DIVISION 1
Compact Referencer
CR-1 Important amendments brought in the Income-Tax Act
by The Finance Act, 2025 ………………………………………………………………………………. 1
CR-2 Rates of Taxation ………………………………………………………………………………………… 51
CR-3 Direct Tax Rates for Last Ten Assessment Years …………………………………………….. 69
CR-4 Cost Inflation Index & Exemptions Available in Computation of Capital
Gain ………………………………………………………………………………………………………….. 84
CR-5 Deductions to be made in Computing Total Income …………………………………………. 91
CR-6 TDS & TCS at a glance………………………………………………………………………………. 103
CR-7 Investment Planner ……………………………………………………………………………………. 132
CR-8 Gold & Silver Rates since 1-4-2001 ……………………………………………………………… 150
CR-9 State Bank of India: Interest Rates w.e.f. 01.04.2024 for the purpose of
computing perquisite valuation ……………………………………………………………………. 152
DIVISION 2
Part A: Income Tax
Chapter 1 Introduction [Sections 1 to 4] …………………………………………………………….. 161
Chapter 2 Scope of Total Income & Residential Status [Sections 5 to 9B] …………….. 171
Chapter 3 Incomes which do not form part of Total Income [Sections 10, 10AA
and 11 to 13A] ………………………………………………………………………………… 189
Chapter 4 Heads of Income [Section 14] and Income under the Head “Salaries”
[Sections 15 to 17] …………………………………………………………………………… 202
Chapter 5 Income under the Head “Income from House Property” [Sections 22
to 27]……………………………………………………………………………………………… 261
Chapter 6 Income under the Head “Profits and Gains of Business or Profession”
[Sections 28 to 44D] ………………………………………………………………………… 275
Chapter 7 Income under the Head “Capital Gains” [Sections 45 to 55A] ………………… 347
Chapter 8 Income under the Head “Income from Other Sources” [Sections 56
to 59]……………………………………………………………………………………………… 456
Chpater 9 Income of Other Persons included in Assessee’s Total Income
(Clubbing of Income) [Sections 60 to 65] ……………………………………………. 475
Chapter 10 Unexplained Cash Credits, Investments, Money, etc. [Sections 68 to
69D] ………………………………………………………………………………………………. 482
Chapter 11 Set off or Carry Forward and Set off of Losses [Sections 70 to 80] …………. 487
Chapter 12 Deductions to be made in Computing Total Income [Sections 80A to
80U (Chapter VIA)] …………………………………………………………………………. 503
Chapter 13 Agricultural Income & its Tax Treatment [Sections 2(1A) and 10(1)] ……… 522
Chapter 14 Computation of Tax Liability of Various Categories of Persons …………….. 526
Chapter 15 Return of Income and Procedure of Assessment [Sections 139 to 154] ……. 546
Chapter 16 Permanent Account Number and Aadhaar Number [Section 139A
and 139AA] ……………………………………………………………………………………. 611
viii Contents
Chapter 17 Deduction and Collection of Tax at Source [Sections 190 to 206CA] ……… 622
Chapter 18 Advance Payment of Tax [Sections 207-211, 217 & 219] ……………………… 689
Chapter 19 Interest and Fee Payable [Sections 201(1A), 220(2), 234A, 234B,
234C, 234D, 234E, 234F, 234G,234H & 244A] …………………………………… 695
Chapter 20 Refunds [Sections 237 to 241 & 245] …………………………………………………. 717
Chapter 21 Penalties …………………………………………………………………………………………. 725
Chapter 22 Appeals and Revision [Sections 246 to 268] ………………………………………… 767
Chapter 23 Miscellaneous Provisions ………………………………………………………………….. 790
DIVISION 3
Tables
1 As per new regime …………………………………………………………………………………….. 805
Tax Deduction at source from monthly taxable salary during the
financial year 2025-26 …………………………………………………………………………. 805-807
1A Tax Deduction at source from monthly taxable salary during the ……………………… 809
financial year 2025-26 if the individual has opted for old regime
2A As per new regime (View Important Notes) ………………………………………………….. 814
Income Tax payable* For A.Y. 2025-26
(i.e. the assessee who has not opted to pay tax under the old regime)
Applicable for Individual, HUF, AOP or BOI & AJP
2B As per old regime (View Important Notes) ……………………………………………………. 821
Income Tax payable* For A.Y. 2025-2
IT for A.Y. 2025-26 (Individual/HUF/AOP/BOI/AJP) (Old Regime)
(i.e. total income has been computed after claiming all available
exemptions & deductions)
†Individual, HUF, AOP, BOI or AJP who opts to be taxed under the old regime
3A As per New regime (View Important Notes) ………………………………………………….. 830
Advance tax* For A.Y. 2026-27
(i.e. the assessee who has not opted for the old regime and thus by
default has to pay tax as per section 115BAC(1A))
Applicable for Individual, HUF, AOP or BOI & AJP
3B As per old regime (View Important Notes) ……………………………………………………. 838
Advance tax * For A.Y. 2026-27
Advance Tax Old Regime (Individual, HUF, AOP/BOI & AJP)
(i.e. total income has been computed after claiming all available
exemptions & deductions)
†Individual, HUF, AOP, BOI or AJP who opts to be taxed under the old regime
4 As per old regime ………………………………………………………………………………………. 847
Income Tax Payable* & Advance Tax For A.Ys. 2025-26 & 2026-27
Resident Individual of the age of 60 years or more but less than 80 years
at any time during the previous year
5 As per old regime ………………………………………………………………………………………. 850
Income tax payable* & advance tax for A.Ys. 2025-26 & 2026-27
Resident Individual of the age of 80 years or more at any
time during the previous year ………………………………………………………………………. 850
DETAILED CONTENTS
DIVISION 1
Compact Referencer
CR-1 Important amendments brought in the Income-Tax Act
by The Finance Act, 2025 ………………………………………………………………………………. 1
CR-2 Rates of Taxation ………………………………………………………………………………………… 51
CR-3 Direct Tax Rates for Last Ten Assessment Years …………………………………………….. 69
CR-4 Cost Inflation Index & Exemptions Available in Computation of Capital
Gain ………………………………………………………………………………………………………….. 84
CR-5 Deductions to be made in Computing Total Income …………………………………………. 91
CR-6 TDS & TCS at a glance ………………………………………………………………………………. 103
CR-7 Investment Planner …………………………………………………………………………………….. 132
CR-8 Gold & Silver Rates since 1-4-2001 ……………………………………………………………… 150
CR-9 State Bank of India: Interest Rates w.e.f. 01.04.2024 for the purpose of
computing perquisite valuation ……………………………………………………………………. 152
DIVISION 2
Part A: Income Tax
Chapter 1 Introduction [Sections 1 to 4] ………………………………………………………….. 161
1.1 Income Tax Law ……………………………………………………………………………………….. 161
1.2 Scheme of Taxation …………………………………………………………………………………… 163
1.3 Important Concepts ……………………………………………………………………………………. 163
1.3-a Person [Section 2(31)]: …………………………………………………………………. 163
1.3-b Assessment year [Section 2(9)] ……………………………………………………… 163
1.3-c Previous year [Sections 3] …………………………………………………………….. 163
1.3-d Assessee [Section 2(7)]…………………………………………………………………. 164
1.3-e Charge of income-tax [Section 4] …………………………………………………… 166
1.3-f Total Income ……………………………………………………………………………….. 166
1.3-g Rounding off of Total Income [Section 288A] …………………………………. 169
1.3-h How to compute tax liability on Total Income ………………………………….. 170
1.3-i Rounding off of tax, etc. [Section 288B] …………………………………………. 170
Chapter 2 Scope of Total Income & Residential Status [Sections 5 to 9B] …………. 171
2.1 Scope of Total Income/Incidence of tax [Section 5] ……………………………………….. 171
2.1-a In the case of Resident in India (resident and ordinarily resident in
case of individual or HUF) [Section 5(1)] ……………………………………….. 171
2.1-b In the case of a Resident but not Ordinarily Resident in India (In
the case of individuals and HUF only) (including an individual
who is deemed to be resident in India) [Section 5(1) and its
proviso]………………………………………………………………………………………. 172
2.1-c In the case of Non-Resident [Section 5(2)] ………………………………………. 172
2.2 Need to determine Residential Status? ………………………………………………………….. 173
2.3 Basic rules for determining residential status of an assessee …………………………….. 173
2.4 Rules for determining the residential status of an individual [Sections 6(1)
& 6(1A)] ………………………………………………………………………………………………….. 174
2.4-a When an individual is said to be resident in India? ……………………………. 175
2.4-b Citizen of India shall be deemed to be resident in India in certain
cases [Section 6(1A)] ……………………………………………………………………. 177
2.4-c When an individual is said to be resident but “not ordinarily
resident in India”? [Section 6(6)] ……………………………………………………. 178
2.4-d When an individual is said to be resident and ordinarily resident in
India? …………………………………………………………………………………………. 179
2.4-e When an individual is said to be non-resident in India
[Section 2(30)] …………………………………………………………………………….. 179
2.5 Residential Status of Hindu Undivided Family (HUF) [Section 6(2)] ………………… 181
2.5-a When is HUF said to be a resident in India? …………………………………….. 181
2.5-b When is HUF said to be a Non-Resident? ………………………………………… 181
2.5-c When is HUF said to be a resident and ordinarily resident in India? ……. 182
2.5-d When is HUF said to be resident but “not ordinarily resident in
India”? [Section 6(6)(b)] ……………………………………………………………….. 182
2.6 Residential Status of Firm, Association of Persons (AOP), Body of
Individuals (BOI) and of other persons (except companies) [Sections
6(2) and 6(4)] ……………………………………………………………………………………………. 182
2.6-a When is a Firm, AOP, BOI, etc., said to be resident in India? …………….. 182
2.6-b When is a Firm, AOP, BOI, etc., said to be Non-Resident in India? …….. 183
2.7 Residential Status of a Company [Section 6(3)] ……………………………………………… 183
2.7-a When is a company said to be resident in India? ………………………………. 183
2.7-b When is a company said to be Non-resident in India? ……………………….. 183
2.8 Incomes received or deemed to be received in India [Section 7]……………………….. 183
2.9 Incomes which accrue or arise in India or are deemed to accrue or arise in
India [Section 9]………………………………………………………………………………………… 184
2.10 Income on receipt of capital asset or stock in trade by specific person from
specified entity. [Section 9B] ………………………………………………………………………. 187
2.11 The provisions regarding incidence of tax above may be summarised in the
following table: …………………………………………………………………………………………. 187
Chapter 3 Incomes which do not form part of Total Income [Sections 10,
10AA and 11 to 13A] ………………………………………………………………………. 189
3.1 Agricultural Income [Section 10(1)] …………………………………………………………….. 189
3.2 Sum received by a Member from HUF [Section 10(2)] …………………………………… 189
3.3 Share of Profit of a Partner from a Firm [Section 10(2A)] ……………………………….. 189
3.4 Interest on Non-resident (External) Account [Section 10(4)] ……………………………. 189
3.5 Exemption of certain income received by a specified fund [Section 10(4D)] ……… 189
3.6 Travel concession or assistance received by an individual from his employer
[Section 10(5)] ………………………………………………………………………………………….. 189
3.7 Remuneration to persons who are not citizens of India [Section 10(6)] ……………… 190
3.8 Allowances or perquisites outside India [Section 10(7)] ………………………………….. 190
3.9 Death-cum-retirement gratuity received by an employee [Section 10(10)] …………. 190
3.10 Payment in commutation of pension received by the employees
[Section 10(10A)] ……………………………………………………………………………………… 190
3.11 Leave Encashment [Section 10(10AA)] ………………………………………………………… 190
3.12 Compensation on retrenchment [Section 10(10B)] …………………………………………. 190
3.13 Exemption for compensation received or receivable on account of any
disaster [Section 10(10BC)] ………………………………………………………………………… 190
3.14 Amount received on voluntary retirement [Section 10(10C)] …………………………… 190
3.15 Tax on non-monetary perquisites paid by employer [Section 10(10CC)] …………… 190
3.16 Amount received under a life insurance policy [Section 10(10D)]…………………….. 191
3.17 Provident Fund [Section 10(11)] ………………………………………………………………….. 192
3.18 Interest and withdrawals from Sukanya Samriddhi Account
[Section 10(11A)] ……………………………………………………………………………………… 193
3.19 Payments from Recognised Provident Fund [Section 10(12)] …………………………… 193
3.20 Amount payable at the time of closure or opting out of National Pension
Scheme to be exempt to the extent of 60% of the total amount payable
[Section 10(12A)] ……………………………………………………………………………………… 193
3.21 Tax-exemption to partial withdrawal from National Pension System (NPS)
by an employee [Section 10(12B)] ……………………………………………………………….. 194
3.22 Any payment from an approved Superannuation Fund [Section 10(13)] ……………. 194
3.23 House rent allowance [Section 10(13A)] ………………………………………………………. 194
3.24 Notified special allowance [Section 10(14)] ………………………………………………….. 194
3.25 Interest, premium or bonus on specified investments [Section 10(15)] ………………. 195
3.26 Lease rentals of cruise ships, received from a specified company to be
exempt. [Section 10(15B) inserted w.e.f. Assessment Year 2025-26] ………………… 195
3.27 Scholarships granted to meet the cost of education [Section 10(16)] …………………. 195
3.28 Daily and constituency allowance, etc., received by MPs and MLAs
[Section 10(17)] ………………………………………………………………………………………… 195
3.29 Award or Reward [Section 10(17A)] ……………………………………………………………. 196
3.30 Pension received by certain awardees/any member of their family
[Section 10(18)] ………………………………………………………………………………………… 196
3.31 Exemption of the family pension received by the family members of armed
forces (including para-military forces) personnel killed in action in certain
circumstances [Section 10(19)] ……………………………………………………………………. 196
3.32 Annual value of one palace of the ex-ruler [Section 10(19A)] ………………………….. 196
3.33 Income of a local authority [Section 10(20)] ………………………………………………….. 196
3.34 Income of an approved research association [Section 10(21)] ………………………….. 196
3.35 Income of certain funds of national importance [Section 10(23C)] ……………………. 197
3.36 Income of notified mutual funds [Section 10(23D)]………………………………………… 197
3.37 Any income of Venture Capital Company or Venture Capital Fund from
investment in a Venture Capital Undertaking [Section 10(23FB)] …………………….. 197
3.38 Distributed income received by a unit holder from the business trust
[Section 10(23FD)] ……………………………………………………………………………………. 198
3.39 Income of trade union [Section 10(24)] ………………………………………………………… 198
3.40 Income of a member of Scheduled Tribe residing in certain specified areas
[Section 10(26)] ………………………………………………………………………………………… 198
3.41 Income of an individual being a Sikkimese [Section 10(26AAA)] ……………………. 198
3.42 Income of minor clubbed in the hands of a parent [Section 10(32)] …………………… 199
3.43 Income arising to a shareholder on account of buy back of shares
[Section 10(34A)] ……………………………………………………………………………………… 199
3.44 Income received from securitisation trust [Section 10(35A)] ……………………………. 199
3.45 Exemption of capital gains on compensation received on compulsory
acquisition of agricultural land situated within specified urban limits
[Section 10(37)] ………………………………………………………………………………………… 199
3.46 Exemption of specified income from international sporting event held in
India [Section 10(39)] ………………………………………………………………………………… 200
3.47 Exemption of amount received by an individual as loan under reverse
mortgage scheme [Section 10(43)]……………………………………………………………….. 200
3.48 Exemption of income of New Pension Scheme Trust [Section 10(44)] ……………… 200
3.49 Specified income arising to a notified body / authority / board / trust /
commission [Section 10(46)] ………………………………………………………………………. 200
3.50 Exemption to development authorities etc. [Section 10(46A)] ………………………….. 200
3.51 Exemption in respect of income chargeable to equalization levy
[Section 10(50)] ………………………………………………………………………………………… 201
Chapter 4 Heads of Income [Section 14] and Income under the Head
“Salaries” [Sections 15 to 17] ………………………………………………………….. 202
4.1 Heads of Income [Section 14] ……………………………………………………………………… 203
4.2 No deduction for expenditure incurred in respect of exempt income against
taxable income [Section 14A] ……………………………………………………………………… 203
4.3 Method for allocating expenditure in relation to exempt income
[Section 14A(2) and Rule 8D] …………………………………………………………………….. 203
4.4 Basis of Charge [Section 15] ……………………………………………………………………….. 204
4.4-a Arrears of Salary ………………………………………………………………………….. 204
4.5 Meaning of Salary ……………………………………………………………………………………… 205
4.6 Wages ……………………………………………………………………………………………………… 206
4.7 Annuity ……………………………………………………………………………………………………. 206
4.8 Retirement benefits ……………………………………………………………………………………. 206
4.9 Treatment of Bonus……………………………………………………………………………………. 206
4.10 Salary in lieu of notice period ……………………………………………………………………… 206
4.11 Fee and Commission ………………………………………………………………………………….. 206
4.12 Overtime Payments ……………………………………………………………………………………. 207
4.13 Meaning and Type of Allowances………………………………………………………………… 207
4.14 House Rent Allowance [Section 10(13A) and Rule 2A] ………………………………….. 207
4.15 Prescribed allowances which are exempt to a certain extent [Section 10(14)] …….. 208
4.15-a Special allowances which are exempt to the extent of actual
amount received or the amount spent for the performance of the
duties of an office or employment of profit, whichever is less …………….. 209
4.15-b Allowances to meet personal expenses ……………………………………………. 210
4.16 Treatment of Entertainment Allowance (Not to be allowed, if the employee
does not opt to be taxed under old regime) ……………………………………………………. 212
4.17 Allowances which are exempt in case of certain persons if such person opts
to be taxed under the old regime ………………………………………………………………….. 213
4.18 Allowances which are fully taxable under both the regimes …………………………….. 213
4.19 Definition of ‘Perquisite’ as per section 17(2) …………………………………………………. 213
4.20 Perquisites which are taxable in the hands of all categories of employees ………….. 216
4.21 Perquisites which are taxable only in the case of specified employees ………………. 216
4.21-a Who is a specified employee [Section 17(2)(iii)] ………………………………. 218
4.22 Rent free accommodation or accommodation provided at concessional rate……….. 219
4.22-a The above rules shall not apply in certain cases………………………………… 224
4.23 Valuation of monetary obligation of the employee discharged by the
employer ………………………………………………………………………………………………….. 225
4.24 Valuation of Life Insurance premium/deferred annuity premium
paid/payable by the employer ……………………………………………………………………… 225
4.25 Fringe benefits or amenities which shall be taxable perquisite in the hands of
all employees ……………………………………………………………………………………………. 226
4.25-a Treatment of any other benefit, amenity, etc. provided by the
employer [Rule 3(7)(ix)] ……………………………………………………………….. 231
4.26 Valuation of motor car/other vehicles [Rule 3(2)] …………………………………………… 231
4.27 Provision by the employer of services of a sweeper, a gardener, a watchman
or personal attendant [Rule 3(3)] …………………………………………………………………. 236
4.28 Value of benefit to the employee resulting from the supply of gas, electric
energy or water for household consumption [Rule 3(4)] ………………………………….. 236
4.29 Valuation in respect of free or concessional educational facilities to any
member of employees’ household [Rule 3(5)] ………………………………………………… 237
4.30 Free or concessional journey given to the transport employees and their
family members [Rule 3(6)] ………………………………………………………………………… 238
4.31 Value of any specified security or sweat equity shares ……………………………………. 238
4.32 Contribution made by the employer in a recognised provident fund, in the
scheme referred to in section 80CCD(1); and in an approved superannuation
fund exceeding ₹7,50,000 [Section 17(2)(vii)]……………………………………………….. 238
4.33 Annual Accretion to the balance at the credit of the fund or scheme referred
to in section 17(2)(vii) [Section 17(2)(viia)] ………………………………………………….. 239
4.34 Contribution made by the Central Government in the previous year, to the
Agniveer Corpus Fund account of an individual enrolled in the Agnipath
Scheme referred to in section 80CCH. ………………………………………………………….. 239
4.35 Tax-free Perquisites (for all employees) ……………………………………………………….. 240
4.36 Treatment of medical facilities [Proviso to section 17(2)] ……………………………….. 242
4.37 Treatment of Leave Travel Concession or Assistance (LTC/LTA)
[Section 10(5)] ………………………………………………………………………………………….. 243
4.38 Profits in lieu of salary [Section 17(3)] …………………………………………………………. 245
4.39 Gratuity ……………………………………………………………………………………………………. 247
4.40 Treatment of Pension [Section 17(1)(ii)] ………………………………………………………. 248
4.41 Treatment of Leave Salary ………………………………………………………………………….. 249
4.41-a Encashment of accumulated leave at the time of retirement
[Section 10(10AA)] ……………………………………………………………………… 249
4.42 Retrenchment Compensation [Section 10(10B)] …………………………………………….. 250
4.43 Compensation received on Voluntary Retirement [Section 10(10C)] ………………… 251
4.44 Contribution by the employer to recognised provident fund …………………………….. 252
4.45 Interest credited to recognised provident fund ……………………………………………….. 252
4.46 Amount comprised in the transferred balance ………………………………………………… 252
4.47 Standard deduction [Section 16(ia)] ……………………………………………………………… 253
4.48 Entertainment Allowance [Section 16(ii)] ……………………………………………………… 253
4.49 Tax on Employment (Professional Tax) [Section 16(iii)] ………………………………… 253
4.50 Relief when salary is paid in arrears or in advance, etc. [Section 89/
Rule 21A] ………………………………………………………………………………………………… 257
4.51 Deduction from gross total income ………………………………………………………………. 259
Chapter 5 Income under the Head “Income from House Property”
[Sections 22 to 27] ………………………………………………………………………….. 261
5.1 Chargeability [Section 22] ………………………………………………………………………….. 261
5.2 Basis of Charge …………………………………………………………………………………………. 261
5.3 Essential conditions for taxing income under this head ……………………………………. 262
5.4 What is Annual Value? ………………………………………………………………………………. 263
5.5 Computation of annual value of a property [Section 23(1)] ……………………………… 263
5.6 Treatment of unrealised rent [Explanation to section 23(1)] …………………………….. 267
5.7 Deductions from income from house property [Section 24] ……………………………… 269
5.8 Computation of Income of a property which is self-occupied for residential
purposes or which could not actually be self occupied owing to employment
[Section 23(2), (3) & (4)] ……………………………………………………………………………. 270
5.8-a Where the annual value of such house shall be nil
[Section 23(2)(a) & (b)] ………………………………………………………………… 270
5.8-b Where the annual value of such house shall not be nil
[Section 23(3)] …………………………………………………………………………….. 270
5.8-c Where assessee has more than two houses for self occupation
[Section 23(4)] …………………………………………………………………………….. 270
5.8-d Deduction in respect of one or Two self-occupied houses where
annual value is nil ………………………………………………………………………… 271
5.9 Computation of income of house property which is partly let and partly self
occupied …………………………………………………………………………………………………… 272
5.10 No notional income for house property held as stock-in-trade for a period
upto two years [Section 23(5)] …………………………………………………………………….. 272
5.11 Interest when not deductible from “Income from House Property”
[Section 25] ………………………………………………………………………………………………. 273
5.12 Special provision for arrears of rent and unrealised rent received
subsequently [Section 25A] ………………………………………………………………………… 273
5.13 Property owned by Co-owners [Section 26] …………………………………………………… 273
5.14 Can Annual Value (Net Annual Value) be negative? ………………………………………. 274
5.15 Can there be any loss under the head income from house property? ………………….. 274
Chapter 6 Income under the Head “Profits and Gains of Business or
Profession” [Sections 28 to 44D] ……………………………………………………… 275
6.1 Chargeability/scope of income under the head ‘Profits and gains of business
or profession’ [Section 28] ………………………………………………………………………….. 276
6.2 Rationalisation of provision relating to conversion of inventory into Capital
Asset [Section 28(via)]……………………………………………………………………………….. 278
6.3 Income from business or profession — how to be computed ……………………………. 278
6.4 Method of Accounting [Section 145] ……………………………………………………………. 278
6.5 Expenses which are expressly allowed as a deduction [Sections 30 to 37] …………. 279
6.6 Rent, rates, taxes, repairs and insurance for buildings [Section 30] …………………… 279
6.6-a Deductions ………………………………………………………………………………….. 279
6.7 Repairs and insurance of machinery, plant and furniture [Section 31] ……………….. 280
6.8 Depreciation [Section 32] …………………………………………………………………………… 280
6.8-a What is ‘block of assets’ ……………………………………………………………….. 281
6.8-b Written down value for charging depreciation [Section 43(6)] ……………. 285
6.8-c Actual cost [Section 43(1)] ……………………………………………………………. 286
6.8-d Notional Actual Cost [Explanations to section 43(1)] ………………………… 287
6.8-e Computation of depreciation …………………………………………………………. 290
6.8-f Steps for computing depreciation: ………………………………………………….. 291
6.8-g Depreciation on asset in the previous year of acquisition if the
asset is put to use for less than 180 days during that previous year ………. 291
6.8-h Cases where WDV of a block at the end of the year shall be
reduced to Nil and hence no depreciation ………………………………………… 292
6.9 Special provisions for depreciation in certain cases ………………………………………… 293
6.9-a Special provisions for depreciation in case of assets of an
undertaking engaged in generation or generation and distribution
of power [Section 32(1)(i) and Rule 5(1A)] ……………………………………… 293
6.9-b Proportionate depreciation allowed in certain cases [Sixth Proviso
to section 32] ………………………………………………………………………………. 293
6.9-c Additional depreciation on new machinery or plant
[Section 32(1)(iia)] ………………………………………………………………………. 294
6.9-d Is it mandatory to claim depreciation [Explanation to section 32] ……….. 295
6.10 Carry forward and set off of unabsorbed depreciation [Section 32(2)]……………….. 295
6.11 Tea Development Account, Coffee Development Account and Rubber
Development Account [Section 33AB] (Deduction under section 33AB is
not available if tax is payable under the new regime, i.e., under Section
115BA/115BAA/115BAB/115BAC/115BAD/115BAE) …………………………………. 295
6.12 Site Restoration Fund [Section 33ABA] ……………………………………………………….. 295
6.13 Expenditure on Scientific Research [Section 35] ……………………………………………. 296
6.13-a In-house Scientific Research………………………………………………………….. 296
6.13-b Sale of an asset used for scientific research ……………………………………… 297
6.13-c Unabsorbed capital expenditure on scientific research ………………………. 297
6.13-d Payment to outside agencies ………………………………………………………….. 298
6.13-e Deduction on in house research and development to a company
assessee in certain cases [Section 35(2AB)] …………………………………….. 300
6.14 Expenditure for obtaining licence to operate telecommunication services and
amortisation of spectrum fee for purchase of spectrum ……………………………………. 300
6.15 Deduction in respect of expenditure on specified business [Section 35AD] ……….. 300
6.16 Expenditure by way of payments to associations and institutions for carrying
out Rural Development Programmes [Section 35CCA] …………………………………… 303
6.17 Deduction for expenditure incurred on agricultural extension project
[Section 35CCC] ……………………………………………………………………………………….. 303
6.18 Deduction for expenditure incurred by a company on skill development
project [Section 35CCD] …………………………………………………………………………….. 303
6.19 Amortisation of certain preliminary expenses [Section 35D and Rule 6AB] ………. 303
6.20 Amortisation of expenditure in case of amalgamation or demerger
[Section 35DD] …………………………………………………………………………………………. 305
6.21 Amortisation of expenditure incurred under voluntary retirement scheme
[Section 35DDA] ………………………………………………………………………………………. 305
6.22 Other deductions [Section 36] ……………………………………………………………………… 305
6.22-a Insurance premium of stocks [Section 36(1)(i)] ………………………………… 305
6.22-b Insurance premium of cattle paid by a federal milk cooperative
society [Section 36(1)(ia)] …………………………………………………………….. 305
6.22-c Insurance on health of employees [Section 36(1)(ib)] ……………………….. 305
6.22-d Bonus or Commission to employees [Section 36(1)(ii)] …………………….. 306
6.22-e Interest on borrowed capital [Section 36(1)(iii)] ……………………………….. 306
6.22-f Discount on issue of zero coupon bonds to be allowed as deduction
on pro rata basis [Section 36(1)(iiia)] ……………………………………………… 306
6.22-g Employer’s Contribution to a recognised Provident Fund or
Approved Superannuation Fund [Section 36(1)(iv)] ………………………….. 306
6.22-h Employers’ contribution towards a pension scheme
[Section 36(1)(iva)] ……………………………………………………………………… 307
6.22-i Employer’s contribution to an approved gratuity fund
[Section 36(1)(v)] ………………………………………………………………………… 307
6.22-j Sums received from employees towards certain welfare schemes if
credited to their accounts before the due date [Section 36(1)(va)] ……….. 307
6.22-k Allowance in respect of dead or permanently useless animals
[Section 36(1)(vi)] ……………………………………………………………………….. 307
6.22-l Bad debts [Section 36(1)(vii)] ……………………………………………………….. 308
6.22-m Securities Transaction Tax paid to be allowed as deduction
[Section 36(1)(xv)] ………………………………………………………………………. 309
6.22-n Commodities Transaction Tax to be allowed as a deduction
[Section 36(xvi)] ………………………………………………………………………….. 309
6.22-o Marked to market loss or other expected loss to be allowed
[Clause (xviii) inserted in section 36(1)]………………………………………….. 309
6.23 General Deductions [Section 37(1)] ……………………………………………………………… 309
6.23-a Conditions for allowance under section 37(1) ………………………………….. 310
6.24 Advertisement to political parties [Section 37(2B)] ………………………………………… 311
6.25 Building, plant and machinery or furniture not exclusively used for the
purpose of business or profession [Section 38] ………………………………………………. 311
6.26 Amounts not deductible [Section 40] ……………………………………………………………. 312
6.27 Expenses or payments not deductible in certain circumstances [Section 40A]…….. 315
6.27-a Expenses or payments not deductible where such payments are
made to relatives [Section 40A(2)] …………………………………………………. 315
6.27-b Disallowance of 100% of expenditure if payment is made by any
mode other than account payee cheque or draft [Section 40A(3)(a)] ……. 316
6.27-c Disallowance in respect of provision for gratuity [Section 40A(7)] ……… 319
6.28 Disallowance in respect of contributions to non-statutory funds
[Section 40A(9)] ……………………………………………………………………………………….. 320
6.29 Marked to market loss or other expected loss not to be allowed except
provided in section 36(1)(xviii) [Section 40A(13)] …………………………………………. 320
6.30 Certain deductions to be allowed only on actual [Section 43B] ………………………… 320
6.31 Special provision for full value of consideration for transfer of assets other
than capital assets in certain cases [Section 43CA] …………………………………………. 323
6.32 Computation of income from construction and service contracts
[Section 43CB] …………………………………………………………………………………………. 324
6.33 Deemed profits chargeable to tax …………………………………………………………………. 324
6.34 Maintenance of accounts by certain persons carrying on profession or
business [Section 44AA and Rule 6F]…………………………………………………………… 326
6.34-a Person carrying on certain professions [Section 44AA(1)] …………………. 326
6.34-b Person carrying on a non-specified profession or carrying on
business [Section 44AA(2)] …………………………………………………………… 329
6.34-c When maintenance of books of account is not necessary ……………………. 330
6.34-d Consequences of failure to keep accounts, etc. …………………………………. 331
6.35 Compulsory audit of accounts [Section 44AB] ………………………………………………. 331
6.35-a Report of Audit of Accounts [Rule 6G] …………………………………………… 333
6.36 Special provisions for computing profits and gains of any business
(excluding the business covered under section 44AE) [Section 44AD] ……………… 333
6.37 Special provision for computing profits and gains of profession on
presumptive basis [Section 44ADA] …………………………………………………………….. 336
6.38 Special provisions for computing profits and gains of business of plying,
hiring or leasing goods carriages [Section 44AE] …………………………………………… 337
6.39 Special provisions for computing profits and gains [Sections 44B, 44BB,
44BBA, 44BBB and 44BBC] ……………………………………………………………………… 339
Chapter 7 Income under the Head “Capital Gains” [Sections 45 to 55A] ………….. 347
7.1 Basis of Charge [Section 45(1)] …………………………………………………………………… 347
7.2 There must be a capital asset ……………………………………………………………………….. 348
7.2-a What is a capital asset [Section 2(14)]: ……………………………………………. 348
7.2-b Types of capital assets ………………………………………………………………….. 351
7.3 Capital asset must have been transferred ……………………………………………………….. 355
7.3-a What is transfer [Section 2(47)] ……………………………………………………… 355
7.3-b Transactions not regarded as transfer [Sections 46 and 47] ………………… 356
7.4 Capital gain should arise in the previous year in which transfer took place ………… 359
7.5 Computation of capital gains [Section 48] …………………………………………………….. 360
7.6 Full value of consideration ………………………………………………………………………….. 362
7.7 Expenses on transfer ………………………………………………………………………………….. 364
7.8 Cost of acquisition [Section 55(2)] ………………………………………………………………. 364
7.8-a Deemed cost of acquisition ……………………………………………………………. 365
7.8-b Cost of acquisition of right shares/financial asset
[Section 55(2)(aa)] ……………………………………………………………………….. 370
7.8-c Cost of acquisition of bonus shares or any other financial asset
allotted without payment [Section 55(2)(aa)(iiia)] …………………………….. 371
7.8-d Cost of acquisition of an equity share or a unit for purpose of
computing long-term capital gain under section 112A
[Section 55(2)(ac)] ……………………………………………………………………….. 371
7.8-e Cost of acquisition of assets acquired before 1.4.2001
[Section 55(2)(b)(i) & 55(2)(b)(ii)] …………………………………………………. 371
7.8-f Cost of acquisition of depreciable assets [Section 50] ……………………….. 372
7.9 Treatment of advance money received if forfeited [Section 56(2)(ix)] ………………. 373
7.10 Cost of improvement [Section 55(1)(b)] ……………………………………………………….. 373
7.11 Indexation of cost of acquisition and cost of improvement to be allowed in
case of long-term capital gain [Second proviso to Section 48] [Indexation
applicable upto 22.7.2024] ………………………………………………………………………….. 374
7.11-a Computation of indexed cost of acquisition ……………………………………… 375
7.12 Indexed cost of improvement [Explanation (iv) to Section 48] …………………………. 378
7.13 Computation of capital gain in special cases ………………………………………………….. 379
7.13-a Taxation of zero coupon bonds ………………………………………………………. 379
7.13-b Capital gain in case of amount received from an insurer on account
of damage or destruction of any capital asset [Section 45(1A)] …………… 380
7.13-c Profits or gains arising from receipt of the amount on maturity of
high premium unit linked insurance policy chargeable to tax under
the head Capital gains [Section 45(1B)] ………………………………………….. 381
7.13-d Capital gain on conversion of capital asset into stock-in-trade or
stock-in-trade into capital asset ………………………………………………………. 382
7.13-e Capital gain on transfer of capital asset by a partner/member to a
firm/AOP/BOI as capital contribution [Section 45(3)] ………………………. 383
7.13-f Capital Gain at the time of dissolution or reconstitution of
specified entity…………………………………………………………………………….. 383
7.13-g Capital gain on transfer by way of compulsory acquisition of an
asset [Section 45(5)] …………………………………………………………………….. 388
7.13-h Special provisions for computation of capital gains in case of joint
development agreement [Section 45(5A)] ……………………………………….. 390
7.13-i Capital gain on conversion of debentures into shares
[Section 47(x), 49(2A) and rule 8AA] …………………………………………….. 393
7.13-j Conversion of preference shares into equity shares
[Section 47(xb), 49(2AE), Explanation 1 to section 2(42A)] ………………. 393
7.13-k Capital gains on distribution of assets by companies in liquidation
[Section 46] ………………………………………………………………………………… 394
7.13-l Capital gain on sale of goodwill of a business or
profession/trademark or brand name/associated with the business
or profession or any other intangible asset or a right to
manufacture or right to carry on any business or
profession/tenancy rights/busines route permits or loom hour, or
any other right …………………………………………………………………………….. 394
7.13-m Capital gain on transfer of depreciable assets [Section 50] …………………. 396
7.13-n Cost of acquisition and capital gain in case of depreciable assets of
electricity companies [Section 50A] ……………………………………………….. 397
7.13-o Special provision for taxation of capital gains in case of a unit of a
Specified Mutual Fund acquired on or after 1-4-2023 or Market
Linked Debentures [Section 50AA] ………………………………………………… 397
7.13-p Special provisions for computation of capital gains in case of
slump sale [Section 50B] ………………………………………………………………. 397
7.13-q Special provision for full value of consideration for computation of
capital gains in real estate transactions [Section 50C] ……………………….. 401
7.13-r Special provision for full value of consideration for transfer of
share other than quoted share [Section 50CA] ………………………………….. 403
7.13-s Fair Market Value to be full value of consideration in certain cases
[Section 50D] ……………………………………………………………………………… 403
7.13-t Capital gains on purchase by company of its own shares or other
specified securities [Section 46A]…………………………………………………… 404
7.13-u Computation of capital loss in case of buy back of shares [Proviso
to Section 46A inserted w.e.f. 1.10.2024] ………………………………………… 404
7.13-v Computation of capital gain in case of transfer of Electronic Gold
Receipt ……………………………………………………………………………………….. 405
7.13-w Capital gain on sale of land and building to be computed
separately in case of building constructed by the assessee ………………….. 406
7.14 Capital gain in the case of transfer of shares/debentures by non-residents
[Proviso 1 to section 48 and rule 115A] ………………………………………………………… 406
7.15 Types of exemption of capital gains ……………………………………………………………… 406
7.16 Profit on transfer of house property used for residence [Section 54] ………………….. 407
7.17 Capital Gain on transfer of land used for agricultural purposes [Section 54B]…….. 412
7.18 Capital Gain on compulsory acquisition of land and buildings forming part
of an industrial undertaking [Section 54D] ……………………………………………………. 415
7.19 Capital gain on transfer of long-term capital assets being land or building or
both not to be charged on investment in certain bonds [Section 54EC] ……………… 416
7.20 Capital Gain on transfer of asset, other than a residential house
[Section 54F] ……………………………………………………………………………………………. 417
7.21 Capital gain on transfer of assets in cases of shifting of industrial
undertakings from urban areas [Section 54G] ………………………………………………… 422
7.22 Exemption of capital gain on transfer of assets of shifting of industrial
undertaking from urban area to any Special Economic Zone [Section 54GA] …….. 424
7.23 Exemption of long-term capital gains tax on transfer of residential property
if invested in a new manufacturing SME company [Section 54GB] ………………….. 424
7.24 Extension of time limit for acquiring new asset or depositing or investing
amount of capital gain, in case of compulsory acquisition [Section 54H] …………… 424
7.25 Tax on short-term capital gains in certain cases [Section 111A] ……………………….. 425
7.26 Computation of tax on long-term capital gains [Section 112] …………………………… 427
7.26-a Tax on long-term capital gains from listed securities on which
securities transaction tax is not charged [Proviso to Section 112] ………… 432
7.26-b Rates of tax on long-term capital gain in case of non-resident from
the transfer of capital asset being unlisted securities or shares of a
company not being a company in which public are substantially
interested [Sub-clause (iii) to clause (c) of section 112(1)] …………………. 433
7.27 Tax on long-term capital gains in certain cases [Section 112A] ………………………… 433
7.28 Issues relating to certain amendments made by the Finance (No. 2)
Act, 2024 …………………………………………………………………………………………………. 438
Chapter 8 Income under the Head “Income from Other Sources”
[Sections 56 to 59] ………………………………………………………………………….. 456
8.1 Chargeability…………………………………………………………………………………………….. 456
8.2 Method of Accounting ……………………………………………………………………………….. 456
8.3 Specific incomes included under ‘Income from Other Sources’
[Section 56(2)] ………………………………………………………………………………………….. 456
8.4 Other incomes which are normally included under the head ‘Income from
Other Sources’ ………………………………………………………………………………………….. 458
8.5 Taxability of Dividend [Section 56(2)(i)] ……………………………………………………… 459
8.5-a What is dividend ………………………………………………………………………….. 460
8.5-b Deductions for expenses from dividend income [Section 57(i) and
57(iii)] ……………………………………………………………………………………….. 462
8.6 Winnings from Lotteries, Crossword Puzzles, Horse Races and Card Games
[Section 56(2)(ib)] …………………………………………………………………………………….. 463
8.6-a Special rate of Income-tax in case of winnings from lotteries,
crossword puzzles, races, etc. [Section 115BB] ………………………………… 463
8.6-b Grossing up of lottery income, etc. …………………………………………………. 464
8.7 Special rate of income-tax in case of winnings from online games
[Section 115BBJ inserted by the Finance Act, 2023, w.e.f. A.Y. 2024-25]…………. 464
8.8 Interest on Securities [Section 56(2)(id)] ………………………………………………………. 464
8.8-a Chargeability of Interest on Securities …………………………………………….. 464
8.8-b Accrual of Interest ……………………………………………………………………….. 465
8.8-c Grossing up of Interest………………………………………………………………….. 465
8.8-d Deductions for expenses from Interest on Securities [Section 57(i)
and (iii)] ……………………………………………………………………………………… 466
8.9 Income from letting out of machinery, plant or furniture [Section 56(2)(ii)] ………. 466
8.9-a Income from composite letting of machinery, plant or furniture
and buildings [Section 56(2)(iii)] ……………………………………………………. 466
8.9-b Deductions permissible from letting out of machinery, plant or
furniture and buildings [Section 57(ii) and (iii)] ……………………………….. 466
8.10 Income of any person to include not only gift of money from any person(s)
but also the gift of property (whether movable or immovable) or property
acquired for inadequate consideration [Section 56(2)(x)] ………………………………… 467
8.11 Share premium in excess of the fair market value to be treated as income in
the hands of closely held company [Section 56(2)(viib)] …………………………………. 470
8.12 Interest on compensation or enhanced compensation [Section 56(2)(viii)] …………. 470
8.13 Forfeiture of advance received for transfer of a capital asset to be taxed
under the head “income from other sources” [Section 56(2)(ix)] ………………………. 470
8.14 Any sum received, including the amount allocated by way of bonus, at any
time during a previous year, under a life insurance policy, which is not
exempt under Section 10(10D) [Section 56(2)(xiii) inserted by the Finance
Act, 2023 w.e.f. A.Y. 2024-25] ……………………………………………………………………. 471
8.15 Family pension payments received by the legal heirs of a deceased employee ……. 472
8.16 Contribution of the employee towards his welfare fund, deducted/received
by the employer [Section 56(2)(ic)] ……………………………………………………………… 472
8.17 Any other income taxable under this head …………………………………………………….. 472
8.18 Amounts not deductible in computing the income under the head ‘Income
from Other Sources’ [Section 58] ………………………………………………………………… 473
8.19 Deemed income chargeable to tax [Section 59] ……………………………………………… 474
Chapter 9 Income of Other Persons included in Assessee’s Total Income
(Clubbing of Income) [Sections 60 to 65] …………………………………………. 475
9.1 Transfer of income where there is no transfer of assets [Section 60] …………………. 475
9.2 Revocable transfer of assets [Section 61] ………………………………………………………. 475
9.2-a When a transfer is revocable [Section 63] ……………………………………….. 475
9.2-b Section 61 not applicable, if the transfer is irrevocable for a
specified period [Section 62] …………………………………………………………. 475
9.3 Income of an individual to include income of spouse, minor child, etc.
[Section 64] ………………………………………………………………………………………………. 476
9.3-a Remuneration of spouse from a concern in which the other spouse
has substantial interest [Section 64(1)(ii)] ……………………………………….. 476
9.3-b Income from assets transferred to the spouse [Section 64(1)(iv)] ………… 478
9.3-c Income from assets transferred to son’s wife [Section 64(1)(vi)] …………. 479
9.3-d Income from assets transferred to any person for the benefit of the
spouse of the transferor [Section 64(1)(vii)] …………………………………….. 479
9.3-e Income from assets transferred to any person for the benefit of
son’s wife [Section 64(1)(viii)] ………………………………………………………. 479
9.4 Clubbing of income of a minor child [Section 64(1A)] ……………………………………. 479
9.5 Income from self-acquired property converted to joint family property
[Section 64(2)] ………………………………………………………………………………………….. 480
9.6 Under which head of income will the clubbed income be assessed ……………………. 481
9.7 Liability of person i.e. the transferee in respect of income included in the
income of another person i.e. transferor [Section 65] ………………………………………. 481
Chapter 10 Unexplained Cash Credits, Investments, Money, etc. [Sections 68
to 69D] ………………………………………………………………………………………….. 482
10.1 Cash credits [Section 68] ……………………………………………………………………………. 482
10.2 Unexplained investments [Section 69] ………………………………………………………….. 484
10.3 Unexplained money, etc. [Section 69A] ………………………………………………………… 484
10.4 Amount of investments, not fully disclosed in books of account
[Section 69B] ……………………………………………………………………………………………. 484
10.5 Unexplained expenditure, etc. [Section 69C] …………………………………………………. 484
10.6 Amount borrowed or repaid on hundi [Section 69D] ………………………………………. 485
10.7 Taxation of cash credits, unexplained money, unexplained investments, etc.,
covered under sections 68, 69, 69A, 69B, 69C & 69D [Section 115BBE] ………….. 485
Chapter 11 Set off or Carry Forward and Set off of Losses [Sections 70 to 80] …….. 487
11.1 Set off of loss from one source against income from another source under
the same head of income [Section 70] …………………………………………………………… 487
11.2 Set off of loss from one head against income from another head (Inter-head
adjustment) [Section 71] …………………………………………………………………………….. 488
11.3 Carry forward and set off of losses ………………………………………………………………. 490
11.3-a Compulsory filing of loss returns [Section 80] …………………………………. 490
11.4 Carry forward and set off of loss from house property [Section 71B] ………………… 491
11.5 Carry forward and set off of business losses [Section 72] ………………………………… 491
11.6 Set off and Carry forward and Set off of Speculation Loss [Section 73] …………….. 494
11.7 Set off and carry forward and set off of loss of a specified business referred
to in section 35AD [Section 73A] ………………………………………………………………… 495
11.8 Carry forward of losses under the head ‘capital gains’ [Section 74]……………………. 495
11.9 Set off and carry forward and set off of loss from activity of owning and
maintaining race horses [Section 74A] ………………………………………………………….. 496
11.10 Brought forward losses must be set off in the immediately succeeding
year/years …………………………………………………………………………………………………. 496
11.11 Special provisions of set off of losses in case of an individual or HUF or
AOP/BOI or Artificial Juridical Person who is taxable under section
115BAC(1A)…………………………………………………………………………………………….. 496
11.12 Carry forward and set off of the accumulated business losses and
unabsorbed depreciation allowance in amalgamation or demerger, etc.
[Section 72A] ……………………………………………………………………………………………. 498
11.12-a Provision relating to carry forward and set off of accumulated loss
and unabsorbed depreciation allowance in scheme of amalgamation
of banking company in certain cases [Section 72AA] ……………………….. 500
11.12-b Provisions relating to carry forward and set off of accumulated
losses and unabsorbed depreciation allowance in business
reorganization of co-operative banks [Section 72AB] ……………………….. 500
11.13 Losses of firms ………………………………………………………………………………………….. 500
11.14 Carry forward and set off of losses on succession of any person [Section
78(2)] ………………………………………………………………………………………………………. 500
11.15 Carry forward and set off of losses in case of certain companies [Section 79] …….. 500
11.16 No set off of losses consequent to search & seizure or survey or requisition
proceedings [Section 79A] ………………………………………………………………………….. 502
Chapter 12 Deductions to be made in Computing Total Income [Sections 80A
to 80U (Chapter VIA)] ……………………………………………………………………. 503
12.1 Basic rules of deductions [Sections 80A/80AB/80AC] ……………………………………. 504
12.2 Deduction on account of certain payments are allowed from sections 80C to
80GGC. Deduction in respect of Life Insurance Premium, deferred annuity,
contributions to provident fund, subscription to certain equity shares or
debentures, etc. [Section 80C]……………………………………………………………………… 504
12.2-a Deduction in respect of deposits under National Savings Scheme
or payment to a deferred annuity plan [Section 80CCA] ……………………. 504
12.3 Deduction in respect of contribution to certain pension funds
[Section 80CCC] ……………………………………………………………………………………….. 505
12.4 Deduction in respect of contribution to pension scheme of Central
Government by Central Government or any other employer [Section
80CCD] ……………………………………………………………………………………………………. 505
12.5 Limit on deductions under sections 80C, 80CCC and 80CCD
[Section 80CCE] ……………………………………………………………………………………….. 508
12.6 Deduction in respect of contribution to Agnipath Scheme [Section 80CCH] ………. 509
12.7 Deduction in respect of Medical Insurance premia [Section 80D] …………………….. 509
12.8 Deduction in respect of maintenance including medical treatment of a
dependant who is a person with disability [Section 80DD] ………………………………. 512
12.9 Deduction in respect of medical treatment, etc. [Section 80DDB] …………………….. 512
12.10 Deduction for interest paid on loan taken for pursuing higher education
[Section 80E] ……………………………………………………………………………………………. 513
12.11 Deduction in respect of interest on loan taken for residential house property
[Section 80EE] ………………………………………………………………………………………….. 514
12.12 Deduction in respect of interest on loan taken for certain house property
[Section 80EEA] ……………………………………………………………………………………….. 514
12.13 Deduction in respect of purchase of electric vehicle [Section 80EEB]……………….. 514
12.14 Deduction in respect of donations to certain funds, charitable institutions,
etc. [Section 80G] ……………………………………………………………………………………… 514
12.15 Deductions in respect of rent paid [Section 80GG] …………………………………………. 514
12.16 Deduction in respect of certain donations for scientific research or rural
development [Section 80GGA] ……………………………………………………………………. 515
12.17 Deduction in respect of contributions given by companies to political parties
[Section 80GGB] ………………………………………………………………………………………. 517
12.18 Deduction in respect of contribution given by any person to political parties
[Section 80GGC] ………………………………………………………………………………………. 517
12.19 Special provision in respect of eligible business of eligible start up
[Section 80-IAC]……………………………………………………………………………………….. 517
12.20 Deduction in respect of profits and gains from certain industrial
undertakings other than infrastructure development undertakings
[Section 80-IB] …………………………………………………………………………………………. 519
12.21 Special provisions in respect of certain undertakings in North Eastern States
[Section 80-IE] ………………………………………………………………………………………….. 519
12.22 Deduction in respect of profits and gains from business of collecting and
processing of bio-degradable waste [Section 80JJA] ………………………………………. 519
12.23 Deduction in respect of employment of new employees [Section 80JJAA] ………… 519
12.24 Deduction in respect of certain incomes of Offshore Banking Units and
International Financial Services Centre [Section 80LA] ………………………………….. 519
12.25 Deduction in respect of certain inter-corporate dividends [Section 80M] …………… 519
12.26 Deduction in respect of income of Co-operative Societies [Section 80P] …………… 519
12.27 Deduction in respect of income of Farm Producer Companies
[Section 80PA] ………………………………………………………………………………………….. 519
12.28 Deduction in respect of royalty income, etc., of authors of certain books
other than textbooks [Section 80QQB] …………………………………………………………. 519
12.29 Deduction in respect of royalty on patents [Section 80RRB] ……………………………. 520
12.30 Deduction in respect of interest on deposits in savings accounts to the
maximum extent of ₹10,000 [Section 80TTA] ……………………………………………….. 520
12.31 Deduction in respect of interest on deposits in case of senior citizens
[Section 80TTB] ……………………………………………………………………………………….. 520
12.32 Deduction in case of a person with disability [Section 80U] …………………………….. 521
Chapter 13 Agricultural Income & its Tax Treatment [Sections 2(1A)
and 10(1)] ………………………………………………………………………………………. 522
13.1 Summarised definition of Agricultural Income [Section 2(1A)] ……………………….. 522
13.2 What does agriculture include? ……………………………………………………………………. 522
13.3 Income which is partially agricultural and partially from business ……………………. 523
13.4 Tax on non-agricultural income if the assessee earns agricultural income
also ………………………………………………………………………………………………………….. 524
Chapter 14 Computation of Tax Liability of Various Categories of Persons ……….. 526
14.1 Assessment of an individual………………………………………………………………………… 526
14.2 An individual is liable to pay tax in respect of the following incomes ……………….. 526
14.2-a Incomes received from firm/AOP/HUF which are exempt in the
hands of an individual …………………………………………………………………… 527
14.3 Tax on income of an Individual/HUF or AOP/BOI or Artificial juridical
person [Section 115BAC(1A)] [W.e.f. A.Y. 2024-25] …………………………………….. 527
14.4 Rates of income-tax under old and new regime ……………………………………………… 532
14.5 Rebate of maximum ₹12,500 for resident individuals having total income up
to ₹5,00,000 [Section 87A] …………………………………………………………………………. 535
14.6 Alternate Minimum Tax (AMT) on all persons other than companies
[Sections 115JC to 115JF Chapter XII-BA] …………………………………………………… 537
14.7 Assessment of Hindu Undivided Family ……………………………………………………….. 537
14.8 Computation of Total Income of HUF ………………………………………………………….. 538
14.8-a Tax on income of Hindu Undivided Family [Section 115BAC] ………….. 540
14.9 Partition of HUF ……………………………………………………………………………………….. 540
14.10 Procedure to effect partition and consequences after such partition
[Section 171] …………………………………………………………………………………………….. 540
14.11 Alternate Minimum Tax (AMT) on all persons other than companies
[Sections 115JC to 115JF Chapter XII-BA] …………………………………………………… 540
14.12 Position of Firm under the Income-tax Act ……………………………………………………. 540
14.13 Assessment of firm ……………………………………………………………………………………. 541
14.14 Essential conditions to be satisfied by a firm to be assessed as firm and to be
eligible for deduction of interest, salary, etc., to the partners [Section 184] ………… 541
14.15 Deduction allowable on account of remuneration and interest to the partners
of the firm (including Limited Liability Partnership) ………………………………………. 542
14.16 Computation of Book Profit [Explanation 3 to section 40(b)] …………………………… 543
14.17 Provisions regarding set off and carry forward of losses of firms ……………………… 543
14.17-a Carry forward and Set off of losses under any head in case of
change in constitution of firm [Section 78] ………………………………………. 543
14.18 Alternate Minimum Tax (AMT) on all persons other than companies
[Sections 115JC to 115JF Chapter XII-BA] …………………………………………………… 544
14.19 Treatment of share of profit, interest and remuneration received by a partner
from a firm (including Limited Liability Partnership) ……………………………………… 544
14.20 Assessment of Association of Persons ………………………………………………………….. 545
14.21 Method of computing a member’s share in income of AOP/BOI where the
shares of the members are determinate and known [Section 67A] …………………….. 545
14.22 Alternate Minimum Tax (AMT) on all persons other than companies
[Sections 115JC to 115JF Chapter XII-BA] …………………………………………………… 545
14.23 Assessment of Companies ………………………………………………………………………….. 545
14.24 Provisions of MAT for payment of tax by certain companies
[Section 115JB(1)] …………………………………………………………………………………….. 545
14.25 Special provisions relating to tax on distributed income of domestic
company for buy back of shares [Section 115QA to section 115QC] ………………… 545
Chapter 15 Return of Income and Procedure of Assessment [Sections 139
to 154] …………………………………………………………………………………………… 546
15.1 Submission of return of income [Section 139(1)] …………………………………………… 546
15.1-a Resident person to file return of income in certain cases even
though not required otherwise ……………………………………………………….. 549
15.1-b Due date of furnishing return of income [Explanation 2 to
section 139(1)] …………………………………………………………………………….. 549
15.2 New Scheme to facilitate submission of returns through Tax Return
Preparers [Section 139B] ……………………………………………………………………………. 550
15.3 Mandatory to file return before due date if certain losses are to be carried
forward [Section 139(3)] …………………………………………………………………………….. 551
15.4 Belated return [Section 139(4)] ……………………………………………………………………. 552
15.5 Return of income of charitable trust and institutions [Section 139(4A)] …………….. 552
15.5-a Due date of filing return of charitable trust: ……………………………………… 552
15.6 Return of income of political party [Section 139(4B)] …………………………………….. 552
15.7 Return of income of certain associations and institutions [Section 139(4C)] ………. 553
15.8 Certain university or college, etc. to file return of income/loss
[Section 139(4D)] ……………………………………………………………………………………… 553
15.9 Business trusts will also be required to file return of income
[Section 139(4E)] ………………………………………………………………………………………. 553
15.10 Investment fund referred to in section 115UB mandatorily required to
furnish return of income [Section 139(4F)] ……………………………………………………. 553
15.11 Form and manner of furnishing return of income [Rule 12] ……………………………… 553
15.12 Revised return [Section 139(5)] …………………………………………………………………… 560
15.12-a Completion of assessment …………………………………………………………….. 560
15.12-b Can a belated return under section 139(4) be revised ………………………… 560
15.12-c Can revised return be further revised ………………………………………………. 560
15.12-d Revised return substitutes the original return ……………………………………. 560
15.13 Updated return [Section 139(8A) and Section 140B] ………………………………………. 560
15.14 Defective return [Section 139(9)]…………………………………………………………………. 568
15.15 Provisions of section 139 to apply, if a return of income is furnished after
the order of condonation of dealy [Section 139(9A)] ………………………………………. 568
15.16 Self assessment [Section 140A] …………………………………………………………………… 569
15.17 Inquiry before assessment [Section 142] ……………………………………………………….. 571
15.18 Estimates by Valuation Officer in certain cases [Section 142A] ……………………….. 576
15.19 Faceless inquiry, direction for special audit or inventory valuation and
valuation by Valuation Officer [Section 142B] ………………………………………………. 577
15.20 Processing of return [Section 143(1)]……………………………………………………………. 577
15.20-a Scheme for centralized processing [Section 143(1A)] ……………………….. 579
15.21 Regular/Scrutiny Assessment — On the basis of return of income and after
hearing additional evidence [Section 143(3)] …………………………………………………. 579
15.21-a Compulsory Service of Notice [Section 143(2)] ……………………………….. 579
15.21-b Notice deemed to be valid in certain circumstances [Section 292BB] ….. 580
15.21-c Consequences of failure to comply with notice under section 143(2) …… 580
15.22 Assessment after evidence [Section 143(3)] ………………………………………………….. 580
15.22-a Deduction not to be allowed if claim is not made in the return of
income ……………………………………………………………………………………….. 580
15.22-b Assessment of certain institutions without giving exemption
available under section 10 [First and second provisos to
section 143(3)] …………………………………………………………………………….. 581
15.22-c Assessment of university, college, etc., on withdrawal of
exemption notification issued under section 35(1)(ii) and (iii)
[Third proviso to section 143(3)] ……………………………………………………. 581
15.22-d New scheme for scrutiny assessment [Section 143(3A)/(3B) /(3C)] …….. 581
15.23 Best Judgment Assessment [Section 144] ……………………………………………………… 582
15.23-a Opportunity must be given to the assessee ……………………………………….. 582
15.23-b Assessment on rejection of accounts……………………………………………….. 582
15.24 Power of Joint Commissioner to issue directions in certain cases [Section
144A] [not relevant after Faceless Assessment] ……………………………………………… 583
15.25 Faceless assessment [Section 144B] …………………………………………………………….. 583
15.26 Procedure for Assessment in cases of transactions covered under GAAR
[Section 144BA] ……………………………………………………………………………………….. 592
15.27 Provision for constitution of alternate dispute resolution mechanism for
order of the Transfer Pricing Officer, and foreign company [Section 144C] ……….. 592
15.28 Income escaping assessment and search assessments [Section 147, section
148, section 148A, section 148B, section 149, section 150, section 151,
section 151A] [w.e.f. 1.4.2021] ……………………………………………………………………. 592
15.28-a Time limit for completion of assessment and reassessment under
section 147 [Section 153(2)] ………………………………………………………….. 597
15.28-b Rate at which income assessed or reassessed to be taxed …………………… 597
15.28-c When can the proceedings under section 147 be dropped
[Section 152(2)] …………………………………………………………………………… 598
15.29 Faceless assessment of income escapting assessment [Section 151A] ……………….. 598
15.30 Provision for cases where assessment is in pursuance of an order on appeal,
etc. [Section 150] ………………………………………………………………………………………. 599
15.31 Time limit for completion of all assessments and reassessment [Section 153] …….. 599
15.31-a Period of limitation to exclude certain period [Explanation 1 to
section 153] ………………………………………………………………………………… 605
15.32 Rectification of mistakes [Section 154] ………………………………………………………… 605
15.33 Recomputation of income/amendment of order of the past years in certain
cases [Section 155] [See also section 157A] ………………………………………………….. 608
15.34 Notice of demand [Section 156] …………………………………………………………………… 608
15.35 Modification and revision of notice of demand subsequent to business
reorganization orders of the competent authority [Section 156A] ……………………… 609
15.36 Intimation of Loss [Section 157] ………………………………………………………………….. 609
15.37 Faceless rectification, amendments and issuance of notice or intimation
[Section 157A] ………………………………………………………………………………………….. 609
Chapter 16 Permanent Account Number and Aadhaar Number [Section
139A and 139AA] …………………………………………………………………………… 611
16.1 Permanent Account Number [Section 139A] …………………………………………………. 611
16.1-a Application for allotment of Permanent Account Number
[Rule 114] …………………………………………………………………………………… 612
16.1-b Time limit for submitting application for allotment of PAN ……………….. 613
16.1-c Form number and the documents which are required to be attached
with the application for Permanent Account Number ………………………… 614
16.1-d Aadhaar number to be intimated [Rule 114(5)] ………………………………… 614
16.1-e Power delegated to the Central Government to notify class or
classes of persons for whom it will be obligatory to apply for
permanent account number (PAN) [Section 139A(1A) & (1B)] ………….. 614
16.1-f PAN to be quoted in certain cases [Section 139A(5)] ………………………… 614
16.1-g Quoting of PAN in documents pertaining to such transactions as
may be prescribed by the Board [Section 139A(5)(c)] ……………………….. 615
16.1-h Intimation of PAN in certain cases and obligation of the person to
whom the PAN is intimated …………………………………………………………… 618
16.1-i Duty of the person receiving any document relating to the
transactions where quoting of PAN is compulsory
[Section 139A(6)] ………………………………………………………………………… 620
16.1-j Quoting and authentication of PAN in the documents pertaining to
prescribed transactions [Section 139A(6A)] …………………………………….. 620
16.1-k Person receiving the document pertaining to prescribed
transactions to ensure PAN or Aadhaar number has been duly
quoted and authenticated [Section 139A(6B)] ………………………………….. 620
16.2 Quoting of Aadhaar Number [Section 139AA] ………………………………………………. 620
Chapter 17 Deduction and Collection of Tax at Source [Sections 190 to
206CA] ………………………………………………………………………………………….. 622
17.1 Deduction at source and advance payment [Section 190] ………………………………… 622
17.2 Direct payment [Section 191] ……………………………………………………………………… 622
17.3 Deduction of tax from salary [Section 192] …………………………………………………… 623
17.3-a Tax to be deducted at average of income-tax [Section 192(1)] ……………. 623
17.3-b Furnishing of evidence of claims by employee for deduction of tax
under section 192 [Rule 26C] Applicable only if the employee opts
for old regime ……………………………………………………………………………… 624
17.3-c When does the liability to deduct tax at source arise …………………………. 624
17.3-d Tax on non-monetary perquisites can be paid by employer ………………… 625
17.3-e Salary from more than one employer ………………………………………………. 625
17.3-f Relief under section 89 [Section 192(2A)] ………………………………………. 625
17.3-g Details of other incomes [Section 192(2B)] ……………………………………… 625
17.3-h Employer to furnish a statement to employee [Section 192(2C)] …………. 627
17.3-i CBDT rules to be followed for deduction of tax at source ………………….. 627
17.3-j Adjustment in the amount of tax to be deducted [Section 192(3)] ……….. 627
17.3-k Tax on income of an employee if he does not opt to be taxed under
old regime. [Section 115BAC(1A)] [W.e.f. A.Y. 2024-25] ………………… 628
17.3-l Where the tax is either not to be deducted or to be deducted at
lower rate ……………………………………………………………………………………. 628
17.4 Deduction of tax from accumulated balance of the recognized provident
fund withdrawn by the employee [Section 192A] …………………………………………… 629
17.5 Deduction of Tax from Interest on Securities [Section 193] …………………………….. 629
17.5-a Who is liable to deduct tax ……………………………………………………………. 629
17.5-b When does liability to deduct tax at source arise ………………………………. 629
17.5-c Exemption from tax deduction……………………………………………………….. 630
17.5-d Where no tax is to be deducted at source …………………………………………. 631
17.6 Deduction of tax from dividends [Section 194] ……………………………………………… 631
17.6-a Who is liable to deduct tax ……………………………………………………………. 631
17.6-b When TDS to be deducted …………………………………………………………….. 632
17.6-c Rate of TDS — @ 10% ………………………………………………………………… 632
17.6-d Where no tax is to be deducted or tax is to be deducted at lower
rate …………………………………………………………………………………………….. 632
17.7 Interest other than interest on securities [Section 194A] ………………………………….. 633
17.7-a Who is liable to deduct tax ……………………………………………………………. 633
17.7-b When TDS is to be deducted …………………………………………………………. 633
17.7-c Where no tax is to be deducted at source …………………………………………. 634
17.7-d Tax to be deducted from interest on employee’s contribution to
Provident fund exceeding ₹2,50,000/₹5,00,000, as the case may be …….. 637
17.7-e Rates of TDS for the financial years 2024-25 and 2025-26 ………………… 638
17.8 Winnings from lottery, crossword puzzle, card game, etc. [Section 194B] …………. 638
17.8-a Who is liable to deduct tax ……………………………………………………………. 638
17.8-b When TDS is to be deducted …………………………………………………………. 638
17.8-c Rate of TDS ………………………………………………………………………………… 638
17.9 Winnings from online games [Section 194BA] ………………………………………………. 639
17.9-a Who is liable to deduct tax ……………………………………………………………. 639
17.9-b When TDS is to be deducted …………………………………………………………. 639
17.9-c Rate of TDS for financial years 2024-25 and 2025-26……………………….. 639
17.9-d TDS when net winnings are wholly in kind or partly in cash and
partly in kind [Section 194BA(2)] ………………………………………………….. 639
17.10 Winnings from horse races [Section 194BB] …………………………………………………. 640
17.10-a Who is liable to deduct tax ……………………………………………………………. 640
17.10-b Rate of TDS ………………………………………………………………………………… 640
17.10-c When TDS is to be deducted: At the time of payment of such
income. ………………………………………………………………………………………. 640
17.11 Payment to resident contractor [Section 194C] ………………………………………………. 640
17.12 Insurance Commission [Section 194D] …………………………………………………………. 643
17.12-a Who is required to make TDS ……………………………………………………….. 643
17.12-b When tax to be deducted ……………………………………………………………….. 643
17.12-c Condition for deduction ………………………………………………………………… 644
17.12-d Rate of TDS for financial years 2024-25 and 2025-26……………………….. 644
17.13 TDS from non-exempt payments made under life insurance policy
[Section 194DA] ……………………………………………………………………………………….. 644
17.13-a Tax has to be deducted on the amount which is taxable under
section 56(2)(xiii) ………………………………………………………………………… 645
17.14 Payments to non-resident sportsmen or foreign entertainer or sports
associations [Section 194E] ………………………………………………………………………… 646
17.14-a When the tax is to be deducted ………………………………………………………. 646
17.15 Payments in respect of deposit under National Savings Scheme, etc.
[Section 194EE] ………………………………………………………………………………………… 646
17.15-a Who is liable to deduct tax ……………………………………………………………. 646
17.15-b Rate of TDS ………………………………………………………………………………… 646
17.15-c When tax is to be deducted ……………………………………………………………. 647
17.16 Commission, etc. on sale of lottery tickets [Section 194G] ………………………………. 647
17.16-a Who is liable to deduct tax ……………………………………………………………. 647
17.16-b When tax is to be deducted ……………………………………………………………. 647
17.16-c Rate of TDS ………………………………………………………………………………… 647
17.16-d Where no tax is to be deducted or tax is to be deducted at a lower
rate [Section 194G(2) & (3)]………………………………………………………….. 647
17.17 Commission and Brokerage [Section 194H] ………………………………………………….. 648
17.17-a Who is liable to deduct tax ……………………………………………………………. 648
17.17-b When TDS is to be deducted …………………………………………………………. 648
17.17-c Rate of TDS ………………………………………………………………………………… 648
17.18 Rent [Section 194-I] …………………………………………………………………………………… 648
17.18-a Who is liable to deduct tax ……………………………………………………………. 648
17.18-b Rate of TDS on Rent for financial years 2024-25 and 2025-26 …………… 649
17.18-c When TDS is to be deducted …………………………………………………………. 649
17.19 Tax Deduction at Source (TDS) on transfer of certain immovable properties
(other than agricultural land) [Section 194-IA] ………………………………………………. 650
17.19-a Who is liable to deduct tax at source under section 194-IA? ………………. 650
17.19-b Meaning of consideration for transfer of any immovable property
[Explanation (aa)] ………………………………………………………………………… 650
17.19-c Meaning of immovable property…………………………………………………….. 650
17.19-d When is the tax to be deducted under section 194-IA? ………………………. 651
17.19-e Rate of TDS for financial years 2024-25 and 2025-26……………………….. 651
17.19-f Tax not to be deducted in certain cases ……………………………………………. 651
17.19-g Procedure of deposit of tax deducted at source …………………………………. 651
17.19-h Form, time limit and procedure for issue of TDS certificate of
deduction of tax under section 194-IA …………………………………………….. 652
17.19-i Quarterly statement………………………………………………………………………. 652
17.20 TDS from payment of rent by certain Individuals or HUF [Section 194-IB] ………. 653
17.20-a Who is liable to deduct tax ……………………………………………………………. 653
17.20-b When tax is to be deducted [Section 194-IB(2)] ……………………………….. 653
17.20-c Where no tax is to be deducted at source …………………………………………. 653
17.20-d Rate of TDS ………………………………………………………………………………… 653
17.20-e No requirement for obtaining TAN by the deductor
[Section 194-IB(3)]………………………………………………………………………. 654
17.20-f Amount to be deducted when PAN is not provided by the recipient
of the rent [Section 194-IB(4)] ………………………………………………………. 654
17.20-g Other provisions relating to TDS on Payment of rent by certain
individuals or Hindu undivided family ……………………………………………. 654
17.21 TDS from payment under specified agreement referred to in section 45(5A)
[Section 194-IC] ……………………………………………………………………………………….. 655
17.21-a Who is liable to deduct tax ……………………………………………………………. 655
17.21-b When tax is to be deducted ……………………………………………………………. 655
17.21-c Rate of TDS ………………………………………………………………………………… 655
17.22 Fees for professional or technical services [Section 194J] ……………………………….. 656
17.22-a Who is liable to deduct tax ……………………………………………………………. 656
17.22-b Rate of TDS ………………………………………………………………………………… 656
17.22-c When tax is to be deducted ……………………………………………………………. 656
17.23 Income in respect of units [Section 194K] …………………………………………………….. 657
17.23-a Who is liable to deduct tax ……………………………………………………………. 657
17.23-b When tax is to be deducted ……………………………………………………………. 657
17.23-c Rate of TDS for financial years 2024-25 and 2025-26 – 10% …………….. 657
17.23-d Where no tax is to be deducted at source …………………………………………. 658
17.23-e No tax is deductible at source, where a self declaration under Form
No. 15G/15H is furnished by a particular person
[Section 197A(1A), (1B) and (1C)] ………………………………………………… 658
17.24 Payment of compensation on acquisition of certain immovable property
[Section 194LA] ……………………………………………………………………………………….. 658
17.24-a Who is liable to deduct tax ……………………………………………………………. 658
17.24-b Rate of TDS ………………………………………………………………………………… 658
17.24-c When TDS is to be deducted …………………………………………………………. 658
17.24-d When no tax is to be deducted ……………………………………………………….. 658
17.25 Payment of certain sums by certain individuals or Hindu undivided family
[Section 194M] …………………………………………………………………………………………. 659
17.25-a Who is liable to deduct tax ……………………………………………………………. 659
17.25-b When tax is to be deducted [Section 194M(1)] …………………………………. 659
17.25-c Where no tax is to be deducted at source …………………………………………. 660
17.25-d Rate of TDS ………………………………………………………………………………… 660
17.25-e No requirement for obtaining TAN by the deductor
[Section 194M(2)] ……………………………………………………………………….. 660
17.26 Payment of certain amounts in cash [Section 194N] ……………………………………….. 660
17.26-a Who is liable to deduct tax ……………………………………………………………. 660
17.26-b When tax is to be deducted ……………………………………………………………. 661
17.26-c Rate of TDS ………………………………………………………………………………… 661
17.26-d Where the taxes is either not to be deducted or to be deducted at
lower rate [Section 197 and Rules 28 and 28AA] ……………………………… 662
17.26-e Where no tax is to be deducted at source …………………………………………. 662
17.27 TDS from Payment of Certain Sums by E-commerce Operator to Ecommerce Participant [Section 194-O] …………………………………………………………. 662
17.27-a Who is liable to deduct tax ……………………………………………………………. 662
17.27-b When tax is to be deducted ……………………………………………………………. 662
17.27-c Rate of TDS ………………………………………………………………………………… 663
17.27-d Where no tax is to be deducted at source [Section 194-O(2)] ……………… 663
17.28 Deduction of tax in case of specified senior citizen. [Section 194P] ………………….. 663
17.29 Deduction of tax at source on payment of certain sum for purchase of goods
[Section 194Q] ………………………………………………………………………………………….. 663
17.30 TDS on benefit or perquisite in respect of business or profession [Section
194R, inserted by the Finance Act, 2022] ……………………………………………………… 665
17.30-a Who is liable to deduct tax ……………………………………………………………. 665
17.30-b When tax is to be deducted ……………………………………………………………. 665
17.30-c Rate of TDS ………………………………………………………………………………… 666
17.31 Where no tax is to be deducted at source [Second & third provisos to section
194R(1)]…………………………………………………………………………………………………… 666
17.32 TDS on Payment on Transfer of Virtual Digital Asset [Section 194S] ………………. 666
17.32-a Who is liable to deduct tax ……………………………………………………………. 666
17.32-b When tax is to be deducted ……………………………………………………………. 667
17.32-c Rate of TDS ………………………………………………………………………………… 667
17.32-d Where no tax is to be deducted at source [section 194S(3)] ………………… 667
17.32-e Tax to be deducted under section 194S(1) even if Section 194-O is
also applicable [Section 194S(4)] …………………………………………………… 668
17.33 TDS on Payments to partners of firms [Section 194T] …………………………………….. 668
17.34 Other sums [Section 195] ……………………………………………………………………………. 668
17.34-a TDS on income of non-resident ……………………………………………………… 668
17.34-b When the tax is to be deducted ………………………………………………………. 669
17.34-c Payee of the amount may make application for deduction of tax on
the “income” comprised in the payment [Section 195(2)] …………………… 669
17.34-d Where no tax is to be deducted at source [Section 195(3)] …………………. 669
17.34-e Furnishing of information [Section 195(6)] ……………………………………… 669
17.34-f Board may by general or specified order authorize Assessing
Officer to determine the appropriate proportion of such chargeable
on which tax is to be deducted ……………………………………………………….. 669
17.35 Income payable ‘Net of Tax’ [Section 195A]………………………………………………….. 669
17.36 Interest or dividends or other sums payable to Government, Reserve Bank or
certain corporations [Section 196] ……………………………………………………………….. 670
17.37 General provisions …………………………………………………………………………………….. 670
17.38 No deduction to be made in certain cases [Section 197A] ……………………………….. 671
17.38-a Declaration not allowed if aggregate of income under sections
192A, 193, 194A, 194D, 194DA, 194EE, 194-I and 194K exceeds
the maximum amount not chargeable to income-tax
[Section 197A(1B)] ……………………………………………………………………… 671
17.38-b Senior/very senior citizens can furnish declaration even if such
income exceeds the maximum amount not chargeable to incometax [Section 197A(1C)]…………………………………………………………………. 672
17.39 Tax deducted is income received [Section 198] ……………………………………………… 672
17.40 Credit for tax deducted [Section 199] …………………………………………………………… 673
17.40-a Credit for tax paid by employer under section 192(1A) ……………………… 673
17.40-b CBDT to prescribe rules for giving credit of TDS [Section 199(3)] …….. 673
17.40-c Credit can be given to other person in whose hands income is
assessable [Rule 37BA(2)]…………………………………………………………….. 673
17.41 Tax deduction and collection account number [Section 203A and Rule 114A] …… 674
17.42 Mandatory Requirement to furnish permanent account number [Section 206AA] .. 675
17.43 Special provision for deduction of tax at source for non-filers of income-tax
return [Section 206AB] ………………………………………………………………………………. 676
17.44 Profit and Gains from the Business of trading in Alcoholic Liquor, Forest
Produce, Scrap, etc. [Section 206C] ……………………………………………………………… 678
17.44-a Meaning of “seller” ………………………………………………………………………. 679
17.44-b Meaning of “buyer” ……………………………………………………………………… 680
17.44-c No TCS if declaration is furnished in Form No. 27C by the buyer
to the effect that such goods are to be utilised for the purposes of
manufacturing, processing or producing articles or things, etc. …………… 680
17.44-d Declaration furnished under section 206C(1A) to be delivered to the
Principal Chief Commissioner/Chief Commissioner or Principal
Commissioner/Commissioner [Section 206C(1B) and Rule 37C(3)] ……. 681
17.45 Tax to be collected at source in case of Parking Lot, Toll Plaza or Mining
and Quarrying [Section 206C(1C)] ………………………………………………………………. 681
17.46 TCS on remittance out of India under LRS and on overseas tour programme
package [Section 206C(1G)] ……………………………………………………………………….. 681
17.47 Seller to collect TCS from consideration received from buyer [Section
206C(1H)] ………………………………………………………………………………………………… 685
17.47-a Central Government may issue guidelines if there is any difficulty
to give effect to the provisions of section 206C(1G) and (1H).
[Section 206C(1-I)]………………………………………………………………………. 686
17.48 Higher rate of TCS if PAN is not furnished by collectee [Section 206CC] …………. 686
17.49 Special provision for collection of tax at source for non-filers of income-tax
return [Section 206CCA] ……………………………………………………………………………. 687
Chapter 18 Advance Payment of Tax [Sections 207-211, 217 & 219] …………………… 689
18.1 Liability for payment of Advance Tax [Section 207] ………………………………………. 689
18.2 Senior citizen not required to pay advance tax [Section 207(2)] ……………………….. 689
18.3 Conditions of Liability to pay Advance Tax [Section 208] ………………………………. 689
18.4 Computation and Payment of Advance Tax where the calculation is made by
the assessee himself [Section 209(1)(a) & (d)] ……………………………………………….. 689
18.5 What constitutes Current Income? ……………………………………………………………….. 690
18.6 Payment of advance tax ……………………………………………………………………………… 691
18.7 Instalments of advance tax and due dates [Section 211] ………………………………….. 693
18.8 Payment of advance tax in case of capital gains/casual income [Proviso to
section 234C] ……………………………………………………………………………………………. 694
18.9 Assessee Deemed to be in Default [Section 218] ……………………………………………. 694
18.10 Credit for Advance Tax [Section 219] ………………………………………………………….. 694
Chapter 19 Interest and Fee Payable [Sections 201(1A), 220(2), 234A, 234B,
234C, 234D, 234E, 234F, 234G,234H & 244A] ………………………………….. 695
19.1 Interest for default in furnishing return of income under section 139(1) or (4)
or in response to a notice under section 142(1) [Section 234A(1)]…………………….. 695
19.2 Interest for defaults in furnishing the return of income required by a notice
under section 148 [Section 234A(3)] ……………………………………………………………. 698
19.3 Increase/decrease in the interest on certain orders [Section 234A(4)] ………………… 698
19.4 Interest payable for defaults in payment of advance tax [Section 234B(1)] ………… 699
19.5 Interest payable for defaults in payment of advance tax [Section 234B(3)] ………… 703
19.6 Increase/decrease in the interest on certain orders [Section 234B(4)] ………………… 704
19.7 Interest for deferment of advance tax [Section 234C] ……………………………………… 704
19.8 Interest on excess refund granted at the time of summary assessment
[Section 234D] ………………………………………………………………………………………….. 706
19.9 Fee for delay in furnishing of TDS/TCS Statement [Section 234E] …………………… 707
19.10 Fee for default in furnishing return of income [Section 234F] ………………………….. 707
19.11 Fee for default relating to statement of certificate [Section 234G] …………………….. 708
19.12 Fee for default relating to intimation of Aadhaar number [Section 234H] ………….. 708
19.13 Interest for late payment of demand of tax, interest, penalty, etc.
[Section 220(2)] ………………………………………………………………………………………… 708
19.14 Can interest payable under section 220(2) be increased or decreased [First
proviso to section 220(2)] …………………………………………………………………………… 709
19.14-a For charging interest under section 220(2), the amount specified in
the notice of demand issued under section 156 shall be deemed to
be valid till the disposal of appeal by the last appellate authority or
disposal of proceedings [Section 220(1A)]] ……………………………………… 709
19.15 Reduction or waiver of interest payable under section 220(2)
[Section 220(2A)] ……………………………………………………………………………………… 710
19.15-a Interest under section 220(2) not leviable if charged under
section 201(1A) read with section 200A(1) [Section 220(2B)] ……………. 710
19.15-b Interest under section 220(2) not leviable if charged under
section 206C(7) read with section 206CB(1) [Section 220(2C)]………….. 710
19.16 Failure to deduct and pay tax at source [Section 201(1A)] ……………………………….. 710
19.17 Waiver of interest ………………………………………………………………………………………. 711
19.18 Interest payable to assessee [Section 244A] …………………………………………………… 713
Chapter 20 Refunds [Sections 237 to 241 & 245] ……………………………………………….. 717
20.1 Who is entitled to refund? [Section 237] ……………………………………………………….. 717
20.2 Can a person other than the assessee claim refund? [Section 238] …………………….. 717
20.3 How to claim refund? [Section 239] …………………………………………………………….. 717
20.4 Refund for denying liability to deduct tax in certain cases. [Section 239A] ………… 717
20.5 Refund on appeal, etc. [Section 240] ……………………………………………………………. 718
20.6 Withholding of refund in certain cases [Section 241A] ……………………………………. 718
20.7 Correctness of assessment not to be questioned [Section 242] ………………………….. 718
20.8 Interest payable to assessee [Section 244A] …………………………………………………… 719
20.9 Set off of refund against tax/demand outstanding [Section 245] ……………………….. 719
20.10 Procedure for filing a delayed refund claim …………………………………………………… 720
Chapter 21 Penalties ………………………………………………………………………………………… 725
21.1 Penalties …………………………………………………………………………………………………… 725
21.2 Certain penalties discussed in detail ……………………………………………………………… 745
21.3 Penalty for under-reporting and misreporting of income [Section 270A] …………… 749
21.4 Immunity from imposition of penalty and initiation of proceedings under
section 276C or 276CC [Section 270AA] ……………………………………………………… 756
21.5 Power to reduce or waive penalty, etc., in certain cases [Section 273A] …………….. 757
21.6 Power of Principal Commissioner or Commissioner to grant immunity from
penalty [Section 273AA] ……………………………………………………………………………. 760
21.7 Penalty not to be imposed in certain cases [Section 273B] ………………………………. 761
21.8 Bar of limitation for imposing penalties [Section 275] ……………………………………. 761
Chapter 22 Appeals and Revision [Sections 246 to 268] ……………………………………… 767
22.1 Remedy available against the order of the Joint Commissioner (Appeals) or
the Commissioner (Appeals)/ Revision orders of CIT …………………………………….. 767
22.2 Remedy against orders of Appellate Tribunal ………………………………………………… 768
22.3 Appeal against order of High Court to Supreme Court ……………………………………. 768
22.4 First Appeal ……………………………………………………………………………………………… 768
22.4-a Appealable orders before Joint Commissioner (Appeals) [Section
246 inserted by Finance Act, 2023, w.e.f. 1-4-2023] …………………………. 768
22.4-b Appealable orders before Commissioner (Appeals) [Section 246A] …….. 770
22.4-c Form of appeal and limitation [Section 249 and Rules 45 and 46]……….. 772
22.4-d Powers of the Joint Commissioner (Appeals) or the Commissioner
(Appeals) [Section 251] ………………………………………………………………… 774
22.5 Appeals to the Appellate Tribunal [Section 253(1) and (2)]……………………………… 776
22.5-a Procedure for filing appeal to Appellate Tribunal [Section 253(3),
(3A) (4), (5) and (6)] …………………………………………………………………….. 778
22.6 Orders of Appellate Tribunal [Section 254] …………………………………………………… 779
22.7 Remedy against the order of Appellate Tribunal …………………………………………….. 780
22.7-a Direct Appeal to High Court [Section 260A] ……………………………………. 780
22.8 Appeal to the Supreme Court [Section 261] …………………………………………………… 781
22.9 Revision by the Principal Commissioner or Commissioner ……………………………… 781
22.9-a Revision of orders prejudicial to Revenue [Section 263] ……………………. 781
22.9-b Doctrine of Merger ………………………………………………………………………. 783
22.9-c Revision of orders in favour of assessee [Section 264] ………………………. 784
22.10 Special provision for avoiding repetitive appeals by the assessee
[Section 158A and Rule 16] ………………………………………………………………………… 786
22.11 Procedure where an identical question of law is pending before High Courts
or Supreme Court [Section 158AB] ……………………………………………………………… 787
Chapter 23 Miscellaneous Provisions ………………………………………………………………… 790
23.1 Mode of taking or accepting certain loans, deposits and specified sum
[Section 269SS] ………………………………………………………………………………………… 790
23.1-a Section 269SS not to apply in the following cases [Provisos 1 and
2 to section 269SS] ………………………………………………………………………. 791
23.2 Mode of repayment of certain loans or deposits and specified advance
received [Section 269T] ……………………………………………………………………………… 792
23.2-a Section 269T not applicable even for repayment of loan or deposit
or specified advance exceeding ₹20,000 by any mode other than
account payee cheque/draft if made to certain persons ………………………. 793
23.2-b Consequence of contravention of the provisions of section 269T
[Section 271E] …………………………………………………………………………….. 793
23.3 Mode of undertaking transactions [Section 269ST] ………………………………………… 793
23.3-a Penalty for failure to comply with provisions of section 269ST
[Section 271DA] ………………………………………………………………………….. 795
23.4 Mandating acceptance of payments through prescribed electronic modes
[Sections 269SU, 271DB] …………………………………………………………………………… 795
23.4-a Penalty for failure to comply with provisions of section 269SU
[Section 271DB] ………………………………………………………………………….. 796
23.5 Charge or parting of asset to avoid tax or other sum payable to be void …………….. 796
23.6 Annual information statement [Section 285BB] …………………………………………….. 797
23.7 Condonation of delay in obtaining approval [Section 293B]…………………………….. 798
23.8 Tax on income from virtual digital assets [Section 115BBH] …………………………… 798
23.9 TDS on Payment on transfer of virtual digital asset [Section 194S]…………………… 799
23.10 Explanation to section 56(2)(x) ……………………………………………………………………. 801
23.11 The term “virtual digital asset defined [Section 2(47A)] ………………………………….. 802
DIVISION 3
Tables
Table 1 As per new regime …………………………………………………………………………………….. 805
Tax Deduction at source from monthly taxable salary during the
financial year 2025-26 …………………………………………………………………………. 805-807
Table 1A Tax Deduction at source from monthly taxable salary during the ……………………… 809
financial year 2025-26 if the individual has opted for old regime
Table 2A As per New regime (View Important Notes) ………………………………………………….. 814
Income Tax payable* For A.Y. 2025-26
(i.e. the assessee who has not opted to pay tax under the old regime)
Applicable for Individual, HUF, AOP or BOI & AJP
Taxable Income between ₹3,00,000 and ₹3,30,000 ………………………………………… 814
Taxable Income between ₹3,31,000 and ₹4,20,000 ………………………………………… 815
Taxable Income between ₹4,22,000 and ₹ 7,00,000 ……………………………………….. 816
Taxable Income between ₹7,05,000 and ₹ 10,00,000………………………………………. 817
Taxable Income between ₹ 10,05,000 and 12,00,000………………………………………. 818
Taxable Income between ₹12,05,010 and ₹15,00,000 ……………………………………… 819
Taxable Income between ₹15,00,010 and ₹27,50,000 ……………………………………… 820
Table 2B As per old regime (View Important Notes) ……………………………………………………. 821
Income Tax payable* For A.Y. 2025-2
IT for A.Y. 2025-26 (Individual/HUF/AOP/BOI/AJP) (Old Regime)
(i.e. total income has been computed after claiming all available
exemptions & deductions)
†Individual, HUF, AOP, BOI or AJP who opts to be taxed under the old regime
Taxable Income between ₹2,50,000 and ₹2,79,000 ………………………………………… 821
Taxable Income between ₹2,79,000 and ₹3,68,000 ………………………………………… 822
Taxable Income between ₹3,68,000 and ₹5,00,000 ………………………………………… 823
Taxable Income between ₹5,00,010 and ₹6,20,000 ………………………………………… 824
Taxable Income between ₹6,20,000 and ₹7,50,000 ………………………………………… 825
Taxable Income between ₹7,50,010 and ₹10,00,000……………………………………….. 826
Taxable Income between ₹10,00,010 and ₹12,50,000 ……………………………………… 827
Taxable Income between ₹12, 50,010 and ₹15,00,000 …………………………………….. 828
Taxable Income between ₹15,00,010 and ₹27,50,000 ……………………………………… 829
Table 3A as per New regime (View Important Notes) ………………………………………………….. 830
Advance tax* For A.Y. 2026-27
(i.e. the assessee who has not opted for the old regime and thus by
default has to pay tax as per section 115BAC(1A))
Applicable for Individual, HUF, AOP or BOI & AJP
Taxable Income between ₹4,00,000 and ₹4,59,000 ………………………………………… 830
Taxable Income between ₹4,61,000 and ₹5,79,000 ………………………………………… 831
Taxable Income between ₹5,82,500 and ₹8,00,000 ………………………………………… 832
Taxable Income between ₹8,06,600 and ₹12,00,000……………………………………….. 833
Taxable Income between ₹12,06,600 and ₹16,00,000 ……………………………………… 834
Taxable Income between ₹16,06,600 and ₹20,00,000 ……………………………………… 835
Taxable Income between ₹20,06,600 and ₹24,00,000 ……………………………………… 836
Taxable Income between ₹24,08,000 and ₹32,98,000 ……………………………………… 837
Table 3B as per old regime (View Important Notes) …………………………………………………….. 838
Advance tax * For A.Y. 2026-27
Advance Tax Old Regime (Individual, HUF, AOP/BOI & AJP)
(i.e. total income has been computed after claiming all available
exemptions & deductions)
†Individual, HUF, AOP, BOI or AJP who opts to be taxed under the old regime
Taxable Income between ₹2,50,000 and ₹2,79,000 ………………………………………… 838
Taxable Income between ₹2,79,000 and ₹3,68,000 ………………………………………… 839
Taxable Income between ₹3,68,000 and ₹5,00,000 ………………………………………… 840
Taxable Income between ₹5,00,010 and ₹6,20,000 ………………………………………… 841
Taxable Income between ₹6,20,000 and ₹7,50,000 ………………………………………… 842
Taxable Income between ₹7,50,010 and ₹10,00,000……………………………………….. 843
Taxable Income between ₹10,00,010 and ₹12,50,000 ……………………………………… 844
Taxable Income between ₹12, 50,010 and ₹15,00,000 …………………………………….. 845
Taxable Income between ₹15,00,010 and ₹27,50,000 ……………………………………… 846
Table 4 as per old regime …………………………………………………………………………………………. 847
Income Tax Payable* & Advance Tax For A.Ys. 2025-26 & 2026-27
Resident Individual of the age of 60 years or more but less than 80 years
at any time during the previous year
Taxable Income between ₹3,00,000 and ₹5,00,000 ………………………………………… 847
Taxable Income between ₹5,00,010 and ₹10,00,000……………………………………….. 848
Taxable Income between ₹10,00,010 and ₹27,50,000 ……………………………………… 849
Table 5 as per old regime …………………………………………………………………………………………. 850
Income tax payable* & advance tax for A.Ys. 2025-26 & 2026-27
Resident Individual of the age of 80 years or more at any
time during the previous year ………………………………………………………………………. 850
Taxable Income between ₹5,00,000 and ₹10,00,000……………………………………….. 850
Taxable Income between ₹10,00,010 and ₹27,50,000 ……………………………………… 85
Reviews
There are no reviews yet.