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Income Tax Services

Income Tax is a direct tax paid by persons under different heads includes Salary, Profit & Gains from Business & Profession, Income from House Property, Capital Gains & Income from Other Sources.

Income Tax comprises of taxation on income earned in a financial year starting from 1 April to 31 March.

The scope of total income of an assess is determined on the basis of residential status. For this purpose, Taxpayers are classified into following 2 categories:

income-tax

For individual, Hindu Undivided Family and Company

For the purpose of assessment each category of status is mutually exclusive. The question of residence is to be determined with reference to each previous year because a particular status in one previous year would not necessarily mean that an assessee must have the same residential status in the next year, e.g. an individual who has been regularly assessed as a resident would have to be treated as a non-resident in a particular year, if he stayed outside India throughout the relevant previous year.

 1. IN RESPECT OF INDIVIDUAL’S

A. RESIDENT

  • The residential status of an individual is to be determined on the basis of period of stay of the taxpayer in India and is computed separately for each year. An individual has to satisfy any of the following condition to be a resident in India for that financial year. The conditions are:
  • Condition 1: He is in India for a period of 182 days or more in that financial year or
  • Condition 2: He is in India for 60 days or more during that financial year and has been in India for 365 days or more during 4 previous years immediately preceding the relevant financial year. Exceptions to Residential Status There are 2 exceptions:
  • In case of an individual, who is a citizen of India and who leaves India in any financial year for the purpose of employment outside India, Condition 2 will not be applicable and only Condition 1 will be applicable.
  • In case of an individual who is a citizen of India or is a person of Indian origin and who being outside India comes on a visit to India in any financial year, Condition 2 will not be applicable and only Condition 1 will be applicable.

B. ORDINARILY RESIDENT

In order to be an ordinarily resident, both the following conditions must be satisfied:

  • He should have been resident in India in 2 out of 10 previous years preceding the previous year in which he is resident; and
  • He should have been in India for a period or periods amounting in all to 730 days (i.e.2 years) or more during the 7 years preceding that previous year.

C. NOT ORDINARILY RESIDENT

An individual is said to be not ordinarily resident in India in any previous year if such individual-

  • Has been a non-resident in India in 2 out of 10 previous years preceding that year; or
  • Has during the 7 previous years preceding that year been in India for a period or periods amounting in all to 729 days or less.

NON-RESIDENT

If none of the above conditions are satisfied, the person is said to be a non-resident.

2. IN RESPECT OF H.U.F., FIRM & ASSOCIATION OF PERSONS

A. RESIDENT

A HUF, firm or AOP is resident in India in any previous year of whole of the control and management of its affairs is situated in India.

B. NOT ORDINARILY RESIDENT

Firm and AOP cannot be ‘not ordinarily resident’. HUF is said to be ‘not ordinarily resident’ in India in any previous year if the manager of such HUF:

  • Has been a non-resident in India in 2 out of 10 previous years preceding that year or,
  • Has during the 7 previous years preceding that year been in India for a period or periods amounting in all to 729 days or less.

C. NON RESIDENT

A HUF, firm or AOP is said to be non-resident only when the control and management of its affairs is situated wholly outside India.

3. IN RESPECT OF COMPANY

A. RESIDENT

A company is said to be resident in India in any previous year, if:

  • It is an Indian Company
  • Its place of effective management, in that year, is in India.

B. NOT ORDINARILY RESIDENT

A company can never be a ‘not ordinarily resident’.

C. NON RESIDENT

A company is said to non-resident if it does not satisfy the condition of resident.

The following types of incomes are taxable in the hands of the different categories of taxpayers:

ParticularsResident and Ordinary ResidentNot Ordinary ResidentNon-Resident
Income received or deemed to be received in India whether earned in India or elsewhereYesYesYes
Income which accrue or arise or is deemed to accrue or arise in India during the previous year whether received in India or elsewhereYesYesYes
Income which accrue or arise outside India and received outside India from a business controlled from IndiaYesYesNo
Income which accrue or arise outside India and received outside India in the previous year from any other sourceYesNoNo
Income which accrues or arises outside India and received outside India during the year preceding the year and remitted to India during the previous yearYesNoNo

RATES OF TAXES(A.y. 16-17 & A.y. 17-18)Following is the tax slab for every assessee:

1. For Individuals(Males and females below age of 60 years), HUF, AOP, BOI

Income SlabRates of Income Tax
1) INCOME less than 250000NIL
2) INCOME above 250000 but less than 50000010% of the amount that exceeds 250000
3) INCOME above 500000 but less than 100000025000 plus 20% of the amount that exceeds 500000
4) INCOME exceeds 1000000125000 plus 30% of the amount that exceeds 1000000

2.  For senior citizens (Males and females age above 60 years but less than 80 years)

Income SlabRates of Income Tax
1) INCOME less than 300000NIL
2) INCOME above 300000 but less than 50000010% of the amount that exceeds 300000
3) INCOME above 500000 but less than 100000020000 plus 20% of the amount that exceeds 500000
4) INCOME exceeds 1000000120000 plus 30% of the amount that exceeds 1000000

Notes:

Relief u/s 87A(for individuals having total income below 5,00,000) is 2,000 for A.Y.16-17 and 5,000 for A.Y.17-18.

3. For senior citizens (Males and females age above 80 years)

Income SlabRates of Income Tax
1) INCOME less than 500000NIL
2) INCOME above 500000 but less than 100000020% of the amount that exceeds 500000
3) INCOME exceeds 1000000100000 plus 30% of the amount that exceeds 1000000

Notes:

Surcharge:

  1. For A.Y.16-17, 12% on Individuals, HUF, AOP, BOI having income exceeding 1 crore.
  2. For A.Y.16-17, 12% on Individuals, HUF, AOP, BOI having income exceeding 1 crore.
  3. Education Cess: 2% of Income Tax
  4. Secondary & Higher Education Cess: 1% of Income Tax
  5. Marginal Relief

For Partnership Firms

Rate of Income TaxSurchargeEducation Cess and SCHEC
30% on whole of the taxable incomeFor A.Y.2016-17 & A.Y.17-18. 12% Surcharge of IT. if total income exceeds 1 crores.2% of income tax and Additional Secondary & Higher Education Cess @ 1% is also levied on all assessees.

For Domestic Company

Type of CompanyA.Y.2016-17A.Y.2017-18
A Domestic Company30%
i. Where the total turnover or Gross receipts. of the company. of the previous year 2014-15 does not exceed 5 crore.29%
ii. All other cases30%

A Foreign Company where income consists of:-

i. Royalties received from Government or Indian concern under an agreement made after 31 March 1961 but before 1 April 1976 or fees for rendering technical services received from Government or an Indian concern under an agreement made after 29 February 1964. But before 1 April 1976 and where such agreement has in other case been approved by the Central Government.50%50%
ii. Where agreement referred above is made between 1.4.1976 to 31.5.1997NILNIL
iii. Where agreement referred above is made after 31.5.1997NILNIL
vi. On the balance if any of the total income40%40%

Notes: Education Cess:- 2% of income tax(including surcharge thereon)             

           Secondary & higher Education Cess: 1% of income tax(including surcharge thereon)

Minimum Alternate Tax

Types of assesseeRates of Tax
Domestic Company18.5%
Foreign Company18.5%

Notes:

Education Cess:-

2% of income tax(including surcharge thereon)Secondary & higher Education Cess: 1% of income tax(including surcharge thereon)

Note:

    For the Assessment Year 2017-18, where the unit of the assessee located in an International Finance Center and its income solely in convertible foreign exchange, the applicable rate of income tax is 9%. (vi)Co-operative Society
Income SlabRates of Income Tax
(1) Where the total income does not exceed 1000010% of the total income
(2) Where the total income exceeds 10000 but does not exceed 200001000 plus 20% of income exceeds 10000
(3) Where the total income exceeds 200003000 plus 30% of income exceeds 30000

Notes:

Education Cess:-

2% of income tax Secondary & higher Education Cess: 1% of income tax  Surcharge: 12% of surcharge of income tax if income exceeds 1 crore.
Income is categorized under five broad heads/classes where the taxable component of income is ascertained as per the rules for particular head/class of income followed by aggregation for determining total taxable income. These include:

1. Salaries –

  • Received against services rendered and include wages, pension, fees, commission and taxable value of perquisites.

2. Income from house properties

  • that comprise income that arises from use of residential/commercial properties. Here, only two prescribed deductions u/s 24 are permitted while computing income.

3. Profits and Gains from Business/Profession

  • that covers income earned from business/profession that is net of permissible deductions, against revenue earned.

Capital Gains that covers gains

  • which arise from transfer of capital assets and the period of holding determining classification of asset, which then determines manner of taxation. The gains comprise short-term assets and long-term capital assets.

Income from Other Sources

  • that are residuary head/class of income covering any income not specifically dealt with under other heads.

Sale of Certain Specified Investments that are subjected to taxation under which tax is levied on value of transaction.

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