Tax Exemption: Here are nine incomes you need not pay tax on

Paying income tax is a moral and legal obligation of every proud citizen of the country. “The taxation system is designed to make sure there are no unnecessary taxes that may become a financial burden on the tax payer. The above nine incomes are example of the flexibility of the Indian income tax system allowing tax exemption on various earnings,” says Shetty. Further, the committee has also suggested a clarification on whether the activity of selling of space for advertisement in souvenirs would attract a 5 per cent or 18 per cent tax rate. The panel has received requests for a clarification since some of the guest anchors have requested payment of GST at the rate of 18 per cent on the honorarium paid to them for such appearances.

• B) Expenses incurred on club facilities for the official purposes are exempt from tax.
• The committee felt that a deeper study was needed on the issues involved in crypto ecosystem.
• Interest, salary, bonus, commission or remuneration paid by Association of Persons or Body of Individuals to its members shall not be allowed as deduction .
• B) If taxpayer could not invest the capital gains to acquire new asset before due date of furnishing of return, the capital gains can be deposited before due date for furnishing of return of income in deposit account in any branch of a nationalized bank in accordance with Capital Gain Account Scheme 1988.
• In this regards, one finds that the scheme of classification of income in DTAAs is quite different from that is given in the Income Tax Act.

Interest paid in respect of capital borrowed for the purposes of the business or profession shall be allowed as deduction. However, if capital is borrowed for acquiring an asset, then interest for any period beginning from the date on which capital was borrowed till the date on which asset was first put to use, shall not be allowed as deduction. However, if professional tax is paid by the employer on behalf of its employee than it is first included in the salary of the employee as a perquisite and then same amount is allowed as deduction.

Income Tax on Awards & Prizes: Lottery, Game Shows, Puzzle

Fair Market value of shares or securities on the date of exercise of option by the assessee less amount recovered from the employee in respect of such shares shall be the taxable value of perquisites. It is a well-established rule that payment form of remuneration to a coparcener of a Hindu Undivided Family or the Karta by a firm in which the Hindu Undivided Family is a partner, cannot be assessed as the income of the family https://1investing.in/ unless it has a direct nexus with the investment of funds of the family in the firm. Children of “Divorced wife” who loses the status of a legally wedded wife and as such is not entitled to the award of family pension. However, the eligible child/children from a divorced wife will be entitled to the share of family pension which the mother would have received at the time of death of her husband had she not been divorced.

Category of supply of service—Services supplied by a director of a company or a body corporate to the said company or the body corporate. The panel, while recommending status quo in GST rates on 113 goods and 102 services, also made a case for reduction in taxes on Ostomy Appliances to 5 per cent, from 12 per cent. Rules of DTAAs differ from country to country and DTAA with a specific country may have a separate rule regarding taxability of income discussed above.

Expenditure is allowed as deduction in five equal installments in 5 previous years starting with the year in which amalgamation or demerger took place. Revenue expenditure on scientific research pertaining to business of assessee is allowed as deduction . Where consideration for transfer of land or building or both as stock-in-trade is less than the stamp duty value, the value so adopted shall be deemed to be the full value of consideration for the purpose of computing income under this head.

In such case there are different parameters to decide taxability or otherwise of Income in India. For example one may consider the case of a US university professor, Mr. Levin who is a resident of USA and has been engaged by an Indian educational institute for conducting some classes in India for 10 days. One may note that the services provided by Mr. Levin are covered by “Independent Personal services” clause of DTAA. He does not have any fixed base available to him in India for providing his services and he is also not in India for more than 90 days. Accordingly as per Indo US DTAA, his remuneration / honorarium is taxable only in US and not in India.

What are the Salaries Income which is not treated as Income under Salary head?

In case of contract for providing services with duration of not more than 90 days, the profits and gains shall be determined on basis of project completion method. • Any liability which is unilaterally written off by the taxpayer from the books of accounts shall be deemed as remission or cessation of such liability and shall be chargeable to tax. Any duty of Customs or Excise repaid or repayable as drawback to any person against exports under the Customs and Central Excise Duties Drawback Rules, 1971. Reimbursement for the use of vehicle partly for official purposes and partly for personal purposes of the employee.

The parents, brothers, and sisters of the individual or any of them, wholly or mainly dependent on the individual. 10A.Any compensation received by a person in connection with the termination of his employment or modification of terms and conditions relating thereto.11. D) The FIFO method shall be adopted to reckon the period of the holding of the security, in cases where the dates of purchase and sale cannot be correlated through specific number of scrips. 2) If gross receipts exceeds Rs. 50 Lakhs in any previous year, in case of profession. Deductions for provision for bad and doubtful debts created by certain banks, financial institutions and non-banking financial company .

Investment in new assets or capital gains, whichever is lower, however, subject to Rs. 50 lakhs. Stock or shares becomes property of taxpayer on consolidation, conversion, etc. Full value of consideration is the consideration received or receivable by the transferor in lieu of assets, which he has transferred. If it is received in kind, then fair market value (‘FMV’) of such assets shall be taken as full value of consideration. Any transfer of a capital asset by the predecessor co-operative bank to the successor co-operative bank in a business reorganization. 44ADAIncome from eligible profession u/s 44AA can be computed on presumptive basis if the total gross receipts from such profession do not exceed fifty lakh rupees in a previous year.

B) Any securities held by a FII which has invested in such securities in accordance with the regulations made under the SEBI Act, 1992. Rs. 7,500 for every month or part of a month during which the goods carriage is owned by assessee. Rs. 1,000 per ton of gross vehicle weight for every month or part of a month during which the heavy goods vehicle is owned by assessee.

Family pension is chargeable as “Income from other sources”.

Succession could be due to amalgamation or demerger or succession of a firm succeeded by another firm or company, etc. Out of sum computed above, any loss incurred due to vacancy in the house property shall be deducted and the remaining sum so computed shall be deemed to the gross annual value. The reimbursement is for the use of the vehicle partly for official purposes and partly for personal purposes of the employee or any member of his household. Used exclusively for the personal purposes of the employee or any member of his household.

Currently, entities providing services need to register under GST if their aggregate turnover exceeds Rs 20 lakh and Rs 10 lakh . ”However, the threshold exemption limit on aggregate turnover of the service provider would apply. Liability would arise in case threshold exemption limit for services is crossed,” it said adding a clarification may accordingly be issued.

Assessee-institute collected fees/charges from patients and paid same to visiting doctors after deducting a 10 per cent of collection as administrative charges. Assessee-institute is provided infrastructure for visiting doctors to carry out their professional activities in its premises in lieu of commission and whole arrangement was merely a profit-sharing arrangement between parties for fees collected. A medical institute engaged number of visiting doctors as specialists for a limited period of one year only. Visiting doctors had to follow certain terms regarding attendance of medical institut.

Allowance granted to an employee working in any transport business to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place provided employee is not in receipt of daily allowance. B) Existence of relationship of employer and employee is must between the payer and payee to tax the income under this head. Moreover, any amount payable to any whole time director, who is also an employee of the company would be treated as salary. Proprietor and proprietorship firm are not distinguish form each other and no one can earn from himself, and proprietor is not an employee. The gratuity received by an employee is not taxable if it is received on his retirement, his becoming incapacitated prior to such retirement, termination of employment or if such gratuity is received by his widow, children or dependants on his death.

The rate of tax

This means that even if the individual’s income falls in the 20% slab rate, winnings from awards and prizes would still be taxed @31.2%. If the prize or winning is received in kind, the market value of the item received is taken into consideration. In case payment made by a resident to non resident for professional services , which is not treated as ”fees for technical services” and also not covered as independent personal services , shall be considered under Business Profit Article or under residual article . Normally in a DTAA, the clause of IPS applies in respect of a service provider who is an individual (or in some cases firm of individuals-other than a company) and for the services which are in the nature of “professional services or other independent activities of a similar character”. “Professional services” here includes independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. B) Where the consideration for issue of shares is received by company from class or classes of person as notified by the Government.

C) Use of health club, sports and similar facilities provided uniformly to all employees shall be exempt from tax. B) Expenses incurred on club facilities for the official purposes are exempt from tax. However, Section 17 has not been amended, thus the income shall be computed in the year in which shares are allotted but tax shall be paid in subsequent year. 43A.17Any sum paid by employer in respect of any obligation of an employeeFully Taxable44. Exceptions – If a Citizen of India render services outside India, and receives salary from Government of India, it would be taxable as salary deemed to have accrued in India.

The GST department may soon issue a host of clarification on certain vexed issues in tax rates, including exemptions to assisted reproductive technology or in vitro fertilization as well as applicability of GST on payment of honorarium to guest anchors. Thus, if the payment is being made to a non resident individual and services of NR are in the nature of Independent Personal Services, then (subject to compliance with the requirements of DTAA and is honorarium taxable in india of Sec. 90 of the Act) such income is not taxable in India and as such no TDS u/s. It is important to note that in almost all the DTAAs, the above concept of Independent Personal services is applicable only when the service provider is an individual . However, if the Non resident entity is a company, then it is not a case of Independent Personal services but a Fees for Technical Services or Business Income, depending upon the facts of the case.

Any decision regarding taxability or otherwise of income in the hands of NR must be taken after careful study of DTAA with the country of residence of NR payee. This article does not constitute a legal opinion and is written only for generating a basic awareness about the concept of Independent Personal Services. Similar would be the case for a lawyer or an architect engaged in his individual capacity for providing services in India. From any other person or persons to the extent that such sum doesn’t exceed Rs. 10 lakh. “Specified fund” means a fund established or incorporated in India in the form of a trust or a company or a LLP or a body corporate which has been granted a certificate of registration by SEBI as a Category I or Category II Alternative Investment Fund .