Income Tax (India)

In relation to a Transfer, includes: i) Sale, exchange or relinquishment of a capital asset; or ii) Extinguishment of any rights therein; or iii) Compulsory acquisition of a capital asset under any law; or iv) Conversion or treatment of a capital asset into/as stock-in-trade; or v) The maturity or redemption of a zero coupon bond; or vi) Any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Sec. 53A of the Transfer of Property Act, 1882; or vii) Any transaction whether by way of acquiring shares in or by way of becoming a member of a co-operative society, company or other association of persons or by way of any agreement or arrangement or in any other manner which has the effect of transferring, or enabling the enjoyment of any immovable property. The expression “transfer” includes disposing of or parting with an asset or any interest therein, or creating any interest in...

 According to section 2(14), a capital asset means – (a) property of any kind held by an assessee, whether or not connected with his business or profession; (b) any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the SEBI regulations. (c) any unit linked insurance policy (ULIP) issued on or after 1.2.2021, to which exemption under section 10(10D) does not apply on account of –      (i) premium payable exceeding ` 2,50,000 for any of the previous years during the term of such policy; or      (ii) the aggregate amount of premium exceeding ` 2,50,000 in any of the previous years during the term of any such ULIP(s), in a case where premium is payable by a person for more than one ULIP issued on or after 1.2.2021. However, it does not include— (i) Stock-in trade: Any stock-in-trade [other than securities referred to in (b) above], consumable stores or raw materials held for the purpo...

Explanation 2 to section 28 specifically provides that where an assessee carries on speculative business, that business of the assessee must be deemed as distinct and separate from any other business. This becomes necessary because section 73 provides that losses in speculation business unlike other business, cannot be set-off against the profits of any business other than a speculation business. Profits and losses resulting from speculative transaction must be treated as separate and distinct from profits and gains of business and profession from any other business. (1) Meaning of Speculative Transaction “Speculative transaction” means a transaction in which a contract for the purchase or sales of any commodity including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips [Section 43(5)]. Where any part of the business of a company consists in the purchase and sale of the shares of other companies, suc...

The tax payable by an assessee on his income under this head is in respect of the profits and gains of any business or profession, carried on by him or on his behalf during the previous year. Business -   The term “ business ” has been defined in section 2(13) to “include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture”. Profession - The term “profession” has not been defined in the Act. It means an occupation requiring some degree of learning. • Thus, a painter, a sculptor, an author, an auditor, a lawyer, a doctor, an architect and even an astrologer are persons who can be said to be carrying on a profession but not business. • However, it is not material whether a person is carrying on a ‘business’ or ‘profession’ or ‘vocation’ since for purposes of assessment, profits from all these sources are treated and taxed alike. • Business necessarily means a continuous exercise of an activity; nevertheless, profit...

Invest for long term – an advice routinely given by many Mutual Fund distributors and investment advisors. This is especially true in case of certain Mutual Funds – such as equity and balanced funds. Let us understand why the professionals give such advice. What really happens in the long term? Is there a benefit of staying invested for long term? Consider your Mutual Fund investment as a good quality batsman. Every good quality batsman has a certain style of batting. However, each good quality batsman would be able to accumulate lots of runs, if he continues to play for years. We are talking about the record of a “good quality” batsman. Every good batsman would go through some good and poor performances. On average the record would be impressive. Similarly, a good Mutual Fund would also go through some ups and downs – often due to factors beyond the control of the fund manager. An investor would benefit if one stays invested through these funds for long periods of time. So, as long as...

You may invest in mutual funds for regular income, capital appreciation or both depending on the mutual fund type. You could measure the return from mutual funds using CAGR (Compound Annual Growth Rate) and XIRR (Extended Internal Rate of Return). You will find CAGR showing you the rate at which your mutual fund investment grows per year over the investment period. However, you cannot use CAGR to calculate the return for multiple cash flows. You may consider using XIRR to calculate mutual fund returns for multiple cash flows. For example, you may use XIRR to determine the return from mutual fund investments through the systematic investment plan (SIP).  What is XIRR? You can put a lump-sum amount in a mutual fund. You have a one-time redemption where you sell the entire investment after some time. Investing through a lump sum involves two cash flows. You have a cash outflow which is your investment, and a cash inflow (redemption).  You may consider using CAGR to calculate the ...

GST composition scheme was implemented under the respective State VAT Laws with conditions applied on eligibility for the scheme accordingly. GST composition scheme assures greater compliance without the requirement of maintaining records. Composition Scheme is a simple and easy scheme under GST for taxpayers. Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of turnover. This scheme can be opted by any taxpayer whose turnover is less than Rs. 1.5 crore*. * CBIC has notified the increase to the threshold limit from Rs 1 Crore to Rs. 1.5 Crores. Who can opt for composition scheme? A taxpayer whose turnover is below Rs 1.5 crore can opt for Composition Scheme. In case of North-Eastern states and Himachal Pradesh, the limit is now Rs 75 lakh. As per the CGST (Amendment) Act, 2018, a composition dealer can also supply services to an extent of ten percent of turnover, or Rs.5 lakhs, whichever is higher. This amendment will be applicable from the 1st of Feb, ...

Every registered person is allowed to take tax credit for input tax.  Input credit helps in determining the correct amount of working capital at any given point of time. This is highly critical information from business liquidity standpoint. Meaning of input tax credit Input tax in relation to a registered person, means the central tax, state tax, or union territory tax charged on any supply of goods or services or both made to him ,  for any supply of goods and/or services to him or purchases he makes, which are used or are intended to be used, for the furtherance of his business.  it does not include the tax paid under the composition levy. What are the conditions for claiming input tax credit? Sec 16 of CGST act provides some conditions, input tax credit can only be claimed after fulfilling these conditions: The said goods or services or both are used or intended to be used in the course or in the furtherance of business. Possession of tax-paying document Every Registe...