2. INTRODUCTION
• The income tax is governed by the income tax act 1961.The
government of India imposes an income tax on taxable income of
• Individuals
• Hindu Undivided Families(HUF)
• Firm
• Companies
• Cooperative societies
3. Heads of income
• Salaries
• Income from house property
• Income from Business or Profession
• Capital Gains
• Income from other sources
4. Income of salaries
• All income received as salary under Employer-Employee
relationship is taxed under this head.
• If the income exceeds minimum exemption limit as TDS.
• House rent allowance: the least of the following is available as
deduction
– Actual HRA received
– 50%/40%(metro/non-metro) of basic 'salary‘
– Rent paid minus 10% of 'salary'.
5. Income of House Property
• Income from House property is computed by taking what is
called Annual Value.
6. Income from business or profession
• Carry forward of losses
• Carry forward of gains
Then the computation would be as under: -
Net Profit as per Profit and Loss Account xxx
Add : Inadmissible Expenses debited to Profit and Loss Account xxx
Deemed Incomes not credited to Profit and Loss Account xxx xxx
Less: Deductible Expenses not debited to Profit and Loss Account xxx
Incomes chargeable under other heads credited to Profit & Loss A/c xxx
Profits and Gains of Business or Profession xxx
7. Income from capital gains
• Transfer of capital assets results in capital gains.
• Under section 111A, for shares or mutual funds where STT is
paid, tax rate is 10% From Asst. Yr 2005-06 as per Finance
Act 2004.
• For Asst. Yr 2009-10 the tax rate is 15%.
• In all other cases, it is part of gross total income and normal
tax rate is applicable.
• For companies abroad, the tax liability is 20% of such gains
suitably indexed (since STT is not paid).
8. Income from other sources
• This is a residual head, under this head income which does not meet
criteria to go to other heads is taxed. There are also some specific
incomes which are to be taxed under this head.
• Income by way of Dividends
• Income from horse races
• Income from winning bull races
• Any amount received from key man insurance policy as donation.
• Income from shares (dividend)
9. Slab rate for year 2009-10
SLAB (Rs.) TAX (Rs.)
Upto 1,50,000 nil
1,50,000-3,00,000 10%
3,00,000-5,00,000 20%
Above 5,00,000 30%
