Author: CA Tarannum Khatri

TDS on rent income under section 194I

TDS on rent income is applicable in day to day transactions. TDS under section 194I is applicable on payment of rent which is more than Rs. 180000 p.a. But it is not applicable in all cases. Let’s see the provision.   Rate of TDS on rent u/s 194I: There are different rates applicable for tax deduction under section 194I for rent income from different assets. TDS rate for payment to use of plant and machinery / equipment: 2% TDS rate for any other assets like building, house, vehicle, furniture, fitting etc. : 10%   Who is liable to deduct...

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Cost inflation index ( capital gain index) chart for year 2014-15 and last 23 years

Cost inflation index ( capital gain index ) is useful to calculate long term capital gain. Indexation can help you to save long term capital gain.Here I present table of index for financial year 2014-15, 2015-16 and last 23 years.   Cost inflation index chart / capital gain index chart for past 24 years: Financial Year Cost inflation index 1981-82 100 1982-83 109 1983-84 116 1984-85 125 1985-86 133 1986-87 140 1987-88 150 1988-89 161 1989-90 172 1990-91 182 1991-92 199 1992-93 223 1993-94 244 1994-95 259 1995-96 281 1996-97 305 1997-98 331 1998-99 351 1999-00 389 2000-01 406...

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How to calculate income tax on partnership firm

Having partnership firm is beneficial in business. Do you have one?  Then you must aware of calculation of income tax on partnership firm. Some provisions should be kept in mind while calculating of tax liability. Let’s see. How to calculate income tax on partnership firm? Calculate total business income of the firm: Business income can be calculated in normal way. Deduct all the allowable expenses for business: Expenses which are allowed for deduction under sections of head “profit and loss from business or profession”. Reduce allowable partner’s salary and interest from that profit. Provisions of partner’s salary and interest in income tax: Conditions to get benefit of interest and salary (section 184): There must be partnership deed or other legal instrument for constitution of partnership. Share of partners are definite. Certified copies of partnership should be held by firm. Revised instrument should be made if there is any change in share or remuneration. No failure as in mentioned in section 144. CA assisted  firm’s return filling   Partner’s salary/remuneration is allowed to reduce net profit if following conditions are satisfied: (section 40b) Remuneration should be paid to working partner. It is authorised by partnership deed. It should not related to period prior to partnership deed. Remuneration should be within permissible limit. Permissible limit for deduction of remuneration of partner: Book profit Amount deductible u/s 40(b) (maximum) If book profit...

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Income tax on partnership income

Are you in partnership? Are you generating good income from partnership business? That’s great. Here I present rules for income tax on partnership income. How to calculate income tax on partnership income?   To calculate and understand income tax provisions for partnership income, we can divide partnership income in following parts: Share from partnership profit Remuneration from partnership Interest from loan given to partnership firm. Capital gain on asset sold to partnership firm. Share in partnership profit: Share in partnership profit is exempt from tax. Reason is simple. The profit is already taxed in the hands of partnership firm. Similarly loss from partnership firm is only loss of firm and partner cannot set off loss from partnership from your personal income. Remuneration from partnership: Some firms give salary or remuneration to partners. Remuneration from partnership is taxable in the hands of partners. He is required to show that income under head of income from business or profession. Similarly partnership firm can claim deduction for salary paid to partners. It is allowable expenses. Interest from loan given to partnership firm: If you have given loan to your partnership firm and receives interest, it is taxable in your hand. You can show it in income from other sources.   Capital gains arisen by transfer of assets to partnership firm: Sometimes partners bring asset instead of cash as capital contribution. In that...

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tax on mutual funds investments in India

  Mutual fund is useful way for saving and generation of income. If you are investing, you like to know rules for tax on mutual funds. Tax on mutual funds: We can divide mutual fund in two categories: Equity oriented mutual fund Non equity oriented mutual fund we can also divide capital gain in two categories: Short term capital gains Long term capital gains Short term capital gains: When units of mutual fund is held for less than 1 year, capital gain arising from sale of mutual fund unit is short term capital gains. Long term capital gains: When units of mutual fund is held for more than 1 year, capital gain arising is long term capital gains.   Tax on Equity oriented mutual fund: Dividend Income: Dividend received is exempt from tax u/s 10 (35) (a). Short term capital gain: Capital gain tax rate is 15% if following conditions are satisfied: Redemption with stock exchange or AMC STT is paid For case other than mentioned above, tax rate is as per income tax slab applicable to person. Long term capital gain: Long term capital gain from equity oriented mutual  fund is exempt from tax u/s 10 (38). Tax on Non equity oriented mutual fund: Dividend income: Dividend income is exempt but dividend distribution tax is deducted by AMC. Read our post on dividend distribution tax to know calculation of...

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