Income Tax Slab For Assessment Year 2013-14

Applicable Income Tax Slab For Assessment Year 2013-14

Normal Rates of tax

Where the total income does not exceed Rs. 2,00,000/-.

Nil

Where the total income exceeds Rs. 2,00,000 but does not exceed Rs. 5,00,000/-

10 per cent of the amount by which the total income exceeds Rs.2,00,000/-

Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-.

Rs. 30,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-.

Where the total income exceeds Rs. 10,00,000/-.

Rs. 130,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-.

Rates of tax for a woman, resident in India and below sixty years of age at any time during the financial year

Where the total income does not exceed Rs.2,00,000/-.

Nil

Where the total income exceeds Rs. 2,00,000 but does not exceed Rs. 5,00,000/-.

10 per cent, of the amount by which the total income exceeds Rs. 2,00,000/-

Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-.

Rs. 30,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-.

Where the total income exceeds Rs. 10,00,000/-.

Rs. 130,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-.

Rates of tax for an individual, resident in India and of the age of sixty years or more but less than eighty years at any time during the financial year:

Where the total income does not exceed Rs. 2,50,000/-.

Nil

Where the total income exceeds Rs. 2,50,000 but does not exceed Rs. 5,00,000/-.

10 per cent, of the amount by which the total income exceeds Rs. 2,50,000/-

Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-.

Rs. 25,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-.

Where the total income exceeds Rs. 10,00,000/-.

Rs. 125,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-.

In case of every individual being a resident in India, who is of the age of eighty years or more at any time during the financial year

Where the total income does not exceed Rs. 5,00,000/-

Nil

Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-

20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-

Where the total income exceeds Rs.10,00,000/-

Rs. 1,00,000/- plus 30 per cent of the amount by which the total income exceeds Rs.10,00,000/-

Capital Gain Section 112 under Income Tax

Section 112.

(1) Where the total income of an assessee includes any income, arising from the transfer of a
long-term capital asset, which is chargeable under the head “Capital gains”, the tax payable by the
assessee on the total income shall be the aggregate of,—

(a) in the case of an individual or a Hindu undivided family, 24[being a resident,]—

(i) the amount of income-tax payable on the total income as reduced by the amount of such
long-term capital gains, had the total income as so reduced been his total income ; and

(ii) the amount of income-tax calculated on such long-term capital gains at the rate of twenty
per cent :

Provided that where the total income as reduced by such long-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the
maximum amount which is not chargeable to income-tax and the tax on the balance of such long-term capital gains shall be computed at the rate of twenty per cent ;

(b) in the case of a 24[domestic] company,—

(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income ; and

(ii) the amount of income-tax calculated on such long-term capital gains at the rate of 25
[twenty] per cent :

26[***]

27[(c) in the case of a non-resident (not being a company) or a foreign company,—

(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income ; and

(ii) the amount of income-tax calculated on such long-term capital gains at the rate of twenty per cent ;]

28[(d)] in any other case 29[of a resident],—

(i) the amount of income-tax payable on the total income as reduced by the amount of longterm capital gains, had the total income as so reduced been its total income ; and

(ii) the amount of income-tax calculated on such long-term capital gains at the rate of 30
[twenty] per cent.

Explanation.—31[***]

32[Provided that where the tax payable in respect of any income arising from the transfer of a long-term capital asset, being listed securities 33[or unit] 34[or zero coupon bond], exceeds ten per cent of the amount of capital gains before giving effect to the provisions of the second proviso to section 48, then, such excess shall be ignored for the purpose of computing the tax payable by the assessee.

35[Explanation.—For the purposes of this sub-section,—

(a) “listed securities” means the securities—

(i) as defined in clause (h) of section 236 of the Securities Contracts (Regulation) Act, 1956 (32 of 1956); and

(ii) listed in any recognised stock exchange in India;

(b) “unit” shall have the meaning assigned to it in clause (b) of
Explanation to section 115AB.]]

(2) Where the gross total income of an assessee includes any income arising from the transfer of a longterm capital asset, the gross total income shall be reduced by the amount of such income and the deduction under Chapter VI-A shall be allowed as if the gross total income as so reduced were the gross total income of the assessee.

(3) Where the total income of an assessee includes any income arising from the transfer of a long-term capital asset, the total income shall be reduced by the amount of such income and the rebate under section 88 shall be allowed from the income-tax on the total income as so reduced.

Mandatory Disclosure of Overseas Assets

The Central Board of Direct Taxes (CBDT) recently notified the new tax return forms for the tax year 2011-12 or assessment year 2012-13, mandating disclosure of foreign assets. In the tax return forms called ITR 2/3, a new section called ‘FA’ (Foreign Assets) has been introduced to disclose foreign assets.

The notification stipulates that if an individual’s taxable income exceeds Rs 1 million and domestic and expatriate resident individuals possessing assets overseas, need to file their returns electronically.

Having assets overseas is sufficient for a resident individual to fall under the compulsion of filing income tax returns with full disclosure of the assets in question. Generation of income in India is not the criteria.

Useful Links

New PAN Application Form – http://law.incometaxindia.gov.in/DITTaxmann/IncomeTaxRules/pdf/Form49aE.PDF

New PAN Correction Form – http://www.incometaxindia.gov.in/archive/changeform.pdf

Incom Tax Department Website – http://incometaxindia.gov.in/home.asp

Income Tax Return Efiling portal – https://incometaxindiaefiling.gov.in/portal/

Income Tax Challan 280 – https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp

Overview Amendments in Direct Taxes Budget 2012- 13 http://www.caclubindia.com/articles/details.asp?mod_id=13371#.UAv3YGEe5GY

TAXATION OF DEBIT FUNDS

Taxation of dividends of debt mutual funds

All dividends received from debt mutual funds are tax free in the hands of the investor(Individual/HUF). One does not gave to pay any tax on it.

Capital Gain Taxation

The long term gain is taxed at 10% without indexation and 20% with indexation.
The short term capital gain is added to the taxable income of the individual and taxed according to applicable tax slab.

Plus 3% Education Cess in both cases.

CAPITAL GAIN – Section 111A

After section 111 of the Income-tax Act, the following sec­tion shall be inserted, with effect from the 1st day of April, 2005, namely:—

‘111A. Tax on short-term capital gains in certain cases.—(1) Where the total income of an assessee includes any income charge­able under the head “Capital gains”, arising from the transfer of a short-term capital asset, being an equity share in a company or a unit of an equity oriented fund and—

(a) the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and

(b) such transaction is chargeable to securities transac­tion tax under that Chapter,

the tax payable by the assessee on the total income shall be the aggregate of—

(i) the amount of income-tax calculated on such short-term capital gains at the rate of ten per cent; and

(ii) the amount of income-tax payable on the balance amount of the total income as if such balance amount were the total income of the assessee:

Provided that in the case of an individual or a Hindu undivided family, being a resident, where the total income as reduced by such short-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such short-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not charge­able to income-tax and the tax on the balance of such short-term capital gains shall be computed at the rate of ten per cent.

(2) Where the gross total income of an assessee includes any short-term capital gains referred to in sub-section (1), the deduction under Chapter VI-A shall be allowed from the gross total income as reduced by such capital gains.

(3) Where the total income of an assessee includes any short-term capital gains referred to in sub-section (1), the rebate under section 88 shall be allowed from the income-tax on the total income as reduced by such capital gains.

Explanation.—For the purposes of this section, the expression “equity oriented fund” shall have the meaning assigned to it in the Explanation to clause (38) of section 10.’.

TAX AUDIT – SECTION 43B

As per Section 43B

Notwithstanding anything contained in any other provision of this Act*, a deduction Sudame otherwise allowable under this Act in respect of—

a) any sum payable by the assessee by way of tax, duty, cess or fee, (by whatever name called, under any law for the time being in force);

b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees;

c) any sum payable as bonus or commission to employee for services rendered;

d) any sum payable by the assessee as interest on any loan or borrowing from any public finan­cial institution or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing;

e) any sum payable by the assessee as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advanc­es;

f) any sum payable by the assessee as an employer in lieu of any leave at the credit of his em­ployee.

shall be allowed as deduction only in the previous year in which such sum is actually paid. This is irrespective of the previous year in which the liability to pay such sum was incurred by the as­sessee.

* ?Notwithstanding anything contained in any other provisions of this act‘ denotes that section 43B overrides all the sections in Income Tax Act, 1961.

Exception- When deductible on accrual basis

The exception is applicable if the following three conditions are satisfied:

Assessee keeps books of accounts on mercantile basis
Payment in respect of aforesaid expenses is actually made on or before the due date of submission of return of income under sec 139(1)
The evidence of such payment is submitted along with return of income.
Overview Analysis of clauses

Clause (a)

It is of significance to remember that Sec 43B is applicable in case of tax, duty, cess or fee only when such items are paid under statute to pay under a particular law. This has been the most debatable issue and it is advised to refer most of the case laws which can solve this debate.

Clause (b)

Previously, Employer‘s contribution to various funds was allowed as deduction if the same was paid on or before the due date for making such contribution to the fund. Now these condi­tions have been deleted by Finance Act 2003 and such contributions are allowed as deduc­tions if same has been deposited within the due date of filing return under sec 139(1).

It is worth noting that S.43B is applicable only to Employer‘s contribution and is not applicable to Employees‘ contribution.

Clause (c)

Sec 43B is applicable when bonus or commission is payable to employ­ees only when some services are rendered by the employees. This means that there must be an establishment of Employer-Employee relationship between the employer and the employee. This item is referred in section 36(1)(ii). In other words if commission is paid to an agent, Sec 43B is not applicable as here there is an Agent-Principal relationship.

Clause (d) and Clause (e)

Previously certain courts held that if assessee is not able to pay interest on loans from institu­tions mentioned above, and as part of restructuring such institutions converts this interest in­to loan (such concept is known as Funded Interest Term Loan [FITL]), then it shall be deemed that such interest has been actually paid for the purpose of section 43B and deduction shall be allowed in the year in which such conversion is affected.

To nullify such practices, Section 43B was amended (vide Circular No 7/2006 dated 07-07- 2006 ) by Finance Act 2006 inserting therein two clarificatory Explanations namely; Explana­tion 3C and Explanation 3D the contents in simple words are as follow:

-If any sum payable by an assessee as interest on any loan is converted by the financial insti­tution into a fresh loan, the interest so converted and not ?actually paid‘, shall not be deemed as ?actually payment‘

The converted interest (FITL) in wake of its conversion into a loan, will be eligible for de­duction in the computation of income of the previous year in which the converted interest is ?actually paid‘.

As per Section 43B

Notwithstanding anything contained in any other provision of this Act*, a deduction Sudame otherwise allowable under this Act in respect of—

a) any sum payable by the assessee by way of tax, duty, cess or fee, (by whatever name called, under any law for the time being in force);

b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees;

c) any sum payable as bonus or commission to employee for services rendered;

d) any sum payable by the assessee as interest on any loan or borrowing from any public finan­cial institution or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing;

e) any sum payable by the assessee as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advanc­es;

f) any sum payable by the assessee as an employer in lieu of any leave at the credit of his em­ployee.

shall be allowed as deduction only in the previous year in which such sum is actually paid. This is irrespective of the previous year in which the liability to pay such sum was incurred by the as­sessee.

* ?Notwithstanding anything contained in any other provisions of this act‘ denotes that section 43B overrides all the sections in Income Tax Act, 1961.

return of income under sub-section (1) of section 139. Since the due date
of filing of the return would usually be subsequent to the signing of the tax
audit report the tax auditor would be able to give information in respect of
matters only upto the date of signing of the tax audit report. This fact
should be stated under this clause by way of note as follows:

NOTE: Information given under clause 21(i) (B) is
only up to ……… and does not include any payment
which the assessee may make subsequently before the
due date of filing of the return of income under section
139(1).

The payment made subsequent to that date but before the date of filing
of the return, will still be eligible for deduction under section 43B.
Hence the tax auditor should advise the assessee to include necessary
evidence of payments made after the signing of the tax audit report but
before the due date of filing. This evidence may also be in the form of a
certificate from a chartered accountant obtained specifically for this
purpose – Circular No.601 dated 4.6.1991 vide Appendix XVII.

42.6 The provision made in the accounts for excise duty payable on finished
goods in the bonded warehouse will also have to be disclosed under
this clause. For enabling the assessee to claim this amount as a
deduction the tax auditor may have to verify that the said goods have
been cleared and that excise duty thereon has been paid or adjusted
against MODVAT credits before the due date applicable in his case for
furnishing the return of income under section 139 (1).

42.7 The information required under clause 21(i)(B) is for the purpose of
allowing the deduction of such sum as per the first proviso to section 43B
in respect of payments made after the end of the previous year but before
the due date of filing return of income. As such, reporting under clause
21(i)(B) is required only in respect of the amounts referred to in clauses
(a), (c), (d) or (e) of section 43B which were incurred in the previous year
but were outstanding as at the end of the relevant previous year.

42.8 The above particulars are required irrespective of the fact whether they
have been debited to profit and loss account or not and such a fact
should be stated under this clause.

42.9 The tax auditor is not required to determine any admissible or
inadmissible amount(s).

Under section 43B(a), sales-tax when paid is allowed as a deduction.
Although under clause (a) of section 43B items that have been debited to
the profit and loss account but not paid during the previous year, are to be
specified, where it is the practice of the company to maintain a separate
sales-tax/excise duty account and treat the sales tax/excise duty collected
as a liability, it would be necessary to show by way of note under this
clause, the amount of sales tax/excise duty collected but not paid. In
case, any sum has been paid before the due date of filing the return the
fact of payment along with the amount paid should also be disclosed.

Capital gains: Sec. 54 More than one house can be exempted

In the following decisions, the views expressed are that in lieu of one residential house transferred, only one such house can be acquired: Gulshanbanoo R. Mukhi v. Joint CIT (2002) 83 ITD 649 (Mum.Trib);

Krishna Gopal Nagpal v. Dy. CIT (2004) 82 TTJ (Pune-Trib) 48; and ITO v. Sushila M. Jhaveri (2007) 16 (II) ITCL 254 (Mum ‘I’ Trib).

In the following decisions, considering the facts of the cases, more than one residential houses have been considered permissible: K.G. Vyas v. Seventh ITO (1986) 16 ITD 195 (Bom Trib.); CIT v. Sunita Aggarwal (2007) 13(1) ITCL 66 (Del-HC); ITO v. P.C. Ramkrishna (HUF) 2007 108 ITD 251 (Chen. Trib.) and Prem Prakash Bhutani v. Asstt. CIT (2007) 110 TTJ (Delhi-Trib) 440.

The Karnataka High Court has expressed a more rationale view considering the provisions of Section 54. In the case before the court, the assessee owned a property, which she agreed to give to a builder in lieu of getting 48 per cent of super-built area in the form of residential apartments. The builder constructed eight flats and gave four to the assessee. The issue arose whether capital gain tax exemption can be claimed in respect of acquisition of four flats. The Revenue’s case before the court was that section 54 uses the word ‘a residential house’. Hence, exemption is available only in respect of investment in one such house – not four. The HC did not agree with the Revenue’s view. According to the court, the property is sold is referred to as ‘original asset’ in Section 54, described as buildings or lands appurtenant thereto, being ‘a residential house’. Thus, residential house may include buildings or land appurtenant thereto. The stress is on the use to which the property is put and exemption is available when the house acquired is used as a residential house. The residential house necessarily have to be buildings or lands appurtenant thereto. It cannot be construed as one residential house.

The HC observed that the context in which the expression ‘a residential house’ is used in Section 54 makes it clear that it was not the intention of the legislature to convey the meaning that it refers to as a single residential house. According to the HC, it is permissible to invest the amount of capital gain in more than one house and get exemption envisaged in Section 54.