Gross Total Income

Section 44AD: Special Provisions for Computing Profits & Gains of Eligible Businesses

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Section 44AD provides a presumptive taxation scheme for small businesses, allowing them to declare income at a fixed rate without maintaining detailed books of accounts. 1. Applicability ✅ Eligible Businesses: Retail traders Wholesalers Manufacturers (turnover ≤ ₹2 crore) Service providers(except professionals covered under Section 44ADA) ❌ Excluded Businesses: Professionals(doctors, lawyers, CAs – covered under Section 44ADA) Transport operators(covered under Section 44AE) […]

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Section 44ADA: Presumptive Taxation Scheme for Professionals

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Section 44ADA of the Income Tax Act, 1961 provides a simplified presumptive taxation scheme for eligible professionals, allowing them to declare income at a fixed rate without maintaining detailed books of accounts or undergoing a tax audit. 1. Applicability ✅ Eligible Professionals: Doctors(Physicians, Surgeons, Dentists) Lawyers(Advocates, Solicitors) Chartered Accountants (CAs) Architects Engineers Interior Designers Technical Consultants Film Artists(Actors, Directors, Musicians) Company Secretaries (CS) Other notified professionals

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Section 44AE: Presumptive Taxation Scheme for Goods Carriage Businesses

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Section 44AE of the Income Tax Act, 1961 provides a simplified presumptive taxation scheme for businesses engaged in plying, hiring, or leasing goods carriages. It allows taxpayers to declare income at a fixed rate without maintaining detailed books of accounts or undergoing a tax audit. 1. Applicability ✅ Eligible Businesses: Owners of goods carriages(trucks, trailers, lorries, etc.) Transport operators(hiring or leasing vehicles) Individuals, HUFs, or firms(not

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Tax Implications of Specific Management Decisions in Business

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1. Dividend Declaration vs. Retained Earnings Dividends: Taxable in shareholders’ hands (10% TDS if >₹5,000) No deduction for company (Dividend Distribution Tax abolished) Retained Earnings: No immediate tax impact Future capital gains tax when shares are sold Tax-Smart Approach: Retain earnings if shareholders are in high tax brackets; declare dividends if tax-efficient. 2. Lease vs.

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Section 45(1): Basis of Charge for Capital Gains

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Section 45(1) of the Income Tax Act, 1961 is the foundational provision that defines how and when capital gains are taxed. It establishes that any profits arising from the transfer of a capital asset in a financial year shall be chargeable to tax under the head “Capital Gains”. 1. Key Principles Under Section 45(1) A.  Chargeability Conditions For capital gains to be taxable: There must be

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Capital Asset [Section 2(14)] – Definition & Tax Implications for Capital Gains

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1. Legal Definition (Section 2(14)) A capital asset means: Property of any kind held by an assessee (whether connected with business/profession or not) Includes: Real estate (land, buildings) Securities (shares, bonds, mutual funds) Jewelry, art, antiques Vehicles (if not stock-in-trade) Intangible assets (goodwill, patents, copyrights) Exclusions (Not treated as capital assets): Stock-in-trade (business inventory) Personal effects (clothing,

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Types of Capital Assets for Capital Gains Taxation

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Capital assets are classified into different categories under the Income Tax Act, 1961, each with unique tax implications. Below is a structured breakdown: 1. Classification Based on Nature A. Tangible Capital Assets 1.  Immovable Property Land & buildings (residential/commercial) Tax Treatment: STCG (≤24 months):Slab rate LTCG (>24 months):20% with indexation 2.  Movable Assets Jewelry, gold, precious

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Transfer of Capital Asset for Calculation of Capital Gains

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1. Definition of ‘Transfer’ [Section 2(47)] A transfer includes: Sale, exchange, or relinquishment Compulsory acquisition under law Conversion into stock-in-trade Maturity/redeem of insurance policies Extinguishment of rights Possession given in part performance of contract Any transaction allowing enjoyment of immovable property Exceptions (Not treated as transfer): ✔ Gifts to specified relatives ✔ Will/inheritance (except subsequent sale) ✔

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Transactions Not Treated as “Transfer” of Capital Assets [Sections 46 & 47]

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Under the Income Tax Act, 1961, certain transactions involving capital assets are excluded from the definition of “transfer”, meaning no capital gains tax applies. These exemptions are covered under Sections 46 and 47. 1. Key Exemptions Under Section 47 The following transactions do not qualify as “transfer” and thus do not attract capital gains tax: A. Transactions Related to Companies SECTION TRANSACTION CONDITION

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Computation of Capital Gains [Section 48]

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A format to compute the capital gain is given below: Computation of Short-term Capital Gains Full value of consideration —   Less: (a) Expenditure incurred wholly and exclusively in connection with such a transfer, — (b) Cost of acquisition — (c) Cost of improvement — — Gross short-term capital gains — Less: Exemption, if available,

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