Author: CA Tarannum Khatri

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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TDS on contractors under section 194C

TDS u/s 194C (TDS on contractor) While paying to contractor, you should remember provision for TDS on contractor u/s 194C of income tax act. The provision guides to deduct TDS when there is payment exceeding minimum limit of section 194C. What is work contract for section 194C? advertising broadcasting carriage of goods and passengers by any mode of transport other than railway. catering. labour supply for work contract Manufacturing or supplying a product according to requirement of specification of a customer by using material purchased from customer. Who should deduct TDS  u/s 194C? It is not so that all should deduct TDS while making payment to contractor. But specified person mentioned in section 194C  of income tax act should deduct TDS while paying to contractor. Contractor should be resident of India. Central government or state government Local authority Corporation established by or under central, state or provincial act. Company Cooperative society Housing society Any society registered under the societies registration act, 1860 or any other law in India. Any trust University established by central government, state government or under section 3 of the university grants commission act, 1956. Foreign government, foreign enterprise, any association or body established outside India. Any firm Any individual, HUF whose books of accounts are required to be audited under section 44AB during the immediately preceding financial year. AOP or BOI whose books of accounts...

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wealth tax calculation ultimate guide

Wealth tax is levied on properties which are not used by owners. Wealth tax should be paid annually. Wealth tax calculation is based on valuation rules of assets in wealth tax act. How to do wealth tax calculation? Basic thing is that which asset is taxable under wealth tax act. Read my post. Wealth tax exemption and tax ability So wealth tax is levied on some assets and some assets are completely exempt. Value of taxable asset is determined by wealth tax rule.     How to calculate wealth tax on various assets? We have to learn specific rule...

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Concurrent audit empanelment with SBI

SBI has invited application for  concurrent audit empanelment in some states. Concurrent audit empanelment details: The empanelment opportunity covers branches situated in the states of Delhi, uttrakhand, Rajasthan and some states of Uttar pradesh. SBI can include or exclude other branches for empanelment purpose. Chartered accountant firm or LLP should be listed on RBI panel. Experience should be considered for appointment.   Remuneration for concurrent audit: If you get concurrent audit empanelment, your firm will get following remuneration: Grade Deposit of branches Advances Remuneration 3 300 crore and above Less than 400 crore 25000 p.m. 2/3 – 400 crore and above 35000 to 50000 pm Additionally, 500 per month per account will be payable if the bank has fund and non fund basis exposure of more than 10 crore. The remuneration will be paid quarterly and no separate charges like travelling, taxes will be paid separately. Scope of concurrent audit: Compliance with RBI guidelines and guidance of FEDAI/ IBA. Compliance with ARAC norms. Reporting for compliance with RBI guidelines and if any activity is running which is prohibited by RBI. Compliance with banking regulation rules, 1949. Check compliance with norms in section 20 in banking regulation act for granting loan and advances against shares and other matters. Compliance of rule 20A , 24, 452 and 360 of banking regulation act. Verification of forex transactions. Compliance with any guidelines issued...

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