Hi, It's a very interesting question and I was waiting for it. Lots of companies are appointing a CFO cum Company secretary to save costs. Following provision will help to understand the context of the question: As per section 203, prescribed class of companies shall have the following whole-time kRead more
Hi,
It’s a very interesting question and I was waiting for it. Lots of companies are appointing a CFO cum Company secretary to save costs. Following provision will help to understand the context of the question:
As per section 203, prescribed class of companies shall have the following whole-time key managerial personnel
(i) managing director, or Chief Executive Officer or manager and in their absence, a whole-time director;
(ii) company secretary; and
(iii) Chief Financial Officer
Here, the term used is ‘whole-time’ and therefore, three different individuals are required to hold these three key positions.
Further, as per Regulation 78 of Table F,
‘a provision of the Act or these regulations requiring or authorizing a thing to be done by or to a director and chief executive officer, manager, company secretary or chief financial officer shall not be satisfied by its being done by or to the same person acting both as director and as, or in place of, chief executive officer, manager, company secretary or chief financial officer’.
Hence, with the above provision of the act, it is crystal clear that a CFO can not be appointed as company secretary of the company.
Section 40b describes the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. Excess to this amount will not be allowed as a deduction from the income of the firm. Remuneration in a partnership firm is allowed as a deduction if the following conditions aRead more
Section 40b describes the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. Excess to this amount will not be allowed as a deduction from the income of the firm.
Remuneration in a partnership firm is allowed as a deduction if the following conditions are satisfied:
Remuneration is allowed only to working partners.
Remuneration must be authorized by the partnership deed and according to the terms of the 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. If it is mentioned in the deed that salary is allowed to partners as per the maximum limit defined under this section then this condition is satisfied.
It should be related to the period of the partnership deed.
It is not allowed if the income of the partner ship firm is calculated on the basis of section 44AD or section 44ADA (Presumptive Income).
Remuneration should be within the permissible limits as mentioned below. This limit is for the 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
Such Remuneration will be taxable in the hands of receiving partner as “Income from Business or Profession” but If such remuneration is not allowed as an expense in hands of the partnership firm then it will not be taxable in the hands of partners.
There is no condition for payment of interest under income tax. You can pay any amount of interest. However, for getting deduction of this expenditure under income tax, you need to fulfill the following conditions of section 40b of act: Payment of Interest to a partner (working or non-working partnRead more
There is no condition for payment of interest under income tax. You can pay any amount of interest.
However, for getting deduction of this expenditure under income tax, you need to fulfill the following conditions of section 40b of act:
Payment of Interest to a partner (working or non-working partner)
Interest must be authorized by the partnership deed
Only for the period of partnership deed.
The rate of interest should not exceed 12%. Excess of this is disallowed.
if Income is calculated on a presumptive basis under section 44AD or section 44ADA then it is not allowed.
If interest is paid to a partner on behalf or for the benefit of any other person then such interest is not disallowed under this section.
If the firm receives interest on drawings from a partner then it is taxable in the hands of the firm.
Deduction of Life insurance premium paid by an assess is available in respect of policy taken in the name the taxpayer, his spouse and his children.Further, it should be noted that deduction is allowed for all children irrespective of the fact whether they are dependent/independent, major/minor, orRead more
Deduction of Life insurance premium paid by an assess is available in respect of policy taken in the name the taxpayer, his spouse and his children.Further, it should be noted that deduction is allowed for all children irrespective of the fact whether they are dependent/independent, major/minor, or married/unmarried.
In the case referred in the question, Father can take the deduction of Insurence premium paid by him for the policy of married daughter.
But in my opinion, the daughter can not avail the deduction of the premium paid his father.
Hi, Both are accounting terms. Let's understand first to "Trade payable" (TP). Trade Payable refers to a general ledger account of an identified vendor or supplier in the books of the company. The company has made transactions with them for the supply of goods/services and has some outstanding balanRead more
Hi,
Both are accounting terms. Let’s understand first to “Trade payable” (TP).
Trade Payable refers to a general ledger account of an identified vendor or supplier in the books of the company. The company has made transactions with them for the supply of goods/services and has some outstanding balances to pay in accordance with the terms of payments/agreement.
Since the company has the obligation to pay them they called creditors or trade payable. These are shown in the liability side of the balance sheet of the company.
Now come to Expenses Payable, Technically they’re also the liability of the company and shown in the liability side of the balance sheet. Generally, they belong to unidentified parties. It is also not confirmed that whether the company will require an outflow of economic benefit to settle their obligation in near future. This means either the creditor is not identified or the obligation to payment of the outstanding amount is not confirmed. For example, in the “Provision of an expense” here neither the party is identified nor the obligation is confirmed. When the party is identified or payment of obligation is confirmed the outstanding amount is transferred to the creditor’s account.
Hope it clears the terms. There may be different opinions also.
Interest on loans taken for the purpose of buying, constructing, or for the purpose of repairs and renovation of the house is exempted under Section 24 (b) of the Income Tax Act. In the act, there is no bar that such loans should be have been taken from the financial institutions. Means it can beRead more
Interest on loans taken for the purpose of buying, constructing, or for the purpose of repairs and renovation of the house is exempted under Section 24 (b) of the Income Tax Act. In the act, there is no bar that such loans should be have been taken from the financial institutions. Means it can be taken from anyone including your friends and relatives. Also, nothing has been prescribed for the rate of interest. However, due care must be taken on the rate of interest it should be reasonable and comparable to those available in the market.
The maximum tax deduction of Rs 2 lakh is available for the payment of interest on housing loan taken for the purpose of purchases or construction of the house, for repair and renovation Rs 30000 is exempted.
Note: Deduction of repayment of the principal amount of loan taken from other than banks & notified financial institutinis not allowed under section 80C.
Bitcoin or any other cryptocurrencies are not legal tenders in India. The Reserve Bank of India (RBI) has not yet granted the status of legal tender. Still, it is not illegal as the supreme court has allowed banks to handle cryptocurrency transactions from traders and exchanges Now come on taxationRead more
Bitcoin or any other cryptocurrencies are not legal tenders in India. The Reserve Bank of India (RBI) has not yet granted the status of legal tender. Still, it is not illegal as the supreme court has allowed banks to handle cryptocurrency transactions from traders and exchanges
Now come on taxation of cryptocurrency.
Since Nature of “cryptocurrency trading” falls under the definition of Section 2(14) of the Income Tax Act of “capital asset”. cryptocurrency is treated as ‘property of any kind held by the assessee whether or not connected with his business or profession’.
Therefore, any gains arising out of the transfer of cryptocurrency must be considered as capital gains, if they are held for investment.
Depending on the duration for which these crypto currencies assets are held for the purpose of investment, they would be taxed as long-term capital gains (20 percent post indexation) or short-term capital gains (taxed as per individual slab rate).
VRS is included in Salary head in Income Tax Act as “PROFIT IN LIEU OF SALARY” u/s 17(3) of the Income Tax Act,1961. Accordingly, the VRS received is taxable in the hands of the employee under the head ‘Income from Salary’. “profits in lieu of salary” includes— the amount of any compensation due toRead more
VRS is included in Salary head in Income Tax Act as “PROFIT IN LIEU OF SALARY” u/s 17(3) of the Income Tax Act,1961. Accordingly, the VRS received is taxable in the hands of the employee under the head ‘Income from Salary’.
“profits in lieu of salary” includes—
the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto.
The benefit of receipt VRS can avail in two ways –
Exemption U/s- 10(10C)
Relief U/s- 89
1.VRS amount received is exempted under Section 10(10C) in the following way: –
Any amount received or receivable by an employee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement of –
(i) a public sector company; or
(ii) any other company; or
(iii) an authority established under a Central, State or Provincial Act; or
(iv) a local authority; or
(v) a co-operative society; or
(vi) a University established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a University under section 3 of the University Grants Commission Act,1956 (3 of 1956); or
(vii) an Indian Institute of Technology within the meaning of clause (g) of section 3 of the Institutes of Technology Act, 1961 (59 of 1961); or
(viia) any State Government; or
(viib) the Central Government; or
(viic) an institution, having importance throughout India or in any State or States, as the Central Government may, by notification in the Official Gazette, specify in this behalf; or
(viii) such institute of management as the Central Government may, by notification in the Official Gazette, specify in this behalf,
Is exempt to the lowest of the following amount:
5.00 lakhs.
Amount equivalent to three months’ salary for each completed year of service.
Amount of salary at the time of retirement for the balance period of months of service left before retirement.
2.However, in place of exemption of sec 10 (10c) assess can claim relief under Section 89 for the amount of VRS received by him due to which his total income is assessed at a rate higher than that at which it would otherwise have been assessed. Relief under section can be calculated as per following steps.
The Computation of relief is as follows: –
Step 1.: – Compute the Tax payable during the previous year in which the compensation is received.
Step 2.: – Compute the rate of tax on total income during the previous year in which the compensation is received.
Step 3.: – Compute the tax on total income by adding the 1/3rd of VRS amount received in each of the three preceding previous years immediately preceding the year in which the VRS is received.
Step 4.: – Compute the rate of tax for each preceding three years separately.
Step 5.: – Compute the average of rate of tax for three preceding years.
Step 6.: – Amount of relief = VRS amount X [Step 2 – Step 5]
KEYNOTE: –
As per Income Tax Act,1961 both the sections are mutually exclusive, i.e. an assessee can claim either exemption u/s 10(10C) or relief u/s 89 whichever is most beneficial to him. And if an exemption or relief is claimed in any assessment year, it cannot be claimed again in any other assessment year.
The relief and the exemption in relation to VRS can be claimed once in a life time.
Hi, The answer is a big No. If you are paying rent but not receiving house rent allowance then you are allowed to claim deduction under section 80GG subject to your spouse or children are not owning a house property in the place of employment. And, in case you are paying rent and receiving HRA, thenRead more
Hi,
The answer is a big No.
If you are paying rent but not receiving house rent allowance then you are allowed to claim deduction under section 80GG subject to your spouse or children are not owning a house property in the place of employment.
And, in case you are paying rent and receiving HRA, then you can claim a deduction of such HRA as per section 10(13A).
Hi, If you are paying rent but not receiving HRA from your employer, then still you can take benefit in Income Tax for the amount of Rent paid. You need to satisfy the following conditions: You are self-employed or salaried You have not received HRA at any time during the year for which you are claiRead more
Hi,
If you are paying rent but not receiving HRA from your employer, then still you can take benefit in Income Tax for the amount of Rent paid.
You need to satisfy the following conditions:
You are self-employed or salaried
You have not received HRA at any time during the year for which you are claiming 80GG
You or your spouse or your minor child or HUF of which you are a member – do not own any residential accommodation at the place where you currently reside, perform duties of office, or employment or carry on business or profession.
The deduction can be claimed under Section 80GG as follows:
The lowest of the following can be claimed as a deduction:
1
Rs 5,000 per month;
2
25% of adjusted total income*;
3
Rent paid minus 10% of adjusted total Income*
*here Adjusted Total Income means Total Income minus long-term capital gain, short-term capital gain and deductions 80C to 80U.
If you own any residential property at any place other than the place mentioned above, then you should not claim the benefit of that property as self-occupied. The other property would be deemed to be let out in order to claim the 80GG deduction.
In terms of provision of section 203 of Companies Act, 2013, whether an individual can be appointed as CFO as well as company secretary of a company?
Hi, It's a very interesting question and I was waiting for it. Lots of companies are appointing a CFO cum Company secretary to save costs. Following provision will help to understand the context of the question: As per section 203, prescribed class of companies shall have the following whole-time kRead more
Hi,
It’s a very interesting question and I was waiting for it. Lots of companies are appointing a CFO cum Company secretary to save costs. Following provision will help to understand the context of the question:
As per section 203, prescribed class of companies shall have the following whole-time key managerial personnel
(i) managing director, or Chief Executive Officer or manager and in their absence, a whole-time director;
(ii) company secretary; and
(iii) Chief Financial Officer
Here, the term used is ‘whole-time’ and therefore, three different individuals are required to hold these three key positions.
Further, as per Regulation 78 of Table F,
‘a provision of the Act or these regulations requiring or authorizing a thing to be done by or to a director and chief executive officer, manager, company secretary or chief financial officer shall not be satisfied by its being done by or to the same person acting both as director and as, or in place of, chief executive officer, manager, company secretary or chief financial officer’.
Hence, with the above provision of the act, it is crystal clear that a CFO can not be appointed as company secretary of the company.
See lessWhat is the limit of remuneration of partner as per Income Tax act?
Section 40b describes the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. Excess to this amount will not be allowed as a deduction from the income of the firm. Remuneration in a partnership firm is allowed as a deduction if the following conditions aRead more
Section 40b describes the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. Excess to this amount will not be allowed as a deduction from the income of the firm.
Remuneration in a partnership firm is allowed as a deduction if the 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
Such Remuneration will be taxable in the hands of receiving partner as “Income from Business or Profession” but If such remuneration is not allowed as an expense in hands of the partnership firm then it will not be taxable in the hands of partners.
See lessWhat are the conditions of Interest payable to partners of a firm under the Income Tax Act?
There is no condition for payment of interest under income tax. You can pay any amount of interest. However, for getting deduction of this expenditure under income tax, you need to fulfill the following conditions of section 40b of act: Payment of Interest to a partner (working or non-working partnRead more
There is no condition for payment of interest under income tax. You can pay any amount of interest.
However, for getting deduction of this expenditure under income tax, you need to fulfill the following conditions of section 40b of act:
See lessCan the premium be claimed u/s 80C by married daughter in her return if LIC premium paid by her father?
Deduction of Life insurance premium paid by an assess is available in respect of policy taken in the name the taxpayer, his spouse and his children.Further, it should be noted that deduction is allowed for all children irrespective of the fact whether they are dependent/independent, major/minor, orRead more
Deduction of Life insurance premium paid by an assess is available in respect of policy taken in the name the taxpayer, his spouse and his children.Further, it should be noted that deduction is allowed for all children irrespective of the fact whether they are dependent/independent, major/minor, or married/unmarried.
In the case referred in the question, Father can take the deduction of Insurence premium paid by him for the policy of married daughter.
But in my opinion, the daughter can not avail the deduction of the premium paid his father.
See lessWhat is difference between Trade Payables and Expenses Payable?
Hi, Both are accounting terms. Let's understand first to "Trade payable" (TP). Trade Payable refers to a general ledger account of an identified vendor or supplier in the books of the company. The company has made transactions with them for the supply of goods/services and has some outstanding balanRead more
Hi,
Both are accounting terms. Let’s understand first to “Trade payable” (TP).
Trade Payable refers to a general ledger account of an identified vendor or supplier in the books of the company. The company has made transactions with them for the supply of goods/services and has some outstanding balances to pay in accordance with the terms of payments/agreement.
Since the company has the obligation to pay them they called creditors or trade payable. These are shown in the liability side of the balance sheet of the company.
Now come to Expenses Payable, Technically they’re also the liability of the company and shown in the liability side of the balance sheet. Generally, they belong to unidentified parties. It is also not confirmed that whether the company will require an outflow of economic benefit to settle their obligation in near future. This means either the creditor is not identified or the obligation to payment of the outstanding amount is not confirmed. For example, in the “Provision of an expense” here neither the party is identified nor the obligation is confirmed. When the party is identified or payment of obligation is confirmed the outstanding amount is transferred to the creditor’s account.
Hope it clears the terms. There may be different opinions also.
See lessWhether deduction of Interest on House Loan taken from a private person or close relative is allowed from Income from House property?
Interest on loans taken for the purpose of buying, constructing, or for the purpose of repairs and renovation of the house is exempted under Section 24 (b) of the Income Tax Act. In the act, there is no bar that such loans should be have been taken from the financial institutions. Means it can beRead more
Interest on loans taken for the purpose of buying, constructing, or for the purpose of repairs and renovation of the house is exempted under Section 24 (b) of the Income Tax Act. In the act, there is no bar that such loans should be have been taken from the financial institutions. Means it can be taken from anyone including your friends and relatives. Also, nothing has been prescribed for the rate of interest. However, due care must be taken on the rate of interest it should be reasonable and comparable to those available in the market.
The maximum tax deduction of Rs 2 lakh is available for the payment of interest on housing loan taken for the purpose of purchases or construction of the house, for repair and renovation Rs 30000 is exempted.
Note: Deduction of repayment of the principal amount of loan taken from other than banks & notified financial institutinis not allowed under section 80C.
See lessTax liability on crypto coin
Bitcoin or any other cryptocurrencies are not legal tenders in India. The Reserve Bank of India (RBI) has not yet granted the status of legal tender. Still, it is not illegal as the supreme court has allowed banks to handle cryptocurrency transactions from traders and exchanges Now come on taxationRead more
Bitcoin or any other cryptocurrencies are not legal tenders in India. The Reserve Bank of India (RBI) has not yet granted the status of legal tender. Still, it is not illegal as the supreme court has allowed banks to handle cryptocurrency transactions from traders and exchanges
Now come on taxation of cryptocurrency.
Since Nature of “cryptocurrency trading” falls under the definition of Section 2(14) of the Income Tax Act of “capital asset”. cryptocurrency is treated as ‘property of any kind held by the assessee whether or not connected with his business or profession’.
Therefore, any gains arising out of the transfer of cryptocurrency must be considered as capital gains, if they are held for investment.
Depending on the duration for which these crypto currencies assets are held for the purpose of investment, they would be taxed as long-term capital gains (20 percent post indexation) or short-term capital gains (taxed as per individual slab rate).
Happy crypto trading 🙂
See lessHow Income Tax on VRS amount is calculated?
VRS is included in Salary head in Income Tax Act as “PROFIT IN LIEU OF SALARY” u/s 17(3) of the Income Tax Act,1961. Accordingly, the VRS received is taxable in the hands of the employee under the head ‘Income from Salary’. “profits in lieu of salary” includes— the amount of any compensation due toRead more
VRS is included in Salary head in Income Tax Act as “PROFIT IN LIEU OF SALARY” u/s 17(3) of the Income Tax Act,1961. Accordingly, the VRS received is taxable in the hands of the employee under the head ‘Income from Salary’.
“profits in lieu of salary” includes—
the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto.
The benefit of receipt VRS can avail in two ways –
1.VRS amount received is exempted under Section 10(10C) in the following way: –
Any amount received or receivable by an employee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement of –
(i) a public sector company; or
(ii) any other company; or
(iii) an authority established under a Central, State or Provincial Act; or
(iv) a local authority; or
(v) a co-operative society; or
(vi) a University established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a University under section 3 of the University Grants Commission Act,1956 (3 of 1956); or
(vii) an Indian Institute of Technology within the meaning of clause (g) of section 3 of the Institutes of Technology Act, 1961 (59 of 1961); or
(viia) any State Government; or
(viib) the Central Government; or
(viic) an institution, having importance throughout India or in any State or States, as the Central Government may, by notification in the Official Gazette, specify in this behalf; or
(viii) such institute of management as the Central Government may, by notification in the Official Gazette, specify in this behalf,
Is exempt to the lowest of the following amount:
2.However, in place of exemption of sec 10 (10c) assess can claim relief under Section 89 for the amount of VRS received by him due to which his total income is assessed at a rate higher than that at which it would otherwise have been assessed. Relief under section can be calculated as per following steps.
The Computation of relief is as follows: –
Step 1.: – Compute the Tax payable during the previous year in which the compensation is received.
Step 2.: – Compute the rate of tax on total income during the previous year in which the compensation is received.
Step 3.: – Compute the tax on total income by adding the 1/3rd of VRS amount received in each of the three preceding previous years immediately preceding the year in which the VRS is received.
Step 4.: – Compute the rate of tax for each preceding three years separately.
Step 5.: – Compute the average of rate of tax for three preceding years.
Step 6.: – Amount of relief = VRS amount X [Step 2 – Step 5]
KEYNOTE: –
- As per Income Tax Act,1961 both the sections are mutually exclusive, i.e. an assessee can claim either exemption u/s 10(10C) or relief u/s 89 whichever is most beneficial to him. And if an exemption or relief is claimed in any assessment year, it cannot be claimed again in any other assessment year.
- The relief and the exemption in relation to VRS can be claimed once in a life time.
See lessCan I claim deduction of rent paid in both section 80GG and 10(13a) HRA?
Hi, The answer is a big No. If you are paying rent but not receiving house rent allowance then you are allowed to claim deduction under section 80GG subject to your spouse or children are not owning a house property in the place of employment. And, in case you are paying rent and receiving HRA, thenRead more
Hi,
The answer is a big No.
If you are paying rent but not receiving house rent allowance then you are allowed to claim deduction under section 80GG subject to your spouse or children are not owning a house property in the place of employment.
And, in case you are paying rent and receiving HRA, then you can claim a deduction of such HRA as per section 10(13A).
See lessHow can I get exemption of rent paid even though I dont receive HRA?
Hi, If you are paying rent but not receiving HRA from your employer, then still you can take benefit in Income Tax for the amount of Rent paid. You need to satisfy the following conditions: You are self-employed or salaried You have not received HRA at any time during the year for which you are claiRead more
Hi,
If you are paying rent but not receiving HRA from your employer, then still you can take benefit in Income Tax for the amount of Rent paid.
You need to satisfy the following conditions:
The deduction can be claimed under Section 80GG as follows:
If you own any residential property at any place other than the place mentioned above, then you should not claim the benefit of that property as self-occupied. The other property would be deemed to be let out in order to claim the 80GG deduction.
See less