AS 11 (revised) deals with such a situation. It states that in respect of accounting for transactions in foreign currencies entered into by an enterprise itself or through its branches before 31^st March 2004, AS 11 (1994) will continue to be applicable. Meaning thereby, the accounting treatment hitherto followed by an enterprise in capitalizing exchange differences arising on repayment of liabilities incurred for the purpose of acquiring Fixed assets, to respective fixed assets, will continue even after 01^st April 2004 in respect of loans transacted prior to 31^st March 2004.

One can identify two noticeable differences between the old AS 11 (1994) and the new AS 11 (2003). The earlier Accounting Standard stated that exchange differences arising on repayment of liabilities incurred for the purpose of acquiring fixed assets, which are carried at historical cost, should be adjusted in the carrying amount of the respective fixed assets.

Whereas the new AS 11, now requires, Exchange difference arising on the settlement of monetary items (which shall also include loan liabilities incurred in foreign currency) or on reporting an enterprise’s monetary items at rates different from those at which they were initially recorded during the period or reported in previous financial statements, should be recognized as income or as expense in the period in which they arise. Thus, whereas the earlier Accounting standard stipulated capitalization of such exchange differences, the new Accounting Standard stipulates such exchange difference to be recognized in profit and loss statement.

The second glaring difference is that the old accounting standard recognized only foreign branches and further stated that net exchange difference resulting from the translation of items in the financial statements of a foreign branch should be recognized as income or as expense for the period.

​​​​​​​Whereas the new Accounting Standard revised in 2003 has further classified foreign operations in two parts viz integrated foreign operation and non-integrated foreign operation. The net exchange difference resulting from the translation of financial statements of a integral foreign operation should be recognized as income or expense for the period. Whereas all resulting exchange differences arising from translating the financial statements of a non-integral foreign operation should be accumulated in a foreign currency translation reserve until the disposal of net investment.

Monetary items:

Monetary items are money held and assets and liabilities to be received or paid in fixed or determinable amounts of money. Cash, receivables and payables are examples of monetary items.

Non-monetary items:

Non-monetary items are assets and liabilities other than monetary items. Fixed assets, Inventories and investments in equity shares are examples of non-monetary items.

This Statement should be applied:

1. In accounting for transactions in foreign currencies.
2. In translating the financial statements of foreign operations.
3. This Statement also deals with accounting for foreign currency transactions in the nature of forward exchange contracts.

As per the notification, if the option is exercised, the fact of exercise of such option and of the amount remaining to be amortised in the financial statements of the period in which such option is exercised and in every subsequent period so long as any exchange difference remains unamortised should be disclosed. The option once exercised is irrevocable.

The company has a discretion not to adopt the treatment as per the notification and can follow the principles stated in AS 11. A decision with regard to the exercise of the option will have to be taken in first financial statements approved on or after the date the notification comes into force, i.e. March 31, 2009.

However, in case a company did not have any long term foreign currency monetary items, in such accounting period (being a period commencing on or after 7th December 2006) but such liability is incurred say in a subsequent accounting period, i.e., the accounting period ending on 31st March 2010, it may be possible for such a company to exercise the option in such subsequent year ending on 31st March 2010.

The following have been generally accepted as fundamental accounting Assumptions:—

a. Going Concern

The enterprise is normally viewed as a going concern, that is, as continuing in operation for the foreseeable future. It is assumed that the enterprise has neither the intention nor the necessity of liquidation or of curtailing materially the scale of the operations.

b. Consistency

It is assumed that accounting policies are consistent from one period to another.

c. Accrual

Revenues and costs are accrued, that is, recognised as they are earned or incurred (and not as money is received or paid) and recorded in the financial statements of the periods to which they relate. (The considerations affecting the process of matching costs with revenues under the accrual assumption are not dealt with in this Standard)​​​​​​​

The Employer and Employee contribution to PF is as per the provisions of Provident Fund Act to the extent of 2% - 12%. Section 2(24)(x) of the Act states that the amount received by the employer by way of Employee contribution to PF would be first treated as income of the Employer and thereafter allowed as deduction U/s 36(1)(va) of the Act on actual payment basis.

Employee Contribution to PF: As per the newly inserted explanation 5 to section 43B of the Income Tax Act w.e.f 1 st April 2021, the employees contribution shall be allowed as deduction u/s 36(1)(va) of the Act only if it has been deposited before the due date as per PF law, not giving benefit of reallowance if there is a delay in payment of contribution even by single day. The assessee has to foregone the deduction of Employee’s contribution deposited subsequent to Due Date.

Employer Contribution to PF: It is a statutory payment allowed as general business expense u/s 36 of the Income Tax Act on actual payment basis. The payment should be done on or before the due date subject to the provisions of section 43B which facilitates reallowance of the deduction in subsequent Financial Year on actual payment basis.

The Due Date for depositing Employee & Employer contribution to PF is on or before 15 th of next month.

Yes, as per section 54EC ​you can claim tax relief by investing the long-term capital gains in the bonds issued by the National Highway Authority of India or by the Rural Electrification Corporation Limited. The investment should be made within a period of 6 months from the date of transfer of capital asset and bonds should not be redeemed before 3 years. This benefit cannot be availed in respect of short-term capital gain. Maximum amount which qualifies for investment will be Rs. 50,00,000. Thus, deduction under section 54EC​ cannot be claimed for more than Rs. 50,00,000. ​

It is enlisted as below:

• EQL is not levied if the total amount for services received in the previous year is equal or less than Rs.1 lakh.

• EQL is levied only to B2B(Business to Business), not in case of B2C (Business to Consumer).

• If company registered in Jammu & Kashmir, then EQL is not applicable on such company.

Capital asset is defined to include:

a) Any kind of property held by an assesse, whether or not connected with business or profession of the assesse.

b) Any securities held by a FII which has invested in such securities in accordance with the regulations made under the SEBI Act, 1992.

However, the following items are excluded from the definition of "capital asset":

• Any stock-in-trade, consumable stores, or raw materials held by a person for the purpose of his business or profession.

E.g., Motor car for a motor car dealer or gold for a jewellery merchant, are their stock-in-trade and, hence, they are not capital assets for them.

• Personal effects of a person, that is to say, movable property including wearing apparels and furniture held for use, by a person or for use by any member of his family dependent on him.
• However, jewellery, archeological collections, drawings, paintings, sculptures, or any work of art are not treated as personal effects and, hence, are included in the definition of capital assets.

The term jewellery has been given a wider meaning and includes ornaments made up of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stones, and whether or not worked or sewn into any wearing apparel. It also includes precious or semi-precious stones, whether or not set in any furniture, utensil, or other article or worked or sewn into any wearing apparel.

• Agricultural Land in India, not being a land situated:

1. Within jurisdiction of municipality, notified area committee, town area committee, cantonment board and which has a population of not less than 10,000;
2. Within range of following distance measured aerially from the local limits of any municipality or cantonment board:
3. ​not being more than 2 KMs, if population of such area is more than 10,000 but not exceeding 1 lakh;
4. not being more than 6 KMs , if population of such area is more than 1 lakh but not exceeding 10 lakhs; or
5. not being more than 8 KMs , if population of such area is more than 10 lakhs.

Population is to be considered according to the figures of last preceding census of which relevant figures have been published before the first day of the year.

• 6½% Gold Bonds,1977 or 7% Gold Bonds, 1980 or National Defense Gold Bonds, 1980 issued by the Central Government.
• Special Bearer Bonds, 1991, issued by the Central Government
• Gold Deposit Bonds issued under Gold Deposit Scheme, 1999.
• Deposit certificates issued under the Gold Monetization Scheme, 2015.​

Following points should be kept in mind :

The property being capital asset may or may not be connected with the business or profession of the taxpayer. E.g. Bus used to carry passenger by a person engaged in the business of passenger transport will be his  Capital asset.

Any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 will always be treated as capital asset, hence, such securities cannot be treated as stock-in-trade. ​

Some of the popular investments which are eligible for this tax deduction are mentioned below.

1. Payment made towards life insurance policies (for self, spouse or children)
2. Payment made towards a superannuation/provident fund
3. Tuition fees paid to educate a maximum of two children
4. Payments made towards construction or purchase of a residential property
5. Payments issued towards a fixed deposit with a minimum tenure of 5 years

This section provides for a number of additional deductions like investment in mutual funds, senior citizens saving schemes, purchase of NABARD bonds, etc.

The term standard deduction under head Salary Income is the maximum or flat deduction allowable for computing the Income from Salary subjected to TAX. It was introduced in the Budget 2018 in lieu of the exemption of transport allowance and reimbursement of miscellaneous medical expenses.

For FY 2022-23, the limit of the standard deduction is Rs 50,000 in old regime. As per Budget 2023, Salaried taxpayers are now eligible for standard deduction of Rs. 50,000/- under new tax regime also from Financial Year 2023-24.

The purposes of introducing standard deduction are:

1.  To reduce paperwork and allow for deductions irrespective of the actual expenses.
2.  To provide tax relief to middle-class salaried individuals.
3.  To provide benefits to pensioners.

• A provident fund is an investment fund, generally known as Employees Provident Fund (EPF), that is voluntarily established by Employer and employees to serve as long term savings to support an employee's retirement.
• It is a scheme run by Employees Provident Fund Organization (EPFO), which is aimed at providing social security and retirement benefit.

• 1. Employees contribution: The amount deducted from the employees
• 2. salary at a rate of 2% - 15%. Employers contribution: Besides the usual salary payment made to
• the employer, an employer will also pay 2% - 15% of employees salary into the fund. It is also considered a part of employment welfare.

No, the benefit of indexation is available only in case of long-term capital assets and is not available in case of short-term capital assets.​​ Indexation is a process by which the cost of acquisition/improvement of a capital asset is adjusted against inflationary rise in the value of asset. Hence it is applicable only in the case of long term capital assets.

The fair market value of the asset as on 1st June, 2016 [which has been taken into account for the purpose of said declaration Scheme, 2016] shall be deemed as cost of acquisition of the asset. [This provision is applicable w.e.f. 1-4-2017]

Generally, transfer means sale, however, for the purpose of Income-tax u/s 2(47), in relation to a capital
asset, includes:
i. Sale, exchange or relinquishment of the asset;
ii. Extinguishment of any rights in relation to a capital asset;
iii. Compulsory acquisition of an asset;
iv. Conversion of capital asset into stock-in-trade;
v. Maturity or redemption of a zero coupon bond;
vi. Allowing possession of immovable properties to the buyer in part performance of the contract;
vii. Any transaction which has the effect of transferring an (or enabling the enjoyment of) immovable property; or
viii. Disposing of or parting with an asset or any interest therein or creating any interest in any asset in any
manner whatsoever.

​​House sold by you is a long-term capital asset. Any gain arising on transfer of capital asset is charged to tax under the head “capital gains”. Income-tax Law has prescribed the method of computing capital gain arising on account of sale of capital assets. Thus, to check the taxability in your case, you have to compute capital gain by following the rules laid down in this regard, and if the result is gain, then the same will be liable to tax.​

Yes, as per section 54EC ​you can claim tax relief by investing the long-term capital gains in the bonds issued by the National Highway Authority of India or by the Rural Electrification Corporation Limited. The investment should be made within a period of 6 months from the date of transfer of capital asset and bonds should not be redeemed before 3 years. This benefit cannot be availed in respect of short-term capital gain. Maximum amount which qualifies for investment will be Rs. 50,00,000. Thus, deduction under section 54EC​ cannot be claimed for more than Rs. 50,00,000. ​

Stamp duty value means the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty.
As per section 50C​​, while computing capital gain arising on transfer of land or building or both, if the actual sale consideration of such land and/or building is less than the stamp duty value, then the stamp duty value will be taken as full value of consideration, i.e., as deemed selling price and capital gain will be computed accordingly.

Rental income in the hands of owner is charged to tax under the head “Income from house property”. Rental income of a person other than the owner cannot be charged to tax under the head “Income from house property”. Hence, rental income received by a tenant from sub-letting cannot be charged to tax under the head

“Income from house property”. Such income is taxable under the head “Income from other sources” or profits and gains from business or profession, as the case may be.​

Rental income from a property, being building or land appurtenant thereto, of which the taxpayer is the owner is charged to tax under the head “Income from house property”. To tax the rental income under the head “Income from house property”, the rented property should be building or land appurtenant thereto. Shop being a building, rental income will be charged to tax under the head “Income from house property”. ​

In such a case, composite rent includes rent of building and charges for different services (like lift, watchman, water supply, etc.): In this situation, the composite rent is to be bifurcated and the sum attributable to the use of property will be charged to tax under the head “Income from house property” and charges for various services will be charged to tax under the head “Profits and gains of business and profession” or “Income from other sources” (as the case may be).​

Composite rent includes rent of building and rent towards other assets or facilities. The tax treatment of
composite rent is as follows:-

• In a case where letting out of building and letting out of other assets are inseparable (i.e., both the lettings are composite and not separable, e.g., letting of equipped theatre), entire rent (i.e. composite rent) will be charged to tax under the head “Profits and gains of business and profession” or “Income from other sources”, as the case may be. Nothing is charged to tax under the head “Income from house property”..
• In a case where, letting out of building and letting out of other assets are separable (i.e., both the lettings are separable, e.g., letting out of refrigerator along with residential bungalow), rent of building will be charged to tax under the head “Income from house property” and rent of other assets will be charged to tax under the head “Profits and gains of business and profession” or “Income from other sources”, as the case may be. This rule is applicable, even if the owner receives composite rent for both the lettings. In other words, in such a case, the composite rent is to be allocated for letting out of building and for letting of other assets.

While computing income chargeable to tax under the head "Income from house property" in case of a let-out
property, the taxpayer can claim deduction under section 24(b) on account of interest on loan taken for the
purpose of purchase, construction, repair, renewal or reconstruction of the property.
Deduction on account of interest is classified in two forms, viz., interest pertaining to pre-construction period and
interest pertaining to post-construction period.
Post-construction period interest is the interest pertaining to the relevant year (i.e., the year for which income is
being computed).
Pre-construction period is the period commencing from the date of borrowing of loan and ends on earlier of the
following:
➣  Date of repayment of loan; or
➣  31st March immediately prior to the date of completion of the construction/acquisition of the property.
Interest pertaining to pre-construction period is allowed as deduction in five equal annual instalments,
commencing from the year in which the house property is acquired or constructed.
Thus, total deduction available to the taxpayer under section 24(b)​​ on account of interest will be 1/5th of interest
pertaining to pre-construction period (if any) + Interest pertaining to post construction period (if any).​

A self-occupied property means a property which is occupied throughout the year by the taxpayer for his
residence. Income chargeable to tax under the head ''Income from house property'' in case of a self-occ​upied
property is computed in following manner :
Particulars                                                                                                                       Amount​
Gross annual value                                                                                                             Nil
Less:- Municipal taxes paid during the year                                                                  Nil
Net Annual Value (NAV)                                                                                                     Nil

Less:- Deduction under section 24

➣Deduction under section 24(a) @ 30% of NAV                                                           Nil
➣Deduction under section 24(b​) on account of interest on
borrowed capital                                                                                                             (XXXX)

Income from house property                                                                                         XXXX

From the above computation it can be observed that ''Income from house property'' in the case of a self occupied
property will be either Nil (if there is no interest on housing loan) or negative (i.e., loss) to the extent of interest
on housing loan. Deduction in respect of interest on housing loan in case of a self-occupied property cannot
exceed Rs. 2,00,000 or Rs. 30,000.

The provisions relating to deduction under section 24(b) on account of interest on housing loan in case of self-occupied property are same as applicable in case of let-out property. In other words, deduction available to taxpayer under section 24(b) in respect of self-occupied property will be 1/5th of interest pertaining to pre-construction period (if any) + Interest pertaining to post-construction period (if any).
However, in the case of self-occupied property, deduction under section 24(b)​​ cannot exceed Rs.2,00,000 or Rs.30,000 (as the case may be). If all the following conditions are satisfied, then the limit in respect of interest onborrowed capital will be Rs.2,00,000:
​➣  Capital is borrowed on or after 1-4-1999.
➣  Capital is borrowed for the purpose of acquisition or construction (i.e., not for repair, renewal,reconstruction).
➣  Acquisition or construction is completed within 5 years from the end of the financial year in which the capitalwas borrowed.
➣  The person extending the loan certifies that such interest is payable in respect of the amount advanced foracquisition or construction of the house or as re-finance of the principal amount outstanding under an earlierloan taken for acquisition or construction of the property.
If any of the above condition is not satisfied, then the limit of Rs. 2,00,000 will be reduced to Rs. 30,000.

​Any subsequent recovery of unrealized rent shall be deemed to be the income of taxpayer under the head “Income from house property” in the year in which such rent is realized (whether or not the assesse is the owner of that property in that year).​ It will be charged to tax after deducting a sum equal to 30% of unrealized rent.​

​​The amount received on account of arrears of rent (not charged to tax earlier) will be charged to tax after deducting a sum equal to 30% of such arrears. It is charged to tax in the year in which it is received. Such amount is charged to tax whether or not the taxpayer owns the property in the year of receipt.​

For quick and efficient collection of taxes, the Income-tax Law has incorporated a system of deduction of tax at the point of generation of income. This system is called as “Tax Deducted at Source”, commonly known as TDS. Under this system tax is deducted at the origin of the income. Tax is deducted by the payer and is remitted to the Government by the payer on behalf of the payee. The provisions of deduction of tax at source are applicable to several payments such as salary, interest, commission,brokerage, professional fees, royalty, contract payments, etc. In respect of payments to which the TDS provisions apply, the payer has to deduct tax at source on the payments made by him and he has to deposit the tax deducted by him to the credit of the Government.  The following illustration will explain the TDS u/s 192 of the Income Tax.

Illustration

Mr. Raja has made a fixed deposit with XYZ Bank. Annual interest on the deposit is Rs. 8,40,000. Will the bank be liable to deduct any tax from the interest paid to Mr. Raja?

Interest on fixed deposit is covered under the TDS mechanism and, hence, the bank has to deduct tax from interest and has to pay the net interest to Mr. Raja.

The rate of TDS on interest is 10% and, hence, the bank will deduct tax of Rs. 84,000 from the interest and will pay the net interest of Rs. 7,56,000 (i.e., Rs. 8,40,000 – Rs. 84,000) to Mr. Raja.

The TDS of Rs. 84,000 will be paid by the bank to the Government and Rs. 84,000 will be treated as prepaid tax of Mr. Raja and he can claim tax credit of Rs. 84,000 just like advance tax at the time of filing his return of income.

The above mechanism of deducting the tax at the point of generation of income is called TDS mechanism.

As per section 206AA​​, a declaration in Form No. 15G or Form No. 15H is not a valid declaration, if it does not contain
PAN of the person making the declaration. If the declaration is without the PAN, then tax is to be deducted at higher
of following rates :

• At the rate specified in the relevant provision of the Act.
• At the rate or rates in force, i.e., the rate prescribed in the Finance Act.
• At the rate of 20%.​

P​AN stands for Permanent Account Number and TAN stands for Tax Deduction Account Number. TAN is to be obtained by the person responsible to deduct tax, i.e., the deductor. In all the documents relating to TDS and allthe correspondence with the Income-tax Department relating to TDS one has to quote his TAN. PAN cannot be used for TAN, hence, the deductor has to obtain TAN, even if he holds PAN.

However, in case of TDS on purchase of land and building (as per section 194-​IA) as discussed in previous FAQ, the deductor is not required to obtain TAN and can use PAN for remitting the TDS.​

It is taxable if received while in service. Leave encashment received at the time of retirement is exempt in the hands of the Government employee. In the hands of non-Government employee leave encashment will be exempt subject to the limit prescribed in this behalf under the Income-tax Law

​​In the hands of a Government employee Gratuity and PF receipts on retirement are exempt from tax. In the hands of non-Government employee, gratuity is exempt subject to the limits prescribed in this regard and PF receipts are exempt from tax, if the same are received from a recognised PF after rendering continuous service of not less than 5 years.​

Advance tax is to be calculated on the basis of expected tax liability of the year. Advance tax is to be paid in
instalments as given below:​​
a) In case of all the assessees (other than the eligible assessees as referred to in section 44AD) :
i) Up to 15 per cent – On or before 15th June
ii) Up to 45 per cent – On or before 15th September

iii) Up to 75 per cent – On or before 15th December​
iv) Up to 100 per cent –On or before 15th March
b) In case of eligible assessee as referred to in Section 44AD:
​​
Up to 100 per cent – On or before 15th March
Note: Any advance tax paid on or before 31st day of March shall also be treated as paid during the same financial
year.
[Substituted by the Finance Act, 2016 w.e.f. 1-6-2016]
​
The deposit of advance tax is made through challan ITNS 280 by ticking the relevant column, i.e., advance tax.

Yes, if one could not file the return of income on or before the prescribed due date, then he can file a belated return. A belated return can be filed within a period of one year from the end of the assessment year or before completion of the assessment, whichever is earlier. Return filed after the prescribed due date is called as a belated return. However, w.e.f. 01-04-2017, belated income-tax return for the Assessment Year 2017-18 and onwards can be filed at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.

E.g., In case of income earned during FY 2015-16, the belated return can be filed up to 31st March, 2018

PF generally exists to help employees accumulate a considerable sum for their retirement. It is a government-backed scheme and offers an attractive rate of return which was 8.5% for FY 2020-21 and now the interest rate of 8.10% has come into effect and will be applicable to EPF deposits made
between April 2022 and March 2023.

However, an organization with 20 or more employees is required by Law to register for the PPF scheme, while those with fewer than 20 employees can
opt to register voluntarily.

Also on Employees part, only if you are a salaried employee with a (basic + Dearness Allowance) less than Rs.15,000 per month, it is mandatory for you
to be opened an EPF account by your employer. Else for an employee with salary higher than Rs.15,000, it is voluntary.

The Employees' State Insurance Scheme (ESI) is an integrated measure of Social Insurance embodied in the Employees' State Insurance Act,
managed by Employees' State Insurance Corporation (ESIC), and it is designed to accomplish the task of protecting 'employees' as defined in the Employees' State Insurance Act, 1948 against the impact of incidences of sickness, maternity, disablement and death due to employment injury and to
provide medical care to insured persons and their families. The scheme was inaugurated in Kanpur on 24th February 1952 (ESIC Day) by then Prime
Minister Pandit Jawahar Lal Nehru.

This is a self-financing scheme, where the employees and the employers make regular monthly contributions to the scheme. The rate of contribution by
employer is 4.75% of the wages payable to employees. The employees' contribution is at the rate of 1.75% of the wages payable to an employee.
Employees, earning less than Rs. 137/- a day as daily wages, are exempted from payment of their share of contribution.

Applicability

The ESI Scheme applies to factories and other establishment's viz. Road Transport, Hotels, Restaurants, Cinemas, Newspaper, Shops, and
Educational/Medical Institutions wherein 10 or more persons are employed. However, in some States threshold limit for coverage of establishments is still
20. Employees of the aforesaid categories of factories and establishments, drawing wages upto Rs.15,000/- a month, are entitled to social security cover
under the ESI Act. ESI Corporation has also decided to enhance wage ceiling for coverage of employees under the ESI Act from Rs.15,000/- to Rs.21,000/-

ESI Corporation has extended the benefits of the ESI Scheme to the workers deployed on the construction sites located in the implemented areas under
ESI Scheme w.e.f. 1st August, 2015.

No, the assessee can either claim HRA deduction from his salary or sec 80GG deduction from Gross Total Income for the rent paid towards rentaloccupied property.Usually, HRA forms part of your salary, and you can claim deduction for HRA. If you do not receive HRA from your employer and make payments towardsrent for any furnished or unfurnished accommodation occupied by you for your own residence, you can claim a deduction under section 80GG towardsthe rent that you pay.Note: 80GG can be claimed by a Self employed or a Salaried Individual and HUF having no business income.

Yes, on fulfillment of certain conditions an individual assessee can claim HRA deduction that forms part of Salary and the Interest that he pays for aHome Loan taken for the purchase of a house property.These Conditions are : Where an assessee has availed a house on loan but reside in a rented property due to :

• Job situated in another city
• Children Schooling and working distance
• Own house occupied by parents of either of the spouse.etc
• Owned house being rented out.Note: For house under construction, You can claim only the home loan interest deduction over five years in equal instalments starting from theyear the construction is completed.

As per section 64(1)(iv), if an individual transfers (directly or indirectly) his/her asset (other than house property) to his or her spouse otherwise than for adequate consideration, then income from such asset will be clubbed with the income of the individual (i.e., transferor). Income from transfer of house property without adequate consideration will also attract clubbing provisions, however, in such a case clubbing will be done as per section 27​ and not under section 64(1)(iv).  The clubbing provisions of section 64(1)(iv) will apply even if the form of asset is changed by the transferee-spouse. There are certain situations in which the  clubbing provisions of section 64(1)(iv) are not applicable.

As per section 64(1)(vi)​​, if an individual transfers (directly or indirectly) his/her asset to his/ her son' wife otherwise than for adequate consideration, then income from such asset will be clubbed with the income of the individual (i.e., transferor being father-in-law/mother-in-law). The provisions of clubbing will apply even if the form of asset is changed by the transferee-daughter-in-law.

If the asset is transferred before marriage of son, no income will be clubbed even after marriage, since the relation of father-in-law/mother-in-law and daughter-in-law should exist both at the time of transfer of asset and at the time of accrual of income.

If on the date of accrual of income, the relation of father-in-law/mother-in-law and daughter-in-law does not exist, then the provisions of clubbing will not apply. ​

The residential status of an Individual & HUF is determined in accordance to the provisions of Section 6 of the Income Tax Act. It is vital to the levy of tax in India as Income Tax is levied based on the residential status of a taxpayer. The residential status can be broadly classified as:

1. Resident
   1. Ordinary Resident
   2. Not Ordinary Resident
2. Non Resident

Residential Status of Individual

Under the Income-tax Law, an individual will be treated as a resident in India for a year if he satisfies any of the following conditions ( i.e. may satisfy any one or may satisfy both the conditions):

(1)       He is in India for a period of 182 days or more in that year; or

(2)       He is in India for a period of 60 days or more in the year and for a period of 365 days or more in 4 years immediately preceding the relevant year. 

If an individual does not satisfy any of the above conditions he will be treated as non-resident in India.

Note : Condition given in (2) above will not apply to an Indian citizen leaving India for the purpose of employment or to an Indian citizen leaving India as a member of crew of Indian ship or to an Indian citizen/person of Indian origin coming on a visit to India. A person is said to be of Indian origin, if he or any of his parents or grand-parents (maternal or paternal) were born in undivided India.

 Note: With effect from Assessment Year 2015-16, in the case of an individual, being a citizen of India and a member of the crew of a foreign bound ship leaving India, the period or periods of stay in India shall, in respect of such voyage, be determined in the manner and subject to such conditions as may be prescribed.

If the Individual qualifies to be a Resident, it is essential to find out further whether he is an Ordinary Resident or Not to determine the Tax incidence of Income accruing or arising outside India.

A resident individual will be treated as resident and ordinarily resident in India during the year if he satisfies following conditions:

(1)       He is resident in India for at least 2 years out of 10 years immediately preceding the relevant year.

(2)       His stay in India is for 730 days or more during 7 years immediately preceding the relevant year.

A resident individual who does not satisfy any of the aforesaid conditions or satisfies only one of the aforesaid conditions will be treated as resident but not ordinarily resident.

Residential Status of HUF

For the purpose of Income-tax Law, a HUF will be treated as resident in India, if the control and management of the affairs of the HUF is located (partly or wholly) in India.

A resident HUF will be treated as resident and ordinarily resident in India during the year if its manager ( i.e. karta or manager) satisfies both the following conditions :

(1) He is resident in India for at least 2 years out of 10 years immediately preceding the relevant year.

(2) His stay in India is for 730 days or more during 7 years immediately preceding the relevant year.

A resident HUF whose manager ( i.e. karta or manager) does not satisfy any of the aforesaid conditions or satisfies only one of the aforesaid conditions will be treated as resident but not ordinarily resident.

Following incomes are treated as incomes deemed to have accrued or arisen in India:

• Capital gain arising on transfer of property situated in India.

• Income from business connection in India.
• Income from salary in respect of services rendered in India.
• Salary received by an Indian national from Government of India in respect of service rendered outside India. However, allowances and perquisites are exempt in this case.
• Income from any property, asset or other source of income located in India.
• Dividend paid by an Indian company.
• Interest received from Government of India.
• Interest received from a resident is treated as income deemed to have accrued or arisen in India in all cases, except where such interest is earned in respect of funds borrowed by the resident and used by resident for carrying on business/profession outside India or is in respect of funds borrowed by the resident and is used for earning income from any source outside India.
• Interest received from a non-resident is treated as income deemed to accrue or arise in India if such interest is in respect of funds borrowed by the non-resident for carrying on any business/profession in India.
• Royalty/fees for technical services received from Government of India.
• Royalty/fees for technical services received from resident is treated as income deemed to have accrued or arisen in India in all cases, except where such royalty/fees relates to business/profession/other source of income carried on by the payer outside India.
• Royalty/fees for technical services received from non-resident is treated as income deemed to have accrued or arisen in India if such royalty/fees is for business/profession/other source of income carried by the payer in India.

It is enlisted as below:

• EQL is not levied if the total amount for services received in the previous year is equal or less than Rs.1 lakh.

• EQL is levied only to B2B(Business to Business), not in case of B2C (Business to Consumer).

• If company registered in Jammu & Kashmir, then EQL is not applicable on such company.

The cost of acquisition for the long-term capital asset acquired on or before 31st of January, 2018 will be the actual cost.

However, if the actual cost is less than the fair market value of such asset as on 31st of January, 2018, the fair market value will be deemed to be the cost of acquisition.

Further, if the full value of consideration on transfer is less than the fair market value, then such full value of consideration or the actual cost, whichever is higher, will be deemed to be the cost of acquisition.

Scenario 1 – An equity share is acquired on 1st of January, 2017 at Rs. 100, its fair market value is Rs. 200 on 31st of January, 2018 and it is sold on 1st of April, 2018 at Rs. 250. As the actual cost of acquisition is less than the fair market value as on 31st of January, 2018, the fair market value of Rs. 200 will be taken as the cost of acquisition and the long-term capital gain will be Rs. 50 (Rs. 250 – Rs. 200).

Scenario 2 – An equity share is acquired on 1st of January, 2017 at Rs. 100, its fairmarket value is Rs. 200 on 31st of January, 2018 and it is sold on 1st of April, 2018 at Rs. 150.In this case, the actual cost of acquisition is less than the fair market value as on 31st of January, 2018. However, the sale value is also less than the fair market value as on 31st of January, 2018. Accordingly, the sale value of Rs. 150 will be taken as the cost of acquisition and the long-term capital gain will be NIL (Rs. 150 – Rs. 150).

Scenario 3 – An equity share is acquired on 1st of January, 2017 at Rs. 100, its fair market value is Rs. 50 on 31st of January, 2018 and it is sold on 1st of April, 2018 at Rs. 150. In this case, the fair market value as on 31st of January, 2018 is less than the actual cost of acquisition, and therefore, the actual cost of Rs. 100 will be taken as actual cost of acquisition and the long-term capital gain will be Rs. 50 (Rs. 150 – Rs. 100).

Scenario 4 – An equity share is acquired on 1st of January, 2017 at Rs. 100, its fair market value is Rs. 200 on 31st of January, 2018 and it is sold on 1st of April, 2018 at Rs. 50. In this case, the actual cost of acquisition is less than the fair market value as on 31st January, 2018. The sale value is less than the fair market value as on 31st of January, 2018 and also the actual cost of acquisition. Therefore, the actual cost ofRs. 100 will be taken as the cost of acquisition in this case. Hence, the long-term capital loss will be Rs. 50 (Rs. 50 – Rs. 100) in this case.

The cost of acquisition of right share acquired before 31st January, 2018 will be determined as per sub-clause (6) of clause 31 of the Finance Bill, 2018. Therefore, the fair market value of right share as on 31st January, 2018 will be taken as cost of acquisition (except in some typical situations), and hence, the gains accrued upto 31st January, 2018 will continue to be exempt.

The buyer has to deduct 1% of the sale value. Suppose, on a sale value of Rs.70 Lakhs, Rs.70000 is to be deducted as tax (TDS); instead the buyer deducts and deposits Rs.90000. So, the question is how will the buyer get back this excess amount of Rs.20000? The income Tax department has worked out a mechanism to solve this problem. Though the buyer has deducted excess TDS, the credit will not go to the seller of the property. The seller of the property will get the credit for 1% and the excess amount will reflect in Part A2 of 26AS of buyer. The credit is available for claim in ITR of the buyer while filing his annual Income Tax Return.

Instead of filing 27Q Form, the buyer has wrongly filed 26QB Form. In case of 26QB statement cum Challan processing, the system by default passes on the credit to the seller to the extent of 1% only. However, to obviate the difficulty of getting tax credit for NRI seller, the department will pass on the full credit of TDS to the seller by carrying out necessary changes in the System. (Note – this is done by the department as a onetime measure per assessee and the process of crediting the money will take some time; it won’t happen instantly)In order to make this correction, the buyer has to raise a request for passing on the whole credit of the TDS to seller through sending a mail on email id “contactus@tdscpc.gov.in ” with Acknowledgement number.Therefore, the procedure of deducting and depositing TDS is different for Resident and Non Resident Sellers. One has to correctly follow the rules to avoid unnecessary delay in TDS credits.​​​​​​​

PAN stands for Permanent Account Number and TAN stands for Tax Deduction Account Number. TAN is to be obtained by the person responsible to deduct tax, i.e., the deductor. In all the documents relating to TDS and all the correspondence with the Income-tax Department relating to TDS one has to quote his TAN. PAN cannot be used for TAN, hence, the deductor has to obtain TAN, even if he holds PAN.However, in case of TDS on purchase of land and building (as per section 194-​IA) as discussed in previous FAQ, the deductor is not required to obtain TAN and can use PAN for remitting the TDS.​

It is the duty and responsibility of the payer to deduct tax at source. If the payer fails to deduct tax at source, then the payee will not have to face any adverse consequences. However, in such a case, the payee will have to discharge his tax liability. Thus, failure of the payer to deduct tax at source will not relieve the payee from payment of tax on his income.

A deductor who fails to deduct the whole or any part of the tax on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee-in-default in respect of such tax if such resident—(i)has furnished his return of income under section 139​;(ii)has taken into account such sum for computing income in such return of income; and(iii)has paid the tax due on the income declared by him in such return of income,and the deductor furnishes a certificate to this effect in Form No.26A from a chartered accountant.

Under the Income-tax Act, every person has the responsibility to correctly compute and pay his due taxes. Where the Department finds that there has been understatement of income and resultant tax due, it takes measures to compute the actual tax amount that ought to have been paid. This demand raised on the person is called as Tax on regular assessment. The tax on regular assessment-400 has to be paid within 30 days of receipt of the notice of demand .

Even if you have only agricultural income, you are advised to maintain some proof of your agricultural earnings/expenses.

Gift received only on the occasion of marriage of the individual is not charged to tax. Apart from marriage there is no other occasion inwhich gift received by an individual is not charged to tax. Hence, gift received on occasions like birthday, anniversary, etc. will be charged to tax.​​

In the following cases monetary gift will not be charged to tax.

• Money received from relatives.
• Money received by a HUF from its members.
• Money received on the occasion of the marriage of the individual.
• Money received under will/ by way of inheritance.
• Money received in contemplation of death of the payer or donor.
• Money received from a local authority as defined under section 10(20) of the Income-tax Act.
• Money received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in Section 10(23C).
• Money received from a trust or institution registered under section 12AA.
• Gift received from relatives are exempt from tax. Who will be considered as relative for the purpose of claiming such exemption. section 12AA.

If the following conditions are satisfied then value prescribed for movable property received by an individual or HUF will be charged to tax​:
• Prescribed movable property is received without consideration (i.e., received as gift).
• The aggregate fair market value of such property received by the taxpayer during the year exceeds Rs. 50,000 In above case, the fair market value of the prescribed movable property will be treated as income of the receiver.Prescribed movable property means shares/securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work of art and bullion, being capital asset of the taxpayer.Considering the above definition, nothing will be charged to tax in respect of gift of any item being a movable property other than covered in the above definition, e.g., Nothing will be charged to tax in respect of a television set  received as gift, because  a television  set  is not covered in the definition of prescribed movable property

Taxpayer can link their Aadhaar no. with PAN even if there is mismatch in name of taxpayer as appeared in Aadhaar and PAN. There is no need to login or be registered on E-filing website.In case of any minor mismatch in Aadhaar card name provided by taxpayer as compared to the actual data in Aadhaar card, One Time Password (Aadhaar OTP) will be sent to the mobile number registered with Aadhaar number. Taxpayers should ensure that the date of birth and gender in PAN and Aadhaar card are exactly the same. However, in cases where Aadhaar name is completely different from name in PAN, Aadhaar will not be linked and taxpayer will be required to change the name in either Aadhaar data or in PAN databaseSteps to link Aadhaar with PAN in case of name mismatch:-
• Go to E-filing website, https://incometaxindiaefiling.gov.in
• Click on "Link Aadhaar" under services column.
• Enter "PAN', Aadhaar Number, Name as per Aadhaar and Captcha Code and click on 'Link Aadhaar".
• After submitting these details, a success message is displayed confirming the linking of Aadhaar number with PAN. A confirmation email is also sent to the registered email id of the person.• Note:-
• Please ensure that the date of birth, Gender and Aadhaar number is per Aadhaar details.
• If date of Birth and Gender fully match and Name as per Aadhaar is not exactly matching then user has to additionally provide Aadhaar OTP to proceed with partial Name Matching.
• If Your Aadhaar is already linked with PAN with Same name and want to verify the correctness, the alert message will be displayed on to the screen "Your PAN is already linked to the Aadhaar  Number.

No, the income earned from subletting a house property is chargeable to tax under the head “income from other sources” rather than house property Income.Since, the assessee is not the owner of the property the said rental income cannot be held as income from house property. Since, the assessee was not engaged in the business of subletting, the same cannot be construed as business income of the assessee. Accordingly, such income shall be taxable as last resort income head i.e. income from other sources.

Under certain circumstances as given in section 64(1)(ii) , remuneration ( i.e., salary) received by the spouse of an individual from a concern in which the individual is having substantial interest is clubbed with the income of the individual. Provisions in this regard are as follows:The individual is having substantial interest in a concern (*).Spouse of the individual is employed in the concern in which the individual is having substantial interest.The spouse of the individual is employed without any technical or professional knowledge or experience ( i.e., remuneration is not justifiable).(*) An individual shall be deemed to have substantial interest in any concern, if such individual alone or along with his relatives beneficially holds at any time during the previous year 20% or more of the equity shares (in case of a company) or is entitled to 20% of profit (in case of concern other than a company).Relative for this purpose includes husband, wife, brother or sister or lineal ascendantor descendent of that individual [ section 2( 41 ) ].

As per section 64(1A) , income of minor child is clubbed with the income of his/her parent (*). Income of minor child earned on account of manual work or any activity involving application of his/her skill, knowledge, talent, experience, etc. will not be clubbed with the income of his/her parent. However, accretion from such income will be clubbed with the income of parent of such minor.Income of minor will be clubbed along with the income of that parent whose income (excluding minor's income) is higher.If the marriage of parents does not sustain, then minor's income will be clubbed with the income of parent who maintains the minor.In case the income of individual includes income of his/her minor child, such individual can claim an exemption under section 10(32)of Rs. 1,500 or income of minor so clubbed, whichever is less.Provisions of section 64(1A) will not apply to any income of a minor child suffering from disability specified under section 80U . In other words income of a minor suffering from disability specified under section 80U will not be clubbed with the income of his/her parent.

A person who is earning income in the nature of commission or brokerage cannot adopt the presumptive taxation scheme of section 44AD​. Insurance agents earn income by way of commission and, hence, they cannot adopt the presumptive taxation scheme of section 44AD​

The scheme of sections 44AE​ is available to the person who owns not more than ten goods carriages at any time during the previous year and who is engaged in the business of plying, hiring or leasing such goods carriages.

The report of the tax audit conducted by the chartered accountant is to be ​furnished in the prescribed form. The form prescribed for audit report in respect of audit conducted under section 44AB​ is Form No. 3CB and the prescribed particulars are to be reported in Form No. 3CD.In case of persons covered under those who are required to get their accounts audited by or under any other law, the form prescribed for audit report is Form No. 3CA/3CB and the prescribed particulars are to be reported in Form No. 3CD.

According to section 271B, if any person who is required to comply with section 44AB fails to get his accounts audited in respect of any year or years as required under section 44AB, the Assessing Officer may impose a penalty. The penalty shall be lower of the following amounts:(a) 0.5% of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such year or years. (b) Rs. 1,50,000.However, according to section 273B​, no penalty shall be imposed if reasonable cause for such failure is proved.

A person who is engaged in any profession as prescribed under section 44AA(1)​ cannot adopt the presumptive taxation scheme of section 44AD.​However, he can opt for presumptive taxation scheme under section 44ADA​ and declare 50% of gross receipts of profession as his presumptive income. Presumptive Scheme under section 44ADA​​ is applicable only for resident assessee whose total gross receipts of profession do not exceed fifty lakh rupees.

Generally, as per the Income-tax Law, the taxable business income of every person is computed as follows :Particulars                                                                                                                                                AmountTurnover or gross receipts from the business                                                                              XXXXXLess : Expenses incurred in relation to earning of the income                                                              (XXXXX)Taxable Business Income                                                                                                                          XXXXXFor the purpose of computing taxable business income in the above manner, the taxpayers have to maintain books of account of the business and income will be computed on the basis of the information revealed in the books of accounts.

There is no concession as regards payment of advance tax in case of a person who is adopting the presumptive taxation scheme of section 44AE and, hence, he will be liable to pay advance tax even if he adopts the presumptive taxation scheme of section 44AE

Section 44AA deals with provisions relating to maintenance of books of account by a person engaged in business/profession. Thus, a person engaged in business/profession has to maintain books of account of his business/profession according to the provisions of section 44AA.In case of a person engaged in a business and opting for the presumptive taxation scheme of section 44AD, the provisions of section 44AA  relating to maintenance of books of account will not apply. In other words, if a person adopts the provisions of section 44AD and declares income @ 8%/6% of the turnover, then he is not required to maintain the books of account as provided under section 44AA in respect of business covered under the presumptive taxation scheme of section 44AD​.​

Yes, in order to claim exemption u/s 54 / 54F against long term capital gain from sale of house property, one can book the flat with the builder. As per the recent decision by ITAT in the case of ACIT Vs. Sh. Vineet Kumar Kapila (ITAT Delhi), ITAT held that booking of flat with the builder has to be treated as construction of flat by the assessee and hence period of three years would apply for construction of new house from the date of transfer of long term capital asset. Therefore, the Ld. CIT(A) has rightly allowed the exemption u/s. 54 of the Act, because in the present case also the flat booked with the builder by the assesse has to be considered as a case of construction of flat and the deduction claimed by the assessee u/s. 54 of the Act was rightly allowed

Any fee or remuneration received by a member of the HUF as a partner in a firm which is as a result of the investment made in such concern out of the funds of HUF, shall be treated as income of HUF. However, if such remuneration is earned by the member as a partner for services rendered purely in his personal capacity shall be treated as income of the individual and not the HUF.

If remuneration is paid to Karta of HUF (a) under a valid agreement which is bona fide (b) in the interest of and expedient for the business of the family and (c) the payment is genuine and not excessive, such remuneration paid wholly and exclusively for the business of the family, shall be allowable as an expenditure while computing the income of HUF and such salary will be taxable in the hands of Karta as his individual income.

ITR-2 and ITR-3 are applicable for NRIs. 

Foreign income is generally not taxable for NRIs unless it's derived from a business or profession controlled or set up in India.

If an NRI has no taxable income in India, they are not required to file an income tax return. However, if they have capital gains or rental income, they should file ITR-2.

No, NRIs cannot have or open a resident account in India. 

Dividends earned from stocks are exempt from Income tax in India irrespective of the residential status of the assessee. All the income is required to be reported no matter exempt or not.

Under the Indian foreign exchange regulations, Indian students going abroad for studies are treated as NRIs and are eligible for facilities available to NRIs.

NRIs can file income tax returns electronically through the online portal of the Income Tax Department of India, just like resident Indians. Similarly, the process for e-filing is the same for NRIs as for resident Indians.

For every source of income, you have to maintain proof of earning and the records specified under the IT Act. In case, no such records have been laid down, you should maintain reasonable level of records with which you can support the claim of income.

No, The Income Tax Act, 1961 applies to all persons who earn income in India. Whether they are resident or non-resident.

Income earned in India is not limited to income earned within the geographical limits or boundaries of the country. Certain incomes are also deemed to have been earned in India although they may have been earned outside the country.

Expatriate is one who left his/her home country and moved to the other country for work during the year. It can be in two ways one who comes to India is called Inbound employee and who leaves India for the purpose of employment called as Out bound employee.

It is not necessary that the stay should be for a continuous period.

A person may be resident of more than one country for any Previous Year. 

As residential status is determined by the individual country law and policy, hence it can be possible to be resident in same previous year in two or more countries.

Citizenship of a country and residential status of that country are two separate concepts. A person may be an Indian national/Citizen but may not be a resident in India and vice versa.

Both the day of entry and the day of departure should be treated as the day of stay in India. 

Additionally, Presence in territorial waters in India would also be regarded as stay in India.

Number of days stay in India is to be counted during the period

• Both the Day of Arrival into India and the Day of Departure from India are counted as the days of stay in India (i.e., 2 days stay in India).
• Dates stamped on Passport are normally considered as proof of dates of departure from and arrival in India.

Previous Year is a period of 12 months from 1st April to 31st March.

In Simple Language As per the Income Tax law the income earned in the current year is taxable in the next year. The year in which income is earned is known as the previous year.

While Determining the Residential Status of an Individual (a) Residential status is always determined for the Previous Year because the assessee has to determine the total income of the Previous Year only.

NRIs are generally liable to pay tax in India on income earned or received in India, such as salary, rent, capital gains, interest, etc. However, certain types of income, such as income from agriculture or specified investments like tax-free bonds, may be exempt from tax for NRIs.

The Income-tax Act, 1961, defines a Non-Resident as the person who is not a resident. The Act defines a person to be a Resident of India if any of the following 6 conditions are fulfilled