Section 40b determines the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. The amount over the specified limit is not allowed as a deduction to a partnership firm. Remuneration To Partners Remuneration includes salary, bonus, commission .RemunerationRead more
Section 40b determines the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. The amount over the specified limit is not allowed as a deduction to a partnership firm.
Remuneration To Partners
Remuneration includes salary, bonus, commission .Remuneration in partnership firm is allowed as a deduction if following conditions are satisfied
Remuneration is allowed only to working partners.
Remuneration must be authorised by partnership deed and according to the terms of partnership deed. Also the amount of salary or manner of its computation is to be mentioned in the deed. If there is not any such provision in deed then no deduction is allowed. Normally people mentions in deed that salary is allowed to partners as per maximum limit defined under this section. This clause satisfies the condition for quantum of deduction.
It should be related to the period of the partnership deed. If there is another partnership deed for another period then such deed’s provisions will be considered for that period.
It is not allowed if tax is paid on presumptive basis under section 44AD or section 44ADA.
Remuneration should be within the permissible limits as mentioned below. Please note that this limit is for total salary to all partners and not per partner.
Book Profit
Amount deductible as remuneration under section 40(b)
If book profit is negative
Rs. 1,50,000
If book profit is positive- On first Rs. 3 lakh of book profit On the balance of book profit
Rs. 1,50,000 or 90% of book profit whichever is more 60% of book profit
Calculation of book profit
Profit as per Profit & Loss a/c – xxx
Add- Remuneration to partners if debited to Profit and loss a/c
Add- Brought forward business loss, deduction under section 80C
to 80U if debited to profit and loss a/c
Less – Income under house property, capital gain, other
sources if credited to profit and loss a/c Book Profits xxx
Example-
Book profit = Rs. 9 Lakhs
Maximum allowed salary = 3,00,000*90% + 6,00,000*60% = Rs. 6.3 lakhs
Remuneration which is allowed as expenses in the hands of partnership firm will be taxable in the hands of receiving partner as “Income from Business or Profession”.
If such remuneration is not allowed as expense in hands of partnership firm then it will not be taxable in the hands of partners.
All the income tax returns filed by the taxpayers are first processed online at the Centralised Processing Centre (CPC). After processing the return, the income tax department then issues intimation under section 143(1) to the taxpayers informing them about the results. If you have received an incomRead more
All the income tax returns filed by the taxpayers are first processed online at the Centralised Processing Centre (CPC). After processing the return, the income tax department then issues intimation under section 143(1) to the taxpayers informing them about the results.
If you have received an income tax notice, please do not worry, That May be just Information of ITR Process.
But Also,
An income tax return can be either filed voluntarily under Section 139 or on demand by the income tax department under Section 142(1). It is necessary to understand what happens after the taxpayer has filed the return of income. Income tax department carries out a preliminary assessment of all the returns filed and informs taxpayers of the result of such preliminary assessment. This assessment primarily includes arithmetical errors, internal inconsistencies, tax calculation and verification of tax payment. Such communication to the taxpayer post the preliminary assessment is called intimation under Section 143(1). The preliminary assessment is wholly computerised and does not have any human intervention and is delegated to Centralised Processing Center (CPC).
Yes, Companies can conduct AGM due in the year calendar year 2021 and for further Years through video conferencing. Circular is available at the link- http://www.mca.gov.in/Ministry/pdf/GeneralCircularNo.02_14012021.pdf
Yes, Companies can conduct AGM due in the year calendar year 2021 and for further Years through video conferencing.
All audits on behalf of the Comptroller and Auditor General are required to be conducted as per the auditing standards. In other words, auditing standards shall apply to all types of audit including financial audit, compliance audit and performance audit. In conjunction with obtaining an understandiRead more
All audits on behalf of the Comptroller and Auditor General are required to be
conducted as per the auditing standards. In other words, auditing standards shall apply to all types of audit including financial audit, compliance audit and performance audit.
In conjunction with obtaining an understanding of internal control over financial reporting, the auditor should obtain an understanding of the company’s process for:
Identifying related parties and relationships and transactions with related parties;
Authorizing and approving transactions with related parties; and
Accounting for and disclosing relationships and transactions with related parties in the financial statements.
There is not any direct interest on Late filling of ITR. (this may Impose Penalties) But, If you do not file income tax returns on or before the due date, you would be required to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax remaining unpaid as per sectionRead more
There is not any direct interest on Late filling of ITR. (this may Impose Penalties)
But, If you do not file income tax returns on or before the due date, you would be required to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax remaining unpaid as per section 234A.
It’s important to note that one’s ITR cannot be filed if one hasn’t paid the taxes.
Penalties :
Late Filing Fees u/s 234F
Effective from the FY 2017-28, a late filing fee will be applicable for filing your returns after the due date under section 234F. For instance after due date for FY 2020-21 which is 31st Dec 2021.
The maximum penalty is Rs. 10,000. If you file your ITR after the due date (30th Sep) but before 31 December, a penalty of Rs 5000 will be levied.
For returns filed later than 31 December of the relevant assessment year, the penalty levied will be increased to Rs.10,000.
There is a relief given to small taxpayers – the IT department has stated that if the total income does not exceed Rs 5 lakh, the maximum penalty levied for delay will be Rs 1000.
Tax liability of AOP/BOI depends on whether or not share of members of AOP/BOI are known. 1) Where share of members are known Where individual shares of members in AOP/BOI are known then tax liability of AOP/BOI shall be determined as under: a. Where income of none of the members exceeds the maximuRead more
Tax liability of AOP/BOI depends on whether or not share of members of AOP/BOI are known.
1) Where share of members are known
Where individual shares of members in AOP/BOI are known then tax liability of AOP/BOI shall be determined as under:
a. Where income of none of the members exceeds the maximum amount which is not chargeable to income-tax (i.e., basic exemption limit)In this case income of AOP/BOI shall be taxable at a rate applicable to an individual.But if total income of any member of AOP/BOI is taxable at a rate higher than maximum marginal rate then income of AOP/BOI shall be chargeable to tax as follows:
– Portion of income attributable to such member shall be taxable at such high rate as applicable to that member.
– Balance portion of income shall be taxable at the maximum marginal rate of tax (i.e., 30% plus surcharge and HEC as applicable) .
b. Where income of any member of AOP/BOI exceeds the maximum amount which is not chargeable to income-tax (i.e., basic exemption limit)In this case income of AOP/BOI shall be taxable at maximum marginal rate of tax (i.e., 30% plus surcharge and HEC as applicable).But if total income of any member of AOP/BOI is taxable at a rate higher than maximum marginal rate then income of AOP/BOI shall be chargeable to tax as follows:
– Portion of income attributable to such member shall be taxable at such high rate as applicable to that member.
– Balance portion of income shall be taxable at the maximum marginal rate of tax (i.e., 30% plus surcharge and HEC as applicable).
2) Where share of members are not known
In such a case income of the AOP/BOI shall be taxable at maximum marginal rate (i.e., 30% plus surcharge and HEC as applicable). But if income of any member of AOP/BOI is taxable at a rate higher than maximum marginal rate then total income of AOP/BOI shall be chargeable to tax at such higher rate of tax.
For the purposes of this section, the individual shares of the members of an AOP or BOI in the income of AOP/BOI shall be deemed to be indeterminate or unknown if such shares are indeterminate or unknown on the date of formation of such AOP or BOI or at any time thereafter.
B. Alternate Minimum Tax:
Tax payable by AOP/BOI cannot be less than 18.5 per cent (increased by Surcharge and HEC) of “adjusted total income” as per section 115JC . However, provisions related to alternate minimum tax shall not apply to an AOP or BOI whose adjusted total income does not exceed twenty lakh rupees
TONNAGE TAX In case of a company, the income from the business of operating qualifying ships, may, at its option, be computed in accordance with the provisions of Chapter XII-G. Thus, tonnage taxation is a scheme of presumptive taxation wherein notional income arising from operation of shipsRead more
TONNAGE TAX
In case of a company, the income from the business of operating qualifying ships, may, at its option, be computed in accordance with the provisions of Chapter XII-G.
Thus, tonnage taxation is a scheme of presumptive taxation wherein notional income arising from operation of ships is determined on basis of tonnage of ships.
Special provisions relating to income of shipping companies
Section – 115V : Definitions.
Section – 115VA : Computation of profits and gains from the business of operating qualifying ships.
Section – 115VB : Operating ships.
Section – 115VC : Qualifying company.
Section – 115VD : Qualifying ship.
Section – 115VE : Manner of computation of income under tonnage tax scheme
Section – 115VF : Tonnage income.
Section – 115VG : Computation of tonnage income.
Section – 115VH : Calculation in case of joint operation, etc.
Section – 115V-I : Relevant shipping income.
Section – 115VJ : Treatment of common costs.
Section – 115VK : Depreciation.
Section – 115VL : General exclusion of deduction and set off, etc.
Section – 115VM : Exclusion of loss.
Section – 115VN : Chargeable gains from transfer of tonnage tax assets.
Section – 115V-O : Exclusion from provisions of section 115JB.
Section – 115VP : Method and time of opting for tonnage tax scheme.
Section – 115VQ : Period for which tonnage tax option to remain in force.
Section – 115VR : Renewal of tonnage tax scheme.
Section – 115VS : Prohibition to opt for tonnage tax scheme in certain cases.
Section – 115VT : Transfer of profits to Tonnage Tax Reserve Account.
Section – 115VU : Minimum training requirement for tonnage tax company.
Section – 115VV : Limit for charter in of tonnage
Section – 115VW : Maintenance and audit of accounts.
Section – 115VX : Determination of tonnage.
Section – 115VY : Amalgamation.
Section – 115VZ : Demerger.
Section – 115VZA : Effect of temporarily ceasing to operate qualifying ships.
Section – 115VZB : Avoidance of tax.
Section – 115VZC : Exclusion from tonnage tax scheme.
Category of income Income subject to tax Taxability Donations/voluntary contributions Voluntary contributions with a specific direction to form part of corpus of trust or institution Exempt* Voluntary contribution without such specific direction Forms part of income from property held under tRead more
Category of income
Income subject to tax
Taxability
Donations/voluntary contributions
Voluntary contributions with a specific direction to form part of corpus of trust or institution
Exempt*
Voluntary contribution without such specific direction
Forms part of income from property held under trust
Anonymous donations i.e., donations where donee does not maintain record of identity/any particulars of the donor
Donation exceeding higher of:
i) 5% of total donations received by trust or
ii) Rs 1,00,000
Taxed at 30%
Anonymous donation received by trust established wholly for religious and charitable purpose on
Taxable in the same manner as voluntary contributions (without specific direction) as above
Income from property held under trust for charitable or religious purpose
Income applied for charitable or religious purpose in India
Exempt*
Income accumulated or set aside for the application towards charitable or religious purpose in India
Exempt* to the extent of 15% of such income. This means at-least 85% of income from property to be applied for charitable and religious purpose in India as above and balance 15% can be accumulated or set aside. [See below comment on 85%]
Income from property held under trust created for charitable purpose which tends to promote international welfare in which India is interested
CBDT either by general or special order has directed that such income shall not be included in the total income of trust
Exempt*
Capital gain from asset held under trust in whole
Net consideration is utilised fully for acquiring another capital asset
Entire capital gain is deemed to have been applied for charitable and religious purpose and hence is exempt*
Net consideration is utilised partially for acquiring another capital asset
Capital gain utilised in excess of cost of old asset transferred is considered to have been applied for charitable and religious purpose and is exempt*
*Only Charitable/ religious trust or institution registered under Section 12AA enjoys the exemption
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rigRead more
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rightful ownership in the Trust property, the preservation of the Trust property and channelising the income from the Trust property in accordance with the intentions of the creator of the Trust.
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rigRead more
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rightful ownership in the Trust property, the preservation of the Trust property and channelising the income from the Trust property in accordance with the intentions of the creator of the Trust.
For creating a private Trust, the foremost requirement is that the Author must express with reasonable certainty by words or acts, an intention on his part to create a Trust. Thus, a Trust may be declared either by words, spoken or written or by acts. Where a Trust is declared by words, the language used must be clear enough to show an intention to create a Trust. No formal language is required to constitute an effective declaration of Trust, but the language used must make it certain that:
The Author intended to constitute a Trust binding in law on himself or the person to whom the property was given.
The Author intended to bind definite property by the Trust.
The Author intended to benefit a definite person or persons in a definite way.
What are the conditions of section 40b for getting deduction of remuneration in a firm?
Section 40b determines the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. The amount over the specified limit is not allowed as a deduction to a partnership firm. Remuneration To Partners Remuneration includes salary, bonus, commission .RemunerationRead more
Section 40b determines the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. The amount over the specified limit is not allowed as a deduction to a partnership firm.
Remuneration To Partners
Remuneration includes salary, bonus, commission .Remuneration in partnership firm is allowed as a deduction if following conditions are satisfied
Calculation of book profit
Profit as per Profit & Loss a/c – xxx
Add- Remuneration to partners if debited to Profit and loss a/c
Add- Brought forward business loss, deduction under section 80C
to 80U if debited to profit and loss a/c
Less – Income under house property, capital gain, other
sources if credited to profit and loss a/c
Book Profits xxx
Example-
Book profit = Rs. 9 Lakhs
Maximum allowed salary = 3,00,000*90% + 6,00,000*60% = Rs. 6.3 lakhs
Remuneration which is allowed as expenses in the hands of partnership firm will be taxable in the hands of receiving partner as “Income from Business or Profession”.
If such remuneration is not allowed as expense in hands of partnership firm then it will not be taxable in the hands of partners.
See lessWhat is assessment under section 143(1)?
All the income tax returns filed by the taxpayers are first processed online at the Centralised Processing Centre (CPC). After processing the return, the income tax department then issues intimation under section 143(1) to the taxpayers informing them about the results. If you have received an incomRead more
All the income tax returns filed by the taxpayers are first processed online at the Centralised Processing Centre (CPC). After processing the return, the income tax department then issues intimation under section 143(1) to the taxpayers informing them about the results.
If you have received an income tax notice, please do not worry, That May be just Information of ITR Process.
But Also,
An income tax return can be either filed voluntarily under Section 139 or on demand by the income tax department under Section 142(1). It is necessary to understand what happens after the taxpayer has filed the return of income. Income tax department carries out a preliminary assessment of all the returns filed and informs taxpayers of the result of such preliminary assessment. This assessment primarily includes arithmetical errors, internal inconsistencies, tax calculation and verification of tax payment. Such communication to the taxpayer post the preliminary assessment is called intimation under Section 143(1). The preliminary assessment is wholly computerised and does not have any human intervention and is delegated to Centralised Processing Center (CPC).
See lessCan a Company has Annual General Meeting through Video Conference?
Yes, Companies can conduct AGM due in the year calendar year 2021 and for further Years through video conferencing. Circular is available at the link- http://www.mca.gov.in/Ministry/pdf/GeneralCircularNo.02_14012021.pdf
Yes, Companies can conduct AGM due in the year calendar year 2021 and for further Years through video conferencing.
Circular is available at the link- http://www.mca.gov.in/Ministry/pdf/GeneralCircularNo.02_14012021.pdf
See lessDo the Statutory Auditors have a right to access all the Board Agenda and Minutes thereof?
All audits on behalf of the Comptroller and Auditor General are required to be conducted as per the auditing standards. In other words, auditing standards shall apply to all types of audit including financial audit, compliance audit and performance audit. In conjunction with obtaining an understandiRead more
All audits on behalf of the Comptroller and Auditor General are required to be
conducted as per the auditing standards. In other words, auditing standards shall apply to all types of audit including financial audit, compliance audit and performance audit.
In conjunction with obtaining an understanding of internal control over financial reporting, the auditor should obtain an understanding of the company’s process for:
- Identifying related parties and relationships and transactions with related parties;
- Authorizing and approving transactions with related parties; and
- Accounting for and disclosing relationships and transactions with related parties in the financial statements.
See lessHow much interest is liable on non filing of ITar or late filing of ITR?
There is not any direct interest on Late filling of ITR. (this may Impose Penalties) But, If you do not file income tax returns on or before the due date, you would be required to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax remaining unpaid as per sectionRead more
There is not any direct interest on Late filling of ITR. (this may Impose Penalties)
But, If you do not file income tax returns on or before the due date, you would be required to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax remaining unpaid as per section 234A.
It’s important to note that one’s ITR cannot be filed if one hasn’t paid the taxes.
Penalties :
Late Filing Fees u/s 234F
Effective from the FY 2017-28, a late filing fee will be applicable for filing your returns after the due date under section 234F. For instance after due date for FY 2020-21 which is 31st Dec 2021.
The maximum penalty is Rs. 10,000. If you file your ITR after the due date (30th Sep) but before 31 December, a penalty of Rs 5000 will be levied.
For returns filed later than 31 December of the relevant assessment year, the penalty levied will be increased to Rs.10,000.
There is a relief given to small taxpayers – the IT department has stated that if the total income does not exceed Rs 5 lakh, the maximum penalty levied for delay will be Rs 1000.
See lessHow to compute income of AOP or BOI under the Income Tax Act?
Tax liability of AOP/BOI depends on whether or not share of members of AOP/BOI are known. 1) Where share of members are known Where individual shares of members in AOP/BOI are known then tax liability of AOP/BOI shall be determined as under: a. Where income of none of the members exceeds the maximuRead more
Tax liability of AOP/BOI depends on whether or not share of members of AOP/BOI are known.
1) Where share of members are known
Where individual shares of members in AOP/BOI are known then tax liability of AOP/BOI shall be determined as under:
2) Where share of members are not known
In such a case income of the AOP/BOI shall be taxable at maximum marginal rate (i.e., 30% plus surcharge and HEC as applicable). But if income of any member of AOP/BOI is taxable at a rate higher than maximum marginal rate then total income of AOP/BOI shall be chargeable to tax at such higher rate of tax.
For the purposes of this section, the individual shares of the members of an AOP or BOI in the income of AOP/BOI shall be deemed to be indeterminate or unknown if such shares are indeterminate or unknown on the date of formation of such AOP or BOI or at any time thereafter.
B. Alternate Minimum Tax:
Tax payable by AOP/BOI cannot be less than 18.5 per cent (increased by Surcharge and HEC) of “adjusted total income” as per section 115JC . However, provisions related to alternate minimum tax shall not apply to an AOP or BOI whose adjusted total income does not exceed twenty lakh rupees
See lessWhat is tonnage tax?
TONNAGE TAX In case of a company, the income from the business of operating qualifying ships, may, at its option, be computed in accordance with the provisions of Chapter XII-G. Thus, tonnage taxation is a scheme of presumptive taxation wherein notional income arising from operation of shipsRead more
TONNAGE TAX
Special provisions relating to income of shipping companies
- Section – 115V : Definitions.
- Section – 115VA : Computation of profits and gains from the business of operating qualifying ships.
- Section – 115VB : Operating ships.
- Section – 115VC : Qualifying company.
- Section – 115VD : Qualifying ship.
- Section – 115VE : Manner of computation of income under tonnage tax scheme
- Section – 115VF : Tonnage income.
- Section – 115VG : Computation of tonnage income.
- Section – 115VH : Calculation in case of joint operation, etc.
- Section – 115V-I : Relevant shipping income.
- Section – 115VJ : Treatment of common costs.
- Section – 115VK : Depreciation.
- Section – 115VL : General exclusion of deduction and set off, etc.
- Section – 115VM : Exclusion of loss.
- Section – 115VN : Chargeable gains from transfer of tonnage tax assets.
- Section – 115V-O : Exclusion from provisions of section 115JB.
- Section – 115VP : Method and time of opting for tonnage tax scheme.
- Section – 115VQ : Period for which tonnage tax option to remain in force.
- Section – 115VR : Renewal of tonnage tax scheme.
- Section – 115VS : Prohibition to opt for tonnage tax scheme in certain cases.
- Section – 115VT : Transfer of profits to Tonnage Tax Reserve Account.
- Section – 115VU : Minimum training requirement for tonnage tax company.
- Section – 115VV : Limit for charter in of tonnage
- Section – 115VW : Maintenance and audit of accounts.
- Section – 115VX : Determination of tonnage.
- Section – 115VY : Amalgamation.
- Section – 115VZ : Demerger.
- Section – 115VZA : Effect of temporarily ceasing to operate qualifying ships.
- Section – 115VZB : Avoidance of tax.
- Section – 115VZC : Exclusion from tonnage tax scheme.
See lessHow should a trust use its income to get deduction under Income Tax Act?
Category of income Income subject to tax Taxability Donations/voluntary contributions Voluntary contributions with a specific direction to form part of corpus of trust or institution Exempt* Voluntary contribution without such specific direction Forms part of income from property held under tRead more
i) 5% of total donations received by trust or
ii) Rs 1,00,000
*Only Charitable/ religious trust or institution registered under Section 12AA enjoys the exemption
See lessWhat is a charitable trust under the Income Tax Act?
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rigRead more
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rightful ownership in the Trust property, the preservation of the Trust property and channelising the income from the Trust property in accordance with the intentions of the creator of the Trust.
See lessHow to form a charitable trust?
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rigRead more
A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rightful ownership in the Trust property, the preservation of the Trust property and channelising the income from the Trust property in accordance with the intentions of the creator of the Trust.
For creating a private Trust, the foremost requirement is that the Author must express with reasonable certainty by words or acts, an intention on his part to create a Trust. Thus, a Trust may be declared either by words, spoken or written or by acts. Where a Trust is declared by words, the language used must be clear enough to show an intention to create a Trust. No formal language is required to constitute an effective declaration of Trust, but the language used must make it certain that:
See less