Income Tax Code, 2009

(may came into force on 1st

April, 2011)
By
CA Abhishek Kacholiya
09920704185
&
CA Manish Kabra
09702496332
“To accomplish great things we must
dream as well as act”
 Gross Total Income
Income From Income from Special
Ordinary Source Source
i) From Lottery, Puzzle etc.
i) From Employment
ii) From Horse Race, Card Game
ii) From House Property
iii) Of Non Resident Sports Man
iii) From Business
iv) Of Non Resident Sports Association
iv) Capital Gains
v) Investment Income & Royalty Income
v) From Residuary Source of Non Resident
 Rates of Taxes
a) For Individual & H.U.F
up to 1,60,000 - Nil*
up to 10,00,000 - 10%
up to 25,00,000 - 20%
above 25,00,000 - 30%
*Basic Exemption Limit For Women is 190000 & For Senior Citizen is 240000

b) For Un Incorporate Body (Firm, AOP &BOI) - 30%

c) For Domestic & Foreign Company - 25%
d) For Non Profit Organization - 15%
e) Income form Lottery Puzzle etc. - 30%

Note :
- No Surcharge & Education Cess
- Capital Gain taxable as per normal Tax Rate
- Mutual Funds are Exempted from Tax
 Tax on Gross Asset*
a) In case of Banking Co. - 0.25% of Gross Assets
b) In case of Any Other Co. - 2% of Gross Assets
Gross Assets : Gross Block of Fixed Assets
Plus : Capital Work in Progress
Plus : Book Value of all other Assets
Less : Accumulated Depreciation
Less : Debit Balance of P & L a/c if included in all
other assets
*MAT replace by Tax on Gross Assets and no credit on it.
Tax on Dividend Distributed on Domestic Co. - 15%
Tax on Branch Profit on Foreign Co. - 15%#
So effective Tax Rate for Foreign Companies are 36.25%
#Earlier it was Nil
 Wealth Tax
Applicability - Individual, H.U.F., Private Discretionary Trust
Rate of Tax - 0.25% of the Net Wealth exceed Rs. 50 Crore
Assets* - Assets means all Assets except
i) Property held under Trust
ii) Interest in coprancy Property of HUF
iii) Any one Building & Jewellery of Ruler
iv) Any one house or part of house or plot acquired or
Constructed on or after 01/04/2000
v) Assets located Outside India if person is Either Non
Resident or not a Citizen of India
*Specific Definition of Assets replace by Inclusive definition
 Income from Employment will be the Gross Salary as reduced by following
deduction –
a) Tax on Employment
b) Conveyance Allowance
c) Special Allowance to meet Office Duties
d) Amount received under VRS*
e) Gratuity & Pension*

*If deposited in Retirement Benefit Account with Permitted Saving Intermediaries

Note : i ) HRA, LTC, Leave salary & medical Reimb. are not
allowed
ii) All Allowance & Perquisites are Taxable
iii) Withdrawn from Retirement Benefit Account is taxable
under the head ‘Income From Residuary Sources,
iv) Permitted Saving Intermediaries - Approved Provident &
Superannuation Fund, Life Insurer, New Pension System
Trust
 Income from House Property will be,
Gross Rent* as reduced by following deduction –

- Municipal taxes actually paid

- Service Tax Paid
- 20% of Gross Rent (earlier it was 30%)
- Amount of Any Interest
*In case of Self Occupied house Gross Rent & Interest amount will be Nil
Gross Rent - Higher of Contractual & Presumptive Rent
Contractual Rent - Rent Receivable by Assessee
Presumptive Rent - 6% of Ratable Value fixed by Local
Authorities or 6% of Cost of Construction or Acquisition if
Ratable value is not Fixed
 Income from Any Business carried on by Assessee shall be computed
under “Income from Business”
Gross Earnings XXX
Less : Operating Expenditure XXX
Less : Permitted Finance Charges XXX
Less : Capital Allowance XXX
Income From Business XXX
Special Points –
a) 150% weighted deduction for in-house scientific R&D
expenditure extended to all industries.
b) Loss on sale of entire block of assets is ignored – assessee can
claim Depreciation continue.
c) Adjustment for Exchange Fluctuation in Actual Cost of Assets
is not Available.
d) Amount paid for scientific research to a company is not
eligible for deduction.
e) Limits on partners remuneration and on interest abolished
*Business includes Profession
 Income from transfer of any Investment assets shall be
computed under the head Capital Gain
Capital Gain = Full Value of Consideration
Less : Expenditure on Transfer
Less : Cost of Acquisition*
Less : Cost of Improvement*
*If
Investment Assets is held for more then 1 Year then Concept of indexation will
be applicable.
Indexed Cost =
Cost of Acquisition X CII for the FY in which Assets was Transferred
CII for the AY in which assets was acquired or FY 00-01 whichever is later

Note :-
i) Indexation Benefit is now available on Bonds & Debentures
& also available to Non Residents.
ii) Cost of Acquisition of Assets deemed to be ‘Nil’ if not
determinable
a) Investment Assets means any type of Capital Assets
Excluding –
i) Stock in Trade, Consumable Stores, Raw Material
ii) Self Generated Capital Assets
iii) Intangible Assets
iv) Building, Furniture, Plant & Machinery
v) Any other Capital Assets connected with or used for the
purpose of Business of the Assessee.
b) Transfer of Urban Agricultural Land are also Taxable
c) No difference between Short Term & Long Term Investment
Assets
d) Security Transaction Abolished
e) Capital Gains are taxable at Normal Tax Rate*
*Earlier i) STCG on Equity shares are taxed at 15%
ii) All other STCG are taxed at Normal Tax Rate
iii) LTCG on Equity Shares are Exempted
iv) All other LTCG are taxed at 20%
f) Following Deduction under Section 53 are available only to
Individual & HUF on fulfillment of Certain Condition –

Original Investment Assets* New Investment Assets

Agricultural Land Agricultural Land

Any Investment Assets Residential House

Deposit in CG Saving
Any Investment Assets
Scheme#

*If acquired prior to 1 Year before beginning of the Financial Year in which
the transfer took place.

#Withdrawn from scheme in any case will be liable for tax under income
from residuary sources.
 Any income which is not included in any other head & in
Income from Special Source will be taxable under Income from
Residuary Source

a) Amount Withdrawn from any account maintained with

Permitted Saving Intermediaries* (Double Taxation)

b) Any sum received under a Life Insurance Policy

c) Aggregate of any money & the value of any specified

property which is received without consideration by
Individual & HUF exceeding Rs. 50000/-

*Accumulated balances in provident fund as on 31st march 2011 and accretion

thereof are exempted from tax.
a) Income under any of the head, except Income
from Capital Gain now can be clubbed with
the income of any other head
b) Losses can be carried forwarded up to
Indefinite periods if return of income is
furnished with in due date.
Note –
i) Now Losses of Business can be set off against income from
Salary.
ii) Loss on House Property could be carried forwarded only if
return of income is filed with in due date.
a) Any sum deposited in any account maintained with any Permitted
Saving Intermediaries*
b) Deduction in respect of Children’s Education*
*Deduction should not exceed 3 lacs in an financial year.
c) Deduction to Individual in respect of Interest on Loan taken for
Higher Education.
d) Deduction in respect of Health Insurance Premium - 15000 for
Others & 15000 for Parents.
e) Deduction in respect of Medical Treatment – Rs. 40000/-
f) Deduction in respect of maintenance of a disabled dependent – Rs.
50000/-
g) Deduction in respect of Donation to certain Funds – Donation to
Scientific research Association are Eligible for 125%
h) Deduction in respect of Political Contribution – As per Companies
Act
i) Deduction in respect of Interest Income on Bonds
j) Deduction in respect of Income of Investor Protection
Fund
k) Deduction in respect of Income from House Property
& Income from Other Sources of Trade Union
l) Deduction in respect of Royalty Income of Authors of
Certain Books
m) Deduction in respect of Royalty on Patents
n) Deduction in case of Person with Disability – 50000/-
o) Deduction in respect of Income of Co-operative
Society from Banking Activity
p) Deduction in respect of Income of Primary Co-
operative Societies
q) Expenditure for promoting family planning &
preventing HIV-aids
i) Deduction for payment of Housing Loan shall
not be allowed.
ii) Deduction for purchase of NSC not available.

iii) Deduction for Term Deposit with any

scheduled bank & for subscription to notified
bond of NABARD not available
iv) Deduction for Rent paid not available.
v) Deduction under series 80I shall not be
allowed.
vi) Instead of Series 80I Schedule 11, 12 & 13
introduced
Applicability - Certain Specified Business*
* i) Business of Generation, Transmission or Distribution of Power
ii) Business of Developing, or Operating and Maintaining any
Infrastructure Facility
iii) Business of Operating and Maintaining a Hospital
iv) Business of Processing, Preservation & Packaging of Fruits &
Vegetables.
v) Business of Laying & Operating a Cross Country Natural Gas or
Crude or Petroleum Oil Pipeline Network for distribution
vi) Business of Setting up & Operating a Cold Chain Facility
vii) Business of Setting up & Operating a Warehousing Facility for
storage of Agricultural Produce.
viii) Business of Developing a Special Economic Zone
ix) Business of Mineral Oil & Natural Gas
Calculation of Profit of the Specified Business
Gross Income XXX
Less : Operating Expenses XXX
Less : Permitted Finance Charges XXX
Less : Capital Expenditure incurred XXX
Less : Expenditure on License XXX
Less : Expenditure Incurred before XXX
Commencement of Business
Less : Amount of Negative Profit for XXX
Preceding Financial Years*
Profits of the Business XXX
*Deduction for Negative Profits of the predecessor shall also be
allowed to Successor in Business Reorganization.
 Business
Plying, Leasing & Hiring of
Heavy Goods Vehicle
Plying, Leasing & Hiring of
Light Goods Vehicle
Any Other Business
* Earlier it was Rs. 40 Lacs
Amount of Income Condition
Rs. 5000 Per Month No. of Vehicles owned
Per Vehicle should be <=10
4500 Per Month Per No. of Vehicle owned
Vehicle should be <=10
8% of Total Turnover / Turnover / Gross Receipt
Gross Receipt should be <= 1 Crore*
 Miscellaneous
a) Due date of Return Filing –

(i) 30th June – If the Person is not a Company & does not derive any Income
from Business

(ii) 31st August – In all Other Case

b) Residential Status of Foreign companies - It is resident in India only if

wholly or partly managed and controlled from India at any time during the
year

c) Income of political party form House Property, Capital Gain and

Residuary Sources are exempted from Tax.

d) Any Allowances received by MP or MLA are exempted from tax