April 26, 2023

Introduction Are you looking to understand about A Guide to Understanding Special Provisions for Computing Profits and Gains of Retail Business under Section 44AF of Income Tax Act 1961 ?  This detailed article will tell you all about A Guide to Understanding Special Provisions for Computing Profits and Gains of Retail Business under Section 44AF of Income Tax Act 1961. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. The Indian Income Tax Act, 1961, is a comprehensive legislation that governs the taxation of various sources of income in India. One of the key provisions of the Income Tax Act is the Special Provisions for Computing Profits and Gains of Retail Business under Section 44AF. This provision is applicable to small retail businesses with a turnover of up to Rs. 2 crores. In this blog, we will explore the Special Provisions for Computing Profits and Gains of Retail Business under Section 44AF of the Income Tax Act, 1961. We will look at the eligibility criteria, provisions, and frequently asked questions related to this section. Eligibility Criteria for Section 44AF To be eligible for the Special Provisions for Computing Profits and Gains of Retail Business under Section 44AF, a taxpayer must fulfill the following criteria: The taxpayer must be a resident individual, Hindu Undivided Family (HUF), or partnership firm. The taxpayer must be engaged in the business of retail sale of goods. The taxpayer’s total turnover for the previous year must not exceed Rs. 2 crores. If a taxpayer fulfills all the above criteria, they can avail the benefits of Section 44AF. Provisions of Section 44AF Section 44AF provides for a simplified method of calculating taxable income for small retail businesses. Under this section, taxpayers are not required to maintain detailed books of accounts. Instead, they are required to declare a presumptive income based on a percentage of their total turnover. The presumptive income for retail businesses is fixed at 6% of the total turnover for the previous year. However, in case the payment received by the taxpayer is made through digital modes of payment, the presumptive income is reduced to 5% of the total turnover. It is important to note that taxpayers who opt for the presumptive taxation scheme under Section 44AF cannot claim any deductions or expenses against their presumptive income. However, they are still allowed to claim deductions for any investments made under Section 80C to 80U of the Income Tax Act. FAQs on Section 44AF Q. What is the meaning of presumptive taxation? Presumptive taxation is a method of calculating taxable income based on a percentage of the total turnover of a business. This method is used to simplify the tax compliance process for small businesses. Q. Can a taxpayer opt-out of the presumptive taxation scheme under Section 44AF? Yes, a taxpayer can opt-out of the presumptive taxation scheme under Section 44AF. However, once a taxpayer opts out of this scheme, they will be required to maintain detailed books of accounts and get them audited as per the provisions of the Income Tax Act. Q. Is Section 44AF applicable to all types of retail businesses? No, Section 44AF is applicable only to small retail businesses with a turnover of up to Rs. 2 crores. Retail businesses with a turnover exceeding Rs. 2 crores will have to maintain detailed books of accounts and get them audited as per the provisions of the Income Tax Act. Q. Can a taxpayer claim deductions for investments made under Section 80C to 80U of the Income Tax Act? Yes, taxpayers who opt for the presumptive taxation scheme under Section 44AF can still claim deductions for investments made under Section 80C to 80U of the Income Tax Act. This means that even though they are not allowed to claim deductions or expenses against their presumptive income, they can still reduce their tax liability by investing in tax-saving instruments. Q. What is the penalty for not maintaining detailed books of accounts under Section 44AF? If a taxpayer fails to maintain detailed books of accounts as required under Section 44AF, they may be liable to pay a penalty of Rs. 5,000. However, if the taxpayer is able to show a reasonable cause for not maintaining books of accounts, the penalty may be waived off. Q. Is it mandatory for taxpayers to make digital payments to avail the benefit of reduced presumptive income? No, it is not mandatory for taxpayers to make digital payments to avail the benefit of reduced presumptive income. However, if the payment received by the taxpayer is made through digital modes of payment, the presumptive income is reduced to 5% of the total turnover, which can result in lower tax liability. Conclusion The Special Provisions for Computing Profits and Gains of Retail Business under Section 44AF of the Income Tax Act, 1961, provides a simplified method of calculating taxable income for small retail businesses with a turnover of up to Rs. 2 crores. Under this section, taxpayers are not required to maintain detailed books of accounts and can declare a presumptive income based on a percentage of their total turnover. However, it is important to note that taxpayers who opt for the presumptive taxation scheme under Section 44AF cannot claim any deductions or expenses against their presumptive income. Also, if a taxpayer opts out of the presumptive taxation scheme, they will be required to maintain detailed books of accounts and get them audited as per the provisions of the Income Tax Act. In conclusion, the Special Provisions for Computing Profits and Gains of Retail Business under Section 44AF is a useful provision for small retail businesses to simplify their tax compliance process. However, taxpayers must ensure that they fulfill all the eligibility criteria and understand the provisions of this section to avoid any penalties or legal issues.   Section 44AF, of

Introduction Are you looking to understand about All You Need to Know About Section 44A of the Income Tax Act 1961: Special Provisions for Deduction in the Case of Trade, Professional or Similar Association?  This detailed article will tell you all about All You Need to Know About Section 44A of the Income Tax Act 1961: Special Provisions for Deduction in the Case of Trade, Professional or Similar Association. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. The Income Tax Act 1961 is a comprehensive statute that regulates the taxation of income in India. It prescribes the provisions for determining the income, assessing the tax liability, and collecting taxes. Section 44A of the Income Tax Act 1961 provides for special provisions for deduction in the case of trade, professional, or similar association. This section aims to provide relief to such associations from the burden of excessive taxation. In this blog, we will discuss the provisions of section 44A of the Income Tax Act 1961 in detail. Provisions of Section 44A of the Income Tax Act 1961 Section 44A of the Income Tax Act 1961 provides for the following deductions in the case of trade, professional, or similar associations: 1. Deduction for Income Derived from Services Rendered to Members A trade, professional, or similar association can claim a deduction for the income derived from services rendered to its members. The deduction is allowed if the following conditions are satisfied: The services are rendered to the members of the association. The income is derived from the services rendered to the members. The income is included in the total income of the association. The deduction is allowed to the extent of the income derived from the services rendered to the members. 2. Deduction for Income Derived from Specific Services Rendered to Non-Members A trade, professional, or similar association can claim a deduction for the income derived from specific services rendered to non-members. The deduction is allowed if the following conditions are satisfied: The services are of a specific nature. The services are rendered to non-members. The income is derived from the services rendered to non-members. The income is included in the total income of the association. The deduction is allowed to the extent of the income derived from the specific services rendered to non-members. 3. Deduction for Interest, Dividend, or Royalty Income A trade, professional, or similar association can claim a deduction for the interest, dividend, or royalty income earned by it. The deduction is allowed if the following conditions are satisfied: The interest, dividend, or royalty income is included in the total income of the association. The income is derived from the investments made by the association. The investments are made out of the funds of the association. The deduction is allowed to the extent of the interest, dividend, or royalty income earned by the association. 4. Deduction for Income from House Property A trade, professional, or similar association can claim a deduction for the income from house property owned by it. The deduction is allowed if the following conditions are satisfied: The house property is owned by the association. The property is used for the purposes of the association. The income is included in the total income of the association. The deduction is allowed to the extent of the income from the house property owned by the association. FAQs What is the meaning of a trade, professional, or similar association? A trade, professional, or similar association refers to any association of persons engaged in a specific trade, profession, or similar activity. For example, a bar association, a chartered accountant association, or a trade union. What is the purpose of section 44A of the Income Tax Act 1961? The purpose of section 44A of the Income Tax Act 1961 is to provide relief to trade, professional, or similar associations from the burden of excessive taxation. The section provides for special provisions for deduction in the case of such associations. Can a trade, professional, or similar association claim a deduction for any income? No, a trade, professional, or similar association can claim a deduction only for the income specified in section 44A of the Income Tax Act 1961. How is the deduction calculated? The deduction is calculated to the extent of the income specified in section 44A of the Income Tax Act 1961. Can a trade, professional, or similar association claim a deduction for expenses incurred in earning the income? Yes, a trade, professional, or similar association can claim a deduction for expenses incurred in earning the income specified in section 44A of the Income Tax Act 1961. Is there any limit on the amount of deduction that can be claimed by a trade, professional, or similar association? No, there is no limit on the amount of deduction that can be claimed by a trade, professional, or similar association. However, the deduction is allowed only to the extent of the income specified in section 44A of the Income Tax Act 1961. Conclusion In conclusion, section 44A of the Income Tax Act 1961 provides for special provisions for deduction in the case of trade, professional, or similar associations. The section aims to provide relief to such associations from the burden of excessive taxation. The deductions allowed under section 44A of the Income Tax Act 1961 are for income derived from services rendered to members, income derived from specific services rendered to non-members, interest, dividend, or royalty income, and income from house property. The deduction is allowed to the extent of the income specified in section 44A of the Income Tax Act 1961. Trade, professional, or similar associations can claim a deduction for expenses incurred in earning the income specified in section 44A of the Income Tax Act 1961. Section 44A, of Income Tax Act, 1961 Section 44A, of Income Tax Act, 1961

Section 44B, of Income Tax Act, 1961 Section 44B, of Income Tax Act, 1961 states that (1) Notwithstanding anything to the contrary contained in sections 28 to 43A, in the case of an assessee, being a non-resident, engaged in the business of operation of ships, a sum equal to seven and a half per cent of the aggregate of the amounts specified in sub-section (2) shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”. (2) The amounts referred to in sub-section (1) shall be the following, namely :— (i)  the amount paid or payable (whether in or out of India) to the assessee or to any person on his behalf on account of the carriage of passengers, livestock, mail or goods shipped at any port in India; and (ii)  the amount received or deemed to be received in India by or on behalf of the assessee on account of the carriage of passengers, livestock, mail or goods shipped at any port outside India. Explanation.—For the purposes of this sub-section, the amount referred to in clause (i) or clause (ii) shall include the amount paid or payable or received or deemed to be received, as the case may be, by way of demurrage charges or handling charges or any other amount of similar nature.

Section 44, of Income Tax Act, 1961 Section 44, of Income Tax Act, 1961 states that Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head “Interest on securities”, “Income from house property”, “Capital gains” or “Income from other sources”, or in section 199 or in sections 28 to 43B, the profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or by a co-operative society, shall be computed in accordance with the rules contained in the First Schedule.

Introduction Are you looking to understand about Understanding the Importance of THE SECOND SCHEDULE Sections 222 and 276 of Income Tax Act 1961 ?  This detailed article will tell you all about Understanding the Importance of THE SECOND SCHEDULE Sections 222 and 276 of Income Tax Act 1961. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. When it comes to taxation, India has one of the most complex systems in the world. The Income Tax Act 1961 is the primary legislation governing the taxation system in India. The act provides comprehensive provisions for the computation, assessment, and collection of income tax in India. It is a vital tool in the hands of the government for generating revenue and ensuring social welfare. THE SECOND SCHEDULE Sections 222 and 276 of the Income Tax Act 1961 play a crucial role in the tax collection process in India. Understanding THE SECOND SCHEDULE Sections 222 and 276 of Income Tax Act 1961 To understand the importance of these sections, let’s first look at what they entail. What is THE SECOND SCHEDULE of Income Tax Act 1961? THE SECOND SCHEDULE of the Income Tax Act 1961 provides the procedural rules for the collection of tax. It specifies the different modes of tax collection, the time limit for making payments, and the penalties for non-payment or delayed payment. What is Section 222 of Income Tax Act 1961? Section 222 of the Income Tax Act 1961 deals with the tax arrears. It specifies the recovery process of any outstanding tax due from the taxpayer. According to this section, the tax authorities can recover the tax arrears by following a specific process. What is Section 276 of Income Tax Act 1961? Section 276 of the Income Tax Act 1961 deals with the non-payment or delayed payment of tax. It specifies the penalties for non-payment or delayed payment of tax. According to this section, if the taxpayer fails to pay the tax on time or intentionally evades paying tax, they can face severe consequences. Importance of THE SECOND SCHEDULE Sections 222 and 276 of Income Tax Act 1961 Now that we have understood the meaning of these sections let’s see their significance in the Indian Income Tax system. Efficient Tax Collection Process THE SECOND SCHEDULE Sections 222 and 276 of the Income Tax Act 1961 provide a robust tax collection process. Section 222 specifies the recovery process of any outstanding tax dues, and Section 276 ensures that taxpayers pay their taxes on time. These sections act as deterrents against tax evasion and ensure the efficient collection of revenue. Protection of Taxpayer’s Rights THE SECOND SCHEDULE Sections 222 and 276 of the Income Tax Act 1961 also provide protection to taxpayers’ rights. Section 222 specifies the process for recovery of tax arrears, ensuring that the taxpayer’s interests are safeguarded. Section 276 also ensures that taxpayers are not penalized unfairly and provides an opportunity to appeal against the penalty imposed. Compliance with International Standards THE SECOND SCHEDULE Sections 222 and 276 of the Income Tax Act 1961 are also essential for compliance with international standards. As India aims to become a global economic powerhouse, it is crucial to align with international best practices. These sections ensure that India’s tax collection process is transparent, efficient, and fair. FAQs Can I appeal against the penalty imposed under Section 276 of the Income Tax Act 1961? Yes, you can appeal against the penalty imposed under Section 276 of the Income Tax Act 1961. What is the process of tax recovery under Section 222 of the Income Tax Act 1961? The tax authorities can recover the outstanding tax dues by following a specific process. This process includes sending a notice to the taxpayer asking for payment, attaching the taxpayer’s assets, and even auctioning the assets if necessary. Is it mandatory to pay taxes on time under Section 276 of the Income Tax Act 1961? Yes, it is mandatory to pay taxes on time under Section 276 of the Income Tax Act 1961. If you fail to pay the tax on time or intentionally evade paying tax, you can face severe penalties. What happens if I do not pay my tax arrears under Section 222 of the Income Tax Act 1961? If you do not pay your tax arrears under Section 222 of the Income Tax Act 1961, the tax authorities can take legal action against you, including attaching your assets and even imprisonment in some cases. Conclusion In conclusion, THE SECOND SCHEDULE Sections 222 and 276 of the Income Tax Act 1961 are essential provisions for the efficient functioning of the Indian tax system. These sections ensure that the tax collection process is transparent, efficient, and fair, and protect the taxpayer’s rights. Compliance with these provisions is mandatory, and any non-compliance can result in severe penalties. Therefore, it is crucial for taxpayers and tax authorities alike to understand and comply with the provisions of THE SECOND SCHEDULE Sections 222 and 276 of the Income Tax Act 1961.   THE SECOND SCHEDULE Sections 222 and 276, of Income Tax Act, 1961 THE SECOND SCHEDULE Sections 222 and 276, of Income Tax Act, 1961 states that Definitions. 1. In this Schedule, unless the context otherwise requires,— (a)  “certificate”, except in rules 7, 44, 65 and sub-rule (2) of rule 66, means the certificate drawn up by the Tax Recovery Officer under section 222 in respect of any assessee referred to in that section; (b)  “defaulter” means the assessee mentioned in the certificate; (c)  “execution”, in relation to a certificate, means recovery of arrears in pursuance of the certificate; (d)  “movable property” includes growing crops; (e)  “officer” means a person authorised to make an attachment or sale under this Schedule; (f)  “rule” means a rule contained in this Schedule; and (g)  “share in a corporation” includes stock, debenture-stock, debentures

Introduction Are you looking to understand about Understanding THE THIRD SCHEDULE Section 226(5) of Income Tax Act 1961: A Comprehensive Guide ?  This detailed article will tell you all about Understanding THE THIRD SCHEDULE Section 226(5) of Income Tax Act 1961: A Comprehensive Guide. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. Taxation is an essential aspect of any country’s economy. In India, the Income Tax Act 1961 governs the taxation system, and THE THIRD SCHEDULE section 226(5) is a crucial provision of the Act. This section is related to the deduction of tax at the source, and it has far-reaching implications for both taxpayers and employers. In this blog, we’ll provide a comprehensive guide to help you understand THE THIRD SCHEDULE section 226(5) of the Income Tax Act 1961. We’ll cover what it means, its significance, how it works, and answer some frequently asked questions. Understanding THE THIRD SCHEDULE Section 226(5) of Income Tax Act 1961 THE THIRD SCHEDULE section 226(5) of the Income Tax Act 1961 deals with the deduction of tax at the source. It states that when an employer makes any payment of salary or wages to an employee, they must deduct the appropriate amount of tax at the source and deposit it with the government. The section also provides guidelines on how to calculate the appropriate amount of tax to be deducted. The employer needs to consider the employee’s income, deductions, and exemptions before deducting tax. The rate of tax deduction depends on the employee’s income and the applicable tax slab. The main objective of this section is to ensure that taxpayers pay their taxes in a timely and efficient manner. By deducting the tax at the source, the government ensures that taxpayers don’t default on their tax payments. This provision also helps taxpayers to plan their taxes better as they can estimate their tax liability for the year based on their income. How does THE THIRD SCHEDULE section 226(5) work? To understand how THE THIRD SCHEDULE section 226(5) works, let’s consider an example. Suppose you’re an employee earning a salary of Rs. 50,000 per month. Your employer deducts TDS (tax deducted at source) of Rs. 5,000 per month and deposits it with the government. At the end of the financial year, when you file your income tax return, you’ll get credit for the TDS deducted by your employer. The TDS amount is adjusted against your total tax liability for the year. If the TDS amount is higher than your tax liability, you’ll get a refund from the government. If the TDS amount is lower than your tax liability, you’ll have to pay the remaining tax amount to the government. It’s important to note that THE THIRD SCHEDULE section 226(5) applies to all employees, including salaried individuals, freelancers, and consultants. Employers are required to deduct TDS on all payments made to their employees, including salary, bonus, commission, and other allowances. Frequently Asked Questions Q: What happens if the employer fails to deduct TDS under THE THIRD SCHEDULE section 226(5)? A: If the employer fails to deduct TDS, they’ll be liable to pay interest and penalty. The employee can also be penalized for non-payment of taxes. Q: Can an employee claim a refund if the employer deducts excess TDS? A: Yes, the employee can claim a refund of the excess TDS by filing their income tax return. Q: Is it mandatory for all employers to deduct TDS under THE THIRD SCHEDULE section 226(5) of the Income Tax Act 1961? A: Yes, it’s mandatory for all employers to deduct TDS under THE THIRD SCHEDULE section 226(5) of the Income Tax Act 1961. Failure to do so can result in penalties and legal action. Q: How can an employee ensure that the correct amount of TDS is deducted by the employer? A: An employee can ensure that the correct amount of TDS is deducted by providing accurate information about their income, deductions, and exemptions to their employer. They can also check their Form 26AS to verify the TDS amount deducted by the employer. Conclusion In conclusion, THE THIRD SCHEDULE section 226(5) of the Income Tax Act 1961 is a critical provision that ensures timely tax payments by taxpayers in India. It’s mandatory for all employers to deduct TDS from their employees’ salaries and deposit it with the government. This provision helps taxpayers to plan their taxes better and avoid defaulting on their tax payments. Employers must ensure that they deduct the correct amount of TDS based on their employees’ income, deductions, and exemptions. Failure to do so can result in penalties and legal action. As a taxpayer, it’s essential to understand your tax liability and file your income tax return in a timely and accurate manner. We hope that this comprehensive guide has helped you understand THE THIRD SCHEDULE section 226(5) of the Income Tax Act 1961. If you have any further questions or need assistance with your taxes, consult a tax professional or visit the Income Tax Department website. THE THIRD SCHEDULE section 226(5), of Income Tax Act, 1961 THE THIRD SCHEDULE section 226(5), of Income Tax Act, 1961 states that Distraint and sale. Where any distraint and sale of movable property are to be effected by any Assessing Officer or Tax Recovery Officer authorised for the purpose, such distraint and sale shall be made, as far as may be, in the same manner as attachment and sale of any movable property attachable by actual seizure, and the provisions of the Second Schedule relating to attachment and sale shall, so far as may be, apply in respect of such distraint and sale.

THE FIRST SCHEDULE Section 44, of Income Tax Act, 1961 THE FIRST SCHEDULE Section 44, of Income Tax Act, 1961 states that Profits of life insurance business to be computed separately. 1. In the case of a person who carries on or at any time in the previous year carried on life insurance business, the profits and gains of such person from that business shall be computed separately from his profits and gains from any other business. Computation of profits of life insurance business. 2. The profits and gains of life insurance business shall be taken to be the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938 (4 of 1938), in respect of the last inter-valuation period ending before the commencement of the assessment year, so as to exclude from it any surplus or deficit included therein which was made in any earlier inter-valuation period. Deductions. 3. [Omitted by the Finance Act, 1976, w.e.f. 1-4-1977. Earlier, the rule was first amended by the Finance Act, 1966, w.e.f. 1-4-1966 and by the Finance Act, 1965, w.e.f. 1-4-1965.] Adjustment of tax paid by deduction at source. 4. Where for any year an assessment of the profits of life insurance business is made in accordance with the annual average of a surplus disclosed by a valuation for an inter-valuation period exceeding twelve months, then, in computing the income-tax payable for that year, credit shall not be given in accordance with section 199 for the income-tax paid in the previous year, but credit shall be given for the annual average of the income-tax paid by deduction at source from interest on securities or otherwise during such period. B.—Other insurance business Computation of profits and gains of other insurance business. 5. The profits and gains of any business of insurance other than life insurance shall be taken to be the profit before tax and appropriations as disclosed in the profit and loss account prepared in accordance with the provisions of the Insurance Act, 1938 (4 of 1938) or the rules made thereunder or the provisions of the Insurance Regulatory and Development Authority Act, 1999 (4 of 1999) or the regulations made thereunder, subject to the following adjustments:— (a) subject to the other provisions of this rule, any expenditure or allowance including any amount debited to the profit and loss account either by way of a provision for any tax, dividend, reserve or any other provision as may be prescribed which is not admissible under the provisions of sections 30 to 43B in computing the profits and gains of a business shall be added back; (b)  (i) any gain or loss on realisation of investments shall be added or deducted, as the case may be, if such gain or loss is not credited or debited to the profit and loss account; (ii) any provision for diminution in the value of investment debited to the profit and loss account, shall be added back; 62(c) such amount carried over to a reserve for unexpired risks as may be prescribed in this behalf shall be allowed as a deduction: 63[Provided that any sum payable by the assessee under section 43B, which is added back in accordance with clause (a) of this rule, shall be allowed as deduction in computing the income under the said rule in the previous year in which such sum is actually paid.] C.—Other provisions Profits and gains of non-resident person. 6. (1) The profits and gains of the branches in India of a person not resident in India and carrying on any business of insurance, may, in the absence of more reliable data, be deemed to be that proportion of the world income of such person which corresponds to the proportion which his premium income derived from India bears to his total premium income. (2) For the purposes of this rule, the world income in relation to life insurance business of a person not resident in India shall be computed in the manner laid down in this Act for the computation of the profits and gains of life insurance business carried on in India. Interpretation. 7. (1) For the purposes of these rules—  (i)  [***] (ii)  “investments” includes securities, stocks and shares; (iii) [***] (iv) “life insurance business” means life insurance business as defined in clause (11) of section 2 of the Insurance Act, 1938 (4 of 1938) ; (v)  “rule” means a rule contained in this Schedule. (2) References in these rules to the Insurance Act, 1938 (4 of 1938), or any provision thereof, shall, in relation to the Life Insurance Corporation of India, be construed as references to that Act or provision as read with section 43 of the Life Insurance Corporation Act, 1956 (31 of 1956).

Introduction Are you looking to understand about Understanding the Implications of THE FOURTH SCHEDULE sections 2(38), 10(12), 10(25), 36(1)(iv), 6687(1)(d), 111, 192(4) of Income Tax Act 1961 ?  This detailed article will tell you all about Understanding the Implications of THE FOURTH SCHEDULE sections 2(38), 10(12), 10(25), 36(1)(iv), 6687(1)(d), 111, 192(4) of Income Tax Act 1961. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. Paying taxes is an important aspect of being a responsible citizen. However, the tax laws can be complex and confusing for many individuals. The Income Tax Act of 1961 is a comprehensive tax law in India that governs the taxation of income earned by individuals and businesses in the country. It consists of various sections, schedules, and rules that taxpayers need to comply with. One such schedule is THE FOURTH SCHEDULE, which contains details of the rates at which income tax is chargeable on the income of individuals, Hindu undivided families, and other entities. In this blog, we will discuss the implications of some of the sections of THE FOURTH SCHEDULE, namely sections 2(38), 10(12), 10(25), 36(1)(iv), 6687(1)(d), 111, and 192(4) of the Income Tax Act 1961. Understanding THE FOURTH SCHEDULE sections 2(38), 10(12), 10(25), 36(1)(iv), 6687(1)(d), 111, 192(4) of Income Tax Act 1961 Section 2(38) This section defines the term “speculative transaction.” According to the Income Tax Act, a speculative transaction is a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is settled otherwise than by the actual delivery or transfer of the commodity or scrip. In other words, a speculative transaction is a transaction in which the buyer or seller does not intend to take delivery of the underlying commodity or scrip. Such transactions are considered to be speculative in nature and are subject to different tax treatment. Section 10(12) This section deals with the tax treatment of leave encashment received by an employee. Leave encashment refers to the amount received by an employee in lieu of unused leave days. According to section 10(12) of the Income Tax Act, the amount received as leave encashment by a government employee is fully exempt from tax. However, for non-government employees, the exemption is limited to the minimum of the following three amounts: The amount actually received as leave encashment 10 months’ average salary The amount calculated as per the provisions of section 89(1) of the Income Tax Act Section 10(25) This section deals with the tax treatment of commuted pension received by an employee. Commuted pension refers to a lump-sum amount received by a retiree in lieu of a portion of their pension. According to section 10(25) of the Income Tax Act, commuted pension received by a government employee is fully exempt from tax. For non-government employees, the exemption is limited to the following: The amount received as commuted pension by the employee One-third of the total amount of pension that the employee is entitled to receive The amount calculated as per the provisions of section 89(1) of the Income Tax Act Section 36(1)(iv) This section deals with the tax treatment of bad debts. According to the Income Tax Act, a bad debt is a debt that has become irrecoverable. Section 36(1)(iv) allows for the deduction of bad debts from the profits and gains of a business or profession. However, in order for a bad debt to be allowed as a deduction, certain conditions must be met. For example, the debt must have been included in the income of the taxpayer in an earlier year, and the taxpayer must have written off the debt as irrecoverable in their books of account. Section 6687(1)(d) This section deals with the tax treatment of income received from a foreign source. According to the Income Tax Act, income received from a foreign source is taxable in India if it is received by a resident or a non-resident who is carrying on business or profession in India. Section 6687(1)(d) requires that income received from a foreign source by a resident or non-resident who is carrying on business or profession in India must be included in their total income for the year and taxed accordingly. Section 111 This section deals with the tax treatment of gains from the transfer of a capital asset. According to the Income Tax Act, gains arising from the transfer of a capital asset are subject to tax. Section 111 specifies that gains from the transfer of a capital asset acquired by the taxpayer before April 1, 1981, can be computed in one of two ways, whichever is more beneficial to the taxpayer: By taking the actual cost of acquisition as the cost of acquisition By taking the fair market value of the asset as on April 1, 1981, as the cost of acquisition Section 192(4) This section deals with the tax treatment of salary paid in arrears or in advance. According to the Income Tax Act, salary paid in arrears or in advance is taxable in the year in which it is received. Section 192(4) provides for the computation of tax in cases where salary is paid in arrears or in advance. The tax liability is calculated as if the salary had been received in the year to which it pertains. However, the taxpayer can claim relief under section 89 of the Income Tax Act if the tax liability is higher due to the payment of salary in arrears or in advance. FAQs Q: What is THE FOURTH SCHEDULE of the Income Tax Act 1961? A: THE FOURTH SCHEDULE contains details of the rates at which income tax is chargeable on the income of individuals, Hindu undivided families, and other entities. Q: What is a speculative transaction? A: A speculative transaction is a transaction in which a contract for the purchase or sale of any commodity,

Introduction Are you looking to understand about How Power to Remove Difficulties Section 298 of Income Tax Act 1961 Can Benefit Taxpayers ?  This detailed article will tell you all about How Power to Remove Difficulties Section 298 of Income Tax Act 1961 Can Benefit Taxpayers. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. The Income Tax Act 1961 is a comprehensive piece of legislation that governs the taxation of income in India. It lays down the rules and regulations for the assessment, collection, and recovery of income tax. However, as with any complex legal framework, there are bound to be difficulties that arise during its implementation. To address these difficulties, the government has been given the power to remove them under section 298 of the Income Tax Act 1961. This section is a powerful tool that can be used to provide relief to taxpayers who may be facing challenges in complying with the provisions of the act. In this blog, we will explore how the power to remove difficulties under section 298 can benefit taxpayers. What is the Power to Remove Difficulties Section 298 of Income Tax Act 1961? Section 298 of the Income Tax Act 1961 empowers the government to make rules for removing any difficulties that arise in the implementation of the act. This power can be exercised by the Central Board of Direct Taxes (CBDT), which is the apex body for the administration of direct taxes in India. The CBDT can issue orders, instructions, and circulars to remove any difficulties that may arise in the implementation of the act. These orders can be issued retrospectively or prospectively and can have the effect of modifying the provisions of the act. How Does Section 298 Benefit Taxpayers? The power to remove difficulties under section 298 can benefit taxpayers in several ways: 1. Provides Relief in Case of Unforeseen Circumstances There may be situations where taxpayers are unable to comply with the provisions of the Income Tax Act 1961 due to unforeseen circumstances. For example, a natural disaster may have destroyed the taxpayer’s records, making it difficult for them to file their tax returns. In such cases, the government can use the power under section 298 to provide relief to the taxpayer. 2. Ensures Consistency in Implementation of the Act The Income Tax Act 1961 is a complex piece of legislation that can be difficult to interpret and implement. The power to remove difficulties under section 298 ensures that there is consistency in the implementation of the act across the country. This can help to reduce confusion and ensure that taxpayers are not subjected to different interpretations of the law in different parts of the country. 3. Facilitates Ease of Doing Business The power to remove difficulties under section 298 can also help to facilitate ease of doing business in India. By providing relief to taxpayers who may be facing challenges in complying with the provisions of the act, the government can create a more business-friendly environment. This can help to attract investment and promote economic growth. FAQs Q1. Can the Power to Remove Difficulties Section 298 be Used Retroactively? Yes, the power to remove difficulties under section 298 can be used retrospectively. This means that the government can issue orders, instructions, and circulars that have the effect of modifying the provisions of the Income Tax Act 1961 with retrospective effect. Q2. Can the Power to Remove Difficulties Section 298 be Used Prospectively? Yes, the power to remove difficulties under section 298 can be used prospectively. This means that the government can issue orders, instructions, and circulars that have the effect of modifying the provisions of the Income Tax Act 1961 with prospective effect. Q3. Can Taxpayers Request Relief Under Section 298? No, taxpayers cannot request relief under section 298 of the Income Tax Act 1961. This power can only be exercised by the government through the CBDT. Q4. Are There Any Limits to the Power to Remove Difficulties Section 298? The power to remove difficulties under section 298 is not unlimited. The government cannot use this power to modify the substantive provisions of the Income Tax Act 1961. The power can only be used to remove difficulties that arise in the implementation of the act. Conclusion Section 298 of the Income Tax Act 1961 is a powerful tool that can be used to provide relief to taxpayers who may be facing challenges in complying with the provisions of the act. The power to remove difficulties can be used retrospectively or prospectively and can have the effect of modifying the provisions of the act. By using this power, the government can ensure consistency in the implementation of the act, provide relief in case of unforeseen circumstances, and facilitate ease of doing business in India. It is important to note that the power to remove difficulties under section 298 is not unlimited. The government cannot use this power to modify the substantive provisions of the Income Tax Act 1961. Taxpayers cannot request relief under this section and the power can only be exercised by the government through the CBDT. In conclusion, the power to remove difficulties under section 298 of the Income Tax Act 1961 can be a valuable tool for both taxpayers and the government. By using this power judiciously, the government can create a more business-friendly environment, promote economic growth, and ensure that taxpayers are not unduly burdened by the complexities of the act. Section 298, of Income Tax Act, 1961 Section 298, of Income Tax Act, 1961 states that (1) If any difficulty arises in giving effect to the provisions of this Act the Central Government may, by general or special order, do anything not inconsistent with such provisions which appears to it to be necessary or expedient for the purpose of removing the difficulty.