Taxation Law

Ans:  Under Section 80 D of the Income Tax Act, 1961, a person can get a tax exemption for an amount up to Rs. 25,000 for the medical insurance of self, spouse, and children. If parents are included, the amount for the tax exemption will be Rs 50000 in the case of medical insurance. In the case of medical expenses, a person can claim a tax exemption of an amount up to Rs 50,000. The medical expenditure amount decided for part A, i.e. self, spouse, and child, is Rs 30,000 and the amount of medical expenditure which is decided for part B, i.e. parents, is Rs 30,000, but if both part A and part B are included,  the limit of total amount will be Rs 50,000. A person can get the benefit of tax exemption for maximum number of two children. 

 Ans: In section 80 CCD of income tax act, 1961, the limit is of Rs 50 thousand. In National Pension scheme , a person can get the tax exemption in the limit of Rs 50 thousand in a year under section 80CCD of income tax act, 1961.

Ans:  According to section 80C of the income tax act, 1961, a person can get the benefit of a tax exemption on the amount of Rs 1.5 lakhs. The facility can be availed of under the following conditions:  1. LIC: In a life insurance policy, a person will get a tax exemption of Rs 1.5 lakhs if he pays the premium of Rs 1.5 lakhs on an LIC policy. 2. PPF(Public Providend Fund) : In PPF also, a person can get the deduction of Rs 1.5 lakhs in a year. 3. Mutual Fund ELSS(Equity Linked Savings Scheme): In the equity linked savings scheme of mutual fund, the person can get the tax exemption on the amount of Rs 1.5 lakhs but in this scheme,  the amount gets locked for the period of 3 years. 4. Fixed Deposit: In fixed deposit, a person can get the tax exemption if the amount of fixed deposit is more than 5 years. 5. Home Loan Principal Amount: A person can the benefit of tax exemption on the principal amount of home loan. 6. Tuition fees:  The person will get the...

Ans: Cost Inflation Index or CII is a tool used in the calculation of an estimated yearly increase in an asset's price as a result of inflation. The Central Government fixes this index and publishes it in its official gazette for measuring inflation. 

 Ans:  When any property is sold, the income tax is levied on the property on the basis of short term capital gain or long term capital gain.  If the property is sold within 2 years of purchase of property,  the gain will be short term capital gain and when the property is sold after 2 years of purchase of property,  the gain will be long term capital gain. The long term capital gain tax is fixed i.e 20 percent and the indexation benefit will be achieved on long term capital gain tax. In short term capital gain tax , the tax will be levied according to slab rate whether it is 20 percent slab rate or 30 percent slab rate and indexation benefit is not given on short term capital gain tax.  How the tax is Calculated in long term capital gain tax?  Suppose the purchase price of flat was Rs 5 lakhs and after indexation with inflation rate, the calculated price is Rs 8 lakhs and a person sells that flat in Rs 11 lakhs. Then, the capital gain will...

Ans:  LTCG is long term capital gain tax. So, LTCG is a tax which is levied on asset of long term. CII is used to adjust the capital asset's cost price against the inflation with the help of cost inflation index number and is referred to indexation. CII is used for capital assets like real estate, gold, debt mutual funds or debentures. The benefit of CII is not in shares. Gain of asset = Selling price-Purchase price Real gain of asset= Selling Price - Inflation Adjusted Purchase Price The increase in the inflation rate will lead to increase in the prices of capital assets and eventually result in lesser capital gain as well as taxes. Cost inflation index= 75 percent of the average rise in the consumer price index(urban) for the immediately preceding year. CPI index is used to calculate the current price of specific goods and services and the next year price of goods and services. The difference between these two is consumer price index. Inflation Adjusted Purchase Price=...

 Ans: The capital gain means that the profit which is earned from the sale of an asset. The capital gain is the difference of actual price at which the asset was acquired and the price at which the asset was sold or transferred. The capital gain can be either long term or short term and it depends upon the period of holding .The tax in long term is more as compared to the tax in short term. The rate of tax on long term ranges from 0 percent to maximum 20 percent.

Ans: No, the income is recorded in same accounting period.  Firstly, the income is earned and then it is received. The income which has been earned but not received is known as accrued income. There are two periods i.e same accounting period and subsequent accounting period. The income is recorded in same accounting period in which it is earned rather than in the subsequent accounting period in which it is received. This income is known as accrued income.

Ans:  TDS is deducted from various types of payments.  TDS would stand for tax deducted at source. TDS is the tax which would be deducted on source of income.  Any company or person making a payment will be required to deduct tax at source if the payment exceeds certain threshold limits. TDS is deducted on the following types of payments: Salaries Interest payments by banks Commission payments Rent payments Consultation fees Professional fees

Ans: The Ministry of Finance will be in charge of managing the government of India's revenue operations. The Central Board of Direct Taxes has been given responsibility by the Finance Ministry for the administration of direct taxes like income tax, wealth tax, etc (CBDT). The Ministry of Finance's Department of Revenue includes the CBDT. The CBDT would offer necessary inputs for direct tax planning and policy development, and it also oversees the administration of direct tax laws via the Income-tax Department. As a result, the Income-tax Department will administer the Income-tax Law under the direction and supervision of the CBDT. ​

Ans: The constitutional provisions of income tax are given from article 265 to article 289 of indian constitution.  According to article 265, only the authority of law can collect the taxes. The article 266 talks about the consolidated funds and public accounts of India as well as the states. Consolidated funds are that funds in which all the reciepts of government of India are credited like tax, loans taken , treasury bills , etc. Article 267 Contigency funds are those funds that are maintained by president as well as held by finance secretory on behalf of president.  Contingency funds are used at the time of emergency such as natural calimities as well as crises like floods, tsunamis and earthquakes. Article 268 Under this article, it is explained that the duties are levied by the Union but they are collected as well as appropriated by the states. For eg. Stamp duties, excise duties on medical as well as toilet preparations. Article 269 Taxes would be levied as well a...

  Ans: A person is defined under section 2(31) of income tax act, 1931. A person includes: 1.An individual 2. Hindu undivided family  3. Company 4. Firm 5. An association of persons or body of individuals  6. A local authority  7. Every artificial judicial person not falling within any of the proceeding sub clauses The individual can be the minor, major and senior citizen. The minor can also file income tax. The person whose age is less than 18 years will be the minor and the age of person whose age is more than 18 years and less than 60 years will be the major. The age of senior citizen will be more than 60 years. The Hindu undivided family includes fathers, grandparents,  unmarried sisters and daughters. The company is also included in person.It can be local company or foreign company.  It can be private sector company or it can be public sector company. A firm could be the sole proprietary firm or it could be the partnership firm. The partnership fi...

Ans: The main source of income for the government is tax collection. Under section 2(7) of the Income Tax Act, 1961 , an assessee is a person who is liable to pay taxes to the government under the provisions of this act.  To assess means to evaluate.  So, the assessee is a person who has been evaluated for his income as well as for other's person income, for which the assessee will be assessable for the profit and loss experienced by that person. According to the Income Tax Act, they are classified into the following categories: Normal assessee: A normal assessee is a person who will be responsible to pay taxes on his income generated in the fiscal year. A typical assessee is a person who is responsible to pay penalties and refund.  Assessee representative: In the case of a non-resident, juvenile or lunatic person, an another person who will be responsible for paying taxes on income or losses will be the assessee representative.  Deemed representative: A...

Ans:  There are two types of taxes in an assessment year :  1. Direct taxes 2. Indirect taxes 1.Direct taxes:  The taxes which are paid by assessee himself  are the direct taxes. E.g.,  Income tax, wealth tax, Gift tax ,etc. 2. Indirect taxes: The taxes which are not paid by assessee himself are Indirect taxes. E.g., G.S.T(Goods and services tax), custom duty, etc. An assessee pays more indirect taxes as compared to direct taxes. Thus, indirect taxes generate more income for the government. 

Ans:  Under section 1 of the Income Tax Act, 1961, the act is a central act and it is applicable to whole of India.  This act is called the Income Tax Act, 1961, and it came into force on April 1st, 1962.  Since it came into force on April 1st, 1961, the accessment year is 1st April 1962 to 1st April, 1963 and the previous year is Ist April 1961 to 1st April, 1962.  So ,the government became eligible for tax collection first time on 1st April, 1962. We would discuss about tds and advanced tax later.

Ans: The Income-tax Act, 1961 is the statute of Income Tax in India. It provides for levy, administration, collection as well as recovery of Income Tax. The Government of India brought a draft statute  called the "Direct Taxes Code" which was made to replace the Income Tax Act, 1961 and the Wealth Tax Act, 1957. However the bill was later scrapped. The Income tax act, 1961 comprises of 23 chapters and 298 sections.   The Government of India presents finance bill which is called budget every year in the month of February. The finance budget brings many amendments in Income-tax Act, 1961 that also incudes tax slabs rates. The amendments will be generally applicable to the next following financial year beginning from 1 April unless otherwise specified. Such amendments will become the part of the income tax act after the approval of the president of India.   When the central government would like to withdraw money from consolidated fund of India for the specifi...