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INCOME FROM CAPITAL GAIN, INCOME FROM HOUSEHOLD PROPERTY, INCOME FROM OTHER SOURCES.

GROUP MEMBERS
ABHINAY KATAKAR (32) SONAL KIRVE (34) KEVIN MARTIS (36) RASHMI MORE (38) HARISH RAJENDRAN (40)

CAPITAL GAIN
DEFINITION
section 45 is the main charging for levy of capital gain tax, wherein sec.45(1) deals with general chargeability of capital gain to income tax and the balance deals with specific situation. However, from the plain reading of section 45, capital gain may be defined as profits and gains arising from transfer of capital asset. Thus, the 2 basic constituents of capital gains are : 1) A capital Asset u/s 2(14) 2) its transfer u/s 2(47)

Kinds of capital assets


Short- term capital assets [u/s 2(42A)]

a) Capital assets other than shares in the company b) Capital assets being shares in a company listed securities or units in UTI or zero coupon bond etc. long term capital asset [u/s 2(29A)]

Kinds of capital gains


Long-Term capital gains [ sec.2(29B)]

Short-term capital gains [sec.2(42B)]

Chargeability of capital gain


asset

Not a capital assets u/s 2(14) No capital gains

Capital asset u/s 2(47) Transfer u/s 2(47) Financial asset u/s 2(42A) Not a financial asset u/s 2(42A)

Not a transfer u/s 2(47)

Hp > 12 months

Hp<12 months

Hp <36 months

Hp >36 months

STCA/STCG LTCA/LTCG

The balance is the taxable short term Capital gain or loss


Particulars Full Value Of Consideration XX Rs Rs XX

Less : Expenditure incurred in connection with transfer

: Cost of Acquisition
: Cost of Improvement SHORT TERM CAPITAL GAIN

XX
XX XX XX

The balance is the taxable Long term Capital gain or loss


Particulars Rs Rs Full Value Of Consideration XX

Less : Expenditure incurred in connection with transfer

XX

: Indexed Cost of Acquisition : Indexed Cost of Improvement LONG TERM CAPITAL GAIN

XX XX XX XX

INDEXED COST OF ACQUISITION

Cost of Acquisition Cost Inflation Index for the year of Acquisition by Assesses OR for 1881-82 whichever is later

Cost Inflation Index for the year of transfer of the Asset

INDEXED COST OF IMPROVEMENT

Cost of Improvement Cost Inflation Index for the year in which improvement took place

Cost Inflation Index for the year of transfer of Asset

Income from house property


House property for this purpose means: Any building which has the characteristic features of a building Eg. residential building, cinema theatres etc

Conditions for taxing income under the head house property.


There should be a building or a land appurtenant there to . AND The property should be owned by the assessee. AND Such building should not be used for own business or profession.

Section 22 (charging section)


The Annual Value of building or land appurtenant thereto is chargeable to tax in the hands of the owner provided the same is not used for own business or profession. E.g.: CASE 1: Mr. X lets out a HP to Mr. Y, who intends to carry on his private business. Income from HP. CASE 2: Mr. X uses his property to carry on his own private business. No income from HP.

Exceptions to the rule that the rental income is taxable under HP.
Income from sub letting Income from OTHER SOURCES since the assessee is not the owner. Composite rent When a building has been let out along with the furniture , then such letting out is called composite letting. As per sec 56(2) , when the rent is inseparable income from other sources.

Income from house property

Let out property

Vacant let out property

Self occupied property

Deemed let out property

Section 23( Annual Value)


Sec 23(1)(a) AV = Rent at which the HP is reasonably expected to be let out.

Sec 23( Annual Value)


Sec 23(1)(b) If the house property is actually let out and if rent received or receivable is higher than the reasonable rent as per sec 23(1)(a), then such rent received or receivable is taken as the ANNUAL VALUE.

Sec 23(1)(c) If the property is actually let out and was vacant during the year and rent received or receivable is lesser due to vacancy then such lower rent shall be the annual value.

Sec 23(2) If a HP is self occupied . OR If a HP couldn't be occupied for reasons of employment / profession elsewhere. In such cases the AV= NIL.

Following steps should be taken in case of hp let out


Particulars
1. Gross Annual value 2. Less : Municipal Taxes actually paid and borne by assessee(owner) during the previous year. xx 3. Net annual value xx 4. Deduction u/s 24 5. Standard deduction(30% of NAV) xx 6. Interest on borrowed funds xx 7. Net taxable income
Rs

xx

Xxx xxxx

Income from other sources


Format of total income from other sources:1)Dividend (Foreign company/Co-operative Society) (-) Realization charges/interest on loan. 2)Winning from lottery etc. 3)Employees Contribution to PF etc (-) Paid/credited within the due date.

4)Interest on Securities. (-)exempt u/s 10(15) (-) Realization charges and Interest can loan. For eg:-Interest can post of saving A/c is tax free. 5)Income from Building, Machinery, Furniture on hire. (-) Repairs/Insurance/Depericiation can be deducted. 6)Family pension (-) standard deduction (1/3 of fp or Rs.15000 whichever is less) 7)Gifts >50,000 from non relative.

8)Other taxable items (-)allowance to MP and MLA (-)Govt. awards and reward (-)the general exp incurred for income except. 9)Recovery against earlier deduction

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