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Income Tax Act, 1961 came into force on 1st April, 1962

PERSON [Section 2(31)]

Person includes:

1. An individual;
2. A Hindu Undivided Family (HUF);
3. A Company;
4. A Firm;
5. An Association of Persons (AOP) or a Body of Individuals (BOI),
6. A local authority;
7. Artificial juridical person.

TOTAL INCOME [Section 2(45)]:

Net Total Income/ Net Taxable Income = GTI (-) Deductions

Rates of Tax for A.Y.2016-17:

In case of Individuals (both male & female) (age<60 years),HUF, AOP, BOI & every other artificial judicial person & NON RESIDENT (irrespective of age)

Total income ≤ 2,50,000 - Nil
2,50,001 – 5,00,000 - 10%
5,00,001 – 10,00,000 - 20%
> 10,00,001 - 30%

1) In case of Individuals (age 60 - 79 years)

Total income ≤ 3,00,000 - Nil
3,00,001 – 5,00,000 - 10%
5,00,001 – 10,00,000 - 20%
> 10,00,001 - 30%

2) In case of Individuals (age ≥ 80 years)

Total income ≤ 5,00,000 - Nil
5,00,001 – 10,00,000 - 20%
> 10,00,001 - 30%

3) In the case of every co-operative society -

≤10,000 - 10%
10,001 – 20,000 - 20%
>20,001 - 30%

4) In the case of every firm/Limited Liability Partnership (LLP)/ local authority/domestic company

On the whole of the total income - 30%

5) In the case of a foreign company:

(i) On certain specified income (royalty or technical fees) - 50%
(ii) On other income - 40%

SURCHARGE ON INCOME – TAX

• Individual, HUF, BOI, AOP, AJP, Firm, LLP, Co-operative Soc. Or LA
– 12% if net income exceeds Rs. 1 Crore

• Domestic Company -

If net Income exceeds 1 crore but does not exceed Rs. 10 crore - 7%
Net income exceeds Rs. 10 crore – 12%

• Foreign Company

Net Income exceeds 1 crore but does not exceed Rs. 10 crore - 2%
Net income exceeds Rs. 10 crore – 5%

CESS @ 3% is applicable to all types of persons.

Provisions relating to rounding off :

Rounding off of income [Sec.288A]
Rounding off of tax [Sec.288B]

New Section 115BBE - Unexplained money, investments etc. to attract maximum marginal rate of tax @30%

Rebate of up to Rs. 2,000 for resident individuals having total income of up to Rs 5lakh [Section 87A]

Certain cases when income of a previous year will be assessed in the previous year itself

(i) Shipping business of non-resident [Section 172]
(ii) Persons leaving India
(iii) AOP / BOI / Artificial Juridical Person formed for a particular event or purpose
(iv) Persons likely to transfer property to avoid tax
(v) Discontinued business CCI

Residential Status & Scope of Total Income

A) RESIDENTIAL STATUS OF AN INDIVIDUAL:

Resident: if he fulfils any one of the following two basic conditions:[Section 6(1)]

1) He is in India in that year for a period or periods amounting in all to 182 days or more. OR
2) 60 days or more during the previous year and 365 days or more during the 4 years immediately preceding that previous year.

Exception [ Explanation to Sec.6(1) ]

In the case of following special individuals, the 2nd basic condition is not applicable :

1) who leaves India for the purpose of employment outside India or an Indian Citizen who leaves India during the previous year as a member of the crew of an Indian ship.
2) An Indian Citizen or a person of Indian Origin, who comes on a visit to India during the previous year.

Thus, these special individuals shall not be treated as resident unless their stay in India is at least 182 days during the previous year.

CBDT to prescribe the manner of computation of period of stay for an Indian citizen, being a member of the crew of a foreign bound ship leaving India [Section 6(1)]

Basis for determining the period of stay in India for an Indian citizen, being a member of the crew of a foreign bound ship leaving India [Notification No. 70/2015, dated 17.8.2015]

According to Rule 126, in case of an individual, being a citizen of India and a member of the crew of a ship, the period or periods of stay in India shall, in respect of an eligible voyage, not include the period commencing from the date entered into the Continuous Discharge Certificate in respect of joining the ship by the said individual for the eligible voyage and ending on the date entered into the Continuous Discharge Certificate in respect of signing off by that individual from the ship in respect of such voyage.

Resident and Ordinarily Resident:

In addition to fulfilling one of the above basic conditions, the individual shall have to fulfill both the following additional conditions for him to be considered as resident and ordinarily resident: [Section 6(6)] 1) He has been resident in India in at least 2 out of 10 years preceding the relevant previous year AND 2) He has been in India for a period of 730 days or more during 7 years preceding the relevant previous year.

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