs. 1,50,000. However, employer’s contribution towards NPS (to the extent of 10 per cent of salary) [Sec. 80CCD(2)] shall not be considered for ceiling of Rs. 1,50,000.
Following are eligible investment under this section:
1. Life insurance premium [subject to a maximum of 20% of sum assured/ or 10% of sum assured] (if policy is issued before April 1, 2012, 20% and if policy is issued on or after April 1, 2012, 10% ).
Note:
In the case of individual, policy should be taken on his own life, life of the spouse or any child (child may be dependent/ independent, male/ female, minor/ major or married/ unmarried). In the case of a Hindu undivided family, policy may be taken on the life of any member of the family.
Note:
Minimum period of holding in this case is 2 years.
2. Contribution (not being repayment of loan) towards statutory provident fund (SPF) and recognized provident fund (RPF).
3. Contribution (not being repayment of loan) towards 15-year public provident fund (PPF).
4. Contribution towards an approved superannuation fund.
5. Subscription to National Savings Certificates, VIII Issue or IX issue or Sukanya Samriddhi Account.
6. Contribution for participating in the unit-linked insurance plan (ULIP) of Unit Trust of India.
Note:
Minimum period of holding is 5 years.
7. Contribution for participating in the unit-linked insurance plan (ULIP) of LIC Mutual Fund (i.e., formally known as Dhanraksha plan of LIC Mutual Fund).
Note:
Minimum period of holding is 5 years.
8. Payment for notified annuity plan of LIC (i.e., New Jeevan Dhara, New Jeevan Akshay) or any other insurer.
9. Subscription towards notified units of Mutual Fund or UTI.
10. Contribution to notified pension fund set up by Mutual Fund or UTI (i.e., Retirement Benefit Pension Fund of UTI).
Contribution to certain Pension Fund [Sec. 80CCC]
This deduction is available to an individual for contribution towards Pension Fund. Amount should be paid or deposited under an annuity plan of the LIC of India or any other insurer for receiving pension. Amount should be paid or deposited out of income chargeable to tax. Maximum limit is Rs. 1,50,000.
Tax treatment of pension:
1. If deduction is claimed under section 80CCC and later on pension is received by the assessee (or his nominee), such pension will be taxable in the hands of recipients in the year of receipt.
2. Where (after claiming deduction under section 80CCC) the assessee or his nominee surrenders the annuity before maturity date of such annuity, the surrender value shall be taxable in the hands of the assessee or his nominee, as the case may be, in the year of the receipt.
Health insurance premium [Sec. 80D]
This section is available for individuals and HUF regarding medical insurance premia (payment should not be in cash).
Individual for this purpose, includes assessee himself, spouse, dependent children and parents (whether dependent or not). In case of HUF, members of HUF are covered.
In the case of individual (not HUF), deduction is available for the following also:
a. If payment is made to the Central Government Health Scheme (CGHS) or any scheme notified by the Central Government (payment not by cash) [This is not available to parents]; or/ and
b. Payment on account of preventive health check-up (*payment by any mode including cash).
Deductible amount can be upto Rs. 25,000 (maximum limit is Rs. 5,000 for preventive health check-up). In case of senior citizens (60 years), additional deduction of Rs. 25,000 is available but only in case of mediclaim insurance premium and not available for CGHS or preventive health check-up.
Any payment made on account of medical expenditure in respect of a super senior citizen (80 years or more), if no payment has been made to keep in force an insurance on the health of such person, as does not exceed in the aggregate Rs. 50,000 shall be allowed as deduction under section 80D.
Maintenance including medical treatment of a dependent who is a person with disability [Sec. 80DD]
This deduction is for resident individual and resident HUF for –
a. Expenditure on medical treatment (including nursing), training and rehabilitation of a disabled dependent relative or/ and
b. Amount paid under any scheme framed by the LIC or other insurer, etc.
Amount of deduction is Rs. 75,000 and Rs. 1,25,000 for severe disability (if disability is 80% or more than 80%). This amount is fixed irrespective of actual expenditure.
Dependent includes spouse, children, parents, brothers and sisters of the individual. In case of HUF dependent refers to any member of HUF.
Medical treatment [Sec. 80DDB]
This deduction is available to a resident individual and resident HUF for medical treatment of notified diseases.
Amount of deduction is Rs. 40,000 or amount paid, whichever is less. For senior citizens (60 years or more), amount of deduction is Rs. 1,00,000 or amount paid, whichever is less.
From the aforesaid amount of deduction, amount received from an insurer or amount reimbursed by the employer shall be deducted and the balance shall be allowed as deduction.
Expenditure should be incurred for medical treatment of the assessee himself or dependent spouse, children, parents, brothers and sisters of the individual assessee. In case of HUF dependent refers to any dependent member of HUF.
Donations to certain funds, charitable institutions, etc. [Sec. 80G]
This deduction is available to all the taxpayers. Donations are divided into two categories. On some donations, deduction is available on the amount donated but, on some donations, there is a limit on which benefit of deduction is available. In this second category of donations, if the assessee has donated the amount more than the limit, then on the excess amount donated, benefit of deduction is not available. Table 1 given below contains donations on which there is no limit. Total amount donated, here, is eligible for the benefit of deduction. Excess amount (i.e., the amount donated which exceeds the limit) is not eligible for the benefit of deduction under section 80G.
On the following donations, no maximum limit is applicable. Taxpayer can donate the amount without any limit:

National Defence Fund set up by the Central Government
Donee Deduction (in %age)
100%
Prime Minister’s National Relief Fund 100%
National Children’s Fund 100%
Prime Minister’s Armenia Earthquake Relief Fund 100%
National Foundation for Communal Harmony 100%
An approved university/ educational institution 100%
Any fund set up by the Government of Gujarat for providing relief to victims of earthquake in Gujarat 100%
Zila Saksharta Samiti 100%
National Blood Transfusion Council (NBTC) and State Council for Blood Transfusion 100%
Fund set up by a State Government for the medical relief to the poor 100%
Central Welfare Fund of the Army and Air Force and the Indian Naval Benevolent Fund 100%
Andhra Pradesh Chief Minister’s Cyclone Relief Fund 100%
National Illness Assistance Fund 100%
Chief Minster’s Relief Fund or Lieutenant Governor’s Relief Fund 100%
National Sports Fund or National Cultural Fund or Fund for Technology Development and Application 100%
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities 100%
Swachh Bharat Kosh, National Fund for Control of Drug Abuse 100%
Clean Ganga Fund (amount donated by residents only) 100%
Prime Minister’s Drought Relief Fund 50%
Jawaharlal Nehru Memorial Fund 50%
Indira Gandhi Memorial Trust 50%
Rajiv Gandhi Foundation 50%
On the following donations, there is a restriction on the amount which is eligible for deduction under this section:
Government or any approved local authority, institution or association to be utilised for the purpose of promoting family planning 100%
Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning 50%
Any other approved fund* or any institution which satisfies the conditions mentioned in section 80G(5) 50%
Any authority constituted in India by (or under) any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose planning, development or improvement of cities, towns and villages, or for both 50%
Any corporation for promoting interest of minority community 50%
Any notified temple, mosque, gurudwara, church or other place (for renovation or repair) 50%
Maximum amount:
The maximum amount for all the deductions given in Table 2 above must not exceed 10% of the adjusted gross total income i.e., where the aggregate of sums mentioned in the above table exceeds 10% of the adjusted gross total income, then the amount in excess of 10% of the adjusted gross total income will be ignored while computing the aggregate of the sums in respect of which deduction is to be allowed.
Adjusted gross total income:
The following shall be deducted from gross total income to find out adjusted gross total income:

a. Amount deductible under sections 80C to 80U (except section 80G);

b. Such incomes on which income-tax is not payable;

c. Long-term capital gains;

d. Short-term capital gain which is taxable under section 111A @ 15%; and

e. Incomes referred to in section 115A, 115AB, 115AC or 115AD.

Mode of payment:
1. Donation can be given in cash or by cheque or draft. Donation in kind is not included.
2. It is to be noted that no deduction shall be allowed under section 80G in respect of donation in cash of an amount exceeding Rs. 2,000.
Royalty income of authors [Sec. 80QQB]
1. This section is applicable if the following conditions are satisfied:

a. The taxpayer is a resident individual (may be an Indian citizen or foreign citizen).

b. He is an author or joint author.

c. The book authored by him is work of literary, artistic or scientific nature.
However, the “books” shall not include brouchers, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, text-books for schools, tracts and other publications of similar nature, by whatever name called.
d. The gross total income of the taxpayer includes the following:

i. Royalty or copyright fees (payable in lump sum or otherwise) in respect of aforesaid book; and

ii. Lump sum consideration for transfer (or grant) of any interest in the copyright of the book.
2. Amount of deduction:
If the aforesaid conditions are satisfied, then the amount of deduction is
– a. Rs. 3,00,000; or
b. Income from royalty as stated above, whichever is lower.
3. Note:
Where the income by way of royalty (or the copyright fee) is not a lump sum consideration (in lieu of all rights of the assessee in the book) so much of the income (before allowing expenses attributable to such income) as is in excess of 15% of the value of such books sold during the previous year, shall be ignored.
Note: The summary of Income Tax Notes Part - 07 SET OFF AND CARRY FORWARD OF LOSSES summarise from the content of Book of School of Open Learning. © School of Open Learning.

Profits and Gains From Business or Profession
Capital Gains
Income From Other Sources

Partnership Firms

Income From Other Sources - Income Notes Part - 06

noreply@blogger.com (Unknown) — Fri, 2 Feb 2024 15:14:00 +0530
Income Tax Notes Part - 06 Income from other Sources

Income Tax Notes Part - 06 Income from other Sources
The following ten incomes are always taxable under the head “Income from other sources”:
1. Dividend income;
2. Income from winnings from lotteries, crossword puzzles, races including horse races, etc.;
3. Any sum received by the assessee from his employees as contributions to any staff welfare schemes, if the same is not taxed as business income;
4. Income by way of interest on securities, if the same is not taxed as business income;
5. Income from letting out machinery, plant or furniture, if the same is not taxed as business income”;
6. Income from letting out of machinery, plant or furniture along with letting out of building and the two lettings are not separable (if the income is not taxed as business income);
7. Any sum received under a Keyman insurance policy (including bonus), if such income is not taxable as salary income or business income;
8. If any sum of money received as gift exceeds Rs. 50,000, the whole of the amount is taxable as income from other sources;
9. Income by way of interest on compensation or on enhanced compensation shall be assessed under the head “Income from other sources” in the year in which it is received. However, 50 percent of such interest is deductible and consequently, only 50 percent of such interest is taxable.
10. Where any sum of money, received as an advance or otherwise in the course of the negotiations for transfer of a capital asset, is forfeited and the negotiations do not result in transfer of such capital asset, then, such sum shall be chargeable to tax under the head “Income from other sources”. This provision is applicable for those forfeitures of advance money which are forfeited in the assessment year 2015-16 (or onwards).
Some general incomes which are chargeable to tax under the head “Income from other sources”:
1. Income from subletting;
2. Income from royalty (if it is not an income from business/ profession);
3. Director’s fee;
4. Agricultural income from land situated outside India;
5. Agricultural income from a place outside India;
6. Rent of plot of land;
7. Casual income;
8. Salaries payable to a Member of Parliament;
9. Family pension received by family members of a deceased employee;
10. Income from undisclosed sources;
11. Compensation received for use of business assets;
12. Income from undisclosed sources:
• Unexplained Cash credits (Sec. 68)

• Unexplained Investments (Sec. 69)

• Unexplained Money (Sec. 69A) ▪ Unexplained Expenditure (Sec. 69C)

• Amount borrowed/ repaid on Hundi.

Relevance of method of accounting:
Income chargeable under the head “Income from other sources” is computed in accordance with the method of accounting regularly employed by the assessee.
Deductions under the head “Income from other sources” [Sec. 57]
1. Interest on loan taken for the purpose of investment in shares or securities will also be deductible if it is actually used for the aforesaid purpose. But if dividend is exempt under section 10(34), the expenses shall not be allowed as a deduction because expenses incurred to earn the income which is already exempt under section 10 are not allowed as deduction.
2. In the case of income in the nature of family pension received by the widows or heirs of deceased employee, a deduction of a sum equal to 1/3rd of such income or Rs. 15,000, whichever is less, is allowed as deduction.
3. Any other expenditure (not being a capital expenditure or personal expenditure of the assessee) incurred wholly and exclusively for the purpose of earning such income.
4. Any expenditure is deductible if the following basic conditions are satisfied:
a. The expenditure must be laid out or expended wholly and exclusively for the purpose of making or earning the income;
b. The expenditure must not be in the nature of capital expenditure;
c. It must not be in the nature of personal expenses of the assessee;
d. It must be laid out or expended in the relevant previous year and not in any prior or subsequent year.
Amounts not deductible while computing “Income from other sources” [Sec. 58]
1. Any personal expenses of the assessee.
2. Payment to relatives and associates if the Assessing Officer considers it excessive or unreasonable.
3. Expenses or losses in connection with income from lottery, crossword puzzles, races including horse races, card games, gambling or betting of any nature, shall not be deductible in computing the said income.
4. Expenses incurred in relation to exempted incomes are not deductible.
Miscellaneous Points
1. Dividend from UTI/ Mutual fund is exempt from tax under section 10(35).
2. Winnings from lottery or gambling nature incomes are taxable @ 30%.
3. Interest on Government securities and non-Government securities is taxable under the head “Income from other sources”. However, in case of non-Government securities (listed on non-listed), TDS rate is 10% but in case of Government securities, TDS is Nil.
4. Anything received by partners from their partnership firm is taxable under the head
“Profits and gains of business or profession” in their individual hands. For example, interest on capital, share of profit, remuneration to partners, etc.
5. Share of profit from a partnership firm is exempt from tax in the hands of partners under section 10(2A).
6. Maximum rate of interest which a firm can pay to the partners, as interest on partner’s capital contribution cannot exceed 12% p.a. under section 40(b).
7. Tax-free Government Securities:
These securities are those, the interest on which is fully exempt from tax under section 10(15). Interest on such securities is neither included in total income of the assessee, nor it is taxed.
8. Less-Tax Government Securities:
Interest on such securities shall be included in the total income of security holder. Tax shall not be deducted of source on interest of such securities.
CLUBBING OF INCOME
Transfer of income without transfer of assets [Sec. 60]
If the following conditions are satisfied, then the income from the asset would be taxable in the hands of the transferor:
1. The taxpayer owns an asset.
2. The income from the asset is transferred to any person but ownership of the assets still remains with the transferor.
3. The above transfer may be revocable or may not be revocable.
4. The above transfer may be effected at any time (maybe before the commencement of the Income-tax Act or otherwise).
Revocable transfer of assets [Sec. 61]
By virtue of section 61, if an asset is transferred under a “revocable transfer”, income from such asset is taxable in the hands of the transferor.
Following are treated as revocable transfers:
1. If the transfer contains any provision to re-transfer the asset (or income therefrom) to the transferor directly or indirectly, wholly or partly.
2. If the transferor has any right to reassume power over the asset (or income therefrom) directly or indirectly, wholly or partly.
3. If an asset is transferred under a trust and it is revocable during the lifetime of the beneficiary.
4. If an asset is transferred to a person and it is revocable during the lifetime of the transferee.
5. If an asset is transferred before April 1, 1961 and it is revocable within six years.
Note –
Income from such assets (covered under section 61) is taxable as and when the power to revoke arises. The above rule is applicable even if the power to revoke has not been exercised so far. For example, X has transferred an asset. Under the terms of transfer, on or after April 1, 1998, he has a right to utilize the income of the asset for his benefit. However, he has not exercised this right as yet. On or after April 1, 1998, income of the asset would be taxable in the hands of X, even if he has not exercised the aforesaid right.
When an individual is assessable in respect of Remuneration of Spouse [Sec. 64(1)(ii)]
This section is applicable if the following conditions are satisfied:
1. The taxpayer is an individual.
2. She/ he has a substantial interest in a concern.
3. Spouse of the taxpayer (i.e., husband/ wife of the taxpayer) is employed in the abovementioned concern without any technical or professional knowledge or experience.
If the aforesaid conditions are satisfied, then salary income of the spouse will be taxable in the hands of the taxpayer.
Notes –
1. Salary income includes commission, fees or any other form of remuneration whether in cash or in kind.
2. Substantial Interest:
An individual is deemed to have substantial interest, if he (individually or along with his relatives) beneficially holds 20% or more of equity shares in the case of a company or is entitled to 20% or more of the profits in the case of a concern other than a company, at any time during the previous year.
3. Relative:
Relative in relation to an individual means the husband, wife, brother or sister or any linear ascendant or descendant of that individual.
4. When both the husband and wife have substantial interest in a concern:
When both the husband and wife have substantial interest in a concern and both are in receipt of the remuneration from such concern without any technical and professional qualification, then such remuneration will be included in the total income of husband or wife whose total income, excluding such remuneration, is greater.
It is to be noted that if once clubbing is done in the hands of X, salary of X and Mrs. X will be included in the income of X (in the subsequent years), even if income of X is lower than that of Mrs. X in that year. In such a case, the Assessing Officer can club the income of X and Mrs. X in the hands of Mrs. X only if the Assessing Officer is satisfied that it is necessary to do so. The Assessing Officer can take such action only after giving Mrs. X an opportunity of being heard.
Note: The summary of Income Tax Notes Part - 06 Income from other Sources summarise from the content of Book of School of Open Learning. © School of Open Learning.
House Property
Profits and Gains From Business or Profession
Capital Gains

Set Off And Carry Forward Of Losses

Capital Gains - Income Tax Notes Part - 05

noreply@blogger.com (Unknown) — Fri, 2 Feb 2024 15:11:00 +0530
Capital Gains INCOME TAX NOTES PART - 05 CAPITAL GAINS
Basis of Charge [Sec. 45]
Income is taxable under the head “Capital Gains” if the following conditions are satisfied:
1. There should be a capital asset.
2. The capital asset is transferred by the assessee during the previous year.
3. Any profit or gains arises as a result of such transfer.
4. Such profit or gains is not exempt from tax under section 54, 54B, 54D, 54EC, 54EE, 54F, 54G, 54GA and 54GB.
If the aforesaid conditions are satisfied, then capital gain is taxable in the assessment year relevant to the previous year in which the capital asset is transferred.
Capital Asset [Sec. 2(14)]
“Capital asset” means –
1. Property of any kind held by an assessee (whether or not connected with his business or profession).
2. Any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the SEBI Act.
However, “capital asset” does not include the following:
1. Any stock-in-trade (other than the securities referred to in point 2 above), consumable stores or raw material held for the purpose of business or profession;
2. All personal belongings of the assessee except Jewellery;
3. Agricultural land in India in a rural area;
Note:
Rural area for this purpose means any area which is outside the jurisdiction of a municipality or a cantonment board having a population of 10,000 or more and also which does not fall within distance given below:
a. 2 kilometres from the local limits of municipality/ cantonment board, if the population of the municipality/ cantonment board is more than 10,000 but not more than 1 lakh; or
b. 6 kilometres from the local limits of municipality/ cantonment board, if the population of the municipality/ cantonment board is more than 1 lakh but not more than 10 lakh; or
c. 8 kilometres from the local limits of municipality/ cantonment board, if the population of the municipality/ cantonment board is more than 10 lakh.
4. 6½ per cent Gold Bonds, 1977, or 7 per cent Gold Bonds, 1980, or National Defence Gold Bonds, 1980;
5. Special bearer bonds, 1981;
6. Gold Deposit Bonds issued under Gold Deposit Scheme, 1999; and
7. Deposit certificates issued under the Gold Monetisation Scheme, 2015.
Long-term Capital Asset
“Long-term capital asset” means a capital asset held by an assessee for more than 36 months immediately prior to its date of transfer. However, unlisted shares and immovable property (being land or building or both) will be treated as long-term when these are held by an assessee for more than 24 months (and not 36 months) immediately prior to its transfer. Capital gain arising from the transfer of long-term capital asset is called Long-term capital gain.
Short-term Capital Asset
“Short term capital asset” means a capital asset held by an assessee for not more than 36 months (or 24 months in case of unlisted shares and immovable property), immediately prior to its date of transfer.
In the following cases, however, such period is taken as 12 months:
1. Equity or preference shares in a company listed on a recognized stock exchange in India.
2. Securities (like debentures, bonds, Government securities, etc.) listed on a recognized stock exchange in India.
3. Units of UTI (whether quoted or not).
4. Unit of an equity oriented mutual fund (whether quoted or not).
5. Zero coupon bonds (whether quoted or not).
In the aforesaid cases, if the asset is held for more than 12 months immediately prior to its date of transfer, then it is “long-term capital asset”.
Note: In the case of transfer of a depreciable asset (other than an asset used by a power generating unit eligible for depreciation on straight line basis), capital gain (if any) is taken as short-term capital gain, irrespective of period of holding.
Computation of Capital Gain/ Loss [Sec. 48]
Short Term Capital Gain/ Loss – Computation

Amount (Rs.)

Full value of consideration XX

Less: Expenses on transfer XX

Cost of acquisition XX

Cost of improvement XX XX

Balance XX

Less: Exemption under sections 54B, 54D, 54G and 54GA XX

STCG/ STCL
Long Term Capital Gain/ Loss – Computation
XXX

Amount (Rs.)

Full Value of Consideration XX

2. In case of gift of ESOP shares, fair market value on the date of gift is taken as full value of consideration.

Less: Expenses on transfer XX
Indexed cost of acquisition (ICA) XX
Indexed cost of improvement (ICI) XX XX
Balance XX
Less: Exemption under sections
54, 54B, 54D, 54EC, 54EE, 54F, 54G, 54GA and 54GB XX
LTCG/ LTCL XXX

It is to be noted that no deduction is allowed in respect of securities transaction tax in computing income under the head “Capital gains”.
Indexed Cost of Acquisition -: Computation
Indexed cost of acquisition = {Cost of acquisition/CII for the year in which the asset was first held by the assessee or CII for 2001-02, whichever is later} * CII for the year in which the asset is transferred
CII - Cost Inflation Index
Indexed Cost of Improvement –: Computation
Indexed cost of improvement = {Cost of improvement / CII for the year in which improvement took place} * CII for the year in which the asset is transferred.

Cost inflation index (CII) for the previous year 2001-02 (base year) is 100 and for the previous year 2017-18 is 272.
Cost inflation index for different years –
Financial year CII Financial year CII
2001-02 100 2011-12 184

2002-03 105 2012-13 200

2003-04 109 2013-14 220

2004-05 113 2014-15 240

2005-06 117 2015-16 254

2006-07 122 2016-17 262

2007-08 129 2017-18 272

2008-09 137 2018-19 280

2009-10 148 2019-20 289

2010-11 167 2020-21 301
When the benefit of indexation is not available
In the following cases, benefit of indexation is not available even if a long-term capital asset is transferred:
1. Bonds or debentures (other than capital indexed bonds issued by the Government);
2. Shares in or debentures of an Indian company acquired by utilizing convertible foreign exchange as mentioned under first proviso to section 48* (applicable to a non-resident assessee only); and
3. Bonds/ debentures or Sovereign Gold Bond issued by the RBI under the Sovereign Gold Bond Scheme, 2015.
4. Depreciable asset (however, in case of a power generating unit eligible for depreciation on straight line basis, indexation benefit is available).
5. Equity shares in a company or a unit of equity oriented mutual fund or a unit of a business trust referred to in section112A.
6. Undertaking / division transferred by way of slump sale as covered by section 50B.
Conversion of capital asset into Stock-in-trade [Sec. 45(2)]
Any conversion of capital asset into stock-in-trade during the previous year 1984-85 (or thereafter) is subject to the following provisions:
1. It is treated as transfer in the year in which such conversion took place.
2. Although such a conversion is treated as transfer in the year in which the asset is so converted, but the notional capital gain will arise in the previous year in which such converted asset is sold or otherwise transferred.
3. Indexation of cost of acquisition and improvement, if required, will be done till the previous year in which such conversion took place. Further, the fair market value of the capital asset, as on the date of such conversion, shall be deemed to be full value of the consideration of the asset.
4. The sale price of stock-in-trade minus market value as on the date of conversion shall be treated as business income and taxed under the head “Profits and gains of business or profession”.
Compulsory acquisition of an asset [Sec. 45(5)]
This section is applicable in the following two cases:
1. When the transfer of a capital asset is by way of compulsory acquisition under any law; or
2. When the consideration is approved or determined by the Central Government (not by a State Government) or the RBI (even if there is no compulsory acquisition).
Initial compensation:
Initial compensation is taken as full value of sale consideration and capital gain is chargeable to tax in the previous year in which the initial compensation (or part thereof) is first received (and not taxable in the year in which capital asset is transferred). Indexation benefit is, however, available up to the year in which the asset is compulsorily acquired.
Enhanced compensation:
If compensation is subsequently increased (i.e., enhanced by a court, Tribunal or any authority), then the enhanced compensation shall be taxable in the previous year in which it is received. It will be taxable in the year of receipt even if appeal is pending in any court or Tribunal. For this purpose, cost of acquisition and the cost of improvement shall be taken as nil. However, litigation expenses for getting the compensation enhanced are deductible as expenses on transfer.
If the enhanced compensation is received by any other person, (because of the death of the transferor or for any other reason), it is taxable as income of the recipient.
Where such amount of the compensation is subsequently reduced by any court, Tribunal or other authority, the capital gain of that year, in which the additional compensation received was taxed, shall be recomputed accordingly.
Transfer of shares/ debentures in case of Non-Resident [First proviso to sec. 48]
If a non-resident acquires shares in, or debentures of, an Indian company by utilizing foreign currency, the gain will be calculated in the same foreign currency, which was initially utilized in acquiring shares/ debentures. After calculating capital gain in foreign currency, it will be converted into Indian currency.
This rule is not optional but it is compulsory and applicable whether the asset is short-term or long-term. The benefit of indexation shall not be available but the option of taking fair market value on April 1, 2001 is available. Provisions of securities transaction tax (i.e., sec. 10(38) or sec. 111A, as the case may be) are applicable in case shares are transferred.
Following steps are to be applied to compute capital gain (whether short-term or long-term) under this provision:
Step 1 Find out sale consideration in Indian currency and convert it into foreign currency at “average exchange rate” on the date of transfer
Step 2 Find out the expenditure on transfer in Indian currency and convert it into foreign currency at “average exchange rate” on the date of transfer (and not on the date when expenditure is incurred)
Step 3 Find out the cost of acquisition in Indian currency and convert it into foreign currency at “average exchange rate” on the date of acquisition
Step 4 Capital gain (1 – 2 – 3) will be reconverted in to Indian currency at “buying rate” on the date of transfer
Computation of capital gain in case of Self-generated assets
An asset which does not cost anything to the assessee in terms of money in its creation or acquisition is a self-generated asset.
When a self-generated asset is transferred, the following special rules are applicable:
1. Goodwill of a business (not a profession), right to manufacture/ produce any article/ thing or right to carry on any business or profession:
In the case of transfer of these capital assets, cost of acquisition and improvement are taken as nil. Expenses on transfer are, however, deductible on the basis of actual expenditure.
2. Tenancy rights, route permit, loom hours, trade mark or brand name associated with a business:
In the case of transfer of these capital assets, cost of acquisition is taken as nil. Cost of improvement and expenses on transfer are, however, deductible on the basis of actual expenditure.
3. Any other self-generated asset:
In the case of transfer of any other self-generated capital asset, capital gain is not chargeable to tax.
It is to be noted that even if the above mentioned self-generated assets are acquired before April 1, 2001, the option of adopting the fair market value on the said date is not available.
Fair market value of the asset disclosed under Income Declaration Scheme, 2016
For ‘asset disclosed under Income Declaration Scheme, 2016, fair market value of the asset declared under the scheme on June 1, 2016 (on the basis of which tax, surcharge and penalty is paid under the scheme) is taken as the cost of acquisition.
Cost of acquisition of Bonus Shares
If bonus shares were allotted prior to 1st April, 2001, the fair market value on 1st April, 2001 is taken as the cost of acquisition. If bonus shares are allotted on or after April 1, 2001, cost of acquisition is taken as Nil.
Capital gain on transfer of Right Shares
Following two situations can arise in case of transfer of right shares –
1. Rights entitlement (which is renounced by the assessee in favour of a person): In such a case, cost of acquisition is Nil.
However, in such a case, the amount realized by the original shareholder by selling his rights entitlement will be short-term capital gains in his hands (as the cost is taken as nil). The period of holding of the rights entitlement will be considered from the date of offer made by the company to subscribe to shares to the date when such right entitlement is renounced by the person.
2. Right shares purchased by the person in whose favor rights entitlement has been renounced:
In such a case, cost of acquisition is equal to the purchase price paid to renouncer of rights entitlement plus amount paid to the company which has allotted the rights shares.
Computation of capital gain in case of transfer of unlisted shares in a company [Sec. 50CA]
Where consideration for transfer of shares in a company (other than quoted shares) is less than the FMV of such share, the FMV shall be deemed to be the full value of consideration for the purpose of computing “Capital Gains”.
Exemptions under Capital Gains
Transfer of residential house property [Sec. 54]
• Available to an individual or a HUF
• Residential house property (long-term) is transferred
• Assessee has purchased another residential house within one year before or within two years after sale of original house or constructed another house within three years after sale of original house
• Amount of exemption is investment in new asset or LTCG, whichever is lower
• Exemption is available if One (if the amount of CG does not exceed Rs. 2 crores, the assessee can purchase/construct two residential house properties. However, this benefit is available only once in lifetime) residential house is purchased or constructed in India. A taxpayer may sell two house properties and he may purchase/ construct 1 house property for the purpose of availing the exemption
• Deposit Scheme:
o In case, the assessee is not interested in purchasing or constructing the house till due date of filing return of income, he has to deposit the amount in Capital Gains Deposit Account Scheme till the due date of filing return of income to get the exemption. On the basis of this deposit, exemption under section 54 can be claimed. But assessee has to actually withdraw the deposited amount and utilize this deposited amount within the prescribed time limit for purchasing or constructing the house.
o In case the deposited amount is not fully utilized in purchasing or constructing the house within eligible time limit, then the unutilised amount will be taxable as LTCG in the year in which the maximum time limit for making new investment (i.e., 3 years for construction) expires.
Deposit scheme for exemption under section 54 has been explained below with the help of an example:
a. Suppose the assessee transfers the residential property on January 14, 2020 i.e., previous year 2019-20.
b. If assessee wants to purchase the house, the house should be purchased during January 15, 2019 to January 13, 2022 and if assessee wants to construct the house, the construction should be completed till January 13, 2023 to claim the exemption of section 54.
c. If the assessee is not interested in purchasing or constructing the house till July 31, 2020, the assessee has to deposit the amount in “Capital Gains Deposit Account Scheme” till July 31, 2020 (due date of filing return of income for individuals) to claim the exemption.
d. By withdrawing from this deposit account, the house should be purchased till January 13, 2022 or constructed till January 13, 2023.
e. On January 14, 2023 (Assessment year 2023-24), unutilised amount (if any) will be taxable as LTCG (taxable in the year in which maximum time limit expires). Also, on January 14, 2023 (or at any time thereafter), assessee can withdraw this unutilised amount. However, if the taxpayer dies before the expiry of specified time-limit (for making investment in new asset), then unutilized amount paid to the legal heirs is not taxable in the hands of recipient.
• Withdrawal of exemption:
If the new asset on which exemption is claimed under section 54 is transferred within 3 years of its acquisition/ construction, exemption given will be taken back. For calculating STCG on transfer of new asset, cost of acquisition will be calculated as original cost of acquisition minus exemption availed under section 54.
Note: The summary of Income Tax Notes Part-05 Capital Gains summarise from the content of Book of School of Open Learning. © School of Open Learning.

Salary
House Property
Profits and Gains From Business or Profession

Income From Other Sources

Profits and Gains - Income Tax Notes Part - 04

noreply@blogger.com (Unknown) — Fri, 2 Feb 2024 15:07:00 +0530
PROFITS AND GAINS OF BUSINESS OR PROFESSION - I
INCOME TAX NOTES PART - 04 PROFITS AND GAINS OF BUSINESS OR PROFESSION - I
Depreciation allowance [Sec. 32]
Following conditions should be satisfied by the assessee to avail depreciation:
1. Asset must be owned by the assessee.
2. Asset must be used for the purpose of business or profession.
3. Asset should be used during the relevant previous year:
Normal depreciation (i.e., full year’s depreciation) is available if an asset is put to use at least for sometime during the previous year. However, where an asset is acquired during the previous year but put to use for the purpose of business or profession for less than 180 days during that year, in such a case, half of the normal depreciation is allowed.
4. Depreciation is available on tangible assets (Building, machinery, plant or furniture) as well as intangible assets (know-how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature). However, it must be noted that the intangible assets must be acquired after March 31, 1998.
If all the above conditions are satisfied, depreciation is available (it is a must, it is not at the option of the assessee to claim or not to claim, depreciation in such cases).
Basis concepts for computation of depreciation allowance: 1. Block of assets:
The term “block of assets” means a group of assets falling within a class of assets in respect of which the same percentage of depreciation is prescribed. A taxpayer may have 9 different blocks of assets (out of which 8 blocks are for tangible assets and 1 block is for intangible asset). These blocks are given below:

Type of Asset Blocks Nature of Asset Rate of Depreciation
Buildings 1 Residential buildings 5%

2 Office, factory, godowns 10%

3 Purely temporary erections such as wooden structures 40%

Furniture 4 Any furniture/fittings including electrical fittings 10%

Plant and machinery 5 Any plant and machinery (not covered by block 6, 7 and 8) 15%
6 Ocean-going ships 20%

7 Buses, lorries and taxis used in the business of running them on hire 30%

8 Aeroplanes, Containers made of glass or plastic used as re-fills, Computers, Energy saving devices, Air pollution control equipments, water pollution control equipments, 40%

9 Motor buses, motor lorries and motor taxis (used in a business of running them on hire) acquired on or after 23.08.2019 but before 01.04.2020 and is put to use before 1.4.2020. 45%

Intangible assets (acquired after March 31, 1998) 10 Know-how, patents, copyrights, trademarks, licenses, franchises and any other business or commercial rights of similar nature 25%

2. Written down value/ Depreciated value:
WDV at the year end

= WDV of the block on the 1st day of the previous year

Add: Actual cost of the asset (falling in the same block) acquired during the previous year

Less: Money received/ receivable* (together with scrap value) in respect of that asset (falling within the block of assets) which is sold, discarded, demolished or destroyed during the previous year
(* It does not mean gross consideration. It is net consideration after excluding expenditure incidental to sale. Further, here actual money received or receivable in cash or by cheque or draft is deductible. In other words, any other things or benefit which can be converted in terms of money cannot be deducted.)

3. No depreciation will be charged in the following cases:

a. If written down value of the block of asset is reduced to zero, though the block of assets does not cease to exist on the last day of the previous year; or
b. If block of asset is empty or ceases to exist on the last day of the previous year, though the written down value is not zero (*In such cases, written down value of the block on the first day of the next previous year will be taken as Nil); or
c. If any imported car is used for the purpose of business or profession in India which is acquired during March 1, 1975 and March 31, 2001. If, however, such imported car is used in the business of running it on hire for tourist or for the purpose of business or profession outside India, then depreciation is admissible at the usual rate.
d. Whenever depreciable asset is acquired otherwise than by an account payee cheque/ draft or use of electronic clearing system through a bank account (and the payment exceeds Rs. 10,000), such payment shall not be eligible for normal/ additional depreciation.
4. Meaning of “Actual Cost”:
It means the actual cost to the assessee as reduced by the proportion of the cost thereof, if any, as has been met, directly or indirectly, by any other person or authority. Actual cost for any asset includes all expenses directly relatable to acquisition of the asset.
Interest pertaining to the period till the asset is put to use should be added to the “actual cost” of the asset.
Expenditure on travelling incurred for acquiring depreciable assets is part of “actual cost”.
5. Method of depreciation:
Method of computation of depreciation is written down value method. However, depreciation is available in the case of tangible assets according to “straight-line” method in the case of an undertaking engaged in generation or generation and distribution of power in some cases.
6. The following points should be noted in this regard:
a. The concept of half the rate of normal depreciation is applicable only in the year in which an asset is acquired and not in subsequent years.
b. If an asset is not used at all, no depreciation in respect of that asset is available. This rule is applicable in the first year in which the asset is acquired as well as in the subsequent years.
c. If an asset is acquired during any previous year but not put to use during that previous year; the actual cost of such asset will become part of the block of assets on day 1 of the next year. For example, if any asset is purchased during the previous year 2016-17 but put to use in the previous year 2017-18; this asset is a part of the block on April 1, 2017. This rule is applicable even if the asset is not put to use in the previous year 2016-17. Here, depreciation is available for the first time in the previous year 2017-18.
d. If nothing is mentioned about the date of use of an asset, then assume that the asset is put to use on the same day the asset is acquired.
Tea / Coffee/ Rubber development account [Sec. 33AB]
An assessee can claim deduction under this section if the following conditions are satisfied:
1. The assessee must be engaged in the business of growing and manufacturing tea or coffee or rubber in India.
2. The assessee must make a deposit in a “special account” [i.e., deposit with National Bank for Agriculture and Rural Development (NABARD)] or deposit under a scheme approved by the Tea Board or Coffee Board or Rubber Board.
3. The aforesaid amount shall be deposited within 6 months from the end of the previous year or before the due date of furnishing return of income, whichever is earlier.
Amount of deduction:
The amount of deduction is lower of the following:
a. a sum equal to amounts “deposited in special account” as mentioned above; or
b. 40 per cent of the profit of such business computed under the head “Profits and gains of business or profession” before making any deduction under section 33AB and before adjusting brought forward business loss under section 72.
Expenditure on scientific research [Sec. 35]
The term “scientific research” means “any activity for the extension of knowledge in the fields of natural or applied sciences including agriculture, animal husbandry or fisheries”. To promote scientific research, section 35 provide tax incentives.
Following is the classification of such expenditures which are deductible under section 35:
1. Revenue expenditure incurred by the assessee himself [Sec. 35(1)(i)]
100 per cent deduction is allowed for such expenditure, if such research relates to the business.
Pre-commencement period expenses:
Revenue expenses (other than expenditure on providing perquisites to employees) incurred before the commencement of business (but within 3 years immediately before commencement of business) on scientific research related to the business are deductible in the previous year in which the business in commenced. However, the deduction is limited to the extent it is certified by the prescribed authority.
Such expenses may be the expenditure on purchasing materials used in scientific research, salary paid to employees (not being a perquisite).
2. Contribution made to outsiders [Sec. 35 (ii)/ (iii)]:
Where the assessee does not himself carry on research but makes contributions to other institutions for this purpose, a weighted deduction is allowed, as follows-
a. Deduction allowed is 150 per cent of any sum paid to an approved research association which has, as its object, undertaking of scientific research related or unrelated to the business of assesse [Sec. 35(1)(ii)].
b. Deduction allowed is 150 per cent of any sum paid to an approved university, college or other institution for the use of scientific research related or unrelated to the business of assesse [Sec. 35(1)(ii)].
c. Deduction allowed is 100 per cent of any sum paid to an approved association which has as its object the undertaking of research in social science or statistical science or an approved university, college or other institution for the use of research in social sciences or statistical research related or unrelated to the business of the assessee [Sec. 35(1)(iii)].
It is to be noted that approval under section 35(1)(ii)/(iii) is given by the Central Government.
3. Capital expenditure incurred by an assessee himself [Sec. 35(2)]:
100 per cent deduction is allowed for such expenditure, if such research relates to the business.
However, the following points must be noted in this regard:
a. Such expense may be on plant or equipment for research or constructing building (excluding cost of land) for research or expenses of capital nature connected with research like expenses on purchase of buses to transport research personnel.
b. Where any capital expenditure has been incurred on scientific research related to business before the commencement of business, the amount of such expenditure incurred within 3 years immediately preceding the commencement of the business, is deductible in the previous year in which the business is commenced.
c. Deduction is available even if the relevant asset is not put to use for research and development purposes during the previous year in which the expenditure is incurred.
d. No deduction by way of depreciation is admissible in respect of an asset used in scientific research.
e. If an asset is sold without having been used for other purposes, then surplus (i.e., sale price) or deduction already allowed under section 35, whichever is less, is chargeable to tax as business income of the previous year in which the sale took place [Sec. 41(3)]. The excess of sale price over cost of acquisition (or indexed cost of acquisition) is chargeable to tax under section 45 under the head “Capital Gains”.
4. Contribution to national laboratory [Sec. 35 (2AA)]:
Deduction allowed is 150 per cent of actual payment made to “National Laboratory” or University or Indian Institute of Technology (IIT) or specified person as approved by the prescribed authority. However, the above payment is made under a specific direction that it should be used by the aforesaid person for undertaking scientific research programme approved by the prescribed authority.
5. Expenditure on in-house research and development expenses [Sec. 35(2AB)]: Deduction allowed is 150 per cent of the expenditure incurred if all the given below conditions are satisfied:
a. The taxpayer is a company.
b. The company should be engaged in the business of manufacture or production of any article or thing except those specified in the Eleventh Schedule.
c. It incurs any expenditure on scientific research and such expenditure is of capital nature or revenue nature (not being expenditure in the nature of cost of any land or building)*.
d. The research and development facility is approved by the prescribed authority.
However, if the aforesaid conditions are not satisfied, then deduction may be claimed as per the rules mentioned in point (1) and point (3) above relating to revenue expenses and capital expenses respectively.
In respect of the aforesaid expenditure, no deduction shall be allowed under any other provisions of the Act.
* Cost of building (excluding cost of land) is eligible for 100 per cent deduction under section 35(2).
6. Contribution to a company to be used by such company for scientific research [Sec. 35(1)(iia)]:
The taxpayer can claim a deduction of 100 per cent of the amount paid to the payeecompany if all the given below conditions are satisfied:
a. The taxpayer is any person (may be an individual, HUF, firm, company or any other person).
b. The taxpayer has paid any sum to a company (hereinafter referred to as “payeecompany”) to be used by the payee for scientific research.
c. The scientific research may or may not be related to the business of the tax payer.
d. The payee-company is registered in India which has, as its main object, scientific research and development.
e. The payee-company is for the time being approved by the prescribed authority.
f. The payee-company fulfils such other conditions as may be prescribed.
With a view to avoid multiple claims for deduction, it has been provided that the payee-company will not be entitled to claim weighted deduction of 150 per cent under section 35(2AB). However, deduction to the extent of 100 per cent of the sum spent as revenue expenditure or capital expenditure on scientific research, which is available under section 35(1), will continue to be allowed.
7. Carry forward and set-off of deficiency in subsequent years:
If on account of inadequacy or absence of profits of the business, deduction on account of capital expenditure on scientific research cannot be allowed, fully or partly, the deficiency so arising is to be carried forward as if it is an unabsorbed depreciation.
General Deductions [Section 37]
Section 37(1) is a residuary section. In order to claim deduction under this section, the following conditions should be satisfied:
1. The expenditure should not be of the nature described under sections 30 to 36.
2. It should not be in the nature of capital expenditure.
3. It should not be assessee’s personal expenditure.
4. It should have been incurred in the previous year.
5. It should be in respect of business carried on by the assessee.
6. It should have been expended wholly and exclusively for the purpose of such business.
7. It should not have been incurred for any purpose which is an offence or prohibited by any law.
Advertisement expenses [Section 37(2B)]
Deduction is not available in respect of expenditure incurred by an assessee on advertisement in any souvenir, brochure, tract, pamphlet or the like published by a political party.
Contribution to a political party is deductible under section 80GGB (if contribution is made by an Indian company) or under section 80GGC (if contribution is made by a person other than an Indian company).
Expenditure by way of advertisement in a magazine owned by a political party is treated as “contribution” to a political party for the purpose of section 80GGB, but not for the purpose of section 80GGC. In other words, advertisement expenditure (in a magazine owned by a political party) is deductible under section 80GGB (if the taxpayer is an Indian company) but the same is not deductible under section 80GGC (if the taxpayer is a person other than an Indian company).
Amount not deductible under section 40(a)
In the case of any assessee, the following expenses are expressly disallowed under section 40 (a):
Interest, royalty, fees for technical services or any other sum (except salary) payable outside India or payable to a non-resident in India [Sec. 40(a)(i)]
If the following three conditions are satisfied, the assessee (i.e., the payer) is supposed to deduct tax at source (TDS) and deposit the same with the Government:
Condition 1: The amount paid is interest, royalty, fees for technical services or any other sum (not being salary).
Condition 2: The aforesaid amount is chargeable to tax under the Act in the hands of the recipient.
Condition 3: The aforesaid amount is paid/ payable (a) outside India to any person; or (b) in India to a non-resident.
If the assessee fails to deduct tax at source, 100% of such expenditure is disallowed.
Disallowance of expenditure under section 40(a)(i):

TDS default Is such expenditure deductible in the current previous year Is such expenditure deductible in any subsequent previous year

Case 1: Tax is deductible during the current financial/ previous year but not deducted during the current financial/ previous year 100% of such expenditure is disallowed in the current year If tax is deducted in any subsequent year, the expenditure (which is disallowed in the current year) will be deducted in the year in which TDS will be deposited by the assessee with the Government

Case 2: Tax is deductible (and is so deducted) during the current financial year but it is not deposited on or before the due date of submission of return of income under section 139(1) 100% of such expenditure is disallowed in the current year If tax is deposited with the Government after the due date of submission of return of income, the expenditure (which is disallowed in the current year) will be deducted in that year in which tax will be deposited

Any sum payable (including salary) to a resident (in India or outside India) [Sec. 40(a)(ia)]
Disallowance of expenditure under section 40(a)(ia):

TDS default Is such expenditure deductible in the current previous year Is such expenditure deductible in any subsequent previous year

Case 1: Tax is deductible during the current financial/ previous year but not deducted during the current financial/ previous year 30% of such expenditure is disallowed in the current year If tax is deducted in any subsequent year, the expenditure (which is disallowed in the current year) will be deducted in the year in which TDS will be deposited by the assessee with the Government

Case 2: Tax is deductible (and is so deducted) during the current financial year but it is not deposited on or before the due date of submission of return of income under section 139(1) 30% of such expenditure is disallowed in the current year If tax is deposited with the Government after the due date of submission of return of income, the expenditure (which is disallowed in the current year) will be deducted in that year in which tax will be deposited
Relief applicable in Sec. 40(a)(ia) when recipient has paid tax:
In case of disallowances of section 40(a)(ia), relief is applicable in case 1 default if recipient has paid the tax. In such a case, it shall be deemed that the payer has deducted and paid the tax on such amount and the date of payment shall be assumed as the date when return of income is furnished by the resident recipient.
Amount paid to a non-resident for a service where equalization levy is payable [Sec. 40(a)(ib)]
Where equalization levy (applicable for a specified service) is deductible but not deducted (or deducted but not deposited till due date of filing return of income), any amount paid to a nonresident will be disallowed. However, it will be allowed in the year in which such levy is deposited.
Salary payable outside India (or in India to a non-resident) without tax deduction [Sec. 40(a)(iii)]
This section is applicable if salary is paid paid/ payable outside India to any person or in India to a non-resident and tax has not been paid to the Government nor deducted at source under the Income-tax Act. In such a case, salary payment is not allowed as deduction.
Fringe benefit tax (FBT), income-tax, dividend tax, wealth-tax (including penalty, fine and interest)
These taxes are not deductible while computing income from business or profession.
Note –
Any sum paid on account of income tax (or interest on money borrowed to pay income-tax) is not deductible. Similarly, any interest/ penalty/ fine for non-payment or late payment of income-tax is not deductible. This rule is applicable whether income-tax is payable in India or outside India.
Amount not deductible under section 40A
In the case of any assessee, the following expenses are expressly disallowed under section 40A:
Amount not deductible in respect of payment to relatives [Sec. 40A(2)]
Any expenditure incurred by an assessee in respect of which payment has been made to the relatives is liable to be disallowed in computing business profits to the extent such expenditure is considered to be excessive or unreasonable, having regard to the fair market value* of goods or services or facilities, etc.
Relative [Sec. 2(41)]:
Relative means the husband, wife, brother or sister or any linear ascendant or descendant of that individual.
Substantial Interest:
A person is deemed to have substantial interest in the business or profession if such person is the beneficial owner of at least 20% of equity capital (in case of a company) or if such person is entitled to 20% profits of a concern (in any other case) at any time during the previous year.
* The aforesaid disallowance shall not be made if such transaction is at arm’s length price as defined in section 92F(ii).
Amount not deductible in respect of expenditure exceeding Rs. 10,000 (*Rs. 35,000 in case of payment made for plying, hiring or leasing goods carriages) [Sec. 40A(3)] No deduction is allowed if the following conditions are satisfied:
a. The assessee incurs any expenditure which is otherwise deductible under other provisions of the Act for computing business/ profession income (i.e., expenditure for purchase of raw material, trading goods, expenditure on salary, etc.) and the amount of expenditure exceeds Rs. 10,000*.
b. A payment (or aggregate of payments made to a person in a day) in respect of the above expenditure exceeds Rs. 10,000*.
c. The above payment is made otherwise than by an account payee cheque/ account payee draft or use of electronic clearing system through a bank account (i.e., it is made in cash or by a bearer cheque or by a crossed cheque or by a crossed demand draft).
Notes –
a. If aggregate payment in a day (otherwise than by an account payee cheque/ draft) to the same person in respect of an expenditure exceeds Rs. 10,000*, it will be disallowed under section 40A(3), even if none of each payment in a day exceeds Rs. 10,000*.
b. If an assessee makes payment of two different bills (none of them exceeds Rs. 10,000*) at the same time in cash (or by bearer cheque or by crossed cheque or by crossed demand draft), section 40A(3) is not applicable even if the aggregate payment is more than Rs. 10,000*. To attract the disallowance under section 40A(3), both the amount of the bill and the amount of payment should exceed Rs. 10,000*.
c. Where the assessee makes payment over Rs. 10,000* at a time, partly by an account payee cheque and partly in cash (or bearer cheque or crossed cheque or by crossed demand draft) to some parties and this payment in cash (or by bearer cheque or crossed cheque or crossed demand draft) alone at one time does not exceed Rs. 10,000*, section 40A(3) is not attracted.
d. Provision of section 40A(3) does not apply in respect of an expenditure which is not to be claimed as deduction under sections 30 to 37.
Some cases where no disallowance will be made even if the expenditure (exceeding Rs. 10,000*) is made in cash:
- Payment to Indian railways;
- Payment of taxes to the government;
- Payment made on a day on which the banks were closed either on account of holiday or strike, etc.
Amount not deductible in respect of provision for unapproved gratuity fund [Sec. 40A(7)]
Provision for gratuity fund (for meeting future liability) is deductible only if such gratuity fund is an approved gratuity fund. In other words, we can say that any provision for unapproved gratuity fund (for meeting future liability) is not deductible.
Notes –
a. An employee retires during the current year. Gratuity is paid to him during the current year. It is deductible during the current year if no deduction was claimed earlier.
b. An employee retires during the current year. Gratuity is payable to him. A part of the amount is paid during the current year and the balance will be paid in the next year. A provision is made towards gratuity in the books of account of the current year for making payment in the next year. The entire amount is deductible during the current year if no deduction was claimed earlier.
In this case, deduction is available during the current year even if provision is made for gratuity fund, which is unapproved (because, here, the provision is made for already due liability and not for the future liability).
c. A company has 50 employees. To meet future liability to pay them gratuity at the time of retirement, a gratuity fund is created and the employer makes contribution every year. Employers’ contribution to this fund is deductible only if the gratuity fund is an approved gratuity fund.
Amount not deductible in respect of contributions to non-statutory funds [Sec. 40A(9)] Any sum paid by the assessee as an employer by way of contribution towards recognized provident fund, or approved superannuation fund or an approved gratuity fund or NPS is deductible to the extent it is required by any law.
In simple words, if the following conditions are satisfied, then contribution or payment is not deductible by section 40A(9):
a. The contribution/ payment is made by an assessee as an employer.
b. It is paid towards setting up (or formation of) any trust, company, association of persons, body of individuals, society or it is paid by way of contributions to any fund.
c. The contribution or payment is not required by any law.
Notes –
a. Contribution by an assessee (not being in the capacity of an “employer”) cannot be disallowed under section 40A(9).
b. All expenses incurred for the benefit of employees by an employer cannot be treated as contribution by the employer towards the various funds enumerated in section 40A(9). What is disallowed under section 40A(9) is employer’s contribution/ payment towards a fund (for the benefit of employees) which is otherwise not required by any law (which is paid or contributed by an employer under contractual obligation or otherwise but not under a legal requirement).
Examples –
a. N Ltd. incurs an expenditure of Rs. 50,000 for maintenance of street lights in worker’s colony. The expenditure is incurred without any legal or contractual requirement.
In this case, nothing will be disallowed under section 40A(9), as it is not towards setting up or formation of, or as contribution to, any fund, society, etc.
b. A Ltd. has a tea club in its office. Tea club provides tea, coffee, snacks, softdrinks to the employees during tea breaks. The club has been set up by employees (and/ or by A Ltd.) for the benefit of employees without any legal requirement. A Ltd. contributes Rs. 50,000 annually towards tea club.
It will be disallowed under section 40A(9) in the hands of A Ltd. The position will remain the same even if tea club was set up by the employer under the terms of employment but without any legal obligation.
c. Employer’s contribution towards unrecognized provident fund or any other staff welfare fund (without any statutory requirement) will be disallowed under section 40A(9).
Amount not deductible in respect of unpaid liability [Sec. 43B]
Section 43B is applicable only if the taxpayer maintains books of account on the basis of merchantile system of accounting. The following expenses (which are otherwise deductible under the other provisions of the Income-tax Act) are deductible on payment basis:
1. Any sum payable by way of tax, duty, cess or fee (by whatever name called under any law for the time being in force);
2. Any sum payable by an employer by way of contribution to provident fund or superannuation fund or any other fund for the welfare of employees;
3. Any sum payable as bonus or commission to employees for service rendered;
4. Any sum payable as interest on any loan or borrowing from a public financial institution (i.e., ICICI, IFCI, IDBI, LIC and UTI) or a state financial corporation or a state industrial investment corporation;
5. Interest on any loan or advance taken from a scheduled bank or a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank;
6. Any sum payable by an employer in lieu of leave at the credit of his employee; and
7. Any sum payable on account of use of railway assets.
The above expenses are deductible in the year in which payment is actually made.
Exception:
However, if the assessee maintains books of account on merchantile basis and the given below two conditions are satisfied, then the expenditure is deductible on “accrual” basis in the year in which the liability is incurred. The conditions are:
1. Payment in respect of the aforesaid expenses is actually made on or before the due date of submission of return of income; and
2. The evidence of such payment is submitted along with the return of income. But no annexure is possible with the new Income-tax return forms; so such evidence should be kept by the taxpayer himself and it can be produced before the Assessing Officer whenever he is required to produce it.
Sale consideration in case of Transfer of Immovable Property [Sec. 43CA]
Where the consideration for the transfer of an asset (other than capital asset), being land or building or both, is less than the stamp duty value, the value so adopted (or assessed or assessable) shall be deemed to be the full value of the consideration for the purposes of computing income under the head “Profits and gains of business or profession”.
Time for filing return of income [Sec. 139(1)]
The due date for filling returns of incomes are given below:

Different situations Due date of submission of return

Where the assessee is required to furnish a report under section 92E pertaining to international or specified domestic transaction(s) November 30 of the assessment year
Where the assessee is a company [not having international or specified domestic transaction(s)] September 30 of the assessment year

Where the assessee is a person other than a company [i.e., not having international or specified domestic transaction(s)]:
- In case where accounts of the assessee are required to be audited under any law
- Where the assessee is a “working partner” in a firm whose accounts are required to be audited under any law
- In any other case

September 30 of the assessment year
September 30 of the assessment year
July 31 of the assessment year

Deemed Profits [Sec. 41]
Recovery against any deduction [Sec. 41(1)]
This section is applicable if the following conditions are satisfied:
a. In any of the earlier, years a deduction was allowed to the taxpayer in respect of loss, expenditure (revenue or capital expenditure) or trading liability incurred by the assessee.
b. During the current previous year, the taxpayer:
i. has obtained a refund of such trading liability (it may be in cash or any other manner); or
ii. has obtained some benefit in respect of such trading liability by way of remission or cessation thereof (“remission or cessation” for this purpose includes unilateral act of the assessee by way of writing-off of such liability in his books of account).
If the above two conditions are satisfied, the amount obtained by such person (or the value of benefit accruing to the taxpayer) shall be deemed to be the profits and gains of business or profession and, accordingly, chargeable to tax as the income of that previous year. This rule is applicable even if the business is not in existence in the year of recovery.
Sale of assets used for scientific research [Sec. 41(3)]
Where any capital asset used in scientific research is sold without having been used for other purposes and the sale proceeds, together with the amount of deduction allowed under section 35, exceed the amount of capital expenditure incurred on purchase of such asset, such surplus (i.e., sale price) or the amount of deduction allowed, whichever is less, is chargeable to tax as business income in the year in which the sale took place even if the business is not in existence.
Recovery of bad debts [Sec. 41(4)]
Where any bad debt has been allowed as deduction and the amount subsequently recovered on such debt is greater than the difference between the debt and the deduction so allowed, the excess realization is chargeable to tax as business income of the year in which the debt is recovered even if the business is not in existence.
Recovery after discontinuance of business or profession
Where any business or profession is discontinued by reason of retirement or death of the person carrying on such business or profession, any sum received after the discontinuance of the business or profession is deemed to be the income of the recipient and charged to tax in the year of receipt.
Adjustment of loss [Sec. 41(5)]
Generally, loss of a business cannot be carried forward after 8 years but there is an exception to this rule.
This exception is applicable if the following conditions are satisfied:
a. The business or profession is discontinued.
b. Loss of such business or profession pertaining to the year in which it is discontinued could not be set-off against any other income of that year.
c. Such business is not a speculative business.
d. After discontinuation of such business or profession, there is a receipt which is deemed as business income.
Special provision for computing profits and gains of profession on presumptive basis [Sec. 44ADA]
This section is applicable if the following conditions are satisfied –
1. The assessee is resident in India.
2. The assessee is engaged in a specified profession referred in section 44AA.
3. The total gross receipts do not exceed Rs. 50 lakh in a previous year.
If all the above conditions are satisfied, a sum equal to 50% of the total gross receipts of the assessee in the previous year on account of such profession shall be deemed to be the profits and gains of such profession chargeable to tax under the head "Profits and gains of business or profession".
Notes –
1. The assessee can declare the income higher than 50% of the total gross receipts, if he desires.
2. All deductions allowable under sections 30 to 38 shall be deemed to have been already given and no further deduction under those sections shall be allowed while computing such income i.e., 50% of the total gross receipts.
3. The WDV of any asset used for the purposes of profession shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.
4. An assessee who claims that his profits and gains from the profession are lower than 50% of the total gross receipts and whose total income exceeds the exemption limit, shall be required to maintain such books of account as may enable the Assessing Officer to compute his taxable income. Also, he should get them audited and furnish a report of such audit as required under section 44AB.
Note: The summary of INCOME TAX NOTES PART - 04 PROFITS AND GAINS OF BUSINESS OR PROFESSION - I Gains summarise from the content of Book of School of Open Learning. © School of Open Learning.

Basic Concepts
Salary
House Property

Capital Gains

House Property - Income Tax Notes Part - 03

noreply@blogger.com (Unknown) — Fri, 2 Feb 2024 15:03:00 +0530

INCOME TAX NOTES PART - 03

HOUSE PROPERTY
When income is not taxable under the head “House Property”
In the following cases, income is not taxable under the head “Income from house property”:
1. If letting is only incidental and subservient to the main business of the assessee, rental income is not taxable under the head “Income from house property” but is chargeable under the head “Profits and gains of business and profession”.
2. Composite Rent:
If apart from recovering rent of the building, in some cases, the owner gets rent of other assets (like furniture, plant and machinery etc.) or he charges for different services provided in the building (for instance, security, charges for lift, air conditioning, electricity, water etc.), the amount so recovered is known as “composite rent”.
Following is the tax treatment of “composite rent”:
a. Where composite rent includes rent of building and charges for different services: In such situations, composite rent is to be split up and amount of services is chargeable under the head “Profits and gains of business or profession” or “Income from other sources” as the case may be and rent of property is chargeable under the head “Income from house property”. This rule is applicable even if it is difficult to split up the amount.
b. Where composite rent is rent of letting out of building and letting out of other assets (like furniture, plant etc.) and two letting are not separable i.e., letting of one is not acceptable to the other party without letting of the other):
In such situations, income is taxable either under the head “Profits and gains of business or profession” or “Income from other sources” as the case may be.
This rule is applicable even if sum receivable for the two lettings is fixed separately.
c. Where composite rent is rent of letting out of building and letting out of other assets (like furniture, plant etc.) and the two lettings are separable i.e., letting of one is acceptable to the other party without letting of the other):
In such situations, income from letting out of building is taxable under the head “Income from house property” and income from letting out of other assets is taxable under the head “Profits and gains of business or profession” or “Income from other sources” as the case may be. This rule is applicable even if the assessee receives composite rent from his tenant for two lettings.
When property income is not chargeable to tax
In the following cases, rental income is not chargeable to tax:
1. Income from farm house
2. Annual value of any one palace of an ex-ruler
3. Property income of a local authority
4. Property income of an approved scientific research association
5. Property income of an educational institution and hospital
6. Property income of a trade union
7. House property held for charitable purpose
8. Property income of a political party
9. Property used for own business or profession
10. One self-occupied property
Computation of Income under the head “House Property”
There can be three different types of house properties for the purpose of taxation under the head “Income from house property”.
1. Let out property [LO]
2. Self-occupied property [SO]
3. Deemed to be let out property [DLO]
Following format is to be followed for computing the income under the head “House Property”:
/tr>
Particulars LO (Rs.) Let Out SO (Rs.) Self- Occupied DLO (Rs.) Deemed to be Let Out
Step 1: Expected Rent [MV* or FR* whichever is higher but subject to a maximum of SR*] XX ---- XX
Step 2: Actual rent received/ receivable after deducting Unrealised Rent XX ---- NA*
Step 3: Higher of Step 1 or step 2 XX ---- ER*
Step 4: Deduct loss due to vacancy XX ---- NA
Step 5: Gross Annual Value (GAV) [Step 3 – Step 4] XX Nil ER
Less: Municipal Taxes XX Nil XX
Net Annual Value (NAV) XX Nil XX
Less: Deductions under section 24:
Standard Deduction [24(a)] (30% of NAV) XX Nil XX
Interest on capital borrowed [24(b)] (*limits applicable) XX XX* XX
Income from house property XX (XX) XX
Add: Income under section 25A XX ---- ----
Income taxable under “House Property” XXX (XXX) XXX
* MV refers to Municipal Value, FR refers to Fair Rent, SR refers to Standard Rent, ER refers to Expected Rent and NA refers to Not Applicable.
Meaning of Annual Value
The annual value of any property shall be the sum for which the property might reasonably be expected to be let out from year to year. It may neither be the actual rent derived nor the municipal valuation of the property.
Calculation of gross annual value (GAV)
Step 1: Find out reasonable expected rent of the property
[Municipal value or fair rent whichever is higher but subject to a maximum of standard rent]
Expected Rent:
It is deemed to be the sum for which the property might reasonably be expected to be let out from year to year.
Fair rent:
Rent fetched by a similar property in the same or similar locality.
Standard Rent:
It is the maximum rent which a person can legally recover from his tenant under a Rent Control Act.
Step 2: Find out rent actually received or receivable after excluding unrealized rent but before deducting loss due to vacancy
Step 3: Higher of amount computed in Step 1 or Step 2 is taken
Step 4: Find out loss due to vacancy.
Step 5: Step 3 minus Step 4 is gross annual value.
Rent actually received/ receivable:
Following points should be noted in this regard:
1. Advance rent cannot be rent received/ receivable of the year of receipt.
2. If the tenant has undertaken to bear the cost of repairs, the amount spent by the tenant cannot be added to rent received or receivable.
3. Occupier’s (i.e., tenant’s) share of municipal tax realized from the tenant cannot be added to actual rent received/ receivable, as it is the occupier’s duty to pay municipal tax.
Unrealized Rent
Unrealized rent is the rent which the owner could not realize. Unrealized rent of earlier years is not deductible, only unrealized rent of current previous year is deductible.
Unrealized rent shall be excluded from rent received/ receivable only if the following conditions are satisfied [Conditions of Rule 4]:
1. The tenancy is bonafide.
2. The defaulting tenant has vacated, or steps have been taken to compel him to vacate the property.
3. The defaulting tenant is not in occupation of any other property of the assessee.
4. The assessee has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid rent or satisfies the Assessing Officer that legal proceedings would be useless.
Municipal Taxes
Municipal taxes (like house tax, service tax, local tax)
Standard Deduction [Sec. 24(a)]
30% of NAV is deductible irrespective of any expenditure incurred by the assessee. Thus, no deduction can be claimed in respect of expenses on insurance, ground rent, land revenue, repairs, collection charges, electricity, water supply, salary of liftman, etc.
Interest on Borrowed Capital [Sec. 24(b)]
Interest on borrowed capital is allowable as deduction, if capital is borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the property.
Pre-construction period interest:
Pre-construction period means the period commencing from the date of borrowing and ending on –
a. 31st March immediately prior to the date of completion of construction/ date of acquisition; or
b. Date of repayment of loan, whichever is earlier.
Interest payable by an assessee in respect of funds borrowed for the acquisition or construction of a house property and pertaining to a period prior to the previous year in which such property has been acquired or constructed, to the extent it is not allowed as a deduction under any other provision of the Act, is deductible is five equal annual installments and the first installment starts from the previous year in which the property is acquired or constructed.
Post-construction period interest:
It is charged from the year of completion (YOC) to date of repayment (DOR).
Notes –
1. Interest on borrowed capital is calculated by adding pre-construction period interest and current year interest.
2. Interest is borrowed capital is deductible on “accrual basis”. It can be claimed as deduction on yearly basis, even if the interest is not actually paid during the year.
3. If interest is calculated on the basis of number of days, the date of borrowing should be included while the date of repayment of loan should be excluded.
4. Income from a self-occupied house property can be negative. Its value always lies between Zero to (-) Rs. 2,00,000.
5. Interest on a fresh loan, taken to repay the original loan raised for the aforesaid purposes, is allowable as deduction. This rule is applicable even if the first loan was interest-free loan.
Steps for computation of Interest on Capital Borrowed:
Step 1: Compute Pre-construction Period
PCP which starts from DOB (Date of borrowing)

and ends on 31st March prior to DOC (Date of completion),

OR

Actual DOR (Date of repayment),

Whichever is earlier
Step 2: Compute Pre-construction Period Interest
Step 3: Total Pre-construction Period Interest is allowed as deduction in 5 equal annual instalments and first instalment will be deductible in the year in which the house is purchased or constructed.
Step 4: Compute Post-construction period interest
It starts from YOC (Year of Completion) and ends on Actual DOR (Date of Repayment).
Step 5: Calculate IOCB (Interest on capital borrowed) which is equal to PCPI (Preconstruction period interest) + PCPI (Post-construction period interest) for different years. For assessment year 2018-19, relevant previous year is 2017-18.
Tax treatment of different cases of self-occupied house property
S.No. Self – Occupied Property Tax Treatment
1. If such property is used by the owner for the purpose of carrying on his business or profession No income is taxable under the head “Income from house property” but taxable under the head “Profits and gains of business or profession”
2. If such property is used throughout the previous year for own residential purposes, it is not let out or put to any other use. Further, no benefit is derived by the owner from such property. Nothing is taxable. Only interest on borrowed capital is deductible subject to a maximum ceiling of Rs. 30,000 or Rs. 2,00,000 depending upon the case
3. If such property could not be occupied throughout the previous year because employment, business or profession of the owner is situated at some other place and he has to reside at that other place in a building not owned by him. Further, no other benefit is derived by the owner from that unoccupied property. Same as point (2) above
4. When a part of the property (being independent residential unit) is selfoccupied and the other part is let out. Income from the independent unit (which is self-occupied) will be taxable as selfoccupied property and income from the unit which is let out is taxable as if the unit is let out
5. When such property is self-occupied for a part of the year and let out for the other part of the year. Taxable as a let-out property
6. Where a person has occupied more than one property for his own residential purpose. Only one property (according to his own choice) is treated as self-occupied and all other properties will be taken as deemed to be let out
Notes –
1. In the case of “deemed to be let out” properties, the taxable income will be calculated in the same manner as used for let out properties. In case of “deemed to be let out” properties, GAV shall be taken as reasonable expected rent.
2. As far as point (6) mentioned in the above table is concerned, the option should be exercised in such a way that the net income of a taxpayer is reduced to the minimum possible level. Moreover, the option may be changed every year.
Special provision for arrears of rent and unrealised rent received subsequently [Section 25A]
The amount of rent received in arrear (or unrealised rent realised subsequently) after deducting 30% amount shall be charged to tax in the year in which such rent is received (or realized) by the assesse under the head “Income from house property”.
Notes –
• It is taxable even if the house is not owned (or deemed to be owned) by the assessee in the year of recovery.
• In case of recovery of unrealized rent, expenditure on recovery is not taken in to consideration.
• It is to be noted that normally income is taxable under the head “Income from house property” only if the taxpayer is the owner or deemed owner of a house property during the previous year. However, in the case of arrears of rent received or recovery of unrealized rent, property income is taxable even if no house is owned (or deemed to be owned) by the taxpayer.
Note: The summary of Income Tax Notes Part-03 summarise from the content of Book of School of Open Learning. © School of Open Learning.

Basic Concepts
Salary
Profits and Gains From Business or Profession
Capital Gains

Salary - Income Tax Notes Part - 02

noreply@blogger.com (Unknown) — Fri, 2 Feb 2024 14:59:00 +0530

INCOME TAX NOTES PART – 02

SALARY
MEANING
Meaning of salary [Section 17(1)] –
Salary includes –
a. wages;
b. any annuity or pension;
c. any gratuity;
d. any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages;
e. any advance of salary;
f. any payment received by an employee in respect of any period of leave not availed by him;
g. employer’s contribution towards Recognized Provident Fund (RPF) in excess of 12% of employee’s salary and interest credited to RPF in excess of 9.5% p.a.;
h. transferred balance in a recognized provident fund to the extent it is taxable; and
i. the contribution made by the Central Government (or any other employer) in the previous year, to the account of an employee under a notified pension scheme referred to in section 80CCD.
Profits in lieu of salary [Section 17(3)] –
It includes the following –
a. the amount of any compensation due to or received by an assessee from his employer (or former employer) at or in connection with the termination of his employment or the modification of the terms and conditions thereto;
b. any payment due to or received by an assessee from his employer (or former employer) except the following:
i. Payment of gratuity exempted under section 10(10);
ii. Payment of commuted pension exempted under section 10(10A);
iii. Payment of retrenchment compensation exempted under section 10(10B);
iv. Payment from statutory provident fund (SPF) – Section 10(11);
v. Payment from recognized provident fund (RPF) to the extent it is exempt under section 10(12);
vi. Payment from an approved superannuation fund under section 10(13);
vii. Payment of HRA exempted under section 10(13A).
c. Any payment from unrecognized provident fund (UPF) or such other fund to the extent to which it does not consist of contributions by the assessee or interest on such contributions.
d. Any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy.
e. Any amount due to or received, whether in lump sum or otherwise, by an assessee from any person prior to employment or after cessation of employment.

Computation of salary income –
Income under the head “Salaries” is computed in the following manner:
Particulars Amount (Rs.)
Income from salary XX

Income by way of allowances XX
Taxable value of perquisites XX

Gross salary XX
Less: Deductions under section 16:
Standard Deduction u/s 16 (ia) XX
Entertainment allowance u/s 16 (ii) XX
Professional tax u/s 16 (iii) XX
Income from salaries XXX
Retirement benefits
Leave Salary –
Employees are entitled to different types of leaves while they are in service. The leaves may either be allowed to be availed by them or if not availed, then these leaves may either lapse or encashed every year or accumulated and encashed at the time of retirement/ death/ or leaving the job.
Tax treatment – The tax treatment is given below:
Status of employee Taxability
Government employee It is fully exempt from tax
Non-Government employee Covered by the Payment of Gratuity Act, 1972 See the provisions given below
Not covered by the Payment of Gratuity Act, 1972 see the provisions given below

Government employees receiving gratuity at the time of retirement – In case of Government employees (including employees of local authority but not employees of a statutory corporation), amount of death-cum retirement gratuity received is fully exempt from tax.
Non-Government employees covered by the Payment of Gratuity Act, 1972 – In such cases, least of the following amount is exempt from tax:
a. 15 days salary (7 days salary in the case of employees of a seasonal establishment) based on salary last drawn for every completed year of service or part thereof in excess of 6 months.
For example, if service is rendered for 20 years and 6 months, then we have to take 20 years.
b. Rs. 20,00,000 being the amount specified by the Government
c. Gratuity actually received
Notes:
1. Relief under section 89 – Gratuity in excess of the aforesaid limits is taxable in the hands of the assessee. However, the assessee can claim relief under section 89.
2. Salary for this purpose means – Salary last drawn by an employee and dearness allowance (whether forming part or not) but does not include any bonus, commission, etc.
3. Calculation of 15 days’ salary – Salary of 15 days is calculated by dividing salary last drawn by 26 i.e., the maximum number of working days in a month.
For example, if monthly salary at the time of retirement is Rs. 3,000, 15 days salary would come to Rs. 1,730.77 (Rs. 3,000/26*15).
Non-Government employees not covered by the Payment of Gratuity Act, 1972 – In such cases, least of the following amount is exempt from tax:
a. Half months average salary for each completed year of service
b. Rs. 20,00,000 minus amount exempted earlier
c. Gratuity actually received
Notes:
1. Relief under section 89 – Gratuity in excess of the aforesaid limits is taxable in the hands of the assessee. However, the assessee can claim relief under section 89.
2. Salary for this purpose means – Basic salary (+) dearness allowance (if terms of employment so provide) (+) commission based on fixed percentage on turnover achieved by an employee. It is to be noted that dearness allowance/ pay shall be considered only when it is part of salary for computing all retirement benefits (like provident fund, pension, leave encashment, gratuity, etc.). If dearness allowance/ pay is part of salary for computing only some (not all) of the retirement benefits, then it is not taken into consideration for this purpose.
3. Average monthly salary – is calculated on the basis of average salary for 10 months immediately preceding the month in which the employee has retired. For example, if a person retires on February 19, 2020, average salary will be considered on the basis of salary drawn from April 1, 2019 to January 31, 2020.
4. Completed/ actual years of service – While computing completed/ actual years of service, any fraction of the year shall be ignored. The words “each year of completed service” used for the purpose of ‘gratuity’ in are not confined to completed years of service under one employer and have to be interpreted to mean an employee’s total service under two different employers including employer other than one from whose service he has retired, for purposes of calculation of period of years of his completed service, provided he was not paid gratuity by former employer.
5. Employee – Covered under Gratuity Act 1972 or not – If nothing is mentioned whether the employee is covered under the Payment of Gratuity Act, 1972 or not, it would be assumed that the employee is not covered under the Payment of Gratuity Act, 1972.
Gratuity paid while in service is taxable – Any gratuity paid to an employee while he continues to remain in service (whether or not after he has put in a minimum specified period of service) is not exempt from tax. However, here also, assessee can claim relief under section 89.
Gratuity received by family members after the death of the employee – If gratuity is paid after the death of an employee, then following situations may arise:
a. When gratuity becomes due before the death of the assessee but paid after the death of the assessee, it will be taxable (as per the provisions) in the hands of the assessee even if it is received by his legal heirs after his death.
b. When gratuity becomes due and paid after the death of a person, then the gratuity amount will neither be taxable in the hands of that person nor in the hands of legal heirs of that person.
Pension –
Pension is always given to the employee after retirement. The tax treatment of pension received by the employee from the employer is given below –
Pension Status of employee Is it chargeable to tax
Uncommuted pension (Periodical payment) Government/ It is fully chargeable to tax
Non-Government employee
Commuted Pension (Lump sum payment in lieu of periodical payment) Government employee (including the employees of local authority and statutory corporation) It is fully exempt from tax
Non-Government employee See the provisions given below
Exemption of commuted pension for non-government employees depends upon the receipt of gratuity (i.e., whether employee has received gratuity also or not):
a. In case where a non-government employee receives Gratuity – the commuted value of one-third of the pension which he is normally entitled to receive is exempt from tax.
b. In case where a non-government employee does not receive Gratuity – the commuted value of one-half of such pension which he is normally entitled to receive is exempt from tax.
Notes:
1. Assessee can claim relief under section 89 in respect of taxable pension.
2. Pension received from UNO by the employees or his family members is not chargeable to tax.
3. Family pension received by the family members of armed forces is exempt from tax under section 10(19) in some cases.
4. Family Pension received by family members (not being the family members of armed forces) after the death of an employee is taxable in the hands of recipients under section 56 under the head “Income from other sources”. Standard deduction is available under section 57 which is one-third of such pension or Rs. 15,000, whichever is lower.
5. Judges of the Supreme Court and High Courts are also entitled to the exemption of the commuted pension under section 10(10A)(i) of the Act.
Retrenchment Compensation [Sec. 10(10B)] –
Compensation received by a workman at the time of his retrenchment is exempt from tax to the least of the following amounts –
a. Rs. 5,00,000 (amount specified by the Government);
b. 15 days average pay for every completed year of service or part thereof in excess of 6 months;
c. Amount actually received.
In this case, relief under section 89 is available.
Provident Funds –
Provident fund scheme is a retirement benefit scheme. Under this scheme, a set sum is deducted from the salary of the employee as his contribution towards the fund. The employer also, generally, contributes simultaneously the same amount out of his pocket to the fund.
The employee’s and employer’s contributions are then invested securities and interest earned thereon is also credited to the provident fund account of the employees. The accumulated sum is paid to the employee at the time of his retirement. In the case of death of an employee, accumulated balance is paid to his legal heirs.
Following are the different types of provident funds –
1. Statutory provident fund – This fund is set up under the provisions of the Provident Funds Act, 1925. This fund is maintained by the Government and the Semi-Government organizations, local authorities, railways, universities and recognized educational institutions.
. Recognized provident fund – A provident fund scheme to which the Employee’s Provident Fund and Miscellaneous Provisions Act, 1952 applies is recognized provident fund. As per this Act, any establishment employing 20 or more persons is covered by this Act (establishments employing less than 20 persons can also join the provident fund scheme if the employer and employees want to do so).
3. Unrecognized provident fund – If a provident fund is not recognized by the Commissioner of Income-tax, it is known as unrecognized provident fund.
4. Public provident fund – The Central Government has established the public provident fund for the benefits of general public to mobilize personal savings. Any member of the public (whether a salaried employee or a self-employed person) can participate in the fund by opening a provident fund account at the State Bank of India or its subsidiaries or other nationalized banks. Even a salaried employee can simultaneously become member of employees’ provident fund (whether statutory, recognized or unrecognized) and public provident fund. Any amount (subject to a minimum of Rs. 500 and maximum of Rs. 1,50,000 per annum) may be deposited under this account. The accumulated sum is payable after 15 years (it may be extended). Interest on this fund is credited every year but payable at the time of maturity.
Tax treatment of different types of provident funds –
td> Statutory Provident Fund (SPF)
Situations Recognized Provident Fund (RPF) Unrecognized Provident Fund (UPF) Public Provident Fund (PPF)
Employer’s contribution to provident fund Exempt from tax Exempt up to 12% of salary. Excess of employer’s contribution over 12% of salary is taxable. Exempt from tax Employer does not contribute
Interest credited to provident fund Exempt from tax Exempt from tax if rate of interest does not exceed 9.5%; excess of interest over this rate is taxable. Exempt from tax Exempt from tax
Lump sum payment at the time of retirement or termination of service Exempt from tax Exempt from taxes in some cases given below§. When not exempt, provident fund will be treated as an unrecognized fund from the beginning. Employer’s contribution and interest thereon is taxable under the head “Salary”. However, payment received in respect of employee’s own contribution is exempt from tax. Interest on employee’s contribution is taxable under the head “Income from other sources”. Exempt from tax
Salary for this purpose means – Basic salary (+) dearness allowance/ dearness pay (if terms of employment so provide) (+) commission based on fixed percentage of turnover achieved by an employee.
It is to be noted that dearness allowance/ pay shall be considered only when it is part of salary for computing all retirement benefits (like provident fund, pension, leave encashment, gratuity, etc.). If dearness allowance/ pay is part of salary for computing only some (not all) of the retirement benefits, then it is not taken into consideration for this purpose.
Approved Superannuation Fund –
It means a superannuation fund which is approved by the Commissioner of Income-tax. Like Provident Fund, Superannuation fund is also a scheme of retirement benefits for the employee. These are funds, usually established under trusts by an undertaking, for the purpose of providing annuities, etc. to the employees of the undertaking on their retirement at or after a specified age, or on their becoming incapacitated prior to such retirement, or for the widows, children or dependents of the employees in case of any employee’s earlier death. The trust invests the money contributed to the fund in the form and mode prescribed. Income earned on these investments shall be exempt, if any such fund is an Approved Superannuation Fund.
Tax treatment –
1. Employer’s contribution towards an approved superannuation fund will be chargeable to tax to the extent it exceeds Rs. 1,50,000 per annum.
2. Employee’s contribution towards such fund is exempt from tax under section 80C.
3. Interest on accumulated balance is exempt from tax.
4. Payment from the fund is not chargeable to tax in the following cases:
a. refund of contribution or any payment from fund on the death of employee (i.e., payment to widow); and
b. lump sum payment by way of commutation of annuity to the employee on his retirement.
Allowances
Allowances are fixed monetary amount paid by the employer to the employee for meeting some particular expenses. These are generally fully taxable and thus, included to compute gross salary unless a specific exemption has been provided in respect of that particular allowance which is received.
Allowances are divided under three categories for the purpose of taxability:
1. Fully taxable allowances;
2. Fully exempt allowances; or
3. Partially exempt allowances:
a. Exemption depending upon actual expenditure; or
b. Fixed exemption depending upon the provisions of the Act.
Fully taxable allowances –
There can be hundreds of fully taxable allowances. All those allowances which are not covered under exempt category becomes fully taxable. Some of the common fully taxable allowances are –
1. City compensatory allowance (CCA)
2. Tiffin allowance
3. Fixed medical allowance
4. Servant allowance
5. Dearness allowance
6. Deputation allowance
7. Lunch/ meal/ dinner/ refreshment allowance
8. Overtime allowance
9. Family allowance
10. Non-practicing allowance
11. Warden allowance 12. Planning allowance, etc.
Special allowances prescribed as exempt under section 10(14) –
When exemption depends upon actual expenditure by the employee –
In the case of given below six allowances, lower of the following is allowed as deduction:
• the amount of the allowance; or
• the amount utilized for the specific purpose for which allowance is given.
These allowances are as follows –
1. Travelling allowance/ Transfer allowance –
An allowance (by whatever name called) granted to meet the cost of travel on tour or on transfer (including any sum paid in connection with transfer, packing and transportation of personal effects on such transfer).
2. Conveyance allowance –
Conveyance allowance is exempt from tax to the extent it is utilized for performance of official duties. It is an allowance which is granted to meet the expenditure on conveyance in performance of duties of an office. It may be noted that any expenditure for covering the journey between office and residence is not treated as expenditure in performance of duties of the office.
3. Daily allowance –
An allowance whether granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.
4. Helper allowance –
An allowance (by whatever name called) to meet the expenditure on a helper where such helper is engaged for the performance of official duties.
5. Research/ Academic allowance –
An allowance (by whatever name called) granted for encouraging the academic research and other professional ethics.
6. Uniform allowance –
An allowance (by whatever name called) to meet the expenditure on the purchase or maintenance of uniform for wear during the performance of duties of an office.
When exemption does not depend upon the actual expenditure –
In case of given below allowances, the amount of exemption does not depend upon the expenditure actually incurred by the employee. Amount of exemption is – ▪ the amount of allowance; or
▪ the amount specified in rule 2BB, whichever is lower.
1. House rent allowance [Section 10(13A) and rule 2A] –
In case of house rent allowance, least of the following amount is exempt from tax –
1. An amount equal to 50% of salary, where residential house is situated at Bombay, Calcutta, Delhi or Madras and an amount equal to 40% of salary where residential house is situated at any other place.
2. House rent allowance received by the employee in respect of the period during which rental accommodation is occupied by the employee during the previous year.
3. The excess of rent paid over 10% of salary.
Notes:
1. Salary for this purpose means – Basic salary (+) dearness allowance (if terms of employment so provide) (+) commission based on fixed percentage of turnover achieved by an employee.
It is to be noted that dearness allowance/ pay shall be considered only when it is part of salary for computing all retirement benefits (like provident fund, pension, leave encashment, gratuity, etc.). If dearness allowance/ pay is part of salary for computing only some (not all) of the retirement benefits, then it is not to be taken into consideration for this purpose.
2. Due basis – Salary for this purpose is determined on “due” basis in respect of the period during which rental accommodation is occupied by the employee in the previous year. It, therefore, follows that salary of a period, other than the previous year, is not considered even though such amount is received during the previous year and is taxable on “receipt” basis. Likewise, salary of the period during which rental accommodation is not occupied in the previous year, is left out of the aforesaid computations.
3. Exemption is denied where an employee lives in his own house, or in a house for which he does not pay any rent or pays rent which does not exceed 10% of salary.
Problem –
N who resides in Gurgaon gets Rs. 60,000 per annum as basic pay. He gets Rs. 9,000 per annum as house rent allowance, though he actually pays Rs. 14,000 per annum as rent. During the previous year 2017-18, he receives Rs. 10,000 as advance salary of April 2018. Calculate the amount of house rent allowance exempt from tax as well as taxable salary for the assessment year 2018-19?
Solution:
Computation of income under the head “Salaries” for the assessment year 2020-21:
Particulars Amount (Rs.)
Basic pay 60,000
Advance salary 10,000
HRA [9,000 – 6,000] 3,000
Gross salary 73,000

Notes –
Out of Rs. 9,000 received as HRA, least of the following amount is exempt from tax:
a. Rs. 24,000 [40% of salary]
b. Rs. 9,000 [HRA actually received]
c. Rs. 12,000 – 10% of Rs. 60,000 [Rent paid – 10% of salary] = Rs. 6,000
Rs. 6,000, being the least is exempt per annum and Rs. 3,000 per annum is taxable. Therefore, annual taxable house rent allowance is Rs. 3,000.
2. Entertainment allowance [Sec. 16(ii)] –
It is first included in salary income under the head “allowances” and thereafter a deduction is given on the following basis:
a. In case of a Government employee, the least of the following is deductible:
- Rs. 5,000;
- 20% of basic salary; or
- Amount of entertainment allowance granted during the previous year.
Basic salary for this purpose excludes any allowance, benefit or other perquisites. Further, amount actually expended towards entertainment (out of entertainment allowance received) is not taken in to consideration.
b. In the case of a non-government employee (including employees of local authority and statutory corporation), entertainment allowance is not deductible. It if fully taxable.
3. Allowance for transport employees working in any transport system –
It is an allowance granted to an employee working in any transport system to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place provided that such employee is not in receipt of daily allowance.
Amount of exemption is 70% of such allowance or Rs. 10,000 per month whichever is lower.
4. Transport allowance (Available only to the person suffering from disability) –
It is granted to an employee to meet his expenditure for the purpose of commuting between office and residence. Amount of exemption is limited to Rs. 3,200 per month in case of an employee who is blind or orthopaedically handicapped.
It is to be noted that expenditure for covering the journey between office and residence is not treated as expenditure in performance of duties of the office.
5. Children education allowance –
Amount exempt from tax is limited to Rs. 100 per month per child up to a maximum of two children.
6. Hostel expenditure allowance –
Amount exempt from tax is limited to Rs. 300 per month per child up to maximum of two children.
7. Tribal/ scheduled areas allowance –
Rs. 200 per month if an employee is posted in U.P., M.P., Tamil Nadu, Karnataka, West Bengal, Bihar, Orissa, Assam or Tripura.
8. Underground allowance –
Underground allowance is granted to an employee who is working in uncongenial, unnatural climate in underground mines. Exemption is limited to Rs. 800 per month.
9. Highly active field area allowance –
It is granted to the members of armed forces in the nature of special compensatory highly active field area allowance. It is exempt from tax up to Rs. 4,200 per month.
10. Island duty allowance –
This special allowance is granted to the members of armed forces in the nature of island (duty) allowance in Andaman and Nicobar and Lakshadweep group of islands. It is exempt from tax up to Rs. 3,250 per month.
11. Allowance to Government employees outside India –
Any allowance paid or allowed outside India by the Government to an Indian citizen for rendering service outside India is wholly exempt from tax.
12. Allowance received from UNO –
Not chargeable to tax
13. Allowance to High Court and Supreme Court Judges –
Not chargeable to tax
14. Allowances to Chairman/ members of UPSC –
In the case of serving Chairman and members of UPSC, transport allowance and sumptuary allowance are not chargeable to tax.
Perquisites
Perquisite may be defined as any casual emolument or benefit (monetary or non-monetary) attached to an office or position in addition to salary or wages.
Definition of ‘Perquisite’ as per the Act [Section 17(2)] –
Under the Act, the term “perquisites” includes the following –
a. the value of rent-free accommodation provided to the assessee by his employer;
b. the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer;
c. the value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases:
i. by a company to an employee who is a director thereof;
ii. by a company to an employee, being a person who has substantial interest in the company;
iii. by any employer (including a company) to an employee to whom provisions of (i) and (ii) above do not apply and whose income under the head “Salaries” exclusive of the value of all benefits or amenities not provided for by way of monetary benefits, exceeds Rs. 50,000;
d. any sum paid by an employer in respect of any obligation which but for such payment would have been payable by the assessee;
e. any sum payable by the employer, whether directly or through a fund other than a recognized provident fund or approved superannuation fund or a deposit-linked insurance fund, to effect an assurance on the life of the assessee or to effect a contract for an annuity;
f. the value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer, or former employer, free of cost or at concessional rate to the assessee;
g. the amount of any contribution to an approved superannuation fund by the employer in respect of the assessee, to the extent it exceeds Rs. 1,50,000;
h. the value of any other fringe benefits or amenity as may be provided.
Perquisites are divided under five categories for the purpose of taxability: 1. Perquisites which are taxable for specified as well as non-specified employees;
2. Perquisites which are exempt for specified as well as non-specified employees;
3. Perquisites which are taxable only for specified employees and exempt for nonspecified employees;
4. Contribution by the employer to the approved superannuation fund in respect of the assessee to the extent it exceeds Rs. 1,50,000;
5. Specified equity or sweat equity shares allotted or transferred by the employer to the assessee.
Specified employee –
The following employees are known as “specified employee”:
1. A director-employee – An employee, who is a director in the employer-company at any time during the previous year, is a specified employee of the company in which he is a director.
2. An employee who has substantial interest in the employer-company – An employee who has a substantial interest in the employer-company at any time during the previous year is a specified employee of the company in which he has substantial interest. A person has substantial interest in the employer-company, if he is a beneficial owner of equity shares carrying 20% or more voting power in the employer-company.
3. An employee drawing in excess of Rs. 50,000 – An employee (not covered by the above two cases), whose income chargeable to tax under the head “Salaries” (exclusive of the value of all benefits or amenities not provided by way of monetary payments) exceeds Rs. 50,000, is a specified employee. For computing the sum of Rs. 50,000, the following are excluded or deducted:
a. all non-monetary benefits;
b. monetary benefits which are not taxable under section 10 (for example, house rent allowance to the extent exempt under section 10(13A) is excluded); and
c. deduction on account of entertainment allowance and professional tax.
Where salary is received from more than one employer, the aggregate salary from these employers will have to be taken into account for the purpose of determining the aforesaid monetary ceiling.
Perquisites taxable only in the hands of a specified employee –
The following perquisites are taxable only in the hands of specified employees:
• Service of a sweeper, gardener, watchman or personal attendant
• Supply of gas, electricity or water for household purposes
• Education facility to employee’s family members
• Leave travel concession (LTC)
• Medical facility
• Car or any other automotive conveyance
• Transport facility by a transport undertaking
Valuation of different perquisites
Accommodation –
‘Accommodation’ includes a house, flat, farm house (or part thereof) or accommodation in a hotel, motel, service apartment, guest-house, caravan, mobile home, ship or other floating structure. For the purpose of valuation of this perquisite, employees are divided into two categories:
▪ Central and State Government employees; and
▪ Private sector employees or other employees (including employees of local authority or a foreign Government)
1. Rent-free unfurnished accommodation [Rule 3(1)] –
For Central and State Government employees –The value of perquisite in respect of accommodation provided to such employees is equal to the licence fee which would have been determined by the Central or State Government in accordance with the rules framed by the Government for allotment of houses to its officers.
However, rent-free official residence provided to a Judge of a High Court or to a judge of the Supreme Court is exempt from tax. A similar exemption is extended to an official of Parliament, a Union Minister, a Leader of Opposition in Parliament and serving Chairman/ members of UPSC.
For private sector or other employees (including the employees of a local authority or a foreign Government):
Population of city as per 2001 census where accommodation is provided Where the accommodation is owned by the employer Where the accommodation is taken on lease or on rent by the employer
Exceeding 25 lakh 15% of salary in respect of the period during which the accommodation is occupied by the employee Amount of lease rent paid or payable by the employer or 15% of salary, whichever is lower
Exceeding 10 lakh but not exceeding 25 lakh 10% of salary in respect of the period during which the accommodation is occupied by the employee
Any other 7.5% of salary in respect of the period during which the accommodation is occupied by the employee
Notes:
1. Salary for this purpose includes – Basic salary, dearness allowance/ pay (if terms of employment so provide), bonus, commission, fees, all other taxable allowances (excluding amount not taxable) and any monetary payment which is chargeable to tax (by whatever name called).
It is to be noted that dearness allowance/ pay shall be considered only when it is part of salary for computing all retirement benefits (like provident fund, pension, leave encashment, gratuity, etc.). If dearness allowance/ pay is part of salary for computing only some (not all) of the retirement benefits, then it is not taken into consideration for this purpose.
2. Salary does not include –
• employer’s contribution to provident fund account of an employee;
• all allowances which are exempt from tax;
• value of perquisites [under section 17(2)]; and
• lump-sum payment received at the time of termination of service or superannuation or voluntary retirement, like gratuity, severance pay leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments.
3. Salary shall be determined on “accrual” basis – For example, advance salary of a period other than the previous year is not included even if the same is received in the previous year. Similarly, salary due in the previous year is included, even if it is received after the end of the previous year. In other words, we can say that salary accrued for the period during which rent-free accommodation is occupied by the employee will be considered whether it is received during the previous year or not.
In all we can say that advance salary/ bonus for a period other than the previous year will not to be included in salary for the above purpose.
4. Monetary payments which are in the nature of perquisites under section 17(2) shall not be included. Conversely, monetary payments which are not in the nature of perquisites under section 17(2) shall be included. For example, bonus (not being a perquisite, but being a monetary payment) is taken into consideration. However, income tax payment of an employee by the employer, being a monetary payment but also a perquisite is not included for the purpose of computing salary.
5. Salary from two or more employers – Salary from all employers in respect of the period during which an accommodation is provided will be taken into consideration.
6. Accommodation provided on transfer – Where on account of the transfer of an employee from one place to another, he is provided with accommodation at the new place of posting while retaining the accommodation at the other place, the value of perquisite shall be determined with reference to only one such accommodation which has the lower value for a period not exceeding 90 days and thereafter the value of perquisite shall be charged for both such accommodations.
b>7. Exemption – The above perquisite is not chargeable to tax in respect of any accommodation located in a ‘remote area’ [i.e., an area located at least 40 kilometres away from a town having a population not exceeding 20,000] provided to an employee working at a mining site or an onshore oil exploration site, or a project execution site or a dam site or power generation site or an offshore site.
2. Rent-free furnished accommodation (not being a hotel) –
First, find out the value of the perquisite assuming that the accommodation is unfurnished and to the figures so arrived, add the value of furniture on the following basis –
a. 10% (p.a.) of the original cost of furniture, if furniture is owned by the employer;
b. actual hire charges (whether paid or payable) if furniture is hired by the employer.
Furniture, here, includes radio sets, televisions sets, refrigerators, air–conditioners and other household appliances.
3. Rent-free furnished accommodation provided in a hotel –
Besides, accommodation in a hotel, it includes licensed accommodation in the nature of motel, service apartment or guest house.
The value of perquisite shall be taken as 24% of salary paid or payable for the period during which such accommodation is provided in the previous year or actual charges paid/ payable by the employer to such hotel, whichever is lower.
However, in case of an accommodation provided in a hotel, nothing is chargeable to tax (subject to the fulfilment of given below two conditions) –
1. The hotel accommodation is provided for a period not exceeding in aggregate 15 days in a previous year and
2. Such accommodation is provided on an employee’s transfer from one place to another place.
It is to be noted that if in the aforesaid case, the hotel accommodation is provided for more than 15 days, then the perquisite is not taxable for the first 15 days. After that, it is chargeable to tax.
4. Accommodation provided at concessional rent –
Accommodation may be furnished or unfurnished or it is provided in a hotel. However, if it is provided at a concessional rent, the valuation should be made as follows –
Step 1: Find out the value of the perquisite on the assumption that no rent is charged by the employer (as per the above stated rules).
Step 2: From the value so arrived at, deduct the rent charged by the employer from the employee.
Employee’s obligation met by the employer –
Amount paid by the employer in respect of any obligation which otherwise would have been payable by the employee is taxable in all cases whether the employee is specified or nonspecified.
Amount payable by the employer to effect an assurance on the life of the employee – Amount payable by an employer, directly or indirectly, to effect an assurance on the life of the assessee or to effect a contract for an annuity is taxable in the hands of all employees. This rule is, however, not applicable if the employer makes contribution/ payment towards the following:
1. RPF (up to 12% of salary of the employee);
2. Approved superannuation fund (up to Rs. 1,50,000 per annum);
3. Group insurance schemes;
4. Employee’s state insurance schemes; and
5. Fidelity guarantee schemes.
Interest-free loan or loan at concessional rate of interest –
If a loan is given by an employer to the employee (or any member of his household), it is a perquisite chargeable to tax. Value of perquisite is computed at the rate of interest charged by SBI as on the first day of the relevant previous year in respect of loan for the same purpose advanced by it.
Interest is calculated on the maximum outstanding monthly balance for each loan as on the last day of each month.
Given below are the rates of State Bank of India:
Type of loan Different limit As on April 1, 2019 (applicable for the assessment year 2020-21)
Housing loan 8.65% (8.60% for women)
Car loan 9.25% (9.20% for women)
Education loan Up to Rs. 7.5 lakh 10.00%
Above Rs. 7.5 lakh 10.75%
Personal loan 14.00% (Approx.)
In the following cases, however, the above perquisite is not chargeable to tax:
1. If a loan is made available for medical treatment in respect of diseases specified in rule 3A (the exemption is, however, not applicable to so much of the loan as has been reimbursed to the employee under any medical insurance scheme; in such a case, perquisite will be chargeable to tax from the date of receipt of insurance compensation).
2. Where the amount of original loan (or loans) does not exceed Rs. 20,000 in aggregate. Where, however, the amount exceeds Rs. 20,000, entire amount is chargeable to tax.
Use of movable assets –
The value of this perquisite is determined @ 10% p.a. of the actual cost of such asset (if the asset is owned by the employer) or the amount of rent paid or payable (if the asset is taken on hire by the employer).
From the value so arrived, deduct the amount received from the employee.
However, no perquisite is chargeable to tax in respect of use of computer/ laptops.
Movable assets sold by employer to its employees (or any member of his household) at a nominal price –
The value of this perquisite is calculated as an actual cost of such asset to the employer minus normal wear and tear at the rate given below for each completed year during which such asset was put to use by the employer for his business purposes minus amount received from the employee.
Following are the rates for normal wear and tear:
• Electronic items/ computers : 50% by reducing balance method (WDV)
• Motor Car : 20% by reducing balance method (WDV)
• Any other asset : 10% of the actual cost
[Electronic item means data storage and handling devices like computer, digital diaries and printers but does not include household appliances like mixers, washing machines, ovens, etc.]
Lunch/ Refreshment, etc. –
The value of free food, tea and snacks etc. shall be as under:
Circumstances Value of perquisite
Tea or similar non-alcoholic beverages and snacks (in the form of light refreshments) provided during working hours NIL
Food and non-alcoholic beverages is provided in working hours in remote area or in an offshore installation NIL
Food and non-alcoholic beverages is provided in working hours at any other place (other than remote area or in an offshore installation) i.e., either in office or business premises or through non-transferable paid vouchers usable only at eating joints provided by an employer NIL, if the value thereof in either case is up to Rs. 50 per meal. However, expenditure in excess of Rs. 50 per meal should be treated as perquisite.
Amount received from the employee is deducted to compute the taxable value of the perquisite.
In any other case Actual amount of expenditure incurred by the employer minus amount paid or recovered from the employee
Travelling, Touring and Accommodation –
Following is the treatment in respect of travelling, touring, accommodation and any other expenses paid by employer for any holiday availed by employee (or any member of household) other than leave travel concession (LTC):
Where such facility is available uniformly to all employees:
Expenditure incurred by the employer minus amount recovered from the employee is the taxable value of the perquisite.
Where such facility is not available uniformly to all employees:
Value at which such facilities are offered by other agencies to the public minus amount recovered from the employee is the taxable value of the perquisite.
Gift, Voucher or taken –
The value of any gift, voucher or token in lieu of which gift may be received by the employee (or by the member of his household) on ceremonial occasions or otherwise shall be determined as the sum equal to the amount of such gift. Such gift is exempt from tax where, the value of such gift, voucher or token, as the case may be, is below Rs. 5,000 in aggregate during the previous year. Beyond Rs. 5,000, gift-in-kind is taxable.
However, gifts made in cash or convertible into money (gift cheques) are not exempt from tax even if their value is less than Rs. 5,000.
Credit card –
Any expenditure incurred by the employer in respect of credit card used by the employee or any member of his household after deducting the expenditure on use of this credit card for official purposes is the taxable value of the perquisite. The expenditure incurred by the employer includes the membership fees and annual fees incurred by the employee or any member of his household, which is charged to a credit card (including any add-on-card), provided by the employer (or otherwise paid or reimbursed by the employer).
Club expenditure –
This perquisite includes any expenditure on club facility used by the employee or any member of his household which is paid or reimbursed by the employer. It also includes amount of annual or periodical fees paid or payable to a club.
The amount of expenditure incurred by the employer in respect of club facility used by the employee or any member of his household after deducting the expenditure on use of this club facility for official purposes is the taxable value of the perquisite.
Expenditure for official use:
The amount of expenditure incurred on use of club facility for official purposes is deductible, provided following conditions are satisfied:
1. Complete detail in respect of such expenditure is maintained by the employer which may, inter alia, include the date of expenditure, the nature of expenditure and its business feasibility.
2. The employer gives a certificate for such expenditure to the effect that the same was incurred wholly and exclusively for the performance of official duties.
The following expenditure is exempt from tax:
1. Health club, sports facilities etc. provided uniformly to all classes of employees by the employer at employer’s premises.
2. The initial one-time deposit or fees for corporate or institutional membership, where benefit does not remain with a particular employee after cessation of employment.
Sweat equity shares or Employees stock option plan (ESOP) –
Perquisite in respect of “sweat equity shares” or “ESOP” is chargeable to tax in the hands of employees, provided such shares are allotted or transferred to the concerned employee after March 31, 2009.
For the purpose of valuation of this perquisite, fair market value (FMV) of shares or securities has to be calculated on the date on which the employee exercises the option. Amount actually paid or recovered from the employee in respect of such shares or securities shall be deducted.
This perquisite will be taxable in the hands of employee in the previous year in which shares or securities are allotted or transferred to him. However, fair market value shall be calculated on the date on which the employee exercises the option.
“Sweat equity shares” means shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called. Such shares may be equity shares, any other shares, scrips, debentures, derivatives or units. These may be transferred/ allotted (directly or indirectly) to the employee.
Domestic servants –
The value of perquisite shall be the actual cost to the employer minus amount paid by the employee for such services.
If an employer provides a rent-free house (owned by the employer) to his employee, expenses (inclusive of salary of a gardener) incurred by the employer on maintenance of garden and ground attached to the house, are not taxable separately.
Gas, Electricity or Water supply –
The value of perquisite shall be the cost to the employer as reduced by the amount recovered from the employee.
Education –
A. Any amount spent for providing free education facilities to, and training of, the employees is not taxable.
B. Any payment of school fees of the family members of the employee directly to the school or any reimbursement of expenditure incurred for education of the family members of the employee is taxable as a perquisite in all cases.
C. Education facility in employer’s institute:
a. It means:
b. an educational institute which is owned and maintained by the employer and educational facility is provided; or
c. an educational facility is provided in any institute by reason of employee’s employment with the employer.
Different situations Amount chargeable to tax
Where educational facility is provided to employee’s children:
a. If cost of education or value of such benefit does not exceed Rs. 1,000 per month per child (no restriction on number of children)
b. Where such amount exceeds Rs. 1,000 per month per child
(a). Nil

(b). Cost of such education in a similar institution in or near the locality minus amount paid or recovered from the employee
Where education facility is provided to member of his household (other than children) Cost of such education in a similar institution in or near the locality minus amount paid or recovered from the employee
 A literal meaning of the line indicates that if the cost of education per child exceeds Rs. 1,000 per month, the entire cost will be the value of the perquisite. Also, the Punjab and Haryana High Court in the case of CIT v. Director, Delhi Public School [2011] 202 Taxmann 318 ruled that nothing is taxable if cost of education in a similar institute is equal to or less than Rs. 1,000 per month. In case, it exceeds Rs. 1,000 per month, the entire amount is chargeable to tax.
Leave Travel Concession in India [Section 10(5)] –
Leave travel assistance extended by an employer to an employee for going anywhere in India along with his family is exempt according to the provisions mentioned in the table given below:
Different situations Amount of exemption (exemption is available only in respect of fare for going anywhere in India along with the family twice in a block of four years)
1. Where journey is performed by air Amount of economy class fare of the national carrier by the shortest route or the amount spent, whichever is less
2. Where journey is performed by rail Amount of air-conditioned first-class rail fare by the shortest route or the amount spent, whichever is less
3. Where the places of origin of journey and destination are connected by rail and journey is performed by any other mode of transport Same as (2)
4. Where the places of origin of journey and destination (or part thereof) are not connected by rail:
a. Where a recognized public transport exists
b. Where no recognized public transport exists
(a). First class or deluxe class fare by the shortest route or the amount spent whichever is less

(b). Air-conditioned first-class rail fare by the shortest route (as if the journey had been performed by rail) or the amount actually spent, whichever is less.
Notes:
1. Family for this purpose includes:
a. spouse and children of the employee; and
b. parents, brothers and sisters of the employee, who are wholly or mainly dependent upon the employee.
2. Only two journeys performed in a block of four years is exempt:
Exemption of this perquisite is available in respect of two journeys performed in a block of four calendar years. The different blocks are:
a. 2010-2013 (i.e., January 1, 2010 to December 31, 2013);
b. 2014-2017 (i.e., January 1, 2014 to December 31, 2017);
c. 2018-2021 (i.e., January 1, 2018 to December 31, 2021)
3. “Carry-over” concession:
If an assessee has not availed travel concession or assistance during any of the specified fouryear block periods on one of the two permitted occasions (or on both occasions), exemption can be claimed in the first calendar year of the next block (but in respect of only one journey). This is known as “carry-over” concession. In such case, exemption so availed will not be counted for the purposes of claiming the future exemptions allowable in respect of two journeys in the subsequent block.
4. Exemption is based on actual expenditure.
5. Exemption is available in respect of fare:
Exemption is strictly restricted to expenses on air fare, rail fare, bus fare etc. No other expenditure, like scooter charges, lodging and boarding expenses etc. are qualified for exemption.
6. Exemption is available in respect of shortest route.
Medical Facility –
The following expenses whether incurred or reimbursed by the employer are exempt from tax:
Medical facilities in India:
1. Medical facility in employer’s hospital (including clinic, dispensary or nursing home).
2. Medical facility in a hospital maintained by Central/ State Government or by a local authority or by any other person approved by the Government for the treatment of its employees.
3. Treatment of prescribed disease given in rule 3A(2) in a hospital approved by the Chief Commissioner.
4. Medical insurance premium for employees on any health insurance policy.
Medical facility outside India:
The amount is exempt from tax subject to the conditions given below in the table:
Perquisite not chargeable to tax Conditions to be satisfied
Medical treatment of employee or any member of family of such employee outside India Expenditure shall be excluded from perquisite only to the extent permitted by RBI
Cost on travel of the employee/ any member of his family and one attendant who accompanies the patient in connection with treatment outside India Expenditure shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before included therein the said expenditure (i.e., travelling) does not exceed Rs. 2,00,000
Cost of stay abroad of the employee or any member of the family for medical treatment and cost of stay of one attendant who accompanies the patient in connection with such treatment Expenditure shall be excluded from the perquisite only to the extent permitted by RBI
Family for this perquisite means:
1. the spouse and children of the individual; and
2. the parents, brothers and sisters of the individual or any one of them wholly or mainly dependent on the individual.
Free transport provided by a transport undertaking to its employees –
The value of this perquisite is equal to the value at which such benefit is offered by the employer to the public minus amount recovered from the employee.
However, nothing is chargeable to tax in the hands of employees of railways/ airlines.
Any other benefit or amenity –
It covers any other benefit or amenity, service, right or privilege provided by the employer and it is applicable to all employees. However, it does not cover the following –
1. Perquisites already discussed above
2. Telephone/ mobile phones
Value of such perquisites shall be determined on the basis of cost to the employer under an arm’s length transaction as reduced by the employee’s contribution, if any.
Deductions from salary
Deductions from salary are given in section 16. There are two deductions available from gross salary –
1. Standard deduction [16(ia)] to the maximum extent of ` 50,000.
2. Entertainment Allowance [Sec. 16(ii)]
3. Professional tax [Sec. 16(iii)]: Professional tax or tax on employment, levied by a State under article 276 of the Constitution, is allowed as deduction. Deduction is available only in the year in which professional tax is paid. If the professional tax is paid by the employer on behalf of an employee, it is first included in the salary of the employee as a “perquisite” and then the same is allowed as deduction on account of “professional tax” from gross salary. It is to be noted that there is no monetary ceiling under the Income-tax Act. Under article 276 of the Constitution, a State Government cannot impose more than Rs. 2,500 per annum as professional tax. However, under the Income-tax Act, whatever professional tax is paid during the previous year is deductible.
Note: The summary of Income Tax Notes Part-02 Capital Gains summarise from the content of Book of School of Open Learning. © School of Open Learning.

Basic Concepts
House Property
Profits and Gains From Business or Profession
Capital Gains

Income Tax Notes Part - 01 Basic Concepts

noreply@blogger.com (Unknown) — Fri, 2 Feb 2024 14:53:00 +0530
INCOME TAX NOTES PART-01
INCOME TAX NOTES PART-01

BASIC CONCEPTS
Computation of Total Income
Taxable income of any assessee is computed as per the format given below -

Computation of net taxable income/ total income of an assessee for the assessment year 20XX-20XX:
Particulars Amount (in Rs.)
Income under the head “Salaries” XX
Income under the head “House Property” XX
Income under the head “Profits and gains of business or profession” XX
Income under the head “Capital Gains” XX
Income under the head “Income from other sources” XX
Gross total income (GTI) XX
Less: Deductions under chapter VIA [Sec. 80] XX
Net taxable income or Total income (NTI) XXX
Computation of tax
Tax to be paid by any assessee is computed as per the format given below –
Computation of tax liability of an assessee for the assessment year 20XX-20XX:
td> XX
Particulars Amount (in Rs.)
Income-tax on net taxable income XX
Less: Rebate under section 87A XX
XX
Add: Surcharge (% of income-tax) XX
Total (A) XX
Add: Health & Education Cess @ 4%
Total XX
Less: Relief under Section 89 XX
Tax Liability XX
Add: Interest/Penalty etc. XX
Less: Pre-paid taxes [i.e., advance tax, self-assessment tax, TDS, TCS, MAT credit] XX
Tax Payable XXX
Tax rates, rebate, surcharge and cess for the assessment year 2020-21
Tax Rates for “Individuals”
Situation 1: For a resident senior citizen (who is 60 years or more at any time during the relevant previous year 2019-20 but less than 80 years on the last day of the relevant previous year 20XX-20XX):
Amount Net Taxable Income Tax
Upto Rs. 3,00,000 Nil
Rs. 3,00,000 - Rs.5,00,000 5% of income exceeding Rs. 3,00,000
Rs. 5,00,001 – Rs. 10,00,000 Rs. 10,000 + 20% of income exceeding Rs. 5,00,000
Above Rs. 10,00,000 Rs. 1,10,000 + 30% of income exceeding Rs. 10,00,000
Situation 2: For a resident super senior citizen (who is 80 years or more at any time during the relevant previous year 2019-20):
td> Nil
Amount Net Taxable Income Tax
Upto Rs. 5,00,000
Rs. 5,00,001 – Rs. 10,00,000 20% of income exceeding Rs. 5,00,000
Above Rs. 10,00,000 Rs. 1,00,000 + 30% of income exceeding Rs. 10,00,000
Situation 3: For any other resident individual (who is less than 60 years of age at any time during the relevant previous year 2019-20), any non-resident individual, every HUF/ AOP/ BOI/ artificial juridical person:
Amount Net Taxable Income Tax
Up to Rs. 2,50,000 Nil
Rs. 2,50,001 – Rs. 5,00,000 5% of income exceeding Rs. 2,50,000
Above Rs. 10,00,000 Rs. 1,12,500 + 30% of income exceeding Rs. 10,00,000
Tax Rates for “Firms”
A firm is taxable at a flat rate of 30%.

Tax Rates for “Companies”

Company Tax Rate
In the case of a domestic company: However, a domestic company (whose gross receipt / turnover during the PY 2017-18 does not exceed ` 400 crores) is taxable @25% 30%
In the case of a foreign company: 40%
Rebate of tax in case of certain individuals [Sec. 87A]
This rebate is given to provide tax relief to individual taxpayers who are in lower income bracket.
Any resident individual whose net taxable income (i.e., GTI minus deductions under section 80C to 80U) is Rs. 5,00,000 or less is entitled to claim rebate under section 87A which is 100% of income tax payable on total income or Rs. 12,500, whichever is less. This rebate is available from income tax (before adding surcharge and cess).
Surcharge
The amount of Income Tax shall be increased by a surcharge as follows :-
Person Net Income Range (in Rs.) Surcharge (as % of income tax)
Individual / HUF/ AOP/BOI/AJP 0-50 Lakh
50 Lakhs – 1 Crore NIL
10%
1 Crore – 2 Crore
2 Crore – 5 Crore
Above 5 Crore 15%
25%
37%
Firm / Co-Operative Society / local Authority 0 - 1 Crore
Above 1 Crore NIL
12 %
Health and Education Cess (HEC)
4% of (income tax after deducting rebate under section 87A and after adding surcharge)
Rounded off of income and tax liability (288A and 288B)

Income / Tax liability before rounding off Income / Tax liability after rounding off
17,56,333.99 17,56,330
18,88,994.99 18,88,990
Agricultural Income
Capital gain arising from the transfer of agricultural land shall not be treated as agricultural income.
Partly agricultural incomes:
Income Non - agricultural income Agricultural income
Growing and manufacturing tea in India 40% 60%
Sale of centrifuged latex or cenex or latex based crepes 35% 65%
Sale of coffee grown and cured by seller 25% 75%
Residential Status How to determine the residential status of an INDIVIDUAL [Sec. 6]
An individual may be resident or non-resident. Further, if an individual is resident, he may be resident and ordinarily resident or resident but not ordinarily resident.
Following are the rules to determine the residential status of an individual:
a. Resident: Must satisfy at least one of the basic conditions.
b. Resident and ordinarily resident (ROR): Must satisfy at least one of the basic conditions and both of the additional conditions.
c. Resident but not ordinarily resident (RNOR): Must satisfy at least one of the basic conditions and one or none of the additional conditions.
d. Non-resident (NR): Must not satisfy any of the basic conditions.

Basic conditions [Sec. 6(1)]
a. He is in India in the previous year for a period of 182 days or more; or
b. He is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.
Exceptions:
In the following two situations, basic condition (b) is not applicable:
1. An Indian citizen who leaves India during the previous year ▪ for the purpose of employment outside India; or ▪ as a member of crew of an Indian ship.
2. An Indian citizen or a person of Indian origin who comes on a visit to India during the previous year.
Additional conditions [Sec. 6(6)]
a. He has been resident in India in at least 2 out of 10 previous years immediately preceding the relevant previous year.
b. He has been in India for a period of 730 days or more during 7 years immediately preceding the relevant previous year.
How to determine the residential status of a HUF
A Hindu undivided family (like an individual) is either resident in India or non-resident in India. A resident Hindu undivided family is either ordinarily resident or not ordinarily resident.
Following are the rules to determine the residential status of a Hindu undivided family:
a. A Hindu undivided family is said to be resident in India if control and management of its affairs are situated –
▪ Wholly in India or
▪ Partly in India and partly outside India
It is to be noted that in order to determine whether a HUF is resident or non-resident, the residential status of the karta of the family during the previous year is not relevant. Residential status of the karta during the preceding years is considered for determining whether a resident HUF is “ordinarily resident” or not.
A resident Hindu Undivided family is an ordinarily resident in India if karta or manager of the family satisfies the two additional conditions given above. However, if kata or manager of a resident HUF does not satisfy the two additional conditions, the family is treated as resident but not ordinarily resident in India.
b. A Hindu undivided family is said to be non-resident in India if control and management of its affairs are situated wholly out of India.

Exempted incomes
Some of the incomes exempt under section 10 (excluding exempt incomes under the head “Salaries”) are –
1. Agricultural income
2. Share of income from Hindu Undivided Family
3. Share of income of a partner from his firm
4. Payment received by an individual under Bhopal Gas Leak Disaster Act
5. Educational Scholarships received by an individual
6. Awards made by the Government in public interest
7. Income of scientific research association
8. Income of news agency
9. Income of Khadi and Village Industries
10. Income of SAARC
11. Income of IRDA
12. Income of mutual fund
13. Income of Swachh Bharat Kosh and Clean Ganga Fund
14. Partial withdrawal from NPS (to the extent it does not exceed 25% of an employee’s contribution) is exempt from tax.
15. 60% of the total amount received on account of assessee’s opting out of NPS or closing of NPS account.
Note: The summary of Income Tax Notes Part-01 summarise from the content of Book of School of Open Learning. © School of Open Learning.

Salary
House Property
Profits and Gains from Business or Profession
Income From Other Sources

What Can We Learn From Rich Dad & Poor Dad Book

noreply@blogger.com (Unknown) — Sat, 10 Jun 2023 11:05:00 +0530

Title: “Rich Dad, Poor Dad: A Life-Changing Lesson in Financial Intelligence”
Introduction:
In the world of personal finance, few books have had as profound an impact as “Rich Dad, Poor Dad” by Robert Kiyosaki. Published in 1997, this international bestseller has empowered countless individuals to rethink their approach to money and wealth. With its simple yet powerful teachings, the book challenges conventional wisdom and provides valuable insights into the mindset and strategies of the rich. In this blog, we will explore the summary of “Rich Dad, Poor Dad” and highlight some of the key takeaways that can transform your financial future.
1. The Tale of Two Dads:
The book revolves around two influential figures in the author’s life—his own father, referred to as “poor dad,” and his best friend’s father, known as “rich dad.” While both dads were successful in their respective careers, their attitudes towards money and financial education differed greatly. Poor dad believed in the traditional path of working for money, while rich dad emphasized the importance of making money work for you.
2. The Importance of Financial Education:
One of the core lessons of “Rich Dad, Poor Dad” is the significance of financial education. The author stresses that our education system focuses primarily on academic knowledge and neglects practical financial literacy. Kiyosaki argues that to achieve financial independence, we must actively seek out financial education and continuously expand our knowledge about money, investments, and business.
3. The Difference Between Assets and Liabilities:
Another fundamental concept introduced in the book is understanding the difference between assets and liabilities. According to Kiyosaki, an asset is something that generates income or appreciates in value, while a liability is something that incurs expenses. To become financially independent, he suggests acquiring income-generating assets that can cover your expenses, rather than accumulating liabilities that drain your resources.
4. Building Wealth through Cash Flow:
“Rich Dad, Poor Dad” emphasizes the importance of generating passive income and building positive cash flow. The author encourages readers to focus on acquiring assets that generate income, such as real estate, stocks, or businesses, instead of relying solely on a paycheck. By developing multiple streams of income and investing wisely, individuals can gradually build wealth and attain financial freedom.
5. The Power of Mindset and Overcoming Fear:
Beyond the technical aspects of finance, the book delves into the power of mindset and the role of fear in holding us back from financial success. Kiyosaki encourages readers to embrace a mindset of abundance and to overcome their fears, as fear often leads to missed opportunities. By developing a positive mindset and adopting a proactive approach to financial decision-making, individuals can unlock their true potential and create lasting wealth.
Conclusion:
“Rich Dad, Poor Dad” remains a timeless classic that challenges the traditional notions of money and financial success. Through the contrasting experiences of the author’s two influential figures, readers gain valuable insights into the mindset and strategies of the rich. By emphasizing financial education, distinguishing between assets and liabilities, and focusing on building passive income, Robert Kiyosaki provides a roadmap to financial independence. More than just a book on finance, it serves as a guide to reframe our relationship with money and take control of our financial destiny. So, start your journey towards financial intelligence today and let “Rich Dad, Poor Dad” be your guiding light.

BUDDHA PURNIMA - Let's Learn Something New

noreply@blogger.com (Unknown) — Thu, 4 May 2023 13:35:00 +0530

Gautam Buddha, also known as Siddhartha Gautama, was a spiritual teacher who lived in ancient India. His teachings have had a profound impact on millions of people around the world, and his life serves as an example of wisdom and compassion. Here are 10 life lessons we can learn from his life:
1. Embrace the middle path: Buddha taught that the path to enlightenment lies in avoiding extremes and finding a balanced, middle way. This means not giving in to excessive pleasure or indulgence, but also not denying oneself basic needs or pleasures.
2. Happiness comes from within: Buddha taught that true happiness is not dependent on external circumstances but rather on one’s own thoughts and actions. Therefore, one can find happiness even in difficult situations.
3. Cultivate compassion: Buddha emphasized the importance of cultivating compassion for all living beings, and this remains a key teaching In Buddhism. By developing empathy and understanding for others, we can create a more peaceful and harmonious world.
4. Let go of attachments: One of the key teachings of Buddha is that suffering arises from our attachments to people, things, and ideas. By letting go of these attachments, we can find freedom from suffering.
5. Mindfulness is essential: Buddha taught that mindfulness, or being present and aware in the moment, is crucial for living a fulfilling life. By paying attention to our thoughts and feelings, we can gain a deeper understanding of ourselves and the world around us.
6. Change is inevitable: Buddha taught that everything is impermanent and that change is an inherent part of life. By accepting this reality, we can learn to let go of our fears and attachments and find peace in the present moment.
7. Practice meditation: Meditation is a key component of Buddhist practice, and Buddha himself spent many years in meditation before achieving enlightenment. By quieting the mind and focusing on the present moment, we can cultivate inner peace and clarity.
8. Avoid harm: Buddha taught that we should avoid harming others in thought, word, or deed. By treating others with kindness and compassion, we can create a more harmonious and peaceful world.
9. Seek wisdom: Buddha taught that the pursuit of knowledge and wisdom is essential for spiritual growth. By seeking out wisdom from others and reflecting on our own experiences, we can gain a deeper understanding of ourselves and the world around us.
10. Live in the present moment: Finally, Buddha taught that the present moment is all we have, and that true happiness and fulfillment can only be found in the here and now. By living fully in each moment, we can find joy and meaning in even the simplest experiences.

These are the Top 10 lessons that, we can learn from the Buddha's life & experience to make our surround & ourselves better.

Type of loss to be carried forward to the next year(s)	Income against which carried forward loss can be set off in the next year(s)	For how many years loss can be carried forward
House property loss	Income under the head “House property”	8 years
Speculation loss Non-speculative business loss: 1. On account of unabsorbed depreciation, capital expenditure on scientific research and family planning	Speculation profits Any income except salaries	4 years No time-limit
2. Loss from a specified business under section 35AD 3. Other remaining business loss	Income from a specified business under section 35AD Any business profit (whether from speculation or otherwise)	No time-limit 8 years
Capital loss: 1. Short-term capital loss 2. Long-term capital loss	STCG as well as LTCG Long-term capital gains	8 years 8 years
Loss from the activity of owning and maintaining race horses	Income from the activity of owning and maintaining race horses	4 years

Donee	Deduction (in %age)
100%
Prime Minister’s National Relief Fund	100%
National Children’s Fund	100%
Prime Minister’s Armenia Earthquake Relief Fund	100%
National Foundation for Communal Harmony	100%
An approved university/ educational institution	100%
Any fund set up by the Government of Gujarat for providing relief to victims of earthquake in Gujarat	100%
Zila Saksharta Samiti	100%
National Blood Transfusion Council (NBTC) and State Council for Blood Transfusion	100%
Fund set up by a State Government for the medical relief to the poor	100%
Central Welfare Fund of the Army and Air Force and the Indian Naval Benevolent Fund	100%
Andhra Pradesh Chief Minister’s Cyclone Relief Fund	100%
National Illness Assistance Fund	100%
Chief Minster’s Relief Fund or Lieutenant Governor’s Relief Fund	100%
National Sports Fund or National Cultural Fund or Fund for Technology Development and Application	100%
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities	100%
Swachh Bharat Kosh, National Fund for Control of Drug Abuse	100%
Clean Ganga Fund (amount donated by residents only)	100%
Prime Minister’s Drought Relief Fund	50%
Jawaharlal Nehru Memorial Fund	50%
Indira Gandhi Memorial Trust	50%
Rajiv Gandhi Foundation	50%

Government or any approved local authority, institution or association to be utilised for the purpose of promoting family planning	100%
Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning	50%
Any other approved fund* or any institution which satisfies the conditions mentioned in section 80G(5)	50%
Any authority constituted in India by (or under) any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose planning, development or improvement of cities, towns and villages, or for both	50%
Any corporation for promoting interest of minority community	50%
Any notified temple, mosque, gurudwara, church or other place (for renovation or repair)	50%

		Amount (Rs.)
Full value of consideration		XX
Less: Expenses on transfer	XX
Cost of acquisition	XX
Cost of improvement	XX	XX
Balance		XX
Less: Exemption under sections 54B, 54D, 54G and 54GA	XX
STCG/ STCL Long Term Capital Gain/ Loss – Computation	XXX
		Amount (Rs.)
Full Value of Consideration		XX

Less: Expenses on transfer	XX
Indexed cost of acquisition (ICA)	XX
Indexed cost of improvement (ICI)	XX	XX
Balance		XX
Less: Exemption under sections
54, 54B, 54D, 54EC, 54EE, 54F, 54G, 54GA and 54GB		XX
LTCG/ LTCL		XXX

Financial year	CII	Financial year	CII
2001-02	100	2011-12	184
2002-03	105	2012-13	200
2003-04	109	2013-14	220
2004-05	113	2014-15	240
2005-06	117	2015-16	254
2006-07	122	2016-17	262
2007-08	129	2017-18	272
2008-09	137	2018-19	280
2009-10	148	2019-20	289
2010-11	167	2020-21	301

Step 1	Find out sale consideration in Indian currency and convert it into foreign currency at “average exchange rate” on the date of transfer
Step 2	Find out the expenditure on transfer in Indian currency and convert it into foreign currency at “average exchange rate” on the date of transfer (and not on the date when expenditure is incurred)
Step 3	Find out the cost of acquisition in Indian currency and convert it into foreign currency at “average exchange rate” on the date of acquisition
Step 4	Capital gain (1 – 2 – 3) will be reconverted in to Indian currency at “buying rate” on the date of transfer

Type of Asset	Blocks	Nature of Asset	Rate of Depreciation
Buildings	1	Residential buildings	5%
	2	Office, factory, godowns	10%
	3	Purely temporary erections such as wooden structures	40%
Furniture	4	Any furniture/fittings including electrical fittings	10%
Plant and machinery	5	Any plant and machinery (not covered by block 6, 7 and 8)	15%
	6	Ocean-going ships	20%
	7	Buses, lorries and taxis used in the business of running them on hire	30%
	8	Aeroplanes, Containers made of glass or plastic used as re-fills, Computers, Energy saving devices, Air pollution control equipments, water pollution control equipments,	40%
	9	Motor buses, motor lorries and motor taxis (used in a business of running them on hire) acquired on or after 23.08.2019 but before 01.04.2020 and is put to use before 1.4.2020.	45%
Intangible assets (acquired after March 31, 1998)	10	Know-how, patents, copyrights, trademarks, licenses, franchises and any other business or commercial rights of similar nature	25%

	WDV at the year end
=	WDV of the block on the 1st day of the previous year
Add:	Actual cost of the asset (falling in the same block) acquired during the previous year
Less:	Money received/ receivable* (together with scrap value) in respect of that asset (falling within the block of assets) which is sold, discarded, demolished or destroyed during the previous year (* It does not mean gross consideration. It is net consideration after excluding expenditure incidental to sale. Further, here actual money received or receivable in cash or by cheque or draft is deductible. In other words, any other things or benefit which can be converted in terms of money cannot be deducted.)

TDS default	Is such expenditure deductible in the current previous year	Is such expenditure deductible in any subsequent previous year
Case 1: Tax is deductible during the current financial/ previous year but not deducted during the current financial/ previous year	100% of such expenditure is disallowed in the current year	If tax is deducted in any subsequent year, the expenditure (which is disallowed in the current year) will be deducted in the year in which TDS will be deposited by the assessee with the Government
Case 2: Tax is deductible (and is so deducted) during the current financial year but it is not deposited on or before the due date of submission of return of income under section 139(1)	100% of such expenditure is disallowed in the current year	If tax is deposited with the Government after the due date of submission of return of income, the expenditure (which is disallowed in the current year) will be deducted in that year in which tax will be deposited

Different situations	Due date of submission of return
Where the assessee is required to furnish a report under section 92E pertaining to international or specified domestic transaction(s)	November 30 of the assessment year
Where the assessee is a company [not having international or specified domestic transaction(s)]	September 30 of the assessment year
Where the assessee is a person other than a company [i.e., not having international or specified domestic transaction(s)]: - In case where accounts of the assessee are required to be audited under any law - Where the assessee is a “working partner” in a firm whose accounts are required to be audited under any law - In any other case	September 30 of the assessment year September 30 of the assessment year July 31 of the assessment year

Particulars		LO (Rs.) Let Out	SO (Rs.) Self- Occupied	DLO (Rs.) Deemed to be Let Out
Step 1: Expected Rent [MV* or FR* whichever is higher but subject to a maximum of SR*]		XX	----	XX
Step 2: Actual rent received/ receivable after deducting Unrealised Rent		XX	----	NA*
Step 3: Higher of Step 1 or step 2		XX	----	ER*
Step 4: Deduct loss due to vacancy		XX	----	NA
Step 5: Gross Annual Value (GAV) [Step 3 – Step 4]		XX	Nil	ER
Less: Municipal Taxes		XX	Nil	XX
Net Annual Value (NAV)		XX	Nil	XX
Less:	Deductions under section 24:
	Standard Deduction [24(a)] (30% of NAV)	XX	Nil	XX
	Interest on capital borrowed [24(b)] (*limits applicable)	XX	XX*	XX
Income from house property		XX	(XX)	XX
Add:	Income under section 25A	XX	----	----
	Income taxable under “House Property”	XXX	(XXX)	XXX

S.No.	Self – Occupied Property	Tax Treatment
1.	If such property is used by the owner for the purpose of carrying on his business or profession	No income is taxable under the head “Income from house property” but taxable under the head “Profits and gains of business or profession”
2.	If such property is used throughout the previous year for own residential purposes, it is not let out or put to any other use. Further, no benefit is derived by the owner from such property.	Nothing is taxable. Only interest on borrowed capital is deductible subject to a maximum ceiling of Rs. 30,000 or Rs. 2,00,000 depending upon the case
3.	If such property could not be occupied throughout the previous year because employment, business or profession of the owner is situated at some other place and he has to reside at that other place in a building not owned by him. Further, no other benefit is derived by the owner from that unoccupied property.	Same as point (2) above
4.	When a part of the property (being independent residential unit) is selfoccupied and the other part is let out.	Income from the independent unit (which is self-occupied) will be taxable as selfoccupied property and income from the unit which is let out is taxable as if the unit is let out
5.	When such property is self-occupied for a part of the year and let out for the other part of the year.	Taxable as a let-out property
6.	Where a person has occupied more than one property for his own residential purpose.	Only one property (according to his own choice) is treated as self-occupied and all other properties will be taken as deemed to be let out

Particulars	Amount (Rs.)
Income from salary	XX
Income by way of allowances	XX
Taxable value of perquisites	XX
Gross salary	XX
Less: Deductions under section 16:
Standard Deduction u/s 16 (ia)	XX
Entertainment allowance u/s 16 (ii)	XX
Professional tax u/s 16 (iii)	XX
Income from salaries	XXX

Status of employee		Taxability
Government employee		It is fully exempt from tax
Non-Government employee	Covered by the Payment of Gratuity Act, 1972	See the provisions given below
	Not covered by the Payment of Gratuity Act, 1972	see the provisions given below

Pension	Status of employee	Is it chargeable to tax
Uncommuted pension (Periodical payment)	Government/	It is fully chargeable to tax
Uncommuted pension (Periodical payment)	Non-Government employee	It is fully chargeable to tax
Commuted Pension (Lump sum payment in lieu of periodical payment)	Government employee (including the employees of local authority and statutory corporation)	It is fully exempt from tax
	Non-Government employee	See the provisions given below

Situations	Recognized Provident Fund (RPF)	Unrecognized Provident Fund (UPF)	Public Provident Fund (PPF)
Employer’s contribution to provident fund	Exempt from tax	Exempt up to 12% of salary. Excess of employer’s contribution over 12% of salary is taxable.	Exempt from tax	Employer does not contribute
Interest credited to provident fund	Exempt from tax	Exempt from tax if rate of interest does not exceed 9.5%; excess of interest over this rate is taxable.	Exempt from tax	Exempt from tax
Lump sum payment at the time of retirement or termination of service	Exempt from tax	Exempt from taxes in some cases given below§. When not exempt, provident fund will be treated as an unrecognized fund from the beginning.	Employer’s contribution and interest thereon is taxable under the head “Salary”. However, payment received in respect of employee’s own contribution is exempt from tax. Interest on employee’s contribution is taxable under the head “Income from other sources”.	Exempt from tax

Particulars	Amount (Rs.)
Basic pay	60,000
Advance salary	10,000
HRA [9,000 – 6,000]	3,000
Gross salary	73,000

Population of city as per 2001 census where accommodation is provided	Where the accommodation is owned by the employer	Where the accommodation is taken on lease or on rent by the employer
Exceeding 25 lakh	15% of salary in respect of the period during which the accommodation is occupied by the employee	Amount of lease rent paid or payable by the employer or 15% of salary, whichever is lower
Exceeding 10 lakh but not exceeding 25 lakh	10% of salary in respect of the period during which the accommodation is occupied by the employee
Any other	7.5% of salary in respect of the period during which the accommodation is occupied by the employee

Type of loan	Different limit	As on April 1, 2019 (applicable for the assessment year 2020-21)
Housing loan		8.65% (8.60% for women)
Car loan		9.25% (9.20% for women)
Education loan	Up to Rs. 7.5 lakh	10.00%
Education loan	Above Rs. 7.5 lakh	10.75%
Personal loan		14.00% (Approx.)

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Circumstances	Value of perquisite
Tea or similar non-alcoholic beverages and snacks (in the form of light refreshments) provided during working hours	NIL
Food and non-alcoholic beverages is provided in working hours in remote area or in an offshore installation	NIL
Food and non-alcoholic beverages is provided in working hours at any other place (other than remote area or in an offshore installation) i.e., either in office or business premises or through non-transferable paid vouchers usable only at eating joints provided by an employer	NIL, if the value thereof in either case is up to Rs. 50 per meal. However, expenditure in excess of Rs. 50 per meal should be treated as perquisite. Amount received from the employee is deducted to compute the taxable value of the perquisite.
In any other case	Actual amount of expenditure incurred by the employer minus amount paid or recovered from the employee

Different situations	Amount of exemption (exemption is available only in respect of fare for going anywhere in India along with the family twice in a block of four years)
1. Where journey is performed by air	Amount of economy class fare of the national carrier by the shortest route or the amount spent, whichever is less
2. Where journey is performed by rail	Amount of air-conditioned first-class rail fare by the shortest route or the amount spent, whichever is less
3. Where the places of origin of journey and destination are connected by rail and journey is performed by any other mode of transport	Same as (2)
4. Where the places of origin of journey and destination (or part thereof) are not connected by rail: a. Where a recognized public transport exists b. Where no recognized public transport exists	(a). First class or deluxe class fare by the shortest route or the amount spent whichever is less (b). Air-conditioned first-class rail fare by the shortest route (as if the journey had been performed by rail) or the amount actually spent, whichever is less.

Perquisite not chargeable to tax	Conditions to be satisfied
Medical treatment of employee or any member of family of such employee outside India	Expenditure shall be excluded from perquisite only to the extent permitted by RBI
Cost on travel of the employee/ any member of his family and one attendant who accompanies the patient in connection with treatment outside India	Expenditure shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before included therein the said expenditure (i.e., travelling) does not exceed Rs. 2,00,000
Cost of stay abroad of the employee or any member of the family for medical treatment and cost of stay of one attendant who accompanies the patient in connection with such treatment	Expenditure shall be excluded from the perquisite only to the extent permitted by RBI

	Particulars	Amount (in Rs.)
	Income under the head “Salaries”	XX
	Income under the head “House Property”	XX
	Income under the head “Profits and gains of business or profession”	XX
	Income under the head “Capital Gains”	XX
	Income under the head “Income from other sources”	XX
	Gross total income (GTI)	XX
Less:	Deductions under chapter VIA [Sec. 80]	XX
	Net taxable income or Total income (NTI)	XXX

	Particulars	Amount (in Rs.)
	Income-tax on net taxable income	XX
Less:	Rebate under section 87A	XX
		XX
Add:	Surcharge (% of income-tax)	XX
	Total (A)	XX
Add:	Health & Education Cess @ 4%
	Total	XX
Less:	Relief under Section 89	XX
	Tax Liability	XX
Add:	Interest/Penalty etc.	XX
Less:	Pre-paid taxes [i.e., advance tax, self-assessment tax, TDS, TCS, MAT credit]	XX
	Tax Payable	XXX

Amount Net Taxable Income		Tax
Upto Rs. 3,00,000	Nil
Rs. 3,00,000 - Rs.5,00,000	5% of income exceeding Rs. 3,00,000
Rs. 5,00,001 – Rs. 10,00,000	Rs. 10,000 + 20% of income exceeding Rs. 5,00,000
Above Rs. 10,00,000	Rs. 1,10,000 + 30% of income exceeding Rs. 10,00,000

Amount Net Taxable Income	Tax
Upto Rs. 5,00,000
Rs. 5,00,001 – Rs. 10,00,000	20% of income exceeding Rs. 5,00,000
Above Rs. 10,00,000	Rs. 1,00,000 + 30% of income exceeding Rs. 10,00,000

Amount Net Taxable Income	Tax
Up to Rs. 2,50,000	Nil
Rs. 2,50,001 – Rs. 5,00,000	5% of income exceeding Rs. 2,50,000
Above Rs. 10,00,000	Rs. 1,12,500 + 30% of income exceeding Rs. 10,00,000

Company	Tax Rate
In the case of a domestic company: However, a domestic company (whose gross receipt / turnover during the PY 2017-18 does not exceed ` 400 crores) is taxable @25%	30%
In the case of a foreign company:	40%

Person	Net Income Range (in Rs.)	Surcharge (as % of income tax)
Individual / HUF/ AOP/BOI/AJP	0-50 Lakh 50 Lakhs – 1 Crore	NIL 10%
	1 Crore – 2 Crore 2 Crore – 5 Crore Above 5 Crore	15% 25% 37%
Firm / Co-Operative Society / local Authority	0 - 1 Crore Above 1 Crore	NIL 12 %