Certain Important Provisions UNDER Income Tax ACT, 1961

Allowance exempt partly irrespective of expenditure –

if new scheme of taxation not opted

Allowance	Quantum
Children Education Allowance	Rs. 100 per month per child upto a maximum of 2 children
Hostel expenditure allowance	Rs. 300 per month per child upto a maximum of two children
Leave Travel Concession	Fare two times in 4 years can be given. (block 2022-25)
Medical Reimbursement	Expenditure actually incurred by employee on medical treatment of any member of family in any hospital maintained/ approved by the Govt.
Standard Deduction	Rs. 50,000/-
House Rent Allowance	House rent allowance is exempt as under: i) Amount of House Rent Allowance received ii) Rent paid in excess of 10% of salary iii) 50% of salary in the case of Metropolitan City and 40% in other case The least of above will be exempt as House Rent Allowance and balance is taxable.

INCOME FROM HOUSE PROPERTY

Standard Deduction : 30% of rent receipts after municipal taxes irrespective of actual Expenditure.

Municipal Taxes : Actual amount paid (only by the owner, not by tenant)

Interest on Housing Loan : Actual amount of interest due or paid

(In case of self occupied property, deduction of interest on Housing loan is available upto Rs. 200000/- If construction is completed within Five years of borrow Otherwise Rs. 30000/-)

Tax Audit

Accounts are required to be audited u/s 44AB and Tax Audit report has to be obtained upto 30^th September after end of financial year in the following cases ( Otherwise penalty is equal to 0.5% of turnover/gross receipts or Rs. 1.5 Lakhs whichever is less).

(a) In case of Business:

i) If turnover or gross receipts exceeds Rs.1 Crores in that financial year or

ii) if assessee is an Individual, HUF or Firm and turnover does not exceeds Rs.2 Crore –

a) If taxable net profit from the business is less than 8% of turnover/gross receipts (otherwise than by A/c payee cheque) or 6% of turnover (by a/c payee cheque) and total income is above taxable limit, then Tax audit is required to be done.

b) If taxable net profit from the business is 8% or more of turnover/gross receipts (otherwise than by A/c payee cheque) or 6% of turnover (by a/c payee cheque) than the assessee will not be required to maintain books of account as required in section 44AA and no Tax Audit is required in such case.. Once this option is opted, It cannot be withdrawn in next five years

iii) However, from AY 2021-22 onwards, Tax Audit Limit has been increased from 1 crore to 10 crores provided:

a) Aggregate of all receipts in cash during the previous year does not exceed 5% of total receipt

b) Aggregate of all payments in cash during the previous year does not exceed 5% of total payment.

(b) In case of Profession

i) If gross receipt in profession exceeds Rs.50 Lacs in that financial year: or

ii) if assessee is an Individual, HUF or Firm and turnover does not exceeds Rs. 50 Lacs but taxable net profit from the profession is less than 50% of total gross receipts .

presumptive Taxation u/s 44AD For Business (With Effect From 01/04/2024)

A taxpayer whose gross receipts/total turnover in the FY does not exceed Rs. 2Cr (3Cr in case cash receipts during the FY does not exceed 5% of total turnover/receipts)

Section 44ADA For Profession (With Effect From 01/04/2024)

A taxpayer gross receipts/total turnover in the FY does not exceed Rs. 50Lakh (Rs. 75 Lakh in case cash recepts during the FY does not exceed 5% of total turnover/receipts)

RESTRICTION ON CASH TRANSACTIONS

A. Unsecured Loans/ Deposits / Specified sum (Property Transactions)

No person shall take or accept / repay such amount otherwise than by account payee cheque/draft or use of electronic clearing system through a bank account and IMPS/UPI/BHIM from any person having accumulated balance of Rs. 20000/- or more otherwise penalty is equal to amount of such acceptance/repayment.

B. No Cash Transaction of Rs. 2 Lacs or more (Sec 269ST)

No person shall receive an amount of Rs. 200000/- or more otherwise than by account payee cheque/draft or use of electronic clearing system through a bank account and IMPS/UPI/BHIM in following cases otherwise penalty for such acceptance is equal to the amount accepted.

· The aggregate amount received shall not be from the same person in a day

· The amount received shall not be Rs. 200000/- or more in cash in respect of single transaction

· The amount received shall not be Rs. 200000/- or more in cash in respect of transaction relating to one event/occasion from a person.

C. Payment in Cash for Revenue/Capital Expenditure

No payment either for Revenue or Capital expenditure shall be made otherwise than by account payee cheque/draft or use of electronic clearing system through a bank account and IMPS/UPI/BHIM to the same person in a day more than Rs.10000/- (Rs. 35000/- in case of plying, hiring or leasing goods carriages).

Moreover any payment in connection to expenditure claimed as deduction in earlier years is more than Rs. 10000/- in cash such payment will be treated as business income of the previous year in which the payment is made

In case of default entire (100%) such payment/receipt in case of Loan/Deposit and 100% expenditure/ depreciation on payment for fixed assets will be disallowed and added back to your income.

Above restriction on cash transactions are not applicable if the recipients are a Government, any banking company, post office saving bank or co-operative bank or any recipients notified by central govt.

D. Payment Of Statutory Liabilities

GST, VAT, other statutory liabilities, Bonus or commission to staff and interest on long term borrowing of public financial institutions Provident fund/ESI (of employer contribution) and Interest on loan & borrowings from scheduled banks for that financial year shall be paid before the last date of filing of Income Tax Return of that financial year

ESI/PF (Employee Contribution) has to be deposited within specified time mentioned in relevant Act

In case of default amount in default will be added to total income of assessee in that financial year.

INTEREST/REMUNERATION TO PARTNER IN A FIRM/LLP

a) Interest on capital of partners (also of partners in case of LLP) can be maximum of 12% subject to such clause in partnership deed.

b) Remuneration allowable ( Maximum ) to all partners is as under:

Book Profit

Remuneration allowable

On first Rs. 300000 of book profit or in case of loss

Rs. 150000 or 90% of profits which - ever is more

On the balance book profit

60%

CAPITAL GAINS

In case of Equity:

Capital Gain	STT Paid	STT not paid
Long Term	10% ( If capital gain is more than Rs. 1 Lac otherwise exempt) ( Hold more than one year )	20% ( Hold more than two years )
Short Term	15%	Slab rate

Capital Gain = Sale Consideration - Actual cost or (lower of selling price and market price as on

31/1/2018) whichever is higher

In case of others: Immovable property (Land and Building)

Long Term (Hold more than 24 Months) : 20% of Capital Gain

Short Term (Hold less than 24 months) : Slab rate.

INCOME FROM OTHER SOURCES

Sale of immovable property on price less than stamp duty value.

In case of Sale if immovable property on a price less than stamp duty value, Income tax will be imposed on Stamp duty value considering it as sale price.

If difference between sale price and stamp-duty value is up to 10% of consideration received, difference will be ignored and income tax will be imposed on actual sale price.

DEDUCTIONS FROM GROSS TOTAL INCOME

U/s 80C- Deduction for Investment made by Individual and HUF

Deduction is available for investment like LIC, PPF, NSC, Pension Plan, Mutual Fund, Child education tuition fee for two children, Repayment of Housing Loan, Infrastructure Bonds & notified bonds of NABARD, 5 Year time deposits in post office/ Tax Saving FDR with scheduled Bank & Deposit in an account under the Senior Citizens Saving Scheme Rules Deduction under this section is available up to investment of Rs. 150000/- out of total income.

U/s 80CCA- Deduction in respect of deposits under National Savings Scheme or payment to a deferred annuity plan

Total amount of deduction is restricted to limit prescribed under section – 80C. This deduction is allowable for:-

- any amount in relation to any schemes that central government may notify.

- any amount to effect or to keep in force a contract for such annuity plan of the Life Insurance Corporation as the Central Government may, by notification in the Official Gazette, specify.

Such amount, along with any interest related to it, will be taxable as income in the year of withdrawal.

U/s 80CCD (1B) – Contribution to New Pension Scheme by individual

New sub section (1B) has been inserted in section 80CCD w.e.f. AY 2016-17 so as to provide for an additional deduction in respect of any amount paid upto Rs.50000/- for contribution made by any individual assessee under the NPS.

U/s 80 D – Medical Insurance premium & Medical Expenditure (Otherwise than cash except preventive health check upto Rs. 5000) - In case of Individual & HUF

Scenarios	Health insurance premium paid for & Maximum tax deduction limits		Total Deduction Under Section 80D
Scenarios	Self, Spouse & Dependent Children	Parents (whether dependent or not)	Total Deduction Under Section 80D
No one in family attained 60 years of age	25000	25000	50000
If member of family or parents above 60 years of age	50000	50000	100000

Section 80 DD – Deduction for maintenance of a dependent with disability

In case of resident Individual or a HUF if during the year any amount has been incurred for medical treatment, training, rehabilitation of a dependent (including parents ) with disability or deposited under a scheme of LIC framed in this behalf, the assessee shall be allowed a deduction of Rs. 75000/- and Rs. 125000/- in case of severe disability.

U/s 80 DDB– Deduction in respect of Medical treatment

In case of an individual and HUF if during the year any amount is actually paid for medical treatment of a specified disease then deduction will be allowed for amount actually paid or upto maximum deduction allowable whichever is lower for assessee or his dependent ( including parent) or any member of HUF

AY 2022-23 AY 2023-24

Senior Citizen 1,00,000 1,00,000

Super SC 1,00,000 1,00,000

Others 40,000 40,000

U/s 80E - Interest on loan Taken For higher Education (For Individual only)

Deduction is allowed for 100% of interest amount on education loan paid during the year to any financial institution for pursuing full time studies of self, spouse or children for a period upto eight years succeeding the initial assessment year. Higher education means any course pursued after passing Senior Secondary Exams or its equivalent from any school, board or university recognised by Central Govt or State Govt or local authority or by any other authority authorised by the Central Govt/State Govt/ Local Authority. Initial assessment year means AY relevant to PY in which Assessee starts paying the interest on the loan.

U/s 80 G (DONATIONS)

Deduction is available for donations out of total income:

Deduction amount: 50% of net qualifying amount or

100% of net qualifying amount in case of Chief Minister/ Prime Minister Relief fund/Clean Ganga Fund/National Fund for Control of Drug Abuse / Swachh Bharat Kosh. PM Care fund

Eligible amount: Qualifying amount is restricted to 10% of total income of the assessee before Such donation

No deduction shall be allowed u/s 80G in respect of donation in cash of an amount exceeding Rs.2000

Interest on Saving Bank Account ( U/s 80TTA )

In case of individual or a HUF in respect of any income by way of interest on deposits (not being time deposits) in saving account with Banking Company/ Post Office - General Deduction available upto Rs.10000/-( Senior Citizen upto 50000).

PAN no.

Wrong mention of Pan No. attracts penalty of Rs. 10000/- u/s 272BB.

Linking of PAN with Aadhar is mandatory before Income Tax Return filing – Last Date 31^st March 2023 (along with penalty of Rs. 1000).

Penalty for false entry, etc. in books of accounts. (AY 2021-22 onwards):

Now penalty for false entry, etc. in books of accounts can be imposed -Section 271AAD(1) states:

Without prejudice to any other provisions of this Act, if during any proceeding under this

Act, it is found that in the books of account maintained by any person there is—

a false entry; or
an omission of any entry which is relevant for computation of total income of such person, to evade tax liability,

The Assessing Officer may direct that such person shall pay by way of penalty a sum

equal to the aggregate amount of such false or omitted entry.

Further, Section 271AAD (2) provides that the Assessing officer may also direct any other person, who causes the person referred to in sub-section (1) in any manner to make a false entry or omits or causes to omit any entry referred to in that sub-section, shall pay by way of penalty a sum equal to the aggregate amount of such false or omitted entry.

IMPORTANT DATES (AY 2023-24)

Last date of investment for deduction	:	31^st March 2024
Last date for Income Tax Return	:	31^st July (Other than audit cases & Companies) 31^st October (Audit cases & Companies)
Last Date for Tax Audit Report	:	30^th September
Last date for TDS Return (Quarterly)	:	31^st July, 31^st October, 31^st January, 31^st May
Last date for TCS Return (Quarterly)	:	15^th July, 15^th October, 15^th January, 15^th May
Advance Tax Deposit ( If Tax payable is 10000/- or more )	:	15^th June(15%), 15^th Sept.(45%), 15^th Dec.(75%), 15^th March(100%)
Senior Citizen not having any income from business/profession	:	Not Liable to Pay Advance Tax
Last Date of TDS deposition (each month)	:	7^th of next month and in case of March 30^th April 2024

DISCLAIMER

This circulation is for the persons to whom it is sent only. No information contained in this post should be construed as legal advice. It is for information and reader of this post should not act without seeking the appropriate legal or other professional advice on the particular facts and circumstances.