Introduction…..

• Income Tax Act

• Income Tax Rules
• Circulars
• Notifications
• Amendments in Budget
 Definitions……
• Assessment year & Previous year:
– General Rule: Income of PY is taxable in AY
– Exceptions:
– Income of Non resident from Shipping
– Income of persons leaving India permanently or for a
long period of time
– Income of entities formed for a short duration
– Income of person trying to dispose off the assets to
avoid payment of tax
– Income of Discontinued business
 Definitions……
• Assessee: U/s 2(7) : A person by whom income
tax or any other sum of money is payable
under the act, it includes:
– Every person on whom proceeding has been taken
for assessment of his income or loss or refund due
to him
 Definitions……
• Person: Includes
– Individual
– HUF
– Firm
– AOP/ BOI
– Company
– Local Authority
– Artificial Juridical Person
CAPITAL & REVENUE EXPENDITURE

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Capital & Revenue Expenditure:
1. Expenditure on Acquisition of Fixed Asset is Capital
Expenditure, whereas routine operating exps. are
Revenue Exps. The Benefit of Capital Exps. accrue
over several Previous years, whereas benefit of
Revenue Exps. accrue for only 1 Previous year
2. Capital Exps. make Improvement in Earning Capacity
of Business ,Revenue Exps. maintain Earning Capacity
of Business. Revenue Exps. are of Recurring nature
which is not the case of Capital Exps.
3. Generally, Revenue Expenditure is Deductible from
Income, Capital Expenditure is not deductible
• Gross Total Income (Sec. 14): - As per Sec. 14,
income of a person is computed under the
following five heads:
a) Income from Salaries
b) Income from House Property
c) Profits and gains from Business and
Profession
d) Income from Capital Gains
e) Income from Other Sources
Method of Accounting
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Tax Rates:
Individual, HUF, AOPs, BOIs –

Net Income range Income tax rates Education Cess

Up to Rs. 250000 Nil Nil

Rs. 250001-Rs. 500000 5% of (total income minus Rs. 4 % of income tax

250000)

Rs. 500001- Rs.1000000 Rs. 12500 + 20 % of (total 4 % of income tax

income minus Rs. 500000)

Above Rs. 1000000 Rs. 112500 + 30 % of (total 4 % of income tax

income minus Rs. 1000000)
b) For Resident Senior Citizen (who is 60 years or more at any time during the previous year)
c) For Super Senior Citizens (who are 80 years or more)

Net Income range Income tax rates Education Cess

Up to Rs. 300000 Nil
Rs. 300001-Rs. 500000 5% of (total income minus Rs.
300000)
Rs. 500001- Rs.1000000 Rs. 10000+ 20 % of (total
income minus Rs. 500000)
Nil
4 % of income tax
4 % of income tax

Above Rs. 1000000 Rs110000 + 30 % of (total 4 % of income tax

income minus Rs. 1000000)

Net Income range Income tax rates Education Cess

Up to Rs. 500000 Nil Nil
Rs. 500001-Rs. 1000000 20% of (total income minus Rs. 4 % of income tax
500000)

Above Rs. 1000000 Rs. 100000 + 30 % of (total 4% of income tax

income minus Rs. 1000000)
 Residential Status
• Is it a Citizenship?
Residential Status of an Individual
Basic conditions :
U/s 6(1) an individual is said to be resident in India in any
previous year, if he satisfies at least one of the basic
conditions –
1) He is in India in the previous year for a period of 182 days
or more
2) 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.
Residential Status of an Individual
Additional conditions :
U/s 6(6), a resident individual is treated as
“resident and ordinarily resident” in India if he
satisfies the following two additional conditions –
1) He has been resident in India in at least 2 out
of 10 previous years immediately preceding the
relevant previous year.
2) He has been in India for a period of 730 days or
more during 7 years immediately preceding the
relevant previous year.
 Residential Status of an HUF
• A HUF is said to be resident in India if control and
management of its affairs is wholly or partly
situated in India.
• A HUF is non-resident in India if control and
management of its affairs is wholly situated
outside India.
• The Additional Conditions for HUF are same as
Individual, they should be satisfied by Karta of
HUF
 Residential Status of a Company
• An Indian company is always resident in India.
• A foreign company is resident in India only if,
during the previous year, control and
management of its affairs is situated wholly in
India.
• Residential Status of Every other person:
Resident in India if control and management
of their affairs are wholly or partly situated in
India during the relevant previous year.
 Tax Incidence :
• Income either Accrued in India or Received in
India or accrued and received in India is taxable in
India for all categories
• For RNOR taxable income includes Income from
Business wholly/ partly controlled in
India/Profession set up in India
• For Resident & Ordinarily Resident all incomes
from all over world are taxable in India
• Residential Status is decided for each previous
year
Can a person be Resident of more
than one country at a time ?????
 Residential Status Case studies
1. X comes to India, for the first time, on April
16, 2016. During his stay in India up to
October 5, 2018, he stays at Delhi up to April
10, 2018 and thereafter remains in Chennai
till his departure from India.
Determine his residential status for the
assessment year 2019-20?
2. Decide residential status for assessment year
2019-20 on the basis of following:
Financial year Period of stay (days)
2018 - 19 189
2017 – 18 0
2016 – 17 25
3.Decide residential status for assessment year
2019-20 on the basis of following:
Financial year Period of stay (days)
2018 – 19 180
2017 - 18 30
2016 - 17 85
2015 -16 100
2014 – 15 50