Nifty99000 100%

Sensex99000 100%

Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: 5.0
Tags:
Article rating: 4.3
Tags:
Article rating: No rating
Tags:
What's in Store: Does Coronavirus Outbreak bode Ill for markets?
Categories: Exclusive

What's in Store: Does Coronavirus Outbreak bode Ill for markets?

The global supply chain for most products is linked to China, which is the epicenter of the Coronavirus outbreak. This can cause disruption globally with India impacted as well, depending on how long it lasts

Article rating: 4.0
Tags:
A 5-Step Simple Path To Loan Repayment
Categories: Exclusive

A 5-Step Simple Path To Loan Repayment

Today’s generation is all about the so called ‘Swag’ lifestyle, where patience is minimum and hustle-buslte is maximum. This swag lifestyle can make you end up with long credit card bills, heavy interest ridden debt, high EMIs and low or no cash reserves.

Article rating: No rating
Tags:
RBI Pauses On Interest Rate, What’s Next?
Categories: Exclusive

RBI Pauses On Interest Rate, What’s Next?

Central bank is understandably reluctant to cut rates when inflation is breaching its 2-6% mandate, say experts

Article rating: No rating
Tags:
A Few Smart Last-Minute Tax-Saving Investment Options For FY20
Categories: Exclusive

A Few Smart Last-Minute Tax-Saving Investment Options For FY20

Taxpayers should complete all their tax-saving investments well before the financial year deadline to avoid last-minute glitches.

Article rating: 5.0
Tags:
Does New Option Of Lower Tax Slabs Work For You?
Categories: Exclusive

Does New Option Of Lower Tax Slabs Work For You?

Moreover, a tax payer will not be able to claim carry forward, the losses under house property head under the new scheme

Article rating: 5.0
Tags:
Article rating: 4.0
Tags:
Nirmala's big-picture Budget 2020 offers no quick fix for growth
Categories: Exclusive

Nirmala's big-picture Budget 2020 offers no quick fix for growth

Disappointed Markets also reacted negatively on account of non-abolition of LTCG, confusion about DDT removal impact and taxing dividends in hands of recipient

Article rating: 4.5
Tags:
Loans: The Unwanted Guest Costs You More
Categories: Exclusive

Loans: The Unwanted Guest Costs You More

Banks, finance companies always counting on borrowers to make a mistake and pay interest or even late fees

Article rating: 5.0
Tags:
6 Budget Announcements That Impact Your Personal Finance
Categories: Exclusive

6 Budget Announcements That Impact Your Personal Finance

New income-tax rates are optional; dividends to be taxed at your hands; ESOPs get tax relief; timeline to avail loan for affordable housing extended; definition of NRI changed and much more

Article rating: 3.8
Tags:
Article rating: 5.0
Tags:
RSS

News

Miscellaneous Provisions in the Income Tax Act

Author: AN Shanbhag Sandeep Shanbhag/Wednesday, August 15, 2018/Categories: Tax, Expert View

Miscellaneous Provisions in the Income Tax Act

In our previous column, we covered various deductions in the Income Tax Act which you are entitled to. In this new series, we shall turn our attention to three other aspects — miscellaneous provisions, treatment of losses and presumptive tax. We start with the miscellaneous provisions.  

Gameshows / Lottery etc: Sec. 115B

Winnings from race, lottery, card game, crossword puzzle or betting, i.e. gambling in any form is taxed at the maximum marginal rate. Lottery includes schemes under different names, like money circulation scheme, or remittances for the purpose of securing prize money or awards. The scope encompasses any game show, an entertainment programme on TV or electronic mode, in which people compete to win prizes.

No expenditure is allowed except that on owning and maintaining race horses. Even the benefit of the basic threshold is not available. Consequently, if the winnings are Rs 1,00,000, the tax payable would be Rs 31,200, even if there is no other income.

Cash Payments over Rs 10,000: Sec. 40A(3)

Payment in excess of Rs 10,000 apart from a bank related transaction is not allowed as a deduction. To ease operational problems caused to small truck owners or drivers, the limit is higher at Rs 35,000. Moreover, to ease pressure in genuine cases, Rule 6DD lists several situations under which the provisions of this section will not be operative.

CBDT Circular 27/2017 dt. 3.11.17, has clarified that cash sale of the agricultural produce by its cultivator to the trader for less than Rs 2 lakh will not —

(a)     Result in any disallowance of expenditure u/s 40A (3) in the case of trader;

(b)     Attract prohibition u/s 269ST in the case of the cultivator; and

(c)     Require the cultivator to quote his PAN/or Form-60

Threshold for Maintenance of Books of Accounts: Sec. 44AA

Professionals in legal, medical, engineering, architecture, accountancy, technical consultancy and interior decoration have to maintain books of accounts. Sec 44AA casts an obligation on an individual or HUF carrying on business or profession, other than these professions, to maintain books of accounts and documents provided that the income and total sales, turnover or gross receipts, exceeds Rs 2.5 lakh and Rs 25 lakh, respectively.

Compulsory Audit: Sec. 44AB

Individuals and HUFs have to get their accounts audited if their total sales, turnover or gross receipts from their business exceed Rs 2 crore and gross receipts from his profession exceed Rs 50 lakh. Penalty leviable u/s 271B for failure to get accounts audited or to furnish a report of such audit is up to Rs 1.5 lakh.

Sec 271J provides for a penalty on an accountant, merchant banker or registered valuer who furnishes incorrect information in a report or certificate. The amount of penalty is Rs 10,000 for each such inaccurate report or certificate.

MAT and AMT

To prevent a company taking undue advantages of many deductions to bring down its taxable income drastically, the authorities have inserted Sec. 115JB dealing with Minimum Alternate Tax (MAT) for companies.

If the tax liability under normal provisions is lower than the MAT rate of 18.5 per cent of book profit, the book profit shall be deemed to be the total income and charged to tax at the MAT rate. The book profit for MAT is arrived at by disallowance of deductions claimed u/s 35AD, depreciation allowable u/s 32, 34, 34A, deductions claimed under Chapter VIA, Sec. 10AA, etc.

The amount of extra tax paid is credited to the assessee and allowed to be carried forward for up to 15 successive years for set off against tax payable after the company comes out of MAT.

Sec 115JC dealing with Alternate Minimum Tax (AMT) has made parallel provisions for individuals, HUFs, AOPs, BOIs, LLPs (whether incorporated or not) and artificial juridical persons.

Illegal income

The Income Tax Act brings all kinds of incomes into the tax net, even where the assessee has acquired it by unethical or illegal manner. Any deduction on account of expenses incurred in extortion, hafta, bribes, paid for any activity, legal or illegal, is disallowed.

Madhya Pradesh High Court has, in its order dated August 23, 2011 observed that while kidnapping is an offence, paying ransom to save life is definitely not an offence and therefore, it is deductible.

Moreover, a doctor arrested with a heroin worth Rs 5.5 lakh had sought deduction of income on the ground that contraband seized from him forms part of his stock-in-trade and there was a loss on account of confiscation. The Supreme Court in this case observed, “Business losses are allowable on ordinary commercial principles in computing profits. Once it is found that the heroin formed part of the stock-in-trade of the assessee, it follows that the seizure and confiscation of such stock-in-trade has to be allowed as business loss.”

Bad Loans

The Central Board of Direct Taxes (CBDT) has issued circular 12/2016 dated May 30, 2016, stating that the claim for any debt or part thereof shall be admissible u/s 36(1vii) if it is written off as irrecoverable in the books of accounts of the assessee and it fulfils the conditions stipulated in Sec. 36(2).Previously, the assessee had to establish the fact that the loan has indeed become irrecoverable to the satisfaction of the ITO.

The authors, A.N. and Sandeep Shanbhag, are leading financial advisors. Write to them at wonderlandconsultants@yahoo.com

Print Rate this article:
No rating

Number of views (1013)/Comments (0)

AN Shanbhag Sandeep Shanbhag
AN Shanbhag Sandeep Shanbhag

AN Shanbhag Sandeep Shanbhag

Contact author

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free