Computation of total income & tax liability individual, Partnership Firm, Companies etc

Computation of Total
Income & Tax Liability
of Individual.
CA Abhishek Bansal (CA, M.com, NET-JRF, DISA)
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Computation Of Total Income & Tax Liability of an Individual
[Assessment of Individual]
Step 1: Compute the income of an individual under 5 heads of income on the basis of his
residential status.
Step 2: Income of any other person, if includible u/s 60 to 64, will be included under
respective heads.
Step 3: Set off of the losses if permissible, while aggregating the income under 5 heads of
income.
Step 4: Carry forward and set off of the losses of past years, if permissible, from such income.
Step 5: The income computed under Steps 1 to 4 is known as Gross Total Income from
which deductions under sections 80C to 80U (Chapter VIA) will be allowed. However, no
deduction under these sections will be allowed from short-term capital gain covered under
section 111A, any long-term capital gain and winning of lotteries etc., though these incomes
are part of gross total income.
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Step 6: The balance income after allowing the deductions is known as Total income which will
be rounded off to the nearest Rs. 10.
Step 7: Compute tax on such Total Income at the prescribed rates of tax.
Step 8: Allow rebate of maximum Rs. 12,500/- under section 87A in case of resident individual
having total income upto Rs. 5,00,000 for FY 19-20.
Step 9: Add surcharge @ 10% on total income exceeding Rs. 50,00,000 and upto Rs. 1 Crore
and 15% of such income tax in case of an individual having a total income exceeding Rs. 1
Crore.
Step 10: Add Health & Education Cess @4% on the tax (including surcharge if applicable).
Step 11: Deduct the TDS, advance tax paid for the relevant assessment year and double
taxation relief under section 90, 90A or 91. The balance is the net tax payable which will be
rounded of nearest 10 rupees u/s 288B of IT act and must be paid as self-assessment tax
before submitting the return of income.
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Income From 5 Heads of Income
• Income From Salaries
• Income From House Property
• Income From PGBP (Profit & Gains from Business &
Profession)
• Income From Capital Gain
• Income From Other Sources
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For Residential Individual aged below 60 Years
Surcharge on Income of Individual
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For Senior Citizens aged above 60 Years (at any time during the previous year)
but below 80 years
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For Residential Individual aged above 80 Years
(at any time during the previous year)
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Health & Education Cess
(Earlier Education Cess & Secondary Higher Education Cess)
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Total Income
(Rs)
Tax payable
before cess (Rs)
Rebate u/s 87A
(Rs)
Tax Payable + 4% Cess (Rs)
2,70,000 1,000 1,000 0
3,60,000 3,000 3,000 0
4,90,000 12,000 12,000 0
12,00,000 1,72,500 0 1,79,400
Rebate u/s 87A FY 2019-20 (AY 2020-21)
Rebate u/s 87A FY 2018-19 (AY 2019-20)
Total Income
(Rs)
Tax payable
before cess (Rs)
Rebate u/s 87A
(Rs)
Tax Payable + 4% Cess (Rs)
2,65,000 750 750 0
2,70,000 1,000 1,000 0
3,00,000 2,500 2,500 0
3,50,000 5,000 2,500 2,500+100=2600
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Nature of Income Tax Rate
Royalty received from Government or an Indian concern in
pursuance of an agreement made with the Indian concern after
March 31, 1961, but before April 1, 1976, or fees for rendering
technical services in pursuance of an agreement made after
February 29, 1964 but before April 1, 1976 and where such
agreement has, in either case, been approved by the Central
Government
50%
Any other income 40%
Foreign Company
Assessment Year 2020-21 and Assessment Year 2021-22
Add:
(a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of
2% of such tax, where total income exceeds 1 Crore rupees but not exceeding 10 Crore
rupees and at the rate of 5% of such tax, where total income exceeds 10 Crore rupees.
(b) Health and Education Cess : The amount of income-tax and the applicable surcharge,
shall be further increased by health and education cess calculated at the rate of 4% of such
income-tax and surcharge. CA Abhishek Bansal (CA, M.com, NET-JRF, DISA)
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bhishek
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Partnership Firm
For the Assessment Year 2020-21 & 2021-22, a partnership firm (including LLP) is taxable at 30%.
Add:
(a) Surcharge : The amount of income-tax shall be increased by a surcharge at the rate of 12% of
such tax, where total income exceeds 1 Crore rupees. However, the surcharge shall be subject to
marginal relief (where income exceeds 1 Crore rupees, the total amount payable as income-tax and
surcharge shall not exceed total amount payable as income-tax on total income of 1 Crore rupees by
more than the amount of income that exceeds 1 Crore rupees).
(b) Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be
further increased by health and education cess calculated at the rate of 4% of such income-tax and
surcharge
Local Authority
For the Assessment Year 2020-21 & 2021-22, a local authority is taxable at 30%.
Add:
(a) Surcharge : The amount of income-tax shall be increased by a surcharge at the rate of 12% of
such tax, where total income exceeds 1 Crore rupees. However, the surcharge shall be subject to
marginal relief (where income exceeds 1 Crore rupees, the total amount payable as income-tax and
surcharge shall not exceed total amount payable as income-tax on total income of 1 Crore rupees by
more than the amount of income that exceeds 1 Crore rupees).
(b) Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be
further increased by health and education cess calculated at the rate of 4% of such income-tax and
surcharge. CA Abhishek Bansal (CA, M.com, NET-JRF, DISA)
C
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bhishek
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ansal

Computation of total income & tax liability individual, Partnership Firm, Companies etc

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