Module I:
Hindu Undivided Family
HUF Definition- The Hindu Undivided Family can best be defined as a family that consists of
a common ancestor and all his lineal male descendants and their wives and unmarried
daughters with a minimum of 2 members.
Steps for computation of income-tax of HUF
1. The Gross Total Income of HUF shall be computed under four heads of income
Income from house property, Profits and gains of business or profession, Capital
gains & Income from other sources. ( salary is excluded )
2. Set off of losses is permissible while aggregating the income under different heads of
income.
3. Carry forward and set off of losses of past years is allowed, if permissible
4. Deductions u/s 80C, 80D, 80DD, 80DDB, 80G, 80GGA, 80GGC, 80-IA, 80-IB,
80-IBA, 80-IC, 80- ID, 80-IE, 80JJA, 80JJAA, 80TTA will be allowed.
5. The balance income after allowing the deductions is known as Total income which
will be rounded off to the nearest Rs. 10.
6. Compute the tax at slab rates.
7. Add surcharge and Education cess
8. The balance is the gross tax payable from which deduct the TDS, advance tax paid
for the relevant assessment year and double taxation relief.
9. The balance is the net tax payable which will be rounded off to nearest Rs. 10 and
must be paid as self-assessment tax before submitting the return of income.
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Firms
Persons who have entered into partnership with one another are called individually "partners"
and collectively "a firm", and the name under which their business is carried on is called the
"firm name
Firms are taxed at flat rate (MMR).
The maximum amount of remuneration (salary, bonus, commission or other remuneration) to
all the partners during the previous year should not exceed the limits given below, if it exceed
deduct lower of the following from business income:-
1) Actual renumeration (excluding sleeping partners’)
2) Higher of the following:
i. Statutory limit - 1,50,000
ii. 90% On first 3 lakhs of book profits + 60% On the balance
In case of loss actual remuneration or statutory limit, whichever is least would be deducted.
If the firm does not fulfils the conditions of sec. 184 of income tax act: in such cases
provisions of section 185 apply and in computing business income, interest and
remuneration are not admissible deductions
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✓ Limited liability partnerships (LLPs) allow for a partnership structure where each
partner's liabilities is limited to the amount they put into the business.
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Association of Persons
Association of Persons (AOP) means a group of persons who come together for achieving a
common objective and have the same mindsets.
✓ AOP is taxed at slab rate, if members income doesn’t exceed maximum limit. And
none of member is liable to pay tax.
✓ AOP is to be taxed at 30% if any one of the member’s income exceed maximum limit
(2,50,000) , in that case income of AOP is not shared for computing taxable income of
members and also income of members of AOP are taxed at slab rate
Co-operative Societies
A co-operative society is a voluntary association of individuals having common needs who join
hands for the achievement of common economic interest.
Tax rate of Co-operative Societies
The slab rate for AY 2020-21 is as under:
Net income Rate
Up to Rs. 10,000 10
Rs. 10,000 - Rs. 20,000 20
Above Rs. 20,000 30
Deduction u/s 80p
Following are deducted from GTI of Co-operative Societies
✓ The business of banking or providing credit facilities to its members
✓ Income from Cottage industry
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✓ Income from marketing of agricultural produce grown by its members
✓ Purchase of agricultural implements, seeds, livestock or other articles intended for
agriculture for the purpose of supplying them to its members
✓ Income from processing of agricultural produce of its members without the aid of power
✓ Income from Collective disposal of the labour of its members, or fishing, or any allied
activities (catching, curing, processing, preserving, storing, marketing of fish etc
✓ Income from a co-operative society which is primarily engaged in supplying milk, oilseeds,
fruits or vegetables raised or grown by its members
✓ Income from other business:
a. For consumer co-operative society* – Up to Rs 1 lakh
b. Others – Up to Rs 50,000
✓ Interest or dividend and income on deposits from another co-operative society
✓ Income from letting of godowns or warehouses for storage, processing or facilitating the
marketing of commodities
Trusts & Charitable and Religious Institutions
A trust is a fiduciary relationship in which one party, known as a trustor, gives another party,
the trustee, the right to hold title to property or assets for the benefit of a third party, the
beneficiary.
Charitable institutions :It is the Trusts which has an objective of Charitable Purposes and
provides voluntarily help. They are non-profit based and their main purpose is toward activities
which are for the benefit for the Society at large.
Charitable Purpose includes various acts like the relief of the poor, promoting education, yoga,
medical relief, preservation of the environment, preservation of monuments (e.g Taj Mahal,
Red fort etc.) and also Advancement of any other activities which are of general public benefit.
Religious institutions: churches, temples, mosques and other places of worship and institutions
that exist to support and manage the practice of a specific set of religious beliefs.
Corpus donation: It is type of fund which is a permanent and kept for the basic
expenditures needed for the administration and survival of the organization. Corpus
donation being in the nature of capital receipt is exempted for Tax
Anonymous donations: anonymous donation" means any voluntary contribution, where a
person receiving such contribution does not maintain a record of the identity indicating the
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name and address of the person making such contribution and such other particulars as may be
prescribed.
Anonymous donations are taxable for trust or institutions at the rate of 30%, only
to the extent such donation exceeds Rs. 1,00,000 or 5% of total donations received
by the trust, whichever is higher.
The following entities are exempted to pay tax on anonymous donations:
• donations received by any trust or institution created or established 'wholly for
religious purposes and,
• by any trust or institution created or established for both religious as well as
charitable purposes.
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