Computation of Taxable Income of Individual, Huf and Firms
TAX ASSIGNMENT
On
Computation of taxable income of individual, HUF and firms
COMPUTATION OF TAXABLE INCOME OF AN INDIVIDUAL
What is included in income of an individual?
While computing taxable income of an individual, the following points should be considered— Nature of income | Tax treatment | Income earned by the taxpayerShare of profit from a HUFShare of profit from a firm assessed as firmSalary & interest from the aforesaid firmShare of profit from an association of persons/body of individualsIncome earned by others and included in the income of the taxpayer by virtue of sections 60 to 64 | Except the following, all other incomes shall be included— a. Income exempt under sections 10 to 13A; b. Incomes to be included in income of others by virtue of sections 60 to 64.It is exempt under section 10(2)It is exempt under section 10(2A)These are taxable as business incomeIf the association/body us taxable at the maximum marginal rate, then share of profit is not taxable in the hand of recipientSuch income shall be included in the income of the taxpayer |
Taxable income – how computed
Taxable income shall be computed as follows:
Step 1 – income under the different heads of income- First find out income under the five heads of income.
Step 2 – adjustment of losses of the current year and earlier years- Losses should be set off according to the provisions of sections 70 to 80. The income after adjustment of losses is gross total income.
Step 3 – deduction from gross total income- from the gross total income, the following deductions are available— Section | Nature of deduction | 80C80CCC80CCD80D80DD80DDB80E80G80GG80GGA80GGC80-IA80-IAB80-IB80-IC80-JJA80QQB80RRB80U | Payment of insurance premium, contribution to provident fund etc.Contribution to certain pension fundContribution to pension scheme of central governmentPayment of medical insurance premiumMaintenance including medical treatment of a dependent being a person with disabilityMedical treatment
On
Computation of taxable income of individual, HUF and firms
COMPUTATION OF TAXABLE INCOME OF AN INDIVIDUAL
What is included in income of an individual?
While computing taxable income of an individual, the following points should be considered— Nature of income | Tax treatment | Income earned by the taxpayerShare of profit from a HUFShare of profit from a firm assessed as firmSalary & interest from the aforesaid firmShare of profit from an association of persons/body of individualsIncome earned by others and included in the income of the taxpayer by virtue of sections 60 to 64 | Except the following, all other incomes shall be included— a. Income exempt under sections 10 to 13A; b. Incomes to be included in income of others by virtue of sections 60 to 64.It is exempt under section 10(2)It is exempt under section 10(2A)These are taxable as business incomeIf the association/body us taxable at the maximum marginal rate, then share of profit is not taxable in the hand of recipientSuch income shall be included in the income of the taxpayer |
Taxable income – how computed
Taxable income shall be computed as follows:
Step 1 – income under the different heads of income- First find out income under the five heads of income.
Step 2 – adjustment of losses of the current year and earlier years- Losses should be set off according to the provisions of sections 70 to 80. The income after adjustment of losses is gross total income.
Step 3 – deduction from gross total income- from the gross total income, the following deductions are available— Section | Nature of deduction | 80C80CCC80CCD80D80DD80DDB80E80G80GG80GGA80GGC80-IA80-IAB80-IB80-IC80-JJA80QQB80RRB80U | Payment of insurance premium, contribution to provident fund etc.Contribution to certain pension fundContribution to pension scheme of central governmentPayment of medical insurance premiumMaintenance including medical treatment of a dependent being a person with disabilityMedical treatment