INCOME TAX- I

(V SEMESTER – BBA )
ASSESSMENT YEAR 2023-2024
PREVIOUS YEAR 2022-2023

Compiled by
[Link] S, [Link] Rai, [Link]
Gupta & Manisha.T

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INCOME TAX –I PY 2022-2023, AY 2023-2024

INCOME TAX –I
(Syllabus for BBA V SEM –CMS, Jain (Deemed to be University)

1. INTRODUCTION & BASIC CONCEPTS

2. AGRICULTURAL INCOME & CAPITAL VS REVENUE

3. RESIDENTIAL STATUS

4. INCOME FROM SALARIES (PART I)

5. INCOME FROM SALARIES (PART II)

6. INCOME FROM HOUSE PROPERTY

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MODULE I

INTRODUCTION & BASIC CONCEPTS

INTRODUCTION

Tax: It is defined as a Compulsory extraction made by General Government from the

general public. It is a financial charge imposed on Individuals or legal entities by the
Government in pursuant to its legislative authority.

Indian taxation system is one of the World’s largest taxation systems in terms of its wide
application on a large number of people and other business entities. It is a well-structured
system derived from the Indian Constitution. According to the Constitution, the
government has the right to levy taxes on Individuals and other artificial bodies
/organizations.

The Income – Tax Act 1961 is a comprehensive Act which consists of 298 sections,
subsections, schedules, rules and sub-rules. The Act has been amended ever since. The
Annual Finance Bills presented to Parliament along with Budget make far-reaching
amendments in this Act every year. Part-A of the budget contains the proposed policies of the
government in the fiscal areas, Part-B contains the detailed tax proposals. The rate of tax at
which income shall be charged is prescribed in the schedule I of the finance act. The law
provides for determination of taxable income, tax liability and procedure for assessment
appeals, penalties and prosecutions.

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Different Types of Taxes

“Taxes are paid and nations are made”. However not many are aware that the government
asks to pay taxes in different manners. Taxes are financial charges imposed on an
individual or a company by central government or state government. It is important to
understand the different types of taxes that are applicable in India. It is broadly classified
as Direct Tax and Indirect Tax.

Types of direct tax in India

Direct taxes are obligatory and have to be directly paid to the Government of
India. There has been a gradual and steady increase in the direct tax collections in recent
years in India. The increase in the collection of direct taxes is indeed a positive sign,
showing more people are earning taxable incomes.

Income Tax
If money is earned then tax has to be paid – if it crosses a particular slab of income
received. Income tax returns have to be filed in different forms for different types of
businesses and individuals. There are different ITR forms available for salaried, self-
employed, partnership firms and more.

Corporate Tax
If a corporate organization (Eg: Private Limited Company or Limited Company) is
operating in India then corporate taxes applyto the income generated by the company.
Unlike, individuals taxation, there are no slabs and income tax is applicable on the total
taxable profits of the company.

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LEGAL FRAMEWORK

RATES OF TAXATION
Income Tax Slabs for Individual Tax Payers & HUF (Less Than 60 Years) for
AY 2023-2024, PY 2022-2023

Income Tax Slabs Tax Rate Education & Health Cess

Income up to Rs. 2,50,000 No tax

Income from Rs 2,50,001 – Rs.5,00,000 5%

4% of Income Tax
Income from Rs. 5,00,001 – Rs.10,00,000 20%

Income more than Rs.10,00,001 30%

Income Tax Slabs for Senior Citizens (60 Years& above but Less than 80 Years) for
AY 2023-2024, PY 2022-2023

Income Tax Slabs Tax Rate Education& Health Cess

Income up to Rs.3,00,000 No tax

Income from Rs.3,00,001 – Rs.5,00,000 5%

Income from Rs.5,00,001 – Rs.10,00,000 20% 4% of Income Tax

30%
Income more than Rs.10,00,001
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Income Tax Slabs for Senior Citizens (80 Years &Above) for
AY 2023-2024, PY 2022-2023

Income Tax Slabs Tax Rate Education & Health Cess

No tax
Income up to Rs.5,00,000
20%
Income from Rs.5,00,001 – Rs.10,00,000
4% of Income Tax
30%
Income more than Rs.10,00,001

Note: Rebate U/S 87A

In case of total income of an individual (a resident in India) does not exceed Rs. 5,00,000, a
rebate shall be allowed out of tax. The amount of rebate shall be 100% of Income-tax or
Rs.12,500 whichever is less.

Surcharge:
i) For Individual, HUFs, AOPs / BOIs and Artificial Juridical Person
The rate of surcharge shall be
If total income exceeds Rs. 50 lakhs but does not exceed Rs. 1 cr 10% of Tax
If total income exceeds Rs. 1 crore but does not exceed Rs. 2 cr 15% of Tax
If total income exceeds Rs. 2 crore but does not exceed Rs. 5 cr 25% of Tax
If total income exceeds Rs. 5 crore 37% of Tax

Education & Health Cess: 4% (2% on Primary education, 1% on Higher education and
1% on Health

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. (Continued
henceforth)

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New Regime Slab Rates

Existing Regime Slab Rates
for FY 21-22

Income Tax Slab Resident

Resident
Individuals Resident
Individuals & Applicable for All
& HUF < 60 Individuals & HUF
HUF > 60 to < Individuals & HUF
years of age > 80 years
80 years
& NRIs

Rs 0.0 – Rs 2.5
NIL NIL NIL NIL
Lakhs

Rs 2.5 – Rs 3.00
NIL NIL
Lakhs 5% (tax
rebate u/s 5% (tax rebate u/s 87A is
87A is 5% (tax rebate available)
Rs. 3.00- Rs 5.00 available) u/s 87A is NIL
Lakhs
available)

Rs. 5.00 – Rs 7.5

20% 20% 20% 10%
Lakhs

Rs 7.5 – Rs 10.00
20% 20% 20% 15%
Lakhs

Rs 10.00 – Rs. 12.50

30% 30% 30% 20%
Lakhs

Rs. 12.5 – Rs. 15.00

30% 30% 30% 25%
Lakhs

> Rs. 15 Lakhs 30% 30% 30% 30%

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Conditions for opting New Tax regime.

The taxpayer opting for concessional rates in the New Tax regime will have to forgo certain
exemptions and deductions available in the existing old tax regime. In all there are 70
deductions & exemptions that are not allowed, out of which the most commonly used are
listed below:
List of common Exemptions and deductions “ not allowed” under New Tax rate regime
• Leave Travel Allowance (LTA)
• House Rent Allowance (HRA)
• Conveyance allowance
• Daily expenses in the course of employment
• Relocation allowance
• Helper allowance
• Children education allowance
• Other special allowances [Section 10(14)]
• Standard deduction on salary
• Professional tax
• Interest on housing loan (Section 24)
Deduction under Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section
80CCD(2))

List of deductions “allowed” under new Tax rate regime

• Transport allowance for specially abled people
• Conveyance allowance for expenditure incurred for travelling to work
• Investment in Notified Pension Scheme under section 80CCD(2)
• Deduction for employment of new employees under section 80JJAA
• Depreciation u/s 32 of the Income-tax act except additional depreciation.
• Any allowance for travelling for employment or on transfer

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Canons of Taxation
SL. CANONS OF TAXATION Explanation
No
1 CANON OF EQUALITY The Canon tries to observe the objective of Economic
Justice.
2 CANON OF CERTAINTY The tax which each individual is bound to pay ought to be
certain and not arbitrary. The time of payment, manner of
payment, quantity to be paid all to be very clear.
3 CANON OF The mode and timings of tax payment should be
CONVENIENCE convenient to the Taxpayer. It also advocates that
unnecessary trouble to the Taxpayer should be avoided.
4 CANON OF ECONOMY The Canon recommends that the cost of collection of
Taxes should be minimum possible. It is useless to impose
taxes which are too widespread and difficult to administer.
5 CANON OF It is also called a Canon of Fiscal Adequacy. This Canon
PRODUCTIVITY states that the Tax system should be able to yield enough
to revenue for the Treasury.
6 CANON OF BUOYANCY The tax revenue should have an inherent tendency to
increase along with an increase in National Income, even
if the rates and coverage of taxes are not revised.
7 CANON OF FLEXIBILITY The Authorities without undue delay revise the Tax
structure concerning coverage and rates to suit the
changing requirements of the economy and the treasury.
8 CANON OF SIMPLICITY The Tax system should be simple which is easy to
understand and administer.
9 CANON OF DIVERSITY The tax structure is a part of the Economic Organization of
a society which collects revenue from diversified sources

Finance Bill:
A Finance Bill is a Money Bill as defined in Article 110 of the Constitution. The proposals
of the government for levy of new taxes, modification of the existing tax structure or
continuance of the existing tax structure beyond the period approved by Parliament are
submitted to Parliament through this bill. The Finance Bill is accompanied by a
Memorandum containing explanations of the provisions included in it. The Finance Bill
can be introduced only in Lok Sabha. However, the Rajya Sabha can recommend
amendments in the Bill. The bill has to be passed by the Parliament within 75 days of its
introduction.

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Finance Act
a. Finance minister presents this bill in both the houses of the parliament
b. Part-A of the budget contains the proposed policies of the government in the fiscal
areas, Part-B contains the detailed tax proposals
c. Once the finance bill is approved by the parliament and get the assent of the president
becomes the finance act
d. The rate of tax at which income shall be charged is prescribed in the schedule I of the
finance act
e. The finance act brings an amendment to both direct tax and indirect tax.

Heads of Income (SECTION 14)

Section 14 of the Income-tax Act 1961 provides for the Computation of Total Income of
an Assessee which is divided under five heads of income. Each head of Income has its
method of Computations.

INCOME FROM INCOME FROM HOUSE

SALARIES PROPERTY

INCOME FROM PROFITS AND

GAINS OF BUSINESS OR
PROFESSION

INCOME FROM INCOME FROM

CAPITAL GAINS OTHER SOURCES

CONCEPTS & DEFINTIONS of INCOME – TAX 1961

I. Assessee: Section 2(7)
It means a person by whom any tax or any other sum of money is payable under this Act.
a. Assessee in default
If a person fails to fulfil his statutory obligations of paying Tax.

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b. Deemed Assessee
He is not only liable to pay tax on his income but also the income of the other person
(Example Minor/Guardian)

II. Person 2(31)

a. Individual
b. HUF
c. Partnership Firm
d. Association of person
e. The body of individuals
f. Artificial Judicial person
g. Local authorities
h. Companies

III. Assessment year

Section 2: It is a period of 12 months starting from 1st of April every year and ends on
31st March of next year, in which tax is calculated and levied as per the provision of
assessment year itself. (Example 1-4-2023 to 31-3-2024).

IV. Previous year

Section 3: It is12 months or less commencing before the assessment year i.e. 1st of April
every year and ends on 31st March of next year (example 1-4-2022 to 31-3-2023).

The exception to the rule of the previous year

a. Shipping business income of a non-resident person

b. The person leaving India.
c. In the case of a person who is likely to transfer their assets to avoid tax
d. In the case of discontinued business
e. Assessment of any association of person, a body of individuals or artificial
juridical person formed or established only for a limited period

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V. Income [section 2(24)]

i. Profits and gains

ii. Dividend
iii. Voluntary contribution received by a trust
iv. The value of any perquisite or profit in lieu of salary
v. Any special allowance or benefit other than perquisite included under sub-clause
(iii), specifically granted to the assessee to meet expenses wholly, necessarily and
exclusively for the performance of the duties of an office or employment of profit
vi. Capital gains [Link] from lotteries, race, card games, betting etc.
viii. Employee’s contribution towards provident fund, superannuation fund etc.

VI. Gross Total Income (GTI)

U/s 14 the term “Gross Total Income” [GTI] means the aggregate of incomes computed
under the following five heads:
• Income under the head “Salaries”
• Income under the head “ House Property”
• Income under the head “Profit and Gains of Business or Profession”.
• Income under the head “Capital Gain”.
• Income under the head “Other Sources”.

After aggregating income under various heads, losses are adjusted and the resultant figure
is called “Gross Total Income” [GTI]

VII. Total Taxable Income/Total Income

Total Taxable Income is computed after deducting permissible deductions under section
80C to 80U, from the Gross Total Income, where the Gross Total Income of the Assesses
includes Short-Term Capital Gains from transfer of equity shares/units of an equity-
oriented mutual fund subject to Securities Transaction Tax or any Long-Term Capital

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Gains, then no deduction shall be allowed against such Capital [Link] this Taxable
Income, Income Tax will be calculated as per the applicable rates.

8. Tax Rebate

Tax Rebate in India is allowed to those individuals whose income falls within the tax
slabs that are modified every year as per the directions of the government. All
information about modifications in the rebate structure is announced in the union budget
of the respective year.

Problems - Determination of Tax Payable

1. Mr Searns a total income of Rs.5,90,000 in the previous year 2022-2023.

You are required to calculate the amount of tax payable for the Assessment year 2023-
2024. Considering
Situation -1 – Old tax regime
Situation -2 – New tax regime

2. Mr Jagan earns a total income of Rs.9,00,000 in the previous year 2022-2023.

You are required to calculate the amount of tax payable by Mr Jagan for the
Assessment Year 2023-2024.
Situation -1 – old tax regime
Situation -2 – New tax regime

3. Ms Komal’s total income for the previous year 2022-2023 is Rs.14,00,000.

You are required to calculate the amount of tax payable by Ms Komal for the
Assessment Year 2023-2024.
(Advise [Link] as to which tax regime she should opt for with justification)

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4. [Link] aged 70 years earn a total income of Rs.8,20,000 in AY 2023-2024,

PY 2022-2023. You are required to calculate the amount of tax payable by Ms Anjana.
Assuming she opts for New tax regime

5. Mr Govind aged 85 years earns a total income for the previous year 2022-2023 is
Rs.6,70,000, you are required to compute the amount of tax payable by [Link] for
the Assessment Year 2023-2024. Which tax regime you suggest [Link] as a student of
taxation

6. Mrs Suhasini aged 34 years earns a total income for the previous year 2022-2023 is

Rs.29,00,000, you are required to calculate the amount of tax payable by Mrs Suhasini

for the Assessment Year 2023-2024. She assumes her as sensible in opting for old tax
regime – Comment on whether she is sensible in opting for old tax regime

7. [Link] aged 82 years has earned a total income of Rs.13,40,000 during the previous

year 2022-2023. Calculate tax payable by Mr Keshav for the AY 2023-2024. Mr. Keshav
is asking for you advise on opting for old or new tax regime with proper justification

8. Mr Raghav aged 68 years has a total income of Rs.10,50,000 during the previous year

2022-2023. Compute Tax payable by [Link] for the Assessment Year 2023-2024.
Mr. Raghave is asking for you advise on opting for old or new tax regime with proper
justification

9. Mr Hemant aged 68 years earns a total income of Rs.11,50,000 during the previous
year 2022-2023. You are required to calculate the tax payable by [Link] for the
Assessment Year 2023-2024.

10. Mr Dheeraj aged 40 years earn a total income of Rs.17,50,000 during the previous
year 2022-2023. Compute tax payable by him for the Assessment Year 2023-2024.
Suggest which suits him the best & why.

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