Direct and Indirect Taxes with Tax Ready Reckoner.
What is Assessment? Assessment under the Income Tax Act, 1961 refers to the process by which the Income Tax Department examines the income tax returns filed by an individual to ensure that the income, deductions, and tax liabilities are correctly calculated and reported as per the law. The goal is to determine the accurate tax […]
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1. Basic Concept of HUF An HUF (Hindu Undivided Family) is a separate legal entity for tax purposes, consisting of: Karta(head of family, usually the eldest male member) Coparceners(members with birthright in ancestral property) Other members(wives, unmarried daughters) Key Features: ✔ Separate PAN required ✔ Can earn income from business, property, investments ✔ Taxed separately from members’ individual incomes 2.
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1. Basic Concepts Firm: Partnership firm registered under Partnership Act, 1932 LLP: Limited Liability Partnership registered under LLP Act, 2008 Tax Status: Both treated as “firms” under Income Tax Act (Section 2(23)) 2. Key Features of Firm/LLP Taxation ASPECT TREATMENT Tax Rate 30% flat (+ surcharge if applicable) Tax Slabs No slab system – flat
Assessment of Firms (Including LLPs) under Income Tax Act, 1961 Read More »
1. Basic Concepts AOP (Association of Persons): Group formed for common purpose (business/profession) BOI (Body of Individuals): Group of individuals (not for business) Tax Status: Treated as separate taxable entity (Section 2(31)) 2. Key Features of Assessment PARAMETER AOP/BOI TREATMENT Tax Rate Same as individual slabs (old regime) OR flat 30% if no shares determinate
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The Income Tax Act, 1961 governs the taxation of companies in India, outlining rules for computation, deductions, assessments, and compliance. Below is a structured breakdown of key aspects related to the taxation and assessment of companies under the Act. 1. Taxability of Companies Companies are classified into two categories for taxation: Domestic Companies(incorporated in India) – Taxed
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Here’s a structured breakdown of the types, definitions, and residential status of companies under the Income Tax Act, 1961: 1. Types of Companies Based on Incorporation Indian Company[Section 2(26)]: Incorporated under Indian laws (e.g., Companies Act 2013). Always treated as a resident in India, regardless of management location. Foreign Company[Section 2(23A)]: Incorporated outside India. Taxed as a resident in Indiaonly
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Section 115JH of the Income Tax Act, 1961, provides transitional and computational rules for foreign companies deemed resident in India due to their Place of Effective Management (POEM) being in India. Here’s a structured breakdown: 1. Background & Purpose POEM Rule: Under Section 6(3), a foreign company is deemed a tax resident in Indiaif its POEM (where key management/commercial decisions are
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A closely held company (where the public is not substantially interested) is subject to stricter tax provisions to prevent tax avoidance and misuse of corporate structures. Below are the key special provisions under the Income Tax Act, 1961: 1. Deemed Dividend under Section 2(22)(e) Applicability: If a closely held company gives loans/advancesto: A shareholderholding ≥10% voting power or A concern(HUF, firm, AOP, etc.)
1. Overview Section 115BBD provided a concessional tax rate of 15% (plus surcharge and cess) on dividends received by Indian companies from specified foreign companies where the Indian company held ≥26% equity shares. Introduced in 2011 to promote foreign investments, this provision was withdrawn effective April 1, 2023 (AY 2023–24) to align tax treatment with domestic dividends. 2. Key Provisions (Before Withdrawal) Applicability: Only
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1. Basic Framework Companies are taxed on their total incomecomputed under the Income Tax Act, 1961. Tax rates vary based on: Type of company (domestic/foreign) Turnover/special categories (e.g., manufacturing) Applicable tax regime (normal or concessional) 2. Computation of Total Income Step 1: Calculate Gross Total Income Aggregate income under 5 heads: Profits/gains from business/profession Capital gains
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