CA. Pradip R Shah

Introduction:

1.0    Whether one agrees with the provisions under the Direct Taxes Code (DTC) or not, one thing is certain that it has created a new environment with its language. While reading it, one gets an exhilarating experience. However, having lived with the most complex piece of legislation in the country, it is not possible to believe that Income Act can be written in such a language. As we all know, each language has its own nuances. Therefore, comprehending the provisions poses the reader with several issues.

2.0  Although the length of the Code is much compact with 285 sections, relationship between various sections, clauses, sub-clauses and Schedules makes one wondering from where to start. Should one start reading with Income from Employment or Capital Gain? Or should one start with the Schedule containing the definition clause? Having read it various times, one is still not clear about its ultimate impact on the final tax liability. Such problems arises for two reasons:

Firstly, the language is totally new, the words deployed, the terminology used is fresh. Hence, it takes considerable time in discerning its true meaning. Having burnt the fingers for 50 years under the existing Income Tax Act, one moves cautiously while reading between the lines.

Secondly, some of the concepts are new; the methods proposed for computation of total taxable income, tax payable etc. are also fresh. This poses the problem for the reader in finding out intricate relationship between various clauses and sub-clauses.

An easy way out for solving all these issues is to take a panoramic view of various sections and go deeper inside thereafter. This will help in understanding the various clauses in proper perspectives and in its true colour. An attempt has been made hereunder to provide holistic view of the DTC by providing a panoramic view.

Various templates have been devised based on the provisions of DTC. These templates are applicable in the case of a Male Individual. It provides methodology to be used for computing total taxable income under various heads, deductions to be claimed, exemptions permitted etc.. It may be noted that the templates are not complete in it, as some of the provisions might have been skipped over through oversight. The idea of devising it is to have a bird eye-view and look at it from different angle. It will be advisable to have a look at it and read the DTC thereafter.

Looking to the size of the templates one may get frightened. However, it should be noted that as an attempt has been made to make it as comprehensive as possible. Otherwise, who earns that kind of income in the life, requiring one to refer to each and every clause and sub-clause of DTC?

And lastly, these templates have been devised keeping in mind a person deriving income from salary, capital gains and other sources. Template for income from business has not been included herein. It is a subject itself requiring special treatment.

Hope, the templates presented herein below will help in having some clarity.

Name:
Address:
From 01/04/2011 Status Indl.
To 31/03/2012 Resi. “ Resident
Fin. Yr. 2011-12 Citizen Indian
P.A.No. Birth Date
Sex MALE Age (Yrs.)
COMPUTATION OF TOTAL INCOME
Annex. No. Rs. Rs. T.D.S.
Income from Ordinary Sources
Income from Employment 1 xxxxx
Income from House Property 2 xxxxx
Income from Business 3 xxxxx
Income from Capital Gain 4 xxxxx
Income from Residuary Sources 5 xxxxx
xxxxxx
less:
Unabsorbed Preceding Year Loss from Ordinary Sources xxx
xxxxxx
A –  Gross  Total  Income From Ordinary Sources 0 0
TAX   INCENTIVES
Deductions for Savings – S. 66
Any sum paid / deposited in any account maintained with any permitted
savings intermediary
ABCD xxx
EFGH xxx
Total xxx
Restricted to Rs. 3,00,000 xxxxxx
Dedu. in respect of Children’s Education – S. 67
Any sum paid as tuition fee to any university/ college/school for
education of two children
ABCD xxx
EFGH xxx
Total xxx
Restricted to Rs. 3,00,000 xxxx
Interest on Loan for Higher Education – S. 68
ABCD xxxx
Health Insurance Premium  – S. 69
Premium for Self and family members
Amount paid Rs. xxx
Restricted to Rs. 15,000 xxx
Premium for premium of senior citizen parents
Amount paid Rs. xxx
Restricted to Rs. 20,000 xxx
xxxx
Medical Treatment of Prescribed Disease or Ailment  – S. 70
Paid for Senior Citizen xxx
Any other Case xxx
Restricted to Rs. 60,000 / 40,000 xxxx
less: Amount received from Insu. Co. xx xxx
Maintenance of a Disabled Dependant  – S. 71
Restricted to
Rs. 1,00,000 for a person with severe disability
Rs.   50,000 in other cases xxxx
Donation to Non-Profit Organisations – S. 72
Institution specified in Part-A of Schedule 16
Amount paid as Donation  Rs. xxx
Deduction permitted @ 125.00% xxx
Institution specified in Part-A of Schedule 16
Amount paid as Donation  Rs. xxx
Deduction permitted @ 100.00% xxx
Institution specified in Part-A of Schedule 16
Amount paid as Donation  Rs xxx
Restricted to 10.00% of Gross
Total Income xxx
Deduction permitted @ 50.00% xx
xxxx
Contribution to Political Parties – S. 73
Restricted to Gross Total Income xxx
Interest Income on Bonds – S. 74
Interest income on Bonds issued by Local Authority
Restricted to amount included in Gross Total Income xxx
Income of Investor Protection Fund -S. 75
Contribution received by Income of Investor Protection Fund xxx
Income of Trade Unions – S. 76
Income of Registered Trade Unions – Income derived from
House Property and Residuary Sources xxx
Income from Royalty etc. of Authors from Books – S. 77
Restricted to Rs. 3,00,000 xxx
Income from Royalty in respect of Patents – S. 78
Restricted to Rs. 3,00,000 xxx
Deduction for person with Disability – S. 79
Restricted to
Rs. 1,00,000 for a person with severe disability
Rs.   50,000 in other cases xxxx
Income of co-operative Socities from Banking Activities – S. 80
Income from banking or credit facilities by a co-operative
society to its Members xxxx
Income of Primary co-operative Socities – S. 81
Income from Agriculture or its related operations xxxx
Income from other Activity
(Restricted to Rs. 1,00,000) xxxx
Expenditure for Promoting Family Planning – S. 82
Expenses incurred by a Company xxxx
Total of Deductions xxxxx
B – Aggregate amount of Deductions Allowed xxxx
(Restricted to Gross Total Income from Ordinary Sources)
TOTAL  INCOME FROM ORDINARY SOURCES (A-B) 0 0
C – TOTAL  INCOME FROM SPECIAL SOURCES [Annx. 6] 0 0
Total Income (A-B+C) 0 0
S T A T E M E N T   O F   T A X E S
Tax on income from Ordinary Sources 0
Tax on income from Special Sources 0
Total Tax 0
add: Education Cess @ 2.00% 0
0
add: S & H Edu Cess @ 1.00% 0
0
less: Tax  deducted at  source 0
(Refund) 0
Computation  of  Advance  Tax  Payable and Paid
Adv. Tax Payable Adv. Tax Paid Bank’s Name
Rs. Rs.
1st Inst. 0 15-09-11 0
2nd Inst. 0 15-12-11 0
3rd Inst. 0 15-03-12 0
Total Adv. Tax Paid 0
Tax Payable / Refund 0
a) Add: Interest for
i) U/s _____ (Late Filing of Return of Income)
Last date for filing of Return of Income 30/06/2012
Return of Income filed in the month of 30/06/2012
Delay in filing Return of Income(Months)
Interest  @ 1.00% p.m. on Rs. 0 0
ii) U/s _____(For default in payment of Adv. Tax)
Shortfall [email protected] (%) Period
Per Month (Months)
Total Tax 0 1.00 0
iii) U/s ____(Deferment in payment of Adv. Tax)
Instl. Shortfall [email protected] (%) Period Amount
No. Per Month (Months) Rs.
1st 0 1.00 3 0
2nd 0 1.00 3 0
3rd 0 1.00 1 0
0
(b) Total Interest Payable (i + ii + iii) 0
Tax Payable / Refund 0
Self-assessment Tax paid on ____________ 0
Other pre-paid taxes, if any 0
Net Tax / Interest Payable 0
Tax Payable / Refund 0
Note: Rs.
Details of Exempt Income [ Sixth Schedule]
1) Agricultural Income
2) Amount received from income of HUF
3) Amount received as participant of agreement of an association
4) Family Pension received by the widow or children of a member
of armed forces
5) Amount of accumulated balance as on 31st March 2011of an employee
participating in an approved Provident Fund and accretion thereto
6) Any payment from a provident fund to which the PF Act, 1925 applies
or any other provident fund set up by the Central Government of the
accumulated balance as on 31st March, 20011
7) Income received in respect of units of a Mutual Fund
8.) Dividend in respect of which dividend distribution tax has been paid u/s 99
9) Capital Gain arising on account of transfer of –
a) agricultural land
b) personal effect
c) Gold Deposit Bond
Name:
Address:
From 01/04/2011 Status Indl.
To 31/03/2012 Resi. “ Resident
Fin. Yr. 2011-12 Citizen Indian
P.A.No.
Sex MALE
COMPUTATION OF INCOME FROM EMPLOYMENT – ANNEXURE – 1 [S 19 to 22]
Rs. Rs. T.D.S.
Salary Received from M/s ABCD Ltd. [S 284(244)]
Wages / Salary / Remuneration received from employer xxx
Any Allowance/concession/assistance x
Fees or commission x
Perquisites x
Profit in lieu of or addition to Salary x
Advance or arrears of Salary x
Allowances granted to meet personal expenses – x
to commute between place of work and residence x
to compensate for increased cost of living x
Allowance granted to meet expenses for performance of duties x
Allowance granted to meet expenses for performing duties x
of special nature x
Amount received from employer in connection with – x
-Voluntary retirement x
– Termination of service x
– Voluntary seperation x
x
Amount received from employer for leave not availed x
Contribution by the employer to the account of employee x
maintained with the permitted savings intermediaries x
x
Any contribution by the employer to any fund other than x
approved fund x
Annuity, pension or commutation thereof x
Gratuity x
x
Salary to be received from E Ltd. (former employer) x
x
Salary Received in arrears from F Ltd.(former employer) x
xxxxx
less: Deductions u/s 22
a) Profession Tax x
b) Amount received from the employer for journey from
residence to place of work to the extent prescribed x
c) Any allowance granted to meet expenses for performance
of duties to the extent presecribed x
d) Amount received from employer in connection with –
-Voluntary retirement x
– Termination of service x
– Voluntary seperation x
to the extent prescribed x
e) Amount received by the employee or his wife or children
as gratuity to the extent prescribed x
f) Amount received by the employee from the Central, State
Government or the local authority x
x
g) Amount received in commutation of pension under scheme
of his employer, to the extent prescribed
– If gratuity is received -restricted to 1/3rd of the pension x
– in any other case, 1/2 of the pension x
h) the amount of any pension received by an individual .
who has been in the service of the Central or State Govt.
and has been awarded “Param Vir Chakra” or “Maha Vir
Chakra” or “Vir Chakra” or such other gallantry award x
xxx
Income From Employment xxxxx xxx
Name:
Address:
From 01/04/2011 Status Indl.
To 31/03/2012 Resi. “ Resident
Fin. Yr. 2011-12 Citizen Indian
P.A.No.
Sex MALE
COMPUTATION OF INCOME FROM HOUSE PROPERTY – ANNEXURE – 2 [S 23 to 27]
Rs. Rs. T.D.S.
Property – A (Self Occupied)
Situated at __________
Amount of Gross Rent [See S 25(4) and (6)] NIL
Property – B (Not let Out)
Situated at __________
Presumptive rent
– 6.00% of Rateable Value fixed by local authority xxx
– 6.00% of cost of construction, in other cases xxx
Amount of Gross Rent [See S 25(1)] xxx
Property – C (Let Out)
Situated at __________
a) Contractual Rent Receivable xxx
b) Presumptive rent
– 6.00% of Rateable Value fixed by local authority
– 6.00% of cost of construction, in other cases
whichever is higher xxx
Amount of Gross Rent [See 25(1)] xxx xx
xxxx
less: Deductions u/s 26
a) Amount of taxes paid levied by a local authority xxx
b) Amount of tax on services paid to the Central Government xxx
c) 20.00% of Gross Rent determined as above towards repairs etc. xxx
d) Interest on capital borrowed for acquisition, construction, repair
of property let on hire or lying vacant xxx
xxx
Income from House Property xxxx xxx
Name:
Address:
From 01/04/2011 Status Indl.
To 31/03/2012 Resi. “ Resident
Fin. Yr. 2011-12 Citizen Indian
P. A. No.
Sex MALE
COMPUTATION OF CAPITAL GAIN – ANNEXURE – 4 [S. 44 to 53]
Rs. Rs.
Full value of consideration accrued or received as a result
of the transfer xxxxxx
add:
1) Ceasing of holding of shares of 100% subsidiary as referred to in
S. 45(c) or (d) [S 44(2)(a)(1)(i)] xxx
2) Conversion of investment asset by the transferee into business
trading asset as referred to in S. 45(c) or (d) [S 44(2)(a)(1)(ii)] xxx
3) Income from transfer of asset in a scheme of business re-organisation
– failure to comply with the conditions of S. 284(16) or (81) xxx
4) Amount withdrawn from Capital Gain Deposit Scheme xxx
xxxxx
less: Deduction for Cost of acquisition, inflation-adjustment etc. [S 49]
A) Asset held for LESS than One Year
a) Amount expenditure incurred wholly and exclusively in
connection with the transfer of an asset xxx
b) Cost of acquisition of the asset xxx
c) Cost of improvement of the asset xxx
xxxx
B) Asset held for MORE than One Year
a) Amount expenditure incurred wholly and exclusively in
connection with the transfer of an asset xxx
b) Indexed Cost of acquisition of the asset i.e.
i) Purchase price of the asset
ii) Fair Market Value of Asset as on 1-4-2000 if the
asset has been acquired before the said date
at the option of the assessee xxx
c) Indexed Cost of improvement of the asset xxx
d) Relief for rollover of the asset as provided u/s 53 xxx
xxx
xxxx
Current Income from Capital Gains[47(2)] xxxx
less: Unabsorbed preceding year Capital Loss xx
Income from Capital Gains [ S. 47(3)] xxx
Name:
Address:
From 01/04/2011 Status Indl.
To 31/03/2012 Resi. “ Resident
Fin. Yr. 2011-12 Citizen Indian
P.A.No.
Sex MALE
COMPUTATION OF INCOME FROM RESIDUARY SOURCES

ANNEXURE – 5 [S 54 to 57]

Rs. Rs. T.D.S.
a)Dividends, other than dividends in respect of which
dividend distribution tax has been paid u/s 99; xx
(b) interest xx
(c) income from the activity of owning and maintaining
horses for runnning in horse race; xx
(d)  any amount received from his employees as
contributions to any fund setup for their welfare xx
(e) income from machinery, plant or furniture let on hire xx
(f)  any sum received under a life insurance policy
including the sum allocated by way of bonus xx
(g)  any amount received under Keyman insurance policy xx
(h)  Aggregate of any moneys and the value of any
specified property received, without consideration xx
by any individual or HUF xx
(i) Voluntary contribution received by a Non-Profit organisation xx
(j) amount received, or retained, on account of
settlement or breach of any contract xx
(k) any payment made to a person in a day, otherwise
than by an account payee cheque drawn on a bank
subject to certain conditions xx
(l) any amount found credited in the books of a person
and the person offers no explanation about the
nature and source thereof etc. xx
(m) value of any investment made by the person in the
financial year to the extent for which the person
offers no explanation about the nature and
source thereof etc. xx
(n) value of money, bullion, jewellery or other valuable
article owned by the person to the extent to which
the person offers no explanation about the nature
and source thereof xx
(o) amount of expenditure incurred by the person in the financial year, if-
(i) the person offers no explanation about the source of such
expenditure or part thereof; or
(ii) the explanation, if any, offered by him is not, in the
opinion of the Assessing Officer, satisfactory; xx
(p) amount received as loan or deposit, otherwise than by an account
payee cheque or account payee bank draft, from any person, if
the aggregate amount of such loan or deposit exceeds Rs. 20,000
(q) any repayment of loan or deposit, otherwise than by an account payee
cheque or account payee bank draft, if the aggregate amount, including
interest, due to the payee, either in his own name or jointly with any
other person , on the date of such repayment exceeds Rs. 20,000 xx
(r) any amount received, or withdrawn, under any circumstances, from any
account maintained with any permitted savings intermediaries, referred to in
S. 66(2) , representing,-
(i) the principal amount of the savings; or xx
(ii) interest, dividend, bonus, capital appreciation or any other form of
return on the investment, by whatever name called; xx
(s) any amount deemed to be the income u/s 71(6) xx
(t) the value of the net assets, held by any person on the first day of the financial
year in which the person ceases to be a non-profit organisation, determined
in the prescribed manner. xx
(u) any consideration accrued, or received, in respect of transfer of any business
asset, which is self-generated, if the consideration is not included under the
head ‘income from business’; xx
(v) any amount accrued, or received, on account of the cessation, termination or
forfeiture of any agreement entered by the person, if the amount is not
included under the head ‘income from business’; xx
(w) any amount accrued, or received, as reimbursement of any expenditure
incurred by the person, if the amount is not included under the head ‘income
from business’; xx
(x) any amount received, or withdrawn, under any circumstances from the
account maintained under the Capital Gains Savings Scheme representing the
principal amount or any accretion thereto; xx
(y) any amount received, or withdrawn, under any circumstances from the
Retirement Benefit Account referred to in sub-section (2) of section 22,
representing the principal amount or any accretion thereto; and xx
(z) any amount accrued, or received, as advance, security deposit or otherwise,
from the long term leasing or transfer of whole or part of, or any interest in,
any investment asset. xx
xxxxx
less: Deductions u/s 57
(1) The amount of deductions referred to in section 55 shall be the aggregate of –
(a) the amount of following expenditure: xx
(i) Any reasonable sum paid as remuneration or commission
(ii) Rent paid for earning the income
(iii) Repairs to building etc. for earning the income
(iv) Contribution to provident fund of employees engaged for
earning gross residuary income
(v) Capital allowances i.e. depreciation, terminal allowance etc. for
the assets used for earning gross residuary income
(vi) Any other expenditure not being in the nature of capital expenditure
(b) the amount of following deduction: xx
(i) Any amount received under a life insurance policy upon the death or
completion of the original period of contract subject to condition that
the premium payable on the said policy did not exceed 5.00% of the
actual sum assured
(ii) 1/3rd or Rs. 15,000 whichever is less received in respect of
family pension fund
(iii) Rs. 50,000 in respect of gift received as included u/s 56(2)(h)
(c) 50.00% of the amount of compensation as referred to in S. 85(6)
xx
Total Income from Residuary Sources xxxx
Name:
Address:
From 01/04/2011 Status Indl.
To 31/03/2012 Resi. “ Resident
Fin. Yr. 2011-12 Citizen Indian
P.A.No.
Sex MALE
COMPUTATION OF INCOME FROM SPECIAL SOURCES – ANNEXURE – 6

[Item 3 of the First Schedule]

Rs. Rs. Rs.
Income by way of winning from
i) lottery or crossword puzzle xxx
ii) race, including horse race xxx
iii) card game, gambling, betting xxx
Total xxxx

CA. Pradip R Shah

[email protected]

More Under Income Tax

0 Comments

  1. Anand says:

    Hi, Can you please clarify on the tax applicability on software products like payroll packages, inventory software product, tally accounting product etc.? Also, can you please send us the relevant GO on the same and when it is applicale?
    Thanks

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