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This document provides an introduction to Unit 1 of an Income Tax Law & Practice course. The unit covers topics such as the Income Tax Act of 1961, gross total income, agriculture income, residential status, incidence of tax, and exempted income. It also lists suggested reading materials and chapters related to the scope of total income and residential status. Sample tax slabs are provided for individuals, HUFs, companies, and cooperative societies. Additional payments like surcharge and cess that can impact the total tax liability are also explained.

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76 views28 pages

1 3+part+2

This document provides an introduction to Unit 1 of an Income Tax Law & Practice course. The unit covers topics such as the Income Tax Act of 1961, gross total income, agriculture income, residential status, incidence of tax, and exempted income. It also lists suggested reading materials and chapters related to the scope of total income and residential status. Sample tax slabs are provided for individuals, HUFs, companies, and cooperative societies. Additional payments like surcharge and cess that can impact the total tax liability are also explained.

Uploaded by

jaspreet kaur
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Income Tax Law & Practice

Unit 1

Presented By:
Dr. Pooja Sharma
Assistant Professor
DME Management School
p.sharma@dme.ac.in

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2 of 25
Unit 1- Introduction

1.1 Introduction to Income Tax Act, 1961

1.2 Salient features and Basic concepts


Previous year, Assessment year, Person

1.3 Gross Total Income


1.4 Agriculture Income
1.5 Residential Status
1.6 Incidence of Tax
1.7 Exempted Income

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1.3 Gross total income

9 of 22
Suggested
Readings

Author: Ahuja, Girish and Gupta, Ravi,


Title of the Book: Systematic Approach to Income
Tax, Bharat Law House
Ch ap ter ’s Name: Basic Concepts

Author: Singhania, V.K. and Singhania, Monica


Title of the Book: Student’s Guide to Income Tax
Ch ap ter ’s Name: Scope of Total Income and
Residential Status

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Income Tax Slab for FY 2020-21 & AY 2021-22
Old Tax
Regime(( INDIVIDUA
New Tax
Annual Income L/HUF/AOP/BOI/AJP
Regime(Individuals/HUF)
)

Up to Rs.2.5 lakh Exempt Exempt

Rs.2.5 lakh - Rs.5 lakh 5%* 5%*

Rs.5 lakh - Rs.7.5 lakh 10% 20%

Rs.7.5 lakh - Rs.10 lakh 15% 20%

Rs.10 lakh - Rs.12.5 lakh 20% 30%

Rs.12.5 lakh - Rs.15 lakh 25% 30%

Above Rs.15 lakh 30% 30%


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Question

 Calculate Tax for Mr. X ( Age less than 60) have income of Rs. 700000
under new and old regimes.

 Details
 80C- 150000
 80D- 25000
 24(b)- 75000

 Which regime is better in each of the two cases and why?

1 of
Taxable Income 700000   700000

0 to 2.5 Lakh – –

2.5 to 5 Lakh @ 5% 12500 –

5 Lakh to 10 Lakh @ 40000 –


20%
Tax
> 10Slab
Lakh(NEW)
@ 30%   –  –

0 to 5 Lakh – –

2.5 to 5 Lakh @ 5% – 12,500

5 to 7.5 Lakh @ 10% – 20000


7.5 Lakh to 10 Lakh –  
@ 15%

10 Lakh to 12.5 Lakh – –


@ 20%

12.5 Lakh to 15 Lakh – –


@ 25%
> 15 Lakh @ 30% – –
Income Tax 52500 32500
Cess @ 4% 2100 1300
1 of
Total Tax Outgo 54600 33800
Question 2
Particulars Old Tax Regime (Rs) New Tax Regime (Rs)

Gross Income 700000 700000

Deductions:    

U/Sec: 80C 150,000 –

U/Sec: 80D 25,000 –

U/Sec: 24(b) 75,000 –

Taxable Income 450000 700000


Tax Slab (OLD)    

0 to 2.5 Lakh – –

2.5 to 5 Lakh @ 5% 10000 –

5 Lakh to 10 Lakh @ – –
20%
Tax
> 10Slab
Lakh(NEW)
@ 30%  –  –

0 to 5 Lakh – –

2.5 to 5 Lakh @ 5% – 12,500

5 to 7.5 Lakh @ 10% – 20000


7.5 Lakh to 10 Lakh @ –  
15%

10 Lakh to 12.5 Lakh – –


@ 20%

12.5 Lakh to 15 Lakh – –


@ 25%
> 15 Lakh @ 30% – –
Income Tax 10000 32500
Cess @ 4% 400 1300
1 of
Total Tax Outgo 10400 33800
• Comparison between Old and New Tax Regime FY 2020-21 (AY 2021-22) - for
senior citizen above 60 and below 80)
• Total Income 8,00,000

• Deductions
• Sec.80C - 1,50,000
• Sec.80D - 50,000
• 80TTB - 50,000

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1 of
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Conclusion

• If not investing in any instrument, then you end up paying less tax in new
Regime.

• HOMEWORK
• Now try for individual of the age Income Rs. 700000 :

• A) 65 years
• B) 82 Year

1 of
How to calculate tax using slabs and rates?

• Income is broken in slabs say a person earns total income of Rs.


6,00,000 then 6,00,000 is broken in 3 slabs as follows:
• For first 2,50,000 of his total income, we will see first slab
on previous slide and rate charged on first Rs. 2,50,000 will be
nil. So no tax on first Rs. 2,50,000 of his income.
• For next 2,50,000 (difference between upper and lower
limit of second slab), tax is 5% i.e. 5% of 2,50,000 = Rs.
12,500
• For remaining 1,00,000 of his income, third slab has
the tax rate of 10% so tax charged is Rs. 10,000 rupees
• Total tax liability is Rs. (12,500 + 10,000)
• Note: rebate, surcharge, and health cess are not included in this
calculation. 4 of 22
Other Slabs/Rates
Hindu Undivided Family (Including AOP, BOI and
Artificial Juridical Person)
Net Income Rate of Income-tax
Range
Assessment Year Assessment Year
2022-23 2021-22

Up to Rs. 2,50,000 - -

Rs. 2,50,000 to Rs. 5% 5%


5,00,000
Rs. 5,00,000 to Rs. 20% 20%
10,00,000
Above Rs. 30% 30%
10,00,000
1 of
Company

1 of
Co-operative Society

Taxable income Tax Rate


Up to Rs. 10,000 10%
Rs. 10,000 to Rs. 20,000 20%
Above Rs. 20,000 30%

Note:
The Finance Act, 2020 has inserted a new Section 115BAD in
Income-tax Act to provide an option to the co-operative
societies to get taxed at the rate of 22% plus 10% surcharge
Taxable income Tax Rate
and 4% cess.

The resident co-operative societies have an option to opt for


taxation under newly Section 115BAD of the Act w.e.f.
Any income 22%
Assessment Year 2021-22. The option once exercised under
this section cannot be subsequently withdrawn for the same
or any other previous year.
1 of
Additions/Subtractions to tax liability calculated on
total income of a person
 Apart from tax liability, in India an Assessee is also
subject to these additional payments or deductions over
and above tax:
 Rebate under sec 87A (deduction from tax liability,
explained later in coming slides)
 Surcharge (addition to tax liability explained later in
coming slides)
 Health and Education Cess (4% of tax and
surcharge; addition to tax liability explained in coming
slides)
 Prepaid taxes like TDS, Tax paid on self
assessment, tax paid in advance (deduction from tax
liability) 11 of 22
Rebate of Income Tax (Sec 87A)

Whose Total Income is up to Rs. 500000 Shall be


allowed a rebate, from income tax of 100% of
Income Tax or Rs. 12500 ‘whichever is less.

Education Cess ( @ 4%)

13 of 22
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Surcharge

• A surcharge on income tax is an extra tax to be paid by the taxpayers earning a


higher income i.e., beyond a certain limit.

Taxpayer Income limit Surcharge Rate on the


amount of income tax

Individual/HUF/AOP/BOI/ Artificial Net income exceeds 10%


Judicial Person Rs.50 Lakhs but doesn’t
exceed Rs. 1 Crore

Individual/HUF/AOP/BOI/ Artificial Net income exceeds 15%


Judicial Person Rs.1 Crore but doesn’t
exceed Rs 2 crore

Individual/HUF/AOP/BOI/ Artificial Net income exceeds 25%


Judicial Person Rs.2 Crore but doesn’t
exceed Rs 5 crore

Individual/HUF/AOP/BOI/ Artificial Net income exceeds 37%


Judicial Person Rs.5 Crore
1 of
Surcharge

Firm/LLP/Local Net income exceeds Rs.1 12%


authorities/Co-operative Crore
Society
Domestic Company Net income exceeds 7%
Rs.1 Crore but doesn’t exceed
Rs.10 Crores

Domestic Company Net income exceeds 12%


Rs.10 Crores
Foreign Company Net income exceeds 2%
Rs.1 Crore but doesn’t exceed
Rs. 10 Crores

Foreign Company Net income exceeds 5%


Rs.10 Crores

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Example

1 of

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