1
ASSESSMENT OF INDIVIDUALS
1. Piyush furnishes the particulars of his income/outgoings for the previous year 2007-2008 as follows:
Rs
(i) Gross salary
(ii) Income from house property
(iii) Taxable business profits
(iv) Capital gains: (a) long-term
(v) (b) short-term
(vi) Gross dividends from Indian companies
(vii) Interest from government securities
(viii) Net winnings from lottery (TDS Rs.12,000)
He has made the following contribution/payments:
(i) Insurance premium on self and wife
(ii) Contribution to unrecognised provident fund
(iii) Public provident fund
(iv) NSC VIII Issue
(v) Medical insurance premium under GICApproved policy. Payment was made by
Credit Card (w.e.f.A.Y.2008-09, payment made by any mode other than cash is
allowed)
360,000
45,000
90,000
50,000
20,000
60,000
27,000
28,000
10,000
8,000
30,000
25,000
11,000
He has carried forward business loss amounting Rs 1,20,000 from the assessment year 2004-2005.
Compute his total income and tax liability. He has paid Rs 10,000 as advance tax and the employer has
deducted Rs 30,000 tax from salaries.
(a) Computation of Total Income for the Assessment Year 2008-2009
Particulars Rs Rs
(i) Income from salary: Gross salary
(ii) Income from house property
(iii) Business profits
(iv) Capital gains: long-term
: short-term
(v) Income from other sources:
(a) Dividends from Indian companies: Exempt [Sec. 10(34)]
(b) Interest from government securities
(c ) Winnings from lotteries (28,000 + 12,000)
Aggregated Income
Less: Carried forward business loss to be set-off against business
profits (Sec. 72)
Gross Total Income
Less:
1. Contributions paid under Sec. 80C:
(i) Insurance premium on
self and wife
(ii) Contribution to
unrecognised fund
(iii) Public provident fund
(iv) NSC -VIII Issue
2. Medical insurance premium (Sec. 80 D)
Total Income
50,000
20,000
70,000
(Nil)
27,000
40,000
10,000
-
30,000
25,000
3,60,000
45,000
90,000
70,000
67,000
6,32,000
90,000
5,42,000
65,000
11,000
4,66,000
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(b) Computation of Tax Liability :
Particulars of total income Rs. Rate of tax Rs
(i) Long-term capital gains 50.000 20% 10,000
(ii) Lottery winnings: 40,000 30% 12,000
(iii) Balance of total income Rs .3,76,000
First 1,10,000 Nil -
Next 40,000 10% 4,000
Next 1,00,000 20% 20,000
On the balance 1,26,000 30% 37,800
Gross tax 83,800
Add: Surcharge as income tax Nil
Add: Education cess @ 2% on income and surcharge
Add : SHEC @ 1%
1676
838
Less: (a) Tax deducted at source: 86314
(i) Salary 30,000
(ii) Lottery 12,000
(b) Advance tax 10,000
52,000 (-) 52,000
Tax payable 34,314
Tax payable rounded off to the nearest multiple of Rs 10 (Sec. 288B) 34,310
2. Miss Shristi, resident in India, is employed at a salary of Rs 30,000 p.m. She has sold shares of a company
in July 2007 for Rs 29,600. The shares were purchased in 1975 for Rs 20,000. Their fair market value on 1 April
1981 was Rs 40,000. She paid Rs 5,000 as brokerage on the sale of shares. During the year 2007-2008 she
has received (i) gross interest on bank deposits, Rs 19,000; (ii) interest on Government Securities 75,000; (iii)
gross dividends from cooperative society, Rs 40,000. Compute her total income and determine her tax liability,
making necessary assumptions, for assessment year 2008-2009 if her outgoings during this period are given
below:
Rs
(i) Contribution under Equity Linked Saving Scheme-2005
(ii) Contribution for New Jeevan Akshay-I annuity plan of LIC
(iii) Her contribution to Recognised Provident Fund
(iv) NSC VIII Issue
(v) Medical insurance for her life under GIC scheme by cheque
(vi) Contribution to approved LIC pension fund
(vii) Donation to National Blood Transfusion Council
(viii) Medical expenditure for the treatment of her disease,
Specified under the rules
20,000
12,000
24,000
8,000
3,000
15,00
12,000
50,000
Particulars Rs Rs
1. Income from salary: Gross salary
2. Long-term capital gain: Sale price of shares
Less: 1. Selling expenses:
2. Indexed cost of acquisition:40,000 x (551/100)
Long-term capital loss to be carried forward for future set-off
1,29,600
(-) 5,000
(-) 2,20,400
(-) 95,800
3,60,000
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Particulars Rs Rs
3. Income from other sources:
(a) Interest on bank to deposit
(b) Interest from government Securities
(c) Gross dividend from cooperative society
Gross Total Income
Less: 1. Deductions u/s 80C
(i) Contribution to Equity Linked Savings Scheme-2005
(ii) Contribution to New Jeevan Akshay-I
(iii) Contribution to recognised fund
(iv) NSC-VIII Issue
2. Medical insurance premium (Sec. 80 D)
3. Contribution to LIC pension fund (Sec. 80CCC)
4. Donation to National Blood Transfusion Council (Sec. 80G) Rate of
deduction 100%
5. Medical expenditure for specified diseases (Sec. 80DDB): 40,000
Less: Insurance money 31,000
Amount of deduction 9,000
Total income
19,000
75,000
40,000
20,000
12,000
24,000
8,000
1,34,000
4,94,000
64,000
3,000
15,000
12,000
9,000
3,91,000
Computation of tax liability:
Particulars of total income Rs Rate of tax Rs
First
Next
Next
On the balance
Add : 1. Surcharge on income tax
2. Education cess @ 2% on the aggregate of income tax and
surcharge
Add : SHEC @ 1%
Tax payable
Tax payable rounded off the nearest multiple of Rs 10 (Sec. 288B)
1,45,000
5,000
1,00,000
141,000
3,91,000
Nil
10%
20%
30%
-
500
20,000
42,300
62,800
Nil
1,256
628
64,684
64,680
Note: Long-term capital loss cannot be set-off against the income of any other head. It is carried forward
for next eight assessment years for future set off.
3. Divya, a resident assessee during 2007-2008 is getting pension of Rs. 18,650 p.m. since she retired in
December 1999 after completing 58 years. She has received gross dividends from cooperative society, Rs
16,000. She has also received interest of Rs 5,000 on deposits made with Housing Urban Development
Corporation, engaged in providing long-term finance for house construction/purchase during 2007-2008.
Besides, she has earned long-term capital gain of Rs 2,00,000 on the sale of gold. She has paid Rs 20,000
medical insurance premium on his life by cheque. She has also purchased infrastructure bonds of Rs 80,000
specified under Sec 80C(2)(xix): She has purchased NSC VIII issue on 1-3-2008 for Rs 14,000. Interest of Rs
1000 has accrued on NSC VIII issue purchased in 2004-2005. Compute her total income and tax liability. She
has also deposited Rs. 10,000 under annuity plan of LIC to secure pension from fund referred to under Sec.
23AAB.
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Computation of Total Income for the AY 2008-2009
Particulars Rs Rs
(i) Income from salary: Pension 18,650 x 12
(ii) Long-term capital gains
(iii) Income from other sources:
(a) Interest on deposits with HUDCO
(b) Interest accrued on NSC VIII Issue
(c) Dividend from cooperative society
Gross Total Income
Less: Deduction in computing total income
1. Contributions paid for approved savings [Sec.
80C]:
(i) Infrastructure bonds [Sec. 80C(2)(xix)]
(ii) NSC VIII Issue
(iii) Accrued interest on NSC VIII Issue
2. Deposit under annuity plan of LIC [Sec. 80CCC]
However, deduction is restricted u/s 80CCE:
3. Medical insurance premium (Sec. 80D):
Total income
5,000
620
16,000
80,000
14,000
1000
95,000
10,000
1,05,000
2,23,800
2,00,000
21,620
4,45,420
1,00,000
20,000
3,25,420
Computation of Tax Liability for the AY 2008-2009
Rs Tax Rate Rs
26,084
Nil
522
261
Tax on long-term capital gains [Sec. 112(1)]— [see Note below]
Add: Surcharge on income tax
Add: Education cess @ 2% on income tax + surcharge
Add : SHEC @ 1%
Tax payable
Tax payable rounded off to the nearest multiple of Rs 10 (Sec. 288B)
1,30,420 20%
26,867
26,870
Note: (1) Divya, is a senior citizen. [ Age on retirement + No.of years since retirement till date= 58 + 8=66
years]. Deduction from GTI is Rs 120,000 which has to the allowed against income, other than long-term
capital gain [Sec.112(3)]. Thus, the amount of other incomes included in total income Rs1,25,420
(=2,23,800 + 21,620-1,20,000). Senior citizen is not required to pay any tax up to Rs 1,95,000. Exemption limit
is first adjusted against incomes other that long-term capital gain provided the individual is resident in india.
The unavailed basic exemption limit is Rs.69,580 (Rs.1,95,000 – 1,25,420).Thus, the taxable amount of longterm
capital gain is Rs. 1,30,420 [=2,00,000-69,580]
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4. Mr P. Nandy, resident in India, discloses the following particular of his income/outgoing during the previous
year 2007-2008
Rs
(i) Short-term capital gain from sale of equity shares chargeable to securities
transaction tax: Securities transaction tax paid:
(ii) Loss from the activity of maintaining and owning race horses on which wagering is
lawfully made
(iii) Gross income from Bank of India Mutual Fund [Sec. 10(23D)]
(iv) Annual rent (fair rent Rs 3,50,000) receivable from house property.
It remained vacant for one month and municipal taxes, Rs 30,000, were paid in
two instalments, September 2007 Rs 30,000 and April 2008 Rs 20,000
(v) Repayment of loan (including interest of Rs 1,00,000):
Loan was taken from LIC to purchase house property.
(vi)He has paid school fees for his son (including building fund Rs 15,000)
(vii)Fixed Deposit for 6 years with Scheduled Bank.
(viii) He has incurred expenditure on medical treatment and rehabilitation of his sister,
suffering with 40% disability.
3,00,000
Nil
(-) 1,40,000
2,50,000
2,64,000
1,50,000
40,000
50,000
40,000
Compute his total income and tax liability for the assessment year 2008-2009
Solution: Computation of Total Income for the AY 2008-2009
Particulars Rs Rs
(a) Income from house property:
Gross annual value
(i) ALV:
(ii) Actual rent received
Actual rent is lower than ALV even without vacancy.
Therefore, ALV be reduced to adjust the loss on account of
vacancy 3,50,000 - 22,000 = 3,28,000 GAV
Less: Municipal taxes paid during the previous year
Net Annual Value(NAV)
Less: 1. Statutory deduction—30% of annual value
2. Interest on loan
Income from House Property
Short-term capital gain (Sec. 111A)
Income from other sources:
(i) Loss from owning and maintaining race horses, -1,40,000: it is to be
carried forward for next 4 assessment years.
(ii)Income from units of mutual fund — Exempt [Sec. 10(35)]
Gross Total Income
Less: (1) Deduction u/s 80C
(i) Deposit in CTDS—10-year account not allowed
(ii) Tuition fees for his son (40,000 - 15,000) (only tuition fees allowed)
(iii) Repayment of loan, taken for house constriction
3,50,000
2,42,000
3,28,000
30,000
2,98,000
(-) 84,000
(-) 1,00,000
Nil
25,000
50,000
75,000
1,08,600
3,00,000
-
-
4,08,600
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(2) Expenditure incurred on medical treatment (Sec, 80DD)
As deduction under Chapter VI A can be allowed against short-term
capital gain under Sec. 111A, total deduction including sections 80C and
80 DD is restricted upto the other income of Rs.1,08,600
Total income
Tax Liability
Tax on short-term capital gain @ 10% of Rs 1,90,000
Add: Surcharge on income tax
Add: Education Cess @ 2%
Add : SHEC @ 1%
Tax payable
50,000
1,25,000
19,000
Nil
19,000
380
190
19,570
1,08,600
3,00,000
Note :
1. Sec. 88E rebate is allowed if total income includes any income, chargeable under the head 'business or
profession", arising from taxable securities transactions and the securities transaction tax is paid.
2. No tax is payable by an individual if total income does not exceed Rs 1,10,000. The exemption limit is first
adjusted against income, other than short-term capital gain and thereafter aginst short- term capital gain
provided the assessee individual is resident in India.
5. Mr. Ashis furnishes the following particulars for the assessment year 2008-2009.
Rs
(i) Income from salary
(ii) Income from house property
(iii) Short-term capital gains
(iv) Dividends from Indian companies
(v) Income from stage performance—song and dance shows
4,80,000
90,000
2,00,000
40,000
6,00,000
He has deposited in Public Provident Fund Rs. 30,000 in the name of his widow sister, dependent on him
and Rs. 60,000 in the name of his wife, granted judicial separation. He has repaid Rs 1,00,000 to State Bank
of India against loan taken to complete his master degree in mathematics. 50% repayment is against interest.
He has paid medical insurance premium on his life for Rs 8,000 and on the life of his children Rs 7,000. The
payment was made by cheque. He has made donation (i) Rs 60,000 to Delhi University, and (ii) Rs 70,000 to
Municipal Corporation of Delhi (MCD) for family planning.
His two minor children, Vijay and Sanjay, have earned income of Rs 2,20,000 and Rs 3,50,000 during 2007-2008
from different sources. However income of Sanjay includes a sum of Rs 1,30,000, which he has earned by TV
quiz programme, Vijay is permanently physically handicapped which has reduced gainful employment
opportunities. The physical disability is certified by a doctor of a Government hospital.
Compute his total income for the previous year 2007-2008 and determine his tax liability.
Computation of total income for the AY 2008-2009
Particulars Rs Rs
(i) Income from salary
(ii) Income from house property
(iii) Income from profession: Stage performance
(iv) Short-term capital gains
(v) Income from other sources:
(a)Dividends from Indian companies: Exempt [Sec. 10(34)]
(b) Income of minor child [Sec. 64(1A)]
Sanjay: 3,50,000 - 1,30,000 =
Less: Exemption [Sec. 10(32)]
2,20,000
1,500
4,80,000
90,000
6,00,000
2,00,000
Nil
2,18,500
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Gross Total Income
Less: Deductions under Chapter VI A:
1. Contributions paid for approved savings (Sec. 80C)
(i) Deposit in PPF in the name of wife
(ii) Deposit in PPF in the name dependant sister not allowed
2. Medical Insurance u/s 80D
3. Repayment of interest on loan, taken for higher education [Sec.
80E]
4. Charitable donations:
(a) 1. Delhi University 70,000
2. MCD for family planning 80,000
Actual donations 1,50,000
Or,
(b) 10% x Adjusted Gross Total Income
= 10% [ 15,88,500 – (60,000 + 50,000 + 15000)] = 146,350
whichever is less, is qualifying amount. It is Rs. 1,46,350.
(i)Rs. 80,000 donation to MCD for family planning 100%
(ii) (146350-8000) to Delhli University = 66,350 50%
Total Income
Total income rounded off to the multiple of Rs 10 (Sec. 288A)
60,000
-
15,000
50,000
80,000
33125
15,88,500
2,38,125
13,50,325
13,50,330
Note: From the assessment year 1995-1996, income of a minor child, suffering from a permanent physical
disability cannot be clubbed with the income of parents [Sec. 64(1 A)]. Accordingly, income of Vijay has been
excluded from clubbing operation.
Mr Chopra is required to furnish the return of income on behalf of minor children. P 18.6 Mr J, a noted
lawyer of Jaipur High court, furnishes his receipt and Payment a/c for the year 2006-2007 as follows.
6. Mr. Goutam, a lawyer of Kolkata High Court, furnished his Receipt and Payment a/c for the year 2007-
2008:
Particulars Rs Particulars Rs
To balance b/d
Fees from clients
Salary from law college as part-time lecture
Interest on bank deposits
Dividends from cooperate society
Dividends from UTI
Sale proceeds from house property, used for
residence
Rent from house property
(Municipal value Rs 5,00,000)
5,00,000
30,00,000
4,00,000
60,000
20,000
20,000
10,50,000
6,00,000
56,50,000
Purchase of law books
Rent of chamber
Municipal taxes for house property
Membership fees paid to bar council
Office expenses
Salaries to staff
Motor car purchased in December
2007
Electricity and telephone expenses
Advance income tax paid Donation to
PM's Tsunami relief fund
Life insurance premium paid
Infrastructure bond purchased
By balance c/d
50,000
2,50,000
90,000
20,000
8,00,000
6,00,000
8,00,000
2,00,000
2,00,000
40,000
40,000
1,00,000
24,60,000
56,50,000
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Additional information:
Rs
(i) Outstanding legal fees
(ii) Fees from clients include retainer fees for financial year 2008-2009
(iii) Rent of chamber outstanding
(iv) Law books include subscription for annual law periodical Rs 5,000 and other laws
books purchased in December 2007.
(v) House property remained vacant for one month and tenant and did not pay one
month rent. Conditions of Rule 4 were satisfied in respect of unrealised rent.
(vi) The house property, used for residence, was purchased in 1996-1997 for 2,00,0000.
Compute his total income for the previous year 2007-2008 and his tax liability for the
assessment year 2008-2009.
1,50,000
1,00,000
30,000
Computation of Total Income for the 2008-2009
Particulars Rs Rs
Income from Salary
Income from House Property:
Gross annual value:
(i) ALV 5,00,000
6,00,000
(ii) Rent received for 10 months (assuming conditions of Rule 4 have
been 4,00,000 satisfied). Since rent received even without
vacancy is lower than ALV, only loss due to vacancy is allowed to
be deducted from ALV.
Gross Annual Value (GAV)
Less: Municipal taxes paid
Net annual value
Less: Statutory deduction - 30% of AV
Income from house property
Income from profession
Receipts from profession
Outstanding fees from clients and retainership fees received in advance for
PY 2008-20089 have not to be adjusted as the assesses is following cash
system of accounting
Less: Allowable expenses:
(i) Rent (outstanding rent not to be deducted)
(ii) Membership fees paid to bar council
(iii) Office expenses
(iv) Salaries paid to staff
(v) Electricity and telephone expenses
(vi) Depreciation on law books
(a) Periodicals -100% of 5,000 =
(b) Books – 45,000 x 60% x 50%
(vii) Depreciation on motor car : 8,00,000 x 15% x 50%
Income from Profession
Income from Capital Gains
Sale consideration of the house
Less : indexed cost of acquisition : 2,00,000 x 55%
305
Long-term capital gain
6,00,000
(-) 90,000
5,10,000
1,53,000
3,57,000
30,00,000
(-) 2,50,000
(-) 20,000
(-) 8,00,000
(-) 6,00,000
(-) 2,00,000
(-) 5,000
(-) 13,500
(-) 60,000
10,51,500
10,50,000
3,61,311
6,88,689
4,00,000
3,57,000
10,51,500
6,88,689
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Income from other sources
(I) Interest on bank deposits
(II) Dividends from UTI – Exempt [Sec. 10(35)]
(III) Dividends from cooperative society
Gross Total Income
Less : 1. Contributions paid for approved savings (Sec. 80C) :
(I) LIP
(ii) Infrastructure bonds [Sec. 80C(2) (xix)]
Maximum deduction restricted upto Rs.1,00,000
Less: Deductions u/s 80G
Donation to Charitable Trust @ 100% of Rs.40,000
Total Income
Total Income rounded off u/s 288A
60,000
nil
20,000
40,000
1,00,000
1,40,000
80,000
25,77,189
1,00,000
40,000
24,37,189
24,37,190
Computation of Tax Liability
Rs Rs
Tax on long-term capital gains 20% of Rs 6,88,690 1,37,738
Tax on balance of total income at slab rates= Rs 17,48,500
First 1,10,000 Nil Nil
Next 40,000 10% 4,000
Next 1,00,000 20% 20,000
Balance 14,98,500 30% 4,49,550 4,73,550
Gross income tax 6,11,288
Add : Surcharge 10% on income tax 61,129
6,72,417
Add : Education fees – 2% on income tax and surcharge 13,448
Add : SHEC @ 1% 6,724
Tax payable 6,92,589
Less : Advance income tax 2,00,000
Net Tax Liability 4,92,589
Tax payable rounded off u/s 288B 4,92,590
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Comment (1)
June 10, 2010 at 11:24 PM
nice !
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