CU-BCOM-SEM-V-Income Tax Law And Accounts-Second Draft

from House Property are Rs 1.8 LACS & net income from business head is Rs 4 LACS.  Similarly, it might also possible that net result is total losses during the previous year after considering all the five heads.  Section 70 to Section 80 deals with the treatment of losses under Income Tax Act, 1961. 11.3.1 Compulsory Filing of Loss Returns A loss return is a communication forwarded by a taxpayer to the Income Tax department, informing that there is a loss incurred for a financial year. Typically, the purpose of filing a loss return is to enable the taxpayer to carry forward the loss to future periods. Losses are inevitable while pursuing a business. Loss return filing provides the option to carry forward losses, as well as the option of setting-off against income arising in the future years. Setting off losses means the setting of losses in one head, against gains in another. Loss return can be filed by an assessee who sustained a loss in any previous year under the head “Profits and gains of business or profession”, or under the head “Capital gains”, and claims those losses to be carried forward. Filing of income tax returns is mandatory for a company or firm, but not compulsory in the case of individuals or other taxable entities. However, loss return filing must be submitted before the due date to carry forward the losses. Condo nation of Delay – Loss Return As mentioned above, loss return must be filed before the due date to carry forward the losses. However, in rare cases, delay in filing of loss return can be condoned. In this article, we examine the responsibilities of different personnel with regards to the same, as well as the conditions which determine the rights of the personnel.  The Principal Commissioner of Income-tax/Commissioners of Income-tax has the power to accept/reject a delayed application of claim of loss, provided that the amount of such claims does not exceed rupees 10 LAKHS for any assessment year.  The Principal Chief Commissioners of Income Tax/Chief Commissioners of Income- tax has the power to accept/reject a delayed application of claim of loss, provided that the amount of such claim exceeds 10 LAKHS but isn’t more than 50 LAKHS for any assessment year.  If the claim of exemption exceeds 50LAKHS, the decision to accept/reject delayed application of claim of loss would be vested with the Board.  The delay can be condoned for not more than six years from the end of the assessment year. 201 CU IDOL SELF LEARNING MATERIAL (SLM)

 A condo nation application must be attempted to be disposed of within six months from the end of the month in which the application is received by the competent authority. Conditions for Acceptance/Rejection The power of accepting/rejecting the delay will be subject to the following conditions:  While taking the decision, the concerned officer must ensure the authenticity of the loss declared, and that the case is of genuine hardship on merits.  The concerned officer must empower the jurisdictional assessing officer to make the necessary inquiries or scrutinize the case in accordance with the provisions of the Act, to ascertain the correctness of the claim. Loss Carry Forward – Irrespective of Late Filing The due date for submission of on-time income tax return is mandatory only in case of business loss, speculation loss, capital loss or loss on account of owing and maintaining the horses for the purpose of racing. Loss on account of house property can be carried forward even if the return is submitted late. Further, depreciation not absorbed can be carried forward even if loss return is submitted after the due date. It must also be noted that the set-off of losses of the current year is not prohibited in the late filing of loss return. 11.3.2 Carry Forward and Set Off of Loss from House Property [Section 71b]  Losses under the house property shall be carried forward to 8 Assessment year & can be adjusted against Income under House Property without any monetary Restrictions.  For Example: Losses under the head House Property is Rs 6 LAKHS in AY 2019-20. Income from Capital Gains in AY 2019-20 is Rs 3 LAKHS As per Section 71 Losses of Rs 2 LAKHS can be adjusted against Capital Gains income & Balance losses of Rs 4 LAKHS shall be carried forward to Assessment Year 2020-21.  In Assessment Year 2020-21, it can be adjusted against Income from house property without any monetary restriction of Rs 2 LAKHS  In such a way, Losses shall be adjusted up to AY 2027-28 i.e., from AY 2020-21 to AY 2027-28.  Even he is not the owner of house property in respect of which loss is incurred he can carry forward the losses. 11.3.3 Carry Forward and Set Off of Business Losses other than Speculation Loss (Section 72) Sub section (4) has been inserted with effect from the A.Y. 1999-2000 which states that in case of succession of a business where a firm is succeeded by a company fulfilling the conditions u/s 47 (xiii) or a proprietary concern is succeeded by a company fulfilling the 202 CU IDOL SELF LEARNING MATERIAL (SLM)

conditions u/s 47 (xiv), the accumulated loss and the unabsorbed depreciation of the predecessor firm or proprietary concern as the case may be, shall be deemed to be the loss and unabsorbed depreciation for the successor company for the previous year in which the business reorganization took place. If the specified conditions u/s 47(xiii) and 47(xiv) are not complied with, then brought forward loss and unabsorbed depreciation which has been set off shall be treated as the income of the successor company chargeable to tax in the year in which such conditions are not complied with. One of the conditions for carry forward of the loss of the firm is that the aggregate of the shareholding in the company of the partners of the firm is not less than 50 per cent of the total voting power in the company and their CA R K GAUR M.A.(Eco.), LLM, FCA 10 shareholdings continues to be as such for a period of 5 years from the date of the succession.  Losses from the normal business activities to the extent not set off in Current Year shall be allowed to carried forward upto next 8 Assessment Year.  In the next Assessment year such losses can be adjusted against Income of speculative business, Non-Speculative Business, Specified Business U/s 35AD & Owning & Maintenance Race Horses.  Losses carry forward of Business A can be set off against Income of Business b. there is no such restrictions.  However, Assessee who incurred the losses & assessee who claim the carry forward of losses must be same.  However, there are certain Exceptions of that rule. It means even if the Assessee is not same then also Business Losses shall be allowed to carry forward. Similarly, there are also some exceptions where business losses can be carried forward more than 8 Assessment years.  These exceptions cover only normal business losses i.e., Non-Speculative Business Losses only. Common Exceptions where both Business losses & Unabsorbed Depreciation shall be carried forward beyond 8th Assessment Years even after the Assessee had changed i.e., ownership of the business is changed: 1. The Accumulated Normal Business Losses & Unabsorbed Depreciation of:  The Amalgamating Company (i.e., old company) referred to in Section 72A.  The Amalgamating Banking Companies which include Private Sector Banks as well as Public Sector Banks & merged forcefully with another Banking Company’s referred to in Section 72AA. 203 CU IDOL SELF LEARNING MATERIAL (SLM)

 The Amalgamating General Insurance Companies which include Private as well as Public insurance Companies & merged forcefully by Central Government with another Insurance Company’s referred to in Section 72AA.  The Partnership Firm referred to in Section 47(xiii).  The Private Limited Company as referred to in Section 47(xiiib)  The Proprietorship Business referred to in Section 47(xiv).  Such Accumulated Business Losses & Unabsorbed Depreciation shall be deemed to be the Accumulated Business Losses & Unabsorbed depreciation of.  The Amalgamated Companies (i.e., New Company) as referred to in Section 72A.  The Amalgamated Banking Companies & General Insurance Companies as referred to in Section 72AA.  The Successor Company referred to in Section 47(xiii) & Section 47(xiv).  The successor Limited Liability Partnership Firm referred to in Section 47(xiiib).  & hence, they are allowed to carry forward the normal business losses for fresh period of 8 Assessment year & unabsorbed depreciation indefinitely. 2. There are certain cases also in the Income Tax Act, 1961 where Accumulated Normal Business Losses & unabsorbed Depreciation shall be allowed to be set off even if the ownership had been changed. But it is to be noted that in such a case Period of 8 Years shall not be extended at all. Such cases are:  Demerger of companies where such losses & Depreciation shall be allowed to be carried forward by the Resultant Companies for the Balance Number of Years referred to in Section 72A.  Amalgamation & Demerger of the co-operative banks referred to in Section 72AB where Accumulated Business losses & Unabsorbed Depreciation of the amalgamating &Demerged co-operative Banks are allowed to be carried forward by amalgamated & resultant co-operative bank for the balance number of years. 11.3.4 Carry Forward and Set Off of Speculation Loss (Section 73) But, if a speculation loss could not be set off from the income of another speculation business in the same assessment year, it is allowed to be carried forward to be claimed as a set off in the subsequent year, but only against the income of any speculation business. Such loss is allowed to be carried forward for 4 assessment years immediately succeeding the assessment year for which the loss was first computed. It may be observed that it is not necessary that the same speculation business must continue in the assessment year in which the loss is set off. 204 CU IDOL SELF LEARNING MATERIAL (SLM)

As already discussed, filing of return before the due date is necessary for carry forward of such loss. (Explanation to Section 73): Companies carrying on Business of Buying and Selling Shares This provision is applicable if the following conditions are satisfied  Taxpayer is a company.  It is not a company whose gross total income consists mainly of income which is chargeable under the heads “Interest on securities”, “Income from house property”, “Capital gains” and “Income from other sources”. Alternatively, it is a company whose principal business is other than that of trading in shares or banking or the granting of loans and advances.  The business of the company consists of the purchase and sale of shares of other companies. If the above conditions are satisfied, such company shall be deemed to be carrying on a speculation business to the extent to which the business consists of purchase/sale of such shares. This rule is applicable even if there is no avoidance of tax by the assessee. This Explanation shall not apply to the following companies  Investment companies i.e., a company whose gross total income consists mainly of income chargeable under the heads 'Income from House Property', 'Capital Gains' and 'Income from Other Sources'.  A company whose principal business is of banking or granting of loans/advances.  A company the principal business of which is the business of trading in shares. It may be noted that the above Explanation applies only to a company. It does not apply to an individual, HUF, Firm, AOP, etc. Further, this Explanation only covers transaction of sale and purchase of shares. Debentures, units of Unit Trust of India or units of Mutual Funds are not covered by this Explanation. Thus, Explanation to section 73 is not applicable if  Shares are purchased by the company as investment and not as stock-in-trade; or  A company the principal business of which is the business of trading in shares. Speculative Loss can be Set Off only against Speculative Income (Section 73) Loss in a speculation business can be carried forward to the subsequent year and set off only against the profits of a speculation business carried on in that year. 205 CU IDOL SELF LEARNING MATERIAL (SLM)

Speculative Loss can be carried forward for 4 years. Such loss can be carried forward for 4 assessment years, immediately succeeding the assessment year for which the loss was first computed. Continuity of Business Not necessary for Carry forward and Set Off of Speculation Loss It is not necessary that the speculation business in which the loss was incurred should continue to be carried on in the subsequent year in which the assessee wants to set off the loss but the assessee should be the same. Return of Loss should be Submitted in Time (Section 80) for Carry Forward and Set Off of Speculation Loss The following losses cannot be carried forward unless the return of income (for the year in which the loss is incurred) is submitted within the due date [of submission of return as given in section 139(1)].  Loss of a speculative or non-speculative business (not being unabsorbed depreciation etc.  Short or long-term capital loss; and  Loss (not being unabsorbed depreciation etc., from the activity of owning and maintaining race horses. The delay in submission of return of loss may be condoned if a few conditions are satisfied. CBDT has power under section 119(2) to condone delay in case of a return which is filed late and where a claim for carry forward of losses is made. Other Points towards Carry Forward and Set Off of Speculation Loss  Loss incurred in speculative business in banned items cannot be carried forward to the next year.  Loss in a speculative transaction entered on behalf of principal, is non-speculative loss of agent.  Income from forward transactions entered on behalf of constituents is not income from speculative business carried on by the assessee. 11.3.5 Carry Forward and Set-Off of Loss from Activity of Owning and Maintaining Race Horses (Section 74a)  Losses from the activity of owning & maintenance Race horses can be adjusted only against the Income from Activity of owning & maintenance race horse & not against any nature of income. 206 CU IDOL SELF LEARNING MATERIAL (SLM)

 It can’t be adjusted against normal business income. Losses to the extent not set off shall be carried forward to next 4 Assessment Years & can adjust in that Assessment Year in the same manner. Special Cases of carry Forward of Losses under this chapter  Section 78(1) – where the firm is reconstituted on account of retirement or death of the partner then following losses shall not be allowed to be carried forward by the firm: Share of the retired partner in the Brought Forward Losses – Rsxxxxx Less: Shares of the retired/death partner in the current year – Rsxxxxx Profitsupto the death of retirement  Section 78(2) – where business is succeeded by any other person then he shall not be allowed to carry forward any losses in this chapter. For example: Mr X succeeded the trading of cloth business of Mr Y. He will not allow carrying forward the losses that were incurred by his predecessor. Losses mean losses incurred in any head of income.  However, in case of inherited business successor will allow to carry forward the losses including business losses for the balance number of years.  For Example: Mr M inherited the business of speculation business of his father. Father incurred losses in that business of Rs 16 LACS. Assessee will be allowed to set off such speculation losses of his father against his own speculation Income. It was held by the landmark Judgment of Madhukant M Mehta.  However, in the case of inheritance successor will not allow to carried forward the unabsorbed Depreciation of the predecessor.  Similarly, if a partnership firm is succeeded by the erstwhile partner, then he will not be allowed to carry forward the Losses of the partnership Firm.  Similarly, Losses of the HUF will not be allowed to be carried forward by the Karta after the partition of HUF.  Exception of the succession means cases where successor allowed to carry forward the losses i.e., only Business Losses & Unabsorbed Depreciation is already discussed above in Section 72A/72AA/72AB/47(xiv)/47(xiii)/47  The Losses from the source of Income which is otherwise exempted in the law is not allowed to set off in Income Tax Act, 1961.  Where a business is discontinued in the circumstances referred to in Section 33B of the Act & re-established within the period of 3 years from the end of such previous year then business loss including brought forward losses shall be allowed to carry forward in that Previous year & next 7 Assessment Year after that year. 207 CU IDOL SELF LEARNING MATERIAL (SLM)

 Circumstances referred to in Section 33B include flood, typhoon, cyclone, earthquake, Riots, or civil disturbances etc.  For Example: Business of Assessee is discontinued on 31/01/2012 due to floods. Business Losses of Assessment Year 2013-14 was Rs 5 LACS& Brought Forward Business Losses of AY 2011-12 was Rs 7 LACS. The business is re-established on 25/03/2015. Applying the provision of Section 72, Assessee will allowed losses of Rs 12 LACS in Assessment Year 2016-17. Assessee can adjust the same against the profits of Assessment Year 2016-17. Such loss shall be allowed to carry forward upto Assessment Year 2023-24. 11.3.6 Carry Forward and Set-Off of Capital Loss under the Head ' Capital Gains' (Section 74)  Where the net Result of the head Capital Gains is Losses irrespective of the fact that it represents short-term or Long-Term, it shall always be carried forward to next Assessment Year.  Losses under the head Capital Gains shall allowed carrying forward for a maximum Period of 8 Years. For Example: If losses are belonging to AY 2015-16, then such losses can be carried forward upto AY 2023-24.  In the next Assessment Year if such Losses are Long-Term in nature, then it can adjust only against Long-Term Capital gains of that Assessment Year. For Example: Brought Forward Long-Term Capital Losses of AY 2016-17 can be adjusted only against Long-Term Capital Gains of Current AY 2016-17. But it can’t adjust against Short-Term Capital Gains. To summarise: 1. Brought Forward Long-Term Capital Loss – Can adjust against Current Year LTCG but not against Current Year STCG. 2. Brought Forward Short-Term Capital Loss – Can adjust against both Current Year LTCG & Short-Term Capital Gains. 11.3.7 Carry Forward and Set Off of Loss of a ' Specified Business' Referee in Section 45ad (Section 73a)  On a similar way, Losses from specified business referred to in Section 35AD can be adjusted only against Income from Specified Business in the current year.  If any losses remain, it will be carried forward to next Assessment Year & shall be carried forward to next Assessment Year & so on.  Such Losses will be carried forward indefinitely i.e., Life Time. 208 CU IDOL SELF LEARNING MATERIAL (SLM)

11.4 SUMMARY  This Article covers Income Tax Act Provisions that are related to carry forward and set off losses. All Losses arising from exempted sources of income cannot be adjusted against taxable income. If an income source is exempt, then the loss cannot be set off against any income that is taxable.  Let’s look at an example: Agricultural income is exempted from tax. This means that if the taxpayer suffers loss due to agricultural activity, such loss cannot be applied against any other taxable income. The Income-tax law of India provides some benefits to taxpayers for sustaining losses. This article explains in detail the provisions in the law regarding set-off and carrying forward losses.  The adjustment of losses against income or profit in a particular year is called set off. Losses not set off against income can be carried forward to subsequent years and used against income. You can set off against income in either an intra-head or inter-head way.  The concept of set-off and carry-forward helps us understand that the tax system is flexible. There is sufficient scope of adjustment of losses under this system. As we have seen different heads of income and their provision related to set off and carry forward, we can say that loss should be set off on intra head Basis in the same Assessment Year and if still there is a loss, then only inters head set off is allowed. After completing first two steps only if any loss remains then it will be Carry forward and will set off in next Assessment Year under the same head of income and not different head. But there still exception to it for example Losses in Speculation Business can only be set off against the same head for that Assessment Year. The rule of set-off and carry-forward must be followed in strict accordance with the exemptions and restrictions mentioned in the Income Tax Act, 1961.  If a person has sustained a loss in any previous year under the head \"Profits and gains of business or profession\" or under the head \"Capital Gains\" and claims that such loss or any part thereof should be carried forward under section 72(1) or section 73(2) or 73A(2) or section 74(1) and (3) or section 74A(3) then he may furnish a return of loss within the time prescribed under section 139(1) and all the provisions of this Act shall apply as if it were a return under section 139(1).  It is not mandatory to file a return of loss (except in case of a company or a firm) as there is no taxable income. However, as already discussed under section 80 in the chapter on 'Set off and carry forward of losses', losses under the head business or profession and capital gain cannot be carried forward unless the return of loss is submitted on or before the due date mentioned under section 139(1) and it is duly 209 CU IDOL SELF LEARNING MATERIAL (SLM)

assessed. If the return of loss is not submitted or is submitted after the due date, such losses cannot be carried forward. 11.5 KEYWORDS  Set Off of Losses - Means adjusting the losses against the profit or income of that particular year. Losses that are not set off against income in the same year can be carried forward to the subsequent years for set off against income of those years. A set-off could be an intra-head set-off or an inter-head set-off.  Loss Return - As mentioned above, loss return must be filed before the due date to carry forward the losses. However, in rare cases, delay in filing of loss return can be condoned.  Loss Carry Forward – The due date for submission of on-time income tax return is mandatory only in case of business loss, speculation loss, capital loss or loss on account of owing and maintaining the horses for the purpose of racing.  Long-Term Capital Loss – Can adjust against Current Year LTCG but not against Current Year STCG.  Short-Term Capital Loss – Can adjust against both Current Year LTCG & Short- Term Capital Gains. 11.6 LEARNING ACTIVITY 1. Create a session on Section 70 & 80 of Set off Carry Forward of Losses. ___________________________________________________________________________ ___________________________________________________________________________ 2. Create a survey on Illustration for Better Understanding. ___________________________________________________________________________ ___________________________________________________________________________ 11.7 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What areRestrictions to be kept in mind while making Intra-Head Adjustment of Loss? 2. Define Illustration for Better Understanding? 3. Describe the term Set off Losses? 210 CU IDOL SELF LEARNING MATERIAL (SLM)

4. What is Carry forward of losses? 5. Write the Income tax law? Long Questions 1. Explain the Carry Forward and Set Off of Loss from House Property [Section 71b]. 2. Discuss the objective of Carry Forward and Set Off of Business Losses other than Speculation Loss (Section 72). 3. Illustrate the concept of Carry Forward and Set Off of Speculation Loss (Section 73). 4. Describe the Carry Forward and Set Off of Loss of a ' Specified Business' Referee in Section 45ad (Section 73a). 5. Examine the Section 70 & 80 of Set off Carry Forward of Losses. B. Multiple Choice Questions 1. What is the process of adjustment of loss from a source under a particular head of income against income from other source under the same head of income is called? a. Inter-head adjustment b. Intra-head adjustment c. Carry forward of loss d. Clubbing of income 2. What sets off against while making intra-head adjustment, loss from the business of owning and maintaining race horses? a. Income from winnings from lotteries b. Income from crossword puzzles c. Income from business of owning and maintaining race horses d. Income from card game 3. For how many years an unadjusted loss can be carried forward, if loss under the head “Income from house property” cannot be fully adjusted in the year in which such loss is incurred, immediately succeeding the year in which the loss is incurred.? a. 2 b. 5 c. 8 d. 10 4. How many percentage can a company hold in which public are not substantially interested but not being an eligible start-up as referred to in section 80-IAC, if the 211 CU IDOL SELF LEARNING MATERIAL (SLM)

person beneficially holding of the voting power as on the last day (i.e. 31st March) of the year in which the loss was incurred and on the last day (i.e. 31st March) of the year in which the company wants to set off the brought forward loss are different, then the company cannot set off such brought forward loss? a. 20% b. 25% c. 50% d. 51% 5. Which of the following shall not be regarded as capital asset? a. Jewellery b. Rural Agricultural land c. Archaeological Collections d. Personal residential house Answers 1-b, 2-c, 3-c, 4-d, 5-b 11.8 REFERENCES References Book  Gravelle, Jane G. The Economic Effects of Taxing Capital Income. Ch. 6. Cambridge, Mass., and London: MIT Press, 1994.  U.S. Congress, Joint Committee on Taxation. Proposals and Issues Relating to the Taxation of Capital Gains and Losses (JCS-10-90), March 23, 1990.  U.S. Treasury Department, Office of Tax Analysis. Report to Congress on the Capital Gains Tax Reductions of 1978. Washington, D.C.: U.S. Government Printing Office, 1985. Textbook References  Zodrow, George. “Economic Analyses of Capital Gains Taxation: Realizations, Revenues, Efficiency and Equity.”  Halesowen Presswork & Assemblies Ltd v Westminster Bank Ltd [1970] 3 All ER 473 at 488, per Buckley LJ.  Louise Gullifer, Goode and Gullifer on Legal Problems of Credit and Security, Sweet & Maxwell, 7th ed., 2017. 212 CU IDOL SELF LEARNING MATERIAL (SLM)

Website  http://www.tnkpsc.com/image/setoffandcarryforwardoflosses1.pdf  https://taxguru.in/income-tax/set-carry-losses-income-tax-act-1961.html  https://cleartax.in/s/set-off-carry-forward-losses 213 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 12 – DEDUCTIONS U/S 80 FROM GROSS TOTALINCOME STRUCTURE 12.0 Learning Objectives 12.1 Introduction 12.2 All Deductions under Section 80c to 80u of Income Tax Act 1961 12.3 Summary 12.4 Keywords 12.5 Learning Activity 12.6 Unit End Questions 12.7 References 12.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe the Deductions under Section 80.  Illustrate about Section 80 CCC of the Income Tax Act.  Explain the Section 80 D of the Income Tax offers. 12.1 INTRODUCTION Taxes are part and parcel of adult life. Once you start earning, you must understand your tax liability, how much you must pay, and how much you can save. It sounds a whole lot complicated, but it doesn’t have to be. The government has offered many exemptions under the various sections of the Income Tax Act that you can avail to your advantage. But to do that first, you need to understand what the multiple sections of the Income Tax Act have to offer. One of these is Section 80 of the Income Tax Act, 1961. Deduction under Section 80 includes various options like investments, premiums paid, loan repayment etc. These options can reduce your tax liability considerably if you optimise them. If your annual income makes you liable to pay higher income taxes, then it’s time to consider Section 80. But what exactly are they and how can one make most of a deduction under section 80? Read on to find out. 214 CU IDOL SELF LEARNING MATERIAL (SLM)

12.2 ALL DEDUCTIONS UNDER SECTION 80C TO 80U OF INCOME TAX ACT 1961 Income Tax Deductions under Section 80 C Section 80 C, including Section 80 CCC and 80 CCD, of the Income Tax Act, offer a particular combination of activities that taxpayers can utilise to lower their taxable income. By investing your income in these activities, you can claim a tax deduction of up to Rs. 1.5LAKHS when you file your Income Tax at the end of the financial year. Some of the most prominent investment options to claim Section 80 deductions are listed below.  Tax Saving FDs: By investing in these, you get the dual benefit of tax exemption and high rate of returns. Tax Saving FDs are a perfect investment option for those who want to invest their money in low-risk instruments.  PPF (Public Provident Fund): PPF is a popular option for many investors and taxpayers. Since it is a government established saving scheme with a maximum duration of 15 years, your money is not only securing but also gets a guaranteed return. The interest earned on PPF is tax-free.  ELSS Funds: ELSS or Equity Linked Saving Schemes are another popular means to save on income tax deduction under section 80. By choosing ELSS, you are investing in the type of mutual funds that invest 80% of your money in equity shares. The lock- in period of ELSS funds is 3 years; however, these are great not just from a tax- paying perspective but also from the return’s perspective.  NSC (National Savings Certificates): NSC is yet another option to choose from under Section 80 deductions. These schemes have tenure of 5 years and a fixed rate of interest. The interest you earn on your NSC investment falls under the limit of Rs 1.5 LAKHS deduction limit. If there’s still room for you to claim deductions, you can use this to fill in the gaps and save on your Income Tax.  Life Insurance Premiums: If you have Life Insurance Policies, for yourself, your spouse, or your children towards which you pay regular premiums, you can use tally up this amount to claim tax deductions  Home Loan Repayment: Premiums paid towards the repayment of the principal amount on your home loan is eligible for tax deductions  Payment of tuition fees: If you are paying a certain amount towards the tuition fees for yourself, your spouse, or children, you can claim tax deductions on that sum  EPF (Employee Provident Fund): As per the Employee Provident Fund Act, about 12% of the employee’s salary is contributed towards the Employees Provident Fund investment. The employee’s share of these contributions is eligible for tax deductions. 215 CU IDOL SELF LEARNING MATERIAL (SLM)

 Senior Citizens Savings Scheme: If you invest in SCSS, as investment or you’re your retirement planning, this amount can be claimed as deduction under section 80. Section 80 CCC of the Income Tax Act offers a deduction of contribution to Pension Fund you invest in pension plans offered by public or private sector insurers, the premium you pay towards this fund can be used to claim deduction under section 80 CCC. This falls under the maximum limit of Rs. 1.5LAKHS Section 80 CCD of the Income Tax Act offers a deduction of contribution to Pension plans by the Central Government – Under this scheme, both contributions made by the employer and the individual are eligible for a tax deduction of up to 10% of the individual’s salary. Section 80 CCF of the Income Tax Act allows individuals and Hindu Undivided Families (HUFs) to claim tax deductions on long-term infrastructure bonds issued by the government. You can claim as much as Rs. 20,000 under this section. Section 80 CCG of the Income Tax Act offers tax deductions on investments made in Equity Saving Schemes issued by the government. The maximum amount you can claim under this section is Rs. 25,000. Section 80 D of the Income Tax offers deduction on premium paid for medical insurance – You can claim up to Rs. 25,000 in any financial year. These insurance policies could be for yourself, your spouse, or your children. In case, one of the insured members is 60 years or more, the tax deducted can be claimed up to Rs. 30,000. Additional tax deduction on medical insurance for parents is allowed to the extent of Rs. 25,000. In case, parents are over 60 years or more; you can claim up to Rs. 30,000. The maximum permissible deduction under Section 80D is Rs. 60,000. Section 80D has subdivisions which if applicable to you, can be used to claim deductions. The subdivisions are as follows  Section 80DD isfor tax deductions in two scenarios – If you pay for treatment of dependents with a disability, deduction of Rs. LAKHS 75,000 in other disability cases.  Section 80DDB of the Income Tax Act offers provisions for deductions on expenditures incurred on the treatment of a particular disease. The maximum deduction under this section is Rs. 40,000. In case the treatment is for senior citizens, a deduction can be claimed up to Rs. 60,000. Section 80E of the Income Tax offers deduction on interest paid towards education loan taken for higher studies. So, if you are repaying the education loan taken for yourself, your spouse, or your children’s higher education, then you can claim a tax deduction on the interest amount you’ve paid towards the repayment of this loan. This deduction is valid for 8 years from the time when the loan was taken or until the interest is paid – whichever is 216 CU IDOL SELF LEARNING MATERIAL (SLM)

earlier. If you’ve taken a loan for foreign education, that can be claimed as deduction under Section 80E too. Section 80GG of the Income Tax Act offers deductions on House Rent Paid. If HRA is not a part of your salary, you can claim deduction on house rent paid. However, you, your spouse or your children mustn’t own residential accommodation in the place of employment. The individual claiming the deduction should be the one living on rent and paying the rent. The deduction under this section is capped at Rs. 60,000. Section 80GGA of the Income Tax Act offers deductions on donations towards National Poverty Eradication Fund or as a contribution to further social, scientific or education research. The amount paid towards this contribution can be claimed as a tax deduction Section 80GGB of the Income Tax Act offers tax deductions to Indian Companies who make donations to electoral trusts or political parties. Section 80GGC of the Income Tax Act offers tax deductions to tax-paying individuals who donate or contribute to electoral funds or political parties. Section 80 IA of the Income Tax Act offers tax deductions on the gains received from various industrial activities related to power generation, telecommunication, SEZs, industrial parks etc. There are several subsections under this act that give you more clarity on what kind of tax deductions can be claimed under this section.  Section 80 IAB of the Income Tax Act allows Special Economic Zone (SEZ) developers to claim deductions on the profits generated via the development of SEZs  Section 80 IB of the Income Tax Act offers tax deductions on profits generated from theatres, cold storage plants, ships, convention centres, hotels, scientific research & development, etc.  Section 80 IC of the Income Tax Act offers tax deductions to a resident of states falling under a select category. These states are Manipur, Himachal Pradesh, Tripura, Mizoram, Arunachal Pradesh, Nagaland, Uttarakhand, Assam, and Meghalaya  Section 80 ID of the Income Tax Act offers tax deductions on profits from hotels and convention centres, provided that the location of these businesses is in some specific regions.  Section 80 IE of the Income Tax Act offers tax deductions to all individuals who have projects in North-eastern states in India, subject to several conditions Section 80 JJA of Income Tax Act allows deductions on profits that have been generated from businesses related to processing or treatment on biodegradable waste to produce products like bio-pesticides, bio-fertilisers, biogas, etc. Section 80 JJAA of the Income Tax Act offers deductions on profits generated on the sale of goods and products manufactured in factories. Under this section, companies can claim a 217 CU IDOL SELF LEARNING MATERIAL (SLM)

deduction of up to 30% salary of new full-time employees for an assessment period pf 3 years. A Chartered Accountant must audit these accounts and present a report highlighting all the returns of the company be submitted. Section 80 LA of the Income Tax Act allows Scheduled Banks that have offshore accounts in SEZs, Entities of International Finance Centres, and banks set up in foreign countries to claim tax deductions equal to 100% of the income for the first 5 years and 50% of the income earned by transactions for the next 5 years. Section 80 P of the Income Tax Act offers tax deductions to cooperative societies under certain conditions. If these cooperative societies earn income from cottage industries, fishing, sale of agricultural harvest, production, and sale of milk, etc., then these societies are eligible for tax deductions. It is important to note that all cooperative societies can claim the following tax deductions  Income earned by renting the warehouses owned by the society  Income earned in the form of interest on loans offered to other entities  Income earned in the way of interest on properties or other securities Section 80 QQB of the Income Tax Act allows Indian authors to claim tax deductions on royalties earned on the sale of books. Only Indian authors are eligible to claim this deduction, and the maximum amount that can be claimed is Rs. 3LAKHS. Literary, artistic, or scientific books are exempted from taxes whereas textbooks, journals, diaries, etc., are not considered eligible for tax exemption. Section 80 RRB of the Income Tax Act allows Indian residents to claim tax deductions on income earned via royalty on their patent. They can claim up to Rs. 3 LAKHSas deductions. If you’re receiving a fee on patent from foreign countries, then that amount needs to be brought to the country within a specific time to be eligible for tax deductions. Section 80 TTA of the Income Tax Act allows individuals taxpayers and Hindu Undivided Families (HUFs) to claim deductions of up to Rs. 10,000 every year on the interest earned on their investment in savings bank accounts within the country. Section 80 U of the Income Tax Act allows individual local taxpayers with disabilities to claim tax deductions of up to Rs. 75,000 per year. These individuals will need to have a certificate of Person with Disability issued by a medical authority as proof. In case of severe disabilities, you can claim deductions up to Rs. 1.25 LAKHSsubject to several conditions as set by the government. Summary of Section 80 Deductions 218 CU IDOL SELF LEARNING MATERIAL (SLM)

Section Of Income Maximum Limit Who Can Claim? Tax Act 80 C Individuals & HUFs Rs. 1.5 LAKHS(80C + 80CCC + 80 CCD) 80 CCC Individuals Rs. 1.5 LAKHS(80C + 80CCC + 80 CCD) 80 CCD Individuals Rs. 1.5 LAKHS(80C + 80CCC + 80 CCD) 80 CCF Resident Individuals & HUFs Rs. 20,000 80 CCG Resident Individuals Rs. 25,000 80 D Resident Individuals & HUFs Rs. 20,000 80 DD Rs. 75,000 For General Disability Resident Individuals & HUFs &Rs. 1.25 LAKHSFor Severe Disability 80 DDB Rs. 60,000 For Senior Citizens &Rs. Resident Individuals & HUFs 40,000 For Everyone Else 80 E Individuals No Specific Limit 80 EE Individuals Rs. 3 LAKHS 80 G All Taxpayers The Limit Depends On Donation 80 GG Rs. 2000 Every Month Individuals Who Don’t Get HRA 80 GGA All Taxpayers The Limit Depends On Donation 80 GGB Indian Companies The Limit Depends On Donation 80 GGC All Taxpayers The Limit Depends On Donation 80 IA All Taxpayers No Limit Defined 219 CU IDOL SELF LEARNING MATERIAL (SLM)

80 IAB All Taxpayers No Limit Defined 80 IB All Taxpayers No Limit Defined 80 IC All Taxpayers No Limit Defined 80 ID All Taxpayers No Limit Defined 80 IE All Taxpayers No Limit Defined 80 JJA All Taxpayers All Profits From The First 5 Years 80 JJAA Indian Companies 30% Of Augmented Income 80 LA IFSCs, Scheduled Banks, A Fraction Of Their Income Banks Set Up In Foreign Countries 80 P Cooperative Societies A Fraction Of Their Income 80 QQB Authors Who Are Indian Rs. 3 LAKHS Residents 80 RRB Resident Individuals Rs. 3 LAKHS 80 TTA Individuals & HUFs Rs. 10,000 Per Year 80 U Resident Individuals Rs. 75,000 For People With Disabilities, Rs. 1.25 LAKHSFor People With Severe Disabilities Table 12.1: Summary of Section 80 Deductions 12.3 SUMMARY  With a comprehensive understanding of all the tax deductions available to taxpayers under the Income Tax Act, reducing your taxable income is much easier. The key is to plan and start investing early. Understand the various sections and how they can affect your overall taxable income.  By investing smartly and making the most of the exemptions available to taxpayers, you can ensure that you don’t end up paying more Income Tax than you must. While 220 CU IDOL SELF LEARNING MATERIAL (SLM)

filing for your Income Tax Returns, submit proof for all the above sections that apply to you. All investments, premiums, expenditures, etc.  If eligible, can be used to claim tax deductions. Many of our day-to-day expenses also qualify for tax exemptions. A lot of time, we miss out on claiming deductions on these due to a lack of knowledge. With the above list, you can quickly identify all the avenues where your income is spent, calculate the amount, and whatever fits in the categories mentioned above can be used to claim deductions.  If you are an individual or an HUF, you may claim a deduction of maximum Rs 10,000 against interest income from your savings account with a bank, co-operative society, or post office. Do include the interest from savings bank account in other income.  Section 80TTA deduction is not available on interest income from fixed deposits, recurring deposits, or interest income from corporate bonds.  Adjusted Gross Total Income is arrived at after adjusting the Gross Total Income for certain deductions, exempt income, long-term capital gains and income related to non-residents and foreign companies.  From FY 2016-17 available deductions has been raised to Rs 5,000 a month from Rs 2,000 per month.  A deduction is allowed to an individual for interest on loans taken for pursuing higher education. This loan may have been taken for the taxpayer, spouse, or children or for a student for whom the taxpayer is a legal guardian.  80E deduction is available for a maximum of 8 years (beginning the year in which the interest starts getting repaid) or till the entire interest is repaid, whichever is earlier. There is no restriction on the amount that can be claimed. 12.4 KEYWORDS  PPF (Public Provident Fund) - PPF is a popular option for many investors and taxpayers. Since it is a government established saving scheme with a maximum duration of 15 years, your money is not only securing but also gets a guaranteed return. The interest earned on PPF is tax-free.  ELSS Funds - ELSS or Equity Linked Saving Schemes are another popular means to save on income tax deduction under section 80. By choosing ELSS, you are investing in the type of mutual funds that invest 80% of your money in equity shares. The lock- in period of ELSS funds is 3 years; however, these are great not just from a tax- paying perspective but also from the return’s perspective. 221 CU IDOL SELF LEARNING MATERIAL (SLM)

 NSC (National Savings Certificates) - NSC is yet another option to choose from under Section 80 deductions. These schemes have tenure of 5 years and a fixed rate of interest. The interest you earn on your NSC investment falls under the limit of Rs 1.5 LAKHS deduction limit. If there’s still room for you to claim deductions, you can use this to fill in the gaps and save on your Income Tax.  Life Insurance Premiums - If you have Life Insurance Policies, for yourself, your spouse, or your children towards whom you pay regular premiums, you can use tally up this amount to claim tax deductions.  Home Loan Repayment - Premiums paid towards the repayment of the principal amount on your home loan is eligible for tax deductions. 12.5 LEARNING ACTIVITY 1. Conduct a session on All Deductions under Section 80c of Income Tax Act 1961. ___________________________________________________________________________ ___________________________________________________________________________ 2. Create a survey on All Deductions under Section 80u of Income Tax Act 1961. ___________________________________________________________________________ ___________________________________________________________________________ 12.6 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is Income Tax Deductions under Section 80 C? 2. Define Section 80 CCC of the Income Tax Act? 3. Describe the term Section 80DD? 4. What is Section 80DDB of the Income Tax Act? 5. Write the National Savings Certificates? Long Questions 1. Explain the Section 80 QQB of the Income Tax Act. 2. Discuss the Section 80 CCF of the Income Tax Act. 3. Illustrate the concept of Section 80 D of the Income Tax offers. 4. Describe the All Deductions under Section 80c to 80u of Income Tax Act 1961. 222 CU IDOL SELF LEARNING MATERIAL (SLM)

5. Examine the Section 80E of the Income Tax. B. Multiple Choice Questions 1. Which of the following shall be regarded as capital asset? a. Jewellery b. Sculptures c. Archaeological Collections d. All of these 2. How many kilometres from is outside in rural area from the local limits of the jurisdiction of a municipality or a cantonment board, if the population of municipality or cantonment board is more than 10, 00,000. a. 2 b. 4 c. 6 d. 8 3. Which Section of the Income Tax Act will allow Indian authors to claim tax deductions on royalties earned on the sale of books? a. 80 QQB a. 80 RRB b. 80 TTA c. 80 U 4. Rural area means any area which is outside Kilometres from the local limits of the jurisdiction of a municipality or a cantonment board, if the population of municipality or cantonment board is more than 10,000 but not exceeding 1, 00,000. a. 2 b. 4 c. 6 d. 8 5. Which among the following does capital asset excludes all except one? 223 a. Stock-in-trade b. Personal effects c. Jewellery CU IDOL SELF LEARNING MATERIAL (SLM)

d. Agricultural land in India Answers 1-d, 2-d, 3-c, 4-a, 5-c 12.7 REFERENCES References book  Institute of Chartered Accountants of India (2011).  \"Growth of Income Tax revenue in India\". Retrieved 16 November 2012.  Hultzsch, E. (1925). Inscriptions of Asoka. Oxford: Clarendon Press Textbook References  Jha S M (1990). \"Taxation and Indian Economy\". New Delhi: Deep and Deep Publications.  \"Impact of DTC on India Inc\", The Hindu Business Line, 6 September 2010  \"Black money haul: Rs 65,250 CRORE collected through Income Declaration Scheme\", The Economic Times, 1 October 2016 Website  https://cleartax.in/s/80c-80-deductions  https://cleartax.in/s/80c-80- deductions#:~:text=Section%2080C%20is%20one%20of,from%20the%20taxpayers %20total%20income.  https://cleartax.in/s/donation-under-section-80g-and-80gga 224 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 13 – TAX ON INCOME PART I STRUCTURE 13.0 Learning Objectives 13.1 Introduction 13.2 Calculation of Tax on Income of Individual 13.3 New Scheme of Taxation of Individuals 13.4 Summary 13.5 Keywords 13.6 Learning Activity 13.7 Unit End Questions 13.8 References 13.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe the Calculation of Tax on Income of Individual.  Illustrate about New Scheme of Taxation of Individuals.  Explain the Types of Income Tax payers. 13.1 INTRODUCTION Income tax is a type of tax that the central government charges on the income earned during a financial year by the individuals and businesses. Taxes are sources of revenue for the government. Government utilizes this revenue for developing infrastructure, providing healthcare,education, subsidy to the farmer/ agriculture sector and in other government welfare schemes. Taxes are mainly of two types, directtaxes, and indirect form of taxes. Tax levied directly on the income earned is called as direct tax, for example Income tax is a direct tax. The tax calculation is based on the income slab rates applicable during that financial year. Types of Income Tax payers He Income tax Act has classified the types of taxpayers in categories to apply different tax rates for different types of taxpayers. Taxpayers are categorized as below: 225 CU IDOL SELF LEARNING MATERIAL (SLM)

 Individuals, Hindu Undivided Family (HUF), Association of Persons (AOP) and Body of Individuals (BOI)  Firms  Companies Further, Individuals are broadly classified into residents and non-residents. Resident individuals are liable to pay tax on their global income in India i.e., income earned in India and abroad. Whereas those who qualify as Non-residents need to pay taxes only on income earned or accrued in India. The residential status must be determined separately for tax purposes for every financial year based on the individual tenor of stay in India. Resident Individuals are further classified into below mentioned categories for tax purposes-  Individuals less than 60 years of age  Individuals aged more than 60 but less than 80 years  Individuals aged more than 80 years 13.2 CALCULATION OF TAX ON INCOME OF INDIVIDUAL The Income tax calculator is an easy-to-use online tool that helps you estimate your taxes based on your income after the Union Budget is presented. We have updated our tool in line with the income tax changes proposed in the Union Budget 2021-22. How to use the Income tax calculator for FY 2021-22 (AY 2022-23)? Following are the steps to use the tax calculator:  Choose the financial year for which you want your taxes to be calculated.  Select your age accordingly. Tax liability in India differs based on the age groups.  Click on 'Go to Next Step'  Enter your taxable salary i.e. salary after deducting various exemptions such as HRA, LTA, standard deduction, and so on. (if you want to know your tax liability under the old tax slabs)  Or else, just enter your salary i.e., salary without availing exemptions such as HRA, LTA, standard deduction, professional tax and so on. (if you want to know your tax liability under the new tax slabs)  Along with taxable salary, you must enter other details such as interest income, rental income, interest paid on home loan for rented, and interest paid on loan for self- occupied property.  Click on 'Go to Next Step' again. 226 CU IDOL SELF LEARNING MATERIAL (SLM)

 In case, you want to calculate your taxes under the old tax slabs, you will have to enter your tax saving investments under section 80C, 80D, 80G, 80E and 80TTA.  Click on 'Calculate' to get your tax liability. You will also be able to see a comparison of your pre-budget and post-budget tax liability (old tax slabs and new tax slabs). How to calculate income tax? Income tax calculation for the Salaried Income from salary is the sum of Basic salary + HRA + Special Allowance + Transport Allowance + any other allowance. Some components of your salary are exempt from tax, such as telephone bills reimbursement, leave travel allowance. If you receive HRA and live on rent, you can claim exemption on HRA. Calculate exempt portion of HRA, by using this HRA Calculator. On top of these exemptions, a standard deduction of Rs 40,000 was introduced in budget 2018. This has been increased to Rs 50,000 in budget 2019. In case you opt for the new tax regime, these exemptions will not be available to you. Let's understand income tax calculation under the current tax slabs and new tax slabs (optional) by way of an example. Neha receives a Basic Salary of Rs 1, 00,000 per month. HRA of Rs 50,000. Special Allowance of Rs 21,000 per month. LTA of Rs 20,000 annually. Neha pays a rent of Rs 40,000 and lives in Delhi. Nature Amount Taxable Taxable (Old (New Exemption/Deduction regime) regime) Basic Salary 12,00,000 - 12,00,000 12,00,000 HRA 6,00,000 3,60,000 2,40,000 6,00,000 Special 2,52,000 - 2,52,000 2,52,000 Allowance 227 CU IDOL SELF LEARNING MATERIAL (SLM)

Nature Amount Taxable Taxable (Old (New Exemption/Deduction regime) regime) LTA 20,000 12,000 (bills 8,000 20,000 submitted) Standard - 50,000 50,000 - Deduction Gross Total 16,50,000 20,72,000 Income from Salary Table 13.1: Calculate Income Tax To calculate Income tax, include income from all sources. Include:  Income from Salary (salary paid by your employer)  Income from house property (add any rental income, or include interest paid on home loan)  Income from capital gains (income from sale purchase of shares or house)  Income from business/profession (income from freelancing or a business or profession)  Income from other sources (saving account interest income, fixed deposit interest income, interest income from bonds) Neha has income from interest from savings account of Rs 8,000 and a fixed deposit interest income of Rs12, 000 during the year. Neha has made some investments to save income tax. PPF investment of Rs 50,000, ELSS purchase of Rs 20,000 during theyear. LIC premium of Rs 8,000, Medical insurance paid of Rs 12,000. Here are the deductions Neha can claim under the old tax regime. 228 CU IDOL SELF LEARNING MATERIAL (SLM)

13.3 NEW SCHEME OF TAXATION OF INDIVIDUALS From FY 2020-21, you can choose to pay income tax under an optional new tax regime. The new tax regime is available for individuals and HUFs. ‘Lower tax rates but no deductions/exemptions’ is the key feature. Provisions of the new tax regime are covered under section 115BAC of the Income-tax Act inserted by the Finance Act 2020. Let us discuss more about it in this article. What is primarily covered in this article?  What is the NPTR (New Personal Tax Regime) of taxation for FY 2020-21 and what are the tax rates under new regime?  What are the deductions and Exemptions not eligible under the new regime?  How can I choose between new tax regime and existing provisions? What is the NPTR (New Personal Tax Regime) of taxation for FY 2020-21 and what are the tax rates under new regime? The Budget 2020 introduces a new regime under section 115BAC giving an option to individuals and HUF taxpayers to pay income tax at lower rates. The new system is applicable for income earned from 1 April 2020 (FY 2020-21), which relates to AY 2021-22. The tax rates under the new tax regime and the existing tax regime are: New slab rates Existing slab rates Income from Rs 2. lakh to Rs 5 5% Income from Rs 2.5 lakh to Rs 5 lakh 5% lakh Income from Rs 5 lakh to Rs 7.5 10% Income from Rs 5 lakh to Rs 10 lakh 20% lakh Income from Rs 7.5 lakh to Rs 10 15% Income above Rs 10 lakh 30% lakh Income from Rs 10 lakh to Rs 12.5 20% lakh 229 CU IDOL SELF LEARNING MATERIAL (SLM)

Income from Rs 12.5 lakh to Rs 15 25% lakh Income above Rs 15 lakh 30% Table 13.2: Slab Rates What are the deductions and Exemptions not eligible under the new regime? You cannot claim the following deductions/exemptions/set off under the new tax system:  The standard deduction, professional tax, and entertainment allowance on salaries.  Leave Travel Allowance (LTA)  House Rent Allowance (HRA)  Minor child income allowance  Helper allowance  Children education allowance  Other special allowances [Section 10(14)]  Interest on housing loan on the self-occupied property or vacant property (Section 24)  Business deductions, business expenditures on specified businesses under Income-tax Act.  Tax saving investments under Chapter VI-A deduction (80C,80D, 80E and so on)  Without exemption or deduction for any other perquisites or allowances  Deduction from family pension income  Set off any loss or depreciation carried forward from earlier years in relation to the specified businesses.  Set off loss under Income from House property with any other Income. What can be claimed?  Transport allowance for especiallybaled person.  Conveyance allowance to meet the conveyance expenditure incurred as part of the employment.  Deduction for Notified Pension Scheme under section 80CCD (2)  Deduction for employment of new employees under section 80JJAA 230 CU IDOL SELF LEARNING MATERIAL (SLM)

 Depreciation under section 32 of the Income-tax act except additional depreciation.  Any allowance granted to meet the cost of travel on tour or on transfer.  Any allowance, whether, granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.  Any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit. However, if free conveyance is provided by the employer, the exemption will not be available.  Transport allowance granted to an employee, who is blind or deaf and dumb or orthopedically handicapped with disability of lower extremities, to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty. However, this exemption shall be limited to INR 3,200 per month. How can I choose between new tax regime and existing provisions? An employee can choose the new tax regime at the beginning of FY 2020-21 and intimate their employer. If the Income consists of any income except from Business or profession then, employee can withdraw the option for any year other than the year for which it was exercised, which means you can opt-in and opt-out for every year. If you have opted for a new tax regime at the start of the year, then it cannot be changed anytime during the financial year for the purpose of TDS, however the option can be changed at the time of filing of Income-tax return. If the Income consists of Business or profession and you opted for the new tax regime then, the option to withdraw is available only once, after which you can never be eligible to exercise the option again except when you cease to have income from Business or profession. 13.4 SUMMARY  An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Taxation rates may vary by type or characteristics of the taxpayer and the type of income.  The tax rate may increase as taxable income increases (referred to as graduated or progressive tax rates). The tax imposed on companies is usually known as corporate tax and is commonly levied at a flat rate. Individual income is often taxed at progressive rates where the tax rate applied to each additional unit of income increases (e.g., the first $10000 of income taxed at 0%, the next $10000 taxed at 1%, etc). Most jurisdictions exempt local charitable organizations from tax. Income from investments may be taxed at different (generally lower) rates than other types of 231 CU IDOL SELF LEARNING MATERIAL (SLM)

income. Credits of various sorts may be allowed that reduce tax. Some jurisdictions impose the higher of an income tax or a tax on an alternative base or measure of income.  Taxable income of taxpayer’s resident in the jurisdiction is generally total income less income producing expenses and other deductions. Generally, only net gain from sale of property, including goods held for sale, is included in income. Income of a corporation's shareholders usually includes distributions of profits from the corporation. Deductions typically include all income producing or business expenses including an allowance for recovery of costs of business assets. Many jurisdictions allow notional deductions for individuals and may allow deduction of some personal expenses. Most jurisdictions either do not tax income earned outside the jurisdiction or allow a credit for taxes paid to other jurisdictions on such income. Non-residents are taxed only on certain types of income from sources within the jurisdictions, with few exceptions.  Most jurisdictions require self-assessment of the tax and require payers of some types of income to withhold tax from those payments. Advance payments of tax by taxpayers may be required. Taxpayers not timely paying tax owed are generally subject to significant penalties, which may include jail for individuals or revocation of an entity's legal existence. 13.5 KEYWORDS  Taxable – Generally, an amount included in your income is taxable unless it is specifically exempted by law. Income that is taxable must be reported on your return and is subject to tax. Income that is nottaxable may have to be shown on your tax return but is not taxable.  Jurisdictions – The geographic area over which authority extends; legal authority; the authority to hear and determine causes of action. Jurisdiction generally describes any authority over a certain area or certain persons. In the law, jurisdiction sometimes refers to a particular geographic area containing a defined legal authority.  Taxpayers – A taxpayer may be an individual or business entity that is obligated to pay taxes to a federal, state, or local government. Taxes from both individuals and businesses are a primary source of revenue for governments.  Income Tax – The term income tax refers to a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. By law, taxpayers must file an income tax return annually to determine their tax obligations. 232 CU IDOL SELF LEARNING MATERIAL (SLM)

 Corporate Tax - The tax rate may increase as taxable income increases (referred to as graduated or progressive tax rates). 13.6 LEARNING ACTIVITY 1. Create a session on Income tax calculator for FY 2021-22. ___________________________________________________________________________ ___________________________________________________________________________ 2. Create a survey to calculate Income tax, include income from all sources. ___________________________________________________________________________ ___________________________________________________________________________ 13.7 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What are types of Income Tax payers? 2. Define Income Tax? 3. Describe the term Taxation? 4. What is calculation of tax on income? 5. Write about tax on income? Long Questions 1. Explain the Income tax calculator for FY 2021-22 (AY 2022-23). 2. Discuss the objective of NPTR (New Personal Tax Regime) of taxation for FY 2020- 21. 3. Illustrate the concept of Calculation of Tax on Income of Individual. 4. Describe the New Scheme of Taxation of Individuals. 5. Examine the deductions and Exemptions not eligible under the new regime. B. Multiple Choice Questions 1. When was Income Tax Act passed? a. 1934 b. 1956 c. 1961 d. 1972 233 CU IDOL SELF LEARNING MATERIAL (SLM)

2. When did Income Tax Act came into force? a. 1st April 1935 b. 1st April 1961 c. 1st April 1962 d. 1st April 1956 3. What is Income tax? a. Professional tax b. Direct tax c. Indirect tax d. Service tax 4. Identify on which the Income tax rates are fixed? a. Income tax Act b. Finance Act c. Income tax rules d. Finance rules 5. How many heads are there under income? a. 3 b. 4 c. 5 d. 2 Answers 1-c, 2-d, 3-a, 4-b, 5-a 13.8 REFERENCES References Book  Peter Harris (2006). Income tax in common law jurisdictions: from the origins to 1820, Volume 1  UK Retail Price Index inflation figures are based on data from Clark, Gregory (2017). 234 CU IDOL SELF LEARNING MATERIAL (SLM)

 HM Revenue & Customs. Archived from the original on July 24, 2010. Retrieved 2007-01-24. Textbook References  Steven A. Bank (2011). Anglo-American Corporate Taxation: Tracing the Common Roots of Divergent Approaches.  Revenue Act of 1861, sec. 49, ch. 45, 12 Stat. 292, 309 (Aug. 5, 1861).  Sections 49, 51, and part of 50 repealed by Revenue Act of 1862, sec. 89, ch. 119, 12 Stat. 432, 473 (July 1, 1862). Website  https://taxguru.in/income-tax/new-tax-regime-individuals-features-benefits- conditions.html  https://www.investopedia.com/terms/i/incometax.asp  https://www.britannica.com/topic/income-tax/The-meaning-of-income 235 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 14 – TAX ON INCOME II STRUCTURE 14.0 Learning Objectives 14.1 Introduction 14.2 Calculation of Tax on Income of HUF and Senior Citizens 14.2.1 Taxability of HUF 14.2.2 Deduction from Gross Total Income 14.2.3 Rate of Tax 14.2.4 Partition of Huf 14.3 New Scheme of Taxation of Individuals 14.4 Summary 14.5 Keywords 14.6 Learning Activity 14.7 Unit End Questions 14.8 References 14.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe the Calculation of Tax on Income of HUF and Senior Citizens.  Illustrate about New Scheme of Taxation of Individuals.  Explain the Partition of HUF. 14.1 INTRODUCTION Income tax is a tax charged on the annual income earned by an individual. The amount of tax paid will depend on how much money you earn as income over a financial year. One can proceed with Income tax payment, TDS/TCS payment, and Non-TDS/TCS payments online. All taxpayers must fill in the relevant details to make these payments. The entire process becomes simple and quick. Income tax for FY 2020-21 applies to all residents whose annual income exceeds Rs.2.5 lakh p.a. The highest amount of tax an individual could pay is 30% of their income plus cess at 4% if their income is more than Rs.10LAKHS p.a. 236 CU IDOL SELF LEARNING MATERIAL (SLM)

Who should pay Income Tax? It is mandatory to file ITR for individuals If the gross total income is over Rs.2, 50,000 in a financial year. This limit exceeds Rs.3, 00,000 for senior citizens and Rs.5, 00,000 for super senior citizens. The entities listed below are required to pay tax and file their income tax returns.  Artificial Judicial Persons  Corporate firms  Association of Persons (AOPs)  Hindu Undivided Families (HUFs)  Companies  Local Authorities  Body of Individuals (BOIs) Taxpayers and Income Tax Slab Rates In the Union Budget 2020, the Finance Minister of India has announced a new income tax slab. However, the new income tax regime is optional, and individuals can either opt for the new regime or file their taxes as per the old regime. 14.2 CALCULATION OF TAX ON INCOME OF HUF AND SENIOR CITIZENS An individual resident who is 60 years or above in age but less than 80 years at any time during the previous year is considered as Senior Citizen for Income Tax purposes. A Super Senior Citizen is an individual resident who is 80 years or above, at any time during the previous year.  Senior Citizen should be of age 75 years or above.  Senior Citizen should be ‘Resident’ in the previous year.  Senior Citizen has pension income and interest income only & interest income accrued / earned from the same specified bank in which he is receiving his pension. 14.2.1 Taxability of Huf Since the account is equivalent to an individual’s account there are various tax benefits and a few of them are mentioned below. 237 CU IDOL SELF LEARNING MATERIAL (SLM)

 According to IT act, tax rebates and deductions can be availed under sections 80C for HUF account.  Gifts collected up to a worth of Rs 50,000 will be tax free. A father who owns a HUF account can gift a property or money of higher worth to a son who owns a smaller HUF account; but he should specify that the gift is for the son’s HUF and not to him as an individual. Under section 64(2) and 56(2) tax benefits can be enjoyed in such instance.  Corpus can be used for investment in tax free money instruments. Disadvantages of HUF account  There can be a strong sense of insecurity among members that can keep the corpus of the account empty and if corpus is empty the account is non-functional.  If any of the members of HUF is willing for a partition, then the process of partition in deposit in HUF account can turn to be tedious. Likewise, although salaried individuals cannot divert their salary into the HUF, they can benefit if they plan to earn additional income, which they can claim in the name of a HUF, thereby reducing his taxable income. For instance, if an individual has a salary income of Rs 12LAKHS and is earning additional business income of Rs 6 lakhs. Now, if he creates an HUF and does business in the name of a HUF, then this total income will be taxable under HUF and he could reduce his tax liability after availing benefits under various sections which would otherwise not be allowed, had he earned it in his own name. Ways to reduce tax outgo with an HUF Rental Income from property: Rental income from a property could be received on behalf of a HUF instead of an individual account. Business Income: Profits generated out of the family business, in the name of a HUF, shall be taxed accordingly and exemptions will give more leverage on tax saving. Remuneration to Karta and members: Remuneration to Karta and other family members is an allowable deduction from income of an HUF. Loan to HUF members: If the business, capital, or investment of the HUF is expanding, then such expansion can be done in the individual names of the members of HUF by giving loans to the members from the HUF. The HUF may or may not charge interest on the loans given. Family Settlement or Arrangement: The sole purpose of the family settlement should be to settle existing or future disputes regarding property, amongst the members of the family. Since this arrangement does not involve transfer, it would not attract gift tax, capital gains tax or clubbing. In a family arrangement, tax incidence is considerably reduced, or it may even become nil. 238 CU IDOL SELF LEARNING MATERIAL (SLM)

14.2.2 Deduction from Gross Total Income Sections 80C to 80U of the Income Tax Act specifies the deductions to be made from the gross total income of assesses Gross total Income means the total income, under all the five heads of Income i.e.  Salary Income  Income from House Property  Profit and gain of Business or Profession Income  Capital Gains and Income from Other Sources The gross total income is to be arrived at before allowing any deduction under Chapter VI A and after setting of unabsorbed losses, depreciations, etc of the earlier years. While deductions u/s 80C to 80GGC are in respect of certain payments made by the assessee, while the deductions u/s 80IA to 80RRB & 80TTA are in respect of certain incomes. It may be noted that the aggregate amount of the deductions under chapter VI-A should not, in any case exceed the gross total income. Deductions in respect of certain payments: Section 80C Sections 80C (1) provides that the assesses being an individual or a HUF, will be allowed a deduction from gross total income of an amount not exceeding RS.1,50,000, in respected of amount paid or deposited in the previous year. Section 80C(2) provides that following sum paid or deposited by an individual or HUF, at any time during the previous year, qualifies for deductions u/s80C (1)  Life Insurance Premium Paid iii. Life Insurance Premium paid by an individual on his/her life or on life of his /her spouse or on life of any child (including adult child and a married daughter. Vide circular no 574 dated 22.08.1990 185ITR (St.) 31) of such individual; and iv. by a Hindu undivided Family, on life of any member of the family Please remember that amount of any premium on an insurance policy issued on or before 31.03.2012, eligible for deduction is limited to 20% 0f the actual capital sum assured, i.e., premium paid more than 20% will not qualify for the deduction. Likewise, policy issued on or after 1st April 2012 eligible amount of deduction will be 10% of the capital sum assured. Illustration: Mr. A has taken an insurance policy of Rs. 10,00,000 10 years and paid premium of Rs. 1,20,000 every year will get deduction of Rs. 1,00,000 only being 10% of 239 CU IDOL SELF LEARNING MATERIAL (SLM)

 Payment for deferred annuity. Payment made by and individual, on her life or on life of his/her spouse or life of any child including adult children and a married daughter, of such individual, under contract for a deferred annuity.  Contribution made by an individual to any provident fund to which the Provident Fund Act, 1925 applies,  Contribution to Public Provident Fund Scheme,1968 in an account standing in the name of individual, the wife or husband and any child of such individual.  Contribution made by an employee to a recognized provident fund,  Contribution by an employee to an approved superannuation fund.  Subscription to any such security of Central Government or any such deposit scheme as may be notified.  Subscription to any such saving certificate of the Government Saving Certificate Act 1959 as may be notified.  Contribution made, in the name of any person mentioned below, for participation in the Unit-Linked Insurance Plan 1971 i. In the case of an individual, the wife or husband and any child of such individual ii. In the case of an HUF, any member there of  Contribution made in the name of any person mentioned below for participation in the Unit Linked Insurance Plan of the L.I.C. Mutual Fund  Payment made to effect or to keep in force a notified deferred annuity plan of LIC  Any other insurer i.e. Annuity Plan of ICICI Prudential Life insurance Co, Plan of Tata AIG Ltd., and approved Tata AIG Retire Annuity Plan,  Subscription to any units of Mutual Fund,  Contribution by an individual to notified Pension Fund set up by any mutual fund, Reliance Retirement Fund, HDFC Retirement Saving Fund,  Subscription to notified Deposit scheme of the National Housing Bank i.e., Home loan account scheme, a contribution to notified pension fund set up by the National Housing Bank,  Payment for the purpose of purchase or construction of residential house property, This will include any instalment or part payment of the amount due under any self financing or other scheme of any development authority / housing board/ other similar authority or to any assesses from 240 CU IDOL SELF LEARNING MATERIAL (SLM)

i. Central/ State Government or ii. Any bank including a co-operative bank iii. Life Insurance Corporation of India, iv. National Housing Bank v. Any public limited company or co-operative society engaged in the business of financing the construction of houses vi. The assessee’s employer  Subscription to equity shares or debentures forming part of any eligible issue of capital approved by the board on an application made by such public company  Subscription to any units of any mutual fund referred to in Section 10(23D) and approved by the board  Any sum deposited in accordance with notified scheme of term deposit for a fixed period of not less than 5 years with a schedule bank  Deposit in an account under the Senior Citizens Savings Scheme Rules 2004  Deposit as 5-year time deposit in an account under the Post Office Time Deposit Rules 1981. 14.2.3 Rate of Tax A tax rate is the percentage at which an individual or corporation is taxed. The United States (both the federal government and many of the states) uses a progressive tax rate system, in which the percentage of tax charged increases as the amount of the person's or entity's taxable income increases. A progressive tax rate results in a higher dollar amount collected from taxpayers with greater incomes. To help build and maintain the infrastructures used in a country, the government usually taxes its residents. The tax collected is used for the betterment of the nation, of society, and of all living in it. In the U.S. and many other countries around the world, a tax rate is applied to some form of money received by a taxpayer. The money could be income earned from wages or salary, investment income (dividends, interest), capital gains from investments, profits made from goods or services rendered, etc. The percentage of the taxpayer’s earnings or money is taken and remitted to the government. When it comes to income tax, the tax rate is the percentage of an individual's taxable income or a corporation's earnings that is owed to state, federal, and, in some cases, municipal governments. In certain municipalities, city or regional income taxes are also imposed. The tax rate that is applied to an individual’s earnings depends on the marginal tax bracket that the individual falls under. The marginal tax rate is the percentage taken from the next dollar of taxable income above a pre-defined income limit.1 241 CU IDOL SELF LEARNING MATERIAL (SLM)

The marginal tax rate used by the U.S. government is indicative of its progressive tax system. 14.2.4 Partition of Huf Hindu Undivided Family was a popular way for many families to save tax. The income-tax department treats HUF as a separate assessee. Therefore, it can get all tax deductions available to individuals, and its returns can be filed separately. To be clear, an HUF means a Hindu family, and it comes into existence automatically – it’s not formed through a legal process. There is an option to file returns for HUF. To do this, the family needs to apply for a PAN (permanent account number) with the income tax department. Many families are moving away from using HUF to save tax as the structure is not as attractive as it was some years back. If you were filing income-tax returns for an HUF separately and want to stop it, the process is not as straightforward. An HUF comprises of a ‘KARTA’, who, typically, is the eldest male in the family. The sons, daughters and grandchildren are coparceners who have an equal right to the property. An HUF can only be dissolved after the partition of the property. For this, the family must execute a deed of partition and distribute properties amongst all the family members must be part of the deed. The deed should spell out all the properties that are part of the HUF, which family members are dividing among themselves. The division of assets must be in line with the provisions of the Hindu Succession Act. The Income-tax Act does not recognise partial partition dissolution of HUF. Partition means ‘full partition; For dissolution of the HUF, a family needs to draw up a deed of full partition and get it registered with the signatures of all members. Once the partition of HUF is complete, it will cease to exist. 14.3 NEW SCHEME OF TAXATION OF INDIVIDUALS From FY 2020-21, you can choose to pay income tax under an optional new tax regime. The new tax regime is available for individuals and HUFs. ‘Lower tax rates but no deductions/exemptions’ is the key feature. Provisions of the new tax regime are covered under section 115BAC of the Income-tax Act inserted by the Finance Act 2020. Let us discuss more about it in this article. What is primarily covered in this article?  What is the NPTR (New Personal Tax Regime) of taxation for FY 2020-21 and what are the tax rates under new regime?  What are the deductions and Exemptions not eligible under the new regime?  How can I choose between new tax regime and existing provisions? 242 CU IDOL SELF LEARNING MATERIAL (SLM)

What is the NPTR (New Personal Tax Regime) of taxation for FY 2020-21 and what are the tax rates under new regime? The Budget 2020 introduces a new regime under section 115BAC giving an option to individuals and HUF taxpayers to pay income tax at lower rates. The new system is applicable for income earned from 1 April 2020 (FY 2020-21), which relates to AY 2021-22. The tax rates under the new tax regime and the existing tax regime are: New slab rates Existing slab rates Income from Rs 2.5 lakh to Rs 5 5% Income from Rs 2.5 lakh to Rs 5 lakh 5% lakh Income from Rs 5 lakh to Rs 7.5 10% Income from Rs 5 lakh to Rs 10 lakh 20% lakh Income from Rs 7.5 lakh to Rs 10 15% Income above Rs 10 lakh 30% lakh Income from Rs 10 lakh to Rs 12.5 20% lakh Income from Rs 12.5 lakh to Rs 15 25% lakh Income above Rs 15 lakh 30% Table 14.1: Slab Rates What are the deductions and Exemptions not eligible under the new regime? You cannot claim the following deductions/exemptions/set off under the new tax system:  The standard deduction, professional tax, and entertainment allowance on salaries.  Leave Travel Allowance (LTA)  House Rent Allowance (HRA) 243 CU IDOL SELF LEARNING MATERIAL (SLM)

 Minor child income allowance  Helper allowance  Children education allowance  Other special allowances [Section 10(14)]  Interest on housing loan on the self-occupied property or vacant property (Section 24)  Business deductions, business expenditures on specified businesses under Income-tax Act.  Tax saving investments under Chapter VI-A deduction (80C,80D, 80E and so on)  Without exemption or deduction for any other perquisites or allowances  Deduction from family pension income  Set off any loss or depreciation carried forward from earlier years in relation to the specified businesses.  Set off loss under Income from House property with any other Income. What can be claimed?  Transport allowance for especially abled person.  Conveyance allowance to meet the conveyance expenditure incurred as part of the employment.  Deduction for Notified Pension Scheme under section 80CCD (2)  Deduction for employment of new employees under section 80JJAA  Depreciation under section 32 of the Income-tax act except additional depreciation.  Any allowance granted to meet the cost of travel on tour or on transfer.  Any allowance, whether, granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.  Any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit. However, if free conveyance is provided by the employer, the exemption will not be available.  Transport allowance granted to an employee, who is blind or deaf and dumb or orthopedically handicapped with disability of lower extremities, to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty. However, this exemption shall be limited to INR 3,200 per month. 244 CU IDOL SELF LEARNING MATERIAL (SLM)

Source for Point No. 6 to 9- New Exemptions for taxpayers opting to be governed by New Tax Regime How can I choose between new tax regime and existing provisions? An employee can choose the new tax regime at the beginning of FY 2020-21 and intimate their employer. If the Income consists of any income except from Business or profession then, employee can withdraw the option for any year other than the year for which it was exercised, which means you can opt-in and opt-out for every year. If you have opted for a new tax regime at the start of the year, then it cannot be changed anytime during the financial year for the purpose of TDS, however the option can be changed at the time of filing of Income-tax return. If the Income consists of Business or profession and you opted for the new tax regime then, the option to withdraw is available only once, after which you can never be eligible to exercise the option again except when you cease to have income from Business or profession. 14.4 SUMMARY  The objective of this Standard is to prescribe accounting treatment for taxes on income. Taxes on income are one of the significant items in the statement of profit and loss of an enterprise. In accordance with the matching concept, taxes on income are accrued in the same period as the revenue and expenses to which they relate.  Matching of such taxes against revenue for a period poses special problems arising from the fact that in several cases, taxable income may be significantly different from the accounting income. This divergence between taxable income and accounting income arises due to two main reasons.  Firstly, there are differences between items of revenue and expenses as appearing in the statement of profit and loss and the items which are considered as revenue, expenses, or deductions for tax purposes. Secondly, there are differences between the amount in respect of a particular item of revenue or expense as recognised in the statement of profit and loss.  Taxable income is calculated in accordance with tax laws. In some circumstances, the requirements of these laws to compute taxable income differ from the accounting policies applied to determine accounting income. The effect of this difference is that the taxable income and accounting income may not be the same.  The differences between taxable income and accounting income can be classified into permanent differences and timing differences. Permanent differences are those differences between taxable income and accounting income which originate in one 245 CU IDOL SELF LEARNING MATERIAL (SLM)

period and do not reverse subsequently. For instance, if for the purpose of computing taxable income, the tax laws allow only a part of an item of expenditure, the disallowed amount would result in a permanent difference.  Timing differences are those differences between taxable income and accounting income for a period that originate in one period and are capable of reversal in one or more subsequent periods. Timing differences arise because the period in which some items of revenue and expenses are included in taxable income do not coincide with the period in which such items of revenue and expenses are included or considered in arriving at accounting income.  For example, machinery purchased for scientific research related to business is fully allowed as deduction in the first year for tax purposes whereas the same would be charged to the statement of profit and loss as depreciation over its useful life. The total depreciation charged on the machinery for accounting purposes and the amount allowed as deduction for tax purposes will ultimately be the same, but periods over which the depreciation is charged, and the deduction is allowed will differ.  Another example of timing difference is a situation where, for the purpose of computing taxable income, tax laws allow depreciation based on the written down value method, whereas for accounting purposes, straight line method is used. Some other examples of timing differences arising under the Indian tax laws are given in Illustration I 14.5 KEYWORDS  HUF - Hindu Undivided Family (HUF) was a popular way for many families to save tax.  Tax – A compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.  Corporate Firms- Corporation is a legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that individuals possess they can enter contracts, loan, and borrow money, sue, and be sued, hire employees, own assets, and pay taxes. Some refer to it as a \"legal person.\"  Annuity – A form of insurance or investment entitling the investor to a series of annual sums.  Accounting - Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analysing, and reporting these transactions to oversight agencies, regulators, and tax collection entities. 246 CU IDOL SELF LEARNING MATERIAL (SLM)

14.6 LEARNING ACTIVITY 1. Create a session on Calculation of Tax on Income of HUF and Senior Citizens. ___________________________________________________________________________ ___________________________________________________________________________ 2. Create a survey on New Scheme of Taxation of Individuals. ___________________________________________________________________________ ___________________________________________________________________________ 14.7 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is Taxability of HUF? 2. Define tax of income? 3. Describe the term Rate of Tax? 4. What is Deduction from Gross Total Income? 5. Write the Partition of HUF? Long Questions 1. Explain the New Scheme of Taxation of Individuals. 2. Discuss the ways to reduce tax outgo with an HUF. 3. Illustrate the Calculation of Tax on Income of HUF and Senior Citizens. 4. Describe the Section 80C. 5. Difference between new tax regime and existing provisions. B. Multiple Choice Questions 1. What is a person with the age, or more is considered as a super senior citizen as per Income tax Act? a. 56 b. 60 c. 80 d. 85 2. What is the minimum exceptional limit of income is? 247 CU IDOL SELF LEARNING MATERIAL (SLM)

a. 250,000 b. 200,000 c. 300,000 d. 500,000 3. What as per section the rebate of Income tax is defined? a. 81A b. 87A c. 81C d. 87C 4. What does Section 2(9) of Income tax deals with? a. Person b. Assessee c. Previous Year d. Assessment Year 5. When is the Assessment year is the period of 12 months commencing from every year.? a. 1st March b. 31st March c. 1st April d. 30th April Answers 1-c, 2-d, 3-a, 4-b, 5-a 14.8 REFERENCES References Book  Dunbar, Charles F. (1894). \"The New Income Tax\". The Quarterly Journal of Economics.  Young, Adam (2004-09-07). \"The Origin of the Income Tax\". Ludwig von Mises Institute. Retrieved 2007-01-24  Bernasek, Anna (February 13, 2010). \"Should Tax Bills Be Public Information?\". The New York Times. Retrieved 2010-03-07. 248 CU IDOL SELF LEARNING MATERIAL (SLM)

Textbooks References  Chun, Rene (2019-03-10). \"Why Americans Don't Cheat on Their Taxes\". The Atlantic. Retrieved 2019-03-10.  International tax - France Highlights 2012 Archived October 25, 2012, at the Way back Machine, Deloitte.  International tax - Singapore Highlights 2012 Archived June 3, 2013, at the Way back Machine, Deloitte. Websites  https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx  https://www.accountingtools.com/articles/2017/5/11/income-tax  https://www.oecd.org/ctp/glossaryoftaxterms.htm 249 CU IDOL SELF LEARNING MATERIAL (SLM)