Resident Benefits allowable
A resident person is chargeable to tax in respect of his global income. If Income-tax Act enlarges the scope of taxable income of a resident person, it extends certain benefits and privileges to a resident person as well, inter-alia, an option to compute income on presumptive basis, deductions under Chapter VI-A, exemption from TDS and so forth. This document gives a brief introduction to those provisions which provide certain benefits to a resident person, including an Indian Company.
Benefits available to Resident Persons and Indian Companies (Public Sector Companies, Banking Companies and Insurance Companies have not been considered in this article).
[AY 2015-16]
S.No.
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Section
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Particulars
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Limit of exemption
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Available to
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A.
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Business or Profession
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1.
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35D
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Amortization of certain preliminary expenses (Subject to maximum of 5% of cost of the project or capital employed, whichever is more) Incurred before commencement of business or after commencement of business in connection with extension of an undertaking (Subject to certainconditions and nature ofexpenditures)
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Qualifying preliminary expenditure is allowable in each of 5 successive years beginning with the previous year in which the extension of undertaking is completed or the new unit commences production or operation.
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Indian Company
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2.
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35D
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Amortization of certain preliminary expenses (Subject to maximum of 5% of cost of the project) Incurred before commencement of business or after commencement of business in connection with extension of an undertaking (Subject to certain conditions and nature of expenditures)
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Qualifying preliminary expenditure is allowable in each of 5 successive years beginning with the previous year in which the extension of undertaking is completed or the new unit commences production or operation.
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Resident Non-corporate assessees
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3.
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35DD
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Amortization of expenditure incurred in connection with amalgamation or demerger on or after 01.04.1999
(Subject to certain conditions)
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Allowed as deduction in 5 successive years in equal installments, beginning with the previous year in which such amalgamation or demerger takes place.
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Indian Company
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4.
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35E
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Deduction for qualifying expenditure incurred wholly and exclusively on prospecting, for certain minerals or development of a mine, etc. (Subject to certain conditions)
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Qualifying expenditure is allowed as deduction in equal installments over a period of 10 years.
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Indian Company and Resident Non-Corporate Assessees engaged in prospecting for minerals, etc.
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5.
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44AD
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Computation of income from eligible business on presumptive basis under Section 44AD (Subject to certain conditions).
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Presumptive income of eligible business shall be 8 % of gross receipt or total turnover (if turnover of eligible business does not exceed Rs. 1 crore).
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Resident Individual, Resident HUF or Resident Partnership Firm (Other than LLP)
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B.
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Capital Gain
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1.
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47(iv)
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Transfer of capital asset by a parent company to its wholly owned Indian subsidiary company shall not be treated as ‘transfer’.
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No capital gains shall arise in the hands of holding company due to transfer of capital assets.
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Transferee should be an Indian Company
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2.
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47(v)
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Transfer of capital asset by a wholly owned subsidiary company to its Indian holding company shall not be treated as ‘transfer’ (Subject to certain conditions).
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No capital gains shall arise in the hands of subsidiary company due to transfer of capital assets.
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Transferee should be an Indian Company
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3.
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47(vi)
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Transfer of capital asset in a scheme of amalgamation by amalgamating company to Indian amalgamated company shall not be treated as ‘transfer’.
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No capital gains shall arise in the hands of amalgamating company due to transfer of capital assets.
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Transferee should be an Indian Company
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4.
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47(vib)
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Transfer of capital asset in a scheme of merger by demerged company to Indian resulting company shall not be treated as ‘transfer’ (Subject to certain conditions).
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No capital gains shall arise in the hands of demerged company due to transfer of capital assets.
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Transferee should be an Indian Company
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5.
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47(vii)
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Allotment of shares of Indian amalgamated company to the shareholders in the amalgamating company in lieu of their amalgamation shall not be treated as ‘transfer’ (Subject to certain conditions).
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No capital gains shall arise in the hands of shareholders in the amalgamating company due to such amalgamation.
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Amalgamated company should be an Indian Company
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6.
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111A
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Adjustment of unutilized portion of maximum exemption limit from short-term capital arising from transfer of equity shares or units of equity oriented funds or unit of a business trust and tax onbalance short-term capital gains at 15%
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If total income as reduced by such short-term capital gains is below maximum exemption limit (short-fall), such short-term capital gains shall be reduced by such short-fall and tax on the balance of such capital gains shall be computed at 15%.
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Resident Individual and HUF
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7.
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112
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Adjustment of unutilized portion of maximum exemption limit from long-term capital and tax on balance long-term capital gains at 20%
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If total income as reduced by such long-term capital gains is below maximum exemption limit (short-fall), such long-term capital gains shall be reduced by such short-fall and tax on balance of such capital gains shall be computed at 20%.
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Resident Individual and HUF
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8.
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115ACA
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Concessional rate of tax on long-term capital gains arising from transfer of GDRSs issue by an Indian company, engaged in specified knowledge based industry or service, to its employees in accordance with notified ESOP Scheme. Provided such GDRs are purchased in foreign currency (Subject to certain conditions)
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Such long-term capital gains shall be taxable at 10% without allowing benefits of first and second proviso to Section 48
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Resident Individual – Employee
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C.
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Other Sources
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1.
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115ACA
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Concessional rate of tax on dividends on GDRSs issue by an Indian company, engaged in specified knowledge based industry or service, to its employees in accordance with notified ESOP Scheme. Provided such GDRs are purchased in foreign currency (Subject to certain conditions)
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Such dividend shall be taxable at 10%
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Resident Individual – Employee
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2.
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115BBD
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Concessional rate of tax on dividends declared, distributed or paid by a specified foreign company. The benefits shall be allowed only if Indian company holds 26% or more in nominal value of equity share capital of a foreign company
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15% of such dividend
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Indian Company
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D.
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Deductions
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1.
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80C
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Only resident individuals can Investment in Public provident Fund scheme, 1968 either in his own name or in the name of minor of whom he is a guardian.
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Maximum deposit in PPF Rs. 1,50,000
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Resident Individual
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2.
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80C
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Investment in Senior Citizens Savings Scheme 2004 for 5 year
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Max. Deposit Rs. 15,00,000
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Resident individual who is 60 years of age or by a resident individual who is 55-60 years of age and retired under VRS
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3.
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80CCG
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Amount invested by specified resident individuals, whose gross total income does not exceed Rs. 12 lakhs, in listed shares or listed units in accordance with notified scheme for a lock-in period of 3 years (Subject to certain conditions).
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Deduction of 50 % of total investment subject to maximum of Rs. 25,000 in 3 consecutive assessment years, beginning with the assessment year relevant to the previous year in which the listed shares or list units of equity oriented funds are first acquired
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Specified Resident Individual (New retail investors)
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4.
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80DD
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Deduction allowed to resident Individual and HUF for:
a) Any expenditure incurred for the medical treatment (including nursing), training and rehabilitation of a dependent, being a person with disability
b) Any amount paid or deposited under an approved scheme framed in this behalf by the LIC or any other insurer or the Administrator or the specified company [as referred to in UTI (Transfer of Undertaking & Repeal) Act, 2002] for the maintenance of a dependent, being a person with disability
(Subject to certain conditions).
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Rs. 50,000 (Rs. 1,00,000 in case ofsevere disability)
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Resident Individual and HUF
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5.
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80DDB
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Expenses actually paid by resident individual and HUF for medical treatment of specified diseases and ailments of:
a) In case of Individual: Assessee himself or wholly dependent spouse, children, parents, brothers and sisters
b) In case of HUF: Any member of the family who is wholly dependent upon the family
(Subject to certain conditions).
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Up to Rs. 40,000 (Rs. 60,000 in case of senior citizen)
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Resident Individual/ HUF
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6.
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80GGB
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Sum contributed to political party or electoral trust is allowed as deduction (Subject to certain conditions)
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100% of amount contributed (excluding contribution in cash) is allowed as deduction
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Indian company
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9.
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80JJAA
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Deduction in respect of additional wages paid to new regular workmen employed in the previous year.
(Subject to certain conditions)
* Additional wages means the wages paid to the new regular workman in excess of 100 workmen employed during the previous year. Provided that in case of an existing factory, the additional wages shall be nil, if the increase in the number of regular workmen employed during the year is less than 10% of existing number of workmen employed in such factory as on the last day of the preceding year.
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Deduction of 30% of additional wages paid to the new regular workmen. Deduction shall be allowed for first 3 Assessment Year including Assessment Year relevant to the previous year in which such employment is provided.
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Indian Company earning profits and gains from manufacturing goods in a factory
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10.
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80QQB
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Royalty income of resident individual – authors of certain specified category of books other than text books
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Least of the following shall be exempt from tax:
a) In case of Lump sum payment – Amount of royalty income subject to maximum of Rs. 3,00,000
b) In other cases – amount of such income subject to maximum of 15% of value of books sold during the previous year.
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Resident Individual Author
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11.
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80RRB
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Royalty in respect of patents registered on or after 01.04.2003 (Subject to certain conditions)
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100% of royalty subject to maximum of Rs. 3,00,000
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Resident Individual
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12.
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80U
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A resident individual who, at any time during the previous year, is certified by the medical authority to be a person with disability [as defined under Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995]
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Rs. 50,000 (Rs. 1,00,000 in case of severe disability)
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Resident Individual
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13.
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80-IA
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Indian Company developing, maintaining and operating any infrastructure facility shall be entitled to claim deduction (Subject to certain conditions).
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100% of profit for 10 consecutive AY falling within a period of 15 AY beginning with the AY in which assessee begins operating and maintaining infrastructure facility.
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Indian Company
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14.
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80-IA
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Indian Company formed before 30-11-2005 with majority equity participation by public sector companies to reconstruct or revive a power generating plant shall be entitled to claim deduction. Provided it begins to generate or transmit or distribute power before 31-03-2011 (Subject to certain conditions).
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100% of profit for 10 consecutive AY falling within a period of 15 AY beginning with the AY in which assessee begins operating and maintaining infrastructure facility.
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Indian Company
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15.
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80-IB
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Indian Company with scientific and industrial research and development as its main object and approved by prescribed authority shall be entitled to claim deductions (Subject to certain conditions).
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a) 100% of profit for 5 years from the AY in which it is approved by prescribed authority (if approved before 01-04-1999)
b) 100% of profit for 10 years from the AY in which it is approved by prescribed authority (if approved after 31-03-2000 but before 01-04-2007)
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Indian Company
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E.
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TDS
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1.
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193
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No TDS from interest paid on debentures issued by a company in which public are substantially interested. Provided interest is paid by account payee cheque to resident individual or HUF
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If amount paid or payable during the financial year does not exceed Rs. 5,000
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Resident individual and HUF
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2.
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193
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No TDS from interest on 8% Saving (Taxable) Bonds 2003 paid to a resident persons
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If amount paid or payable during the financial year does not exceed Rs. 10,000
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Resident persons
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3.
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193
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No TDS from interest on 6.5% Gold Bonds, 1977, or 7% Gold Bonds, 1980
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If a declaration is made that the nominal value of such bonds did not exceed Rs. 10,000 at any time during the previous year
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Resident Individual
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| 3A | 193 | No TDS from interest paid on 4.25% National Defence Bonds, 1972, 4.25% National Defence Loan, 1968, or 4.75% National Defence Loan, 1972 | No TDS from interest | Resident Individual |
| 3B | 193 | No TDS from payment of certain interest |
No TDS from payment of interest on following securities:
(a) National Development Bonds;
(b) 7 Year National Savings Certifications (IV Issue);
(c) Debentures issued by notified persons;
(d) Any security of Central or State Government;
(e) Any listed security issued by a company and held in DEMAT form;
(f) Securities beneficially owned by LIC, GIC, specified companies or any other insurer.
| Resident Persons |
4.
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194
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No TDS from dividend paid by account payee cheque to resident persons.
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If amount paid or payable during the financial year does not exceed Rs. 2,500
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Resident person
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5.
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194A
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No TDS from interest other than on securities paid by a banking company or co-operative bank on time deposits
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If amount paid or payable during the financial year does not exceed Rs. 10,000
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Resident persons
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6.
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194A
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No TDS from interest on deposit with a post office under Senior Citizens Saving Scheme Rules, 2004
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If amount paid or payable during the financial year does not exceed Rs. 10,000
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Resident persons
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7.
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194A
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No TDS from interest other than on securities (in any other case)
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If amount paid or payable during the financial year does not exceed Rs. 5,000
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Resident persons
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8.
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194A
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No TDS from interest on compensation awarded by Motor Accident Claims Tribunal
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If amount paid or payable during the financial year does not exceed Rs. 50,000
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Resident persons
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9.
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194A
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No TDS from interest on zero coupon bonds issued by Infrastructure Capital Co., Infrastructure Capital Fund, Public Sector Co. or Scheduled bank
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If Zero Coupon Bonds are issued on or after 01-06-2005 by specified entities
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Resident persons
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10.
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194A
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Interest paid under any provision of Income-tax Act, 1961 or Wealth-tax Act, 1957
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Entire interest is paid under the prescribed Acts
|
Resident persons
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11.
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194A
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Interest paid in respect of deposits under any notified scheme or Post Office deposits, Kisan Vikas Patra, NSC VIII Issue, Indira Vikas Patra, etc.
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If interest is earned on the prescribed deposits
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Resident persons
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12.
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194C
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No TDS from sum paid or payable to contractor (Subject to certain conditions)
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a) If sum paid or payable to a contractor in a single payment does not exceed Rs. 30,000
b) If sum paid or payable to contractor in aggregate does not exceed Rs. 75,000 during the financial year
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Resident Contractor
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13.
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194C
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No TDS from sum paid or payable to transport operator who is in the business of plying, hiring or leasing goods carriage
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If transport operator furnishes his PAN
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Resident transport operator
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16.
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194C
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No TDS from payment made by an Individual or HUF to a resident contractor for exclusively personal purposes
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If payment is made for personal purpose of Individual or HUF
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Resident Contractor
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17.
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197A(1)
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No deduction of tax shall be made under Sections 194 and 194EE, if resident individual furnishes to the payer a written declaration in prescribed form that tax on his estimated total income of the previous year will be nil.
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No tax shall be deducted from specified payments if the sum paid does not exceed the maximum amount which is not chargeable to tax
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Resident Individual
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18.
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197A(1C)
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No deduction of tax shall be made under Sections 193, 194, 194A,194EE and 194K if resident senior citizen furnishes to the payer a written declaration in prescribed form that tax on his estimated total income of the previous year will benil.
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No tax shall be deducted from specified payments
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Resident Individual – Senior Citizen and Super Senior Citizen
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19.
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194LA
|
No TDS from payment of compensation on compulsory acquisition of immovable property (other than Agricultural Land)
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If amount paid or payable during the financial year does not exceed Rs. 2 Lakhs
|
Resident persons
|
20.
|
194D
|
No TDS from insurance commission paid or payable during the financial year
|
If amount paid or payable during the financial year does not exceed Rs. 20,000
|
Resident persons
|
| 20A. | 194DA | No TDS from sum payable under a life insurance policy (including bonus) to a resident person (w.e.f. 01-10-2014) | If amount paid or payable during financial year does not exceed Rs. 1 Lakh |
Resident persons
|
21.
|
194H
|
No TDS from payment of commission or brokerage
|
If amount paid or payable during the financial year does not exceed Rs. 5,000. Further no tax to be deducted from commission payable by BSNL/MTNL to their PCO Franchisees.
|
Resident persons
|
22.
|
194J
|
No TDS from payment of professional fees, technical fees, royalty and directors’ remuneration
|
If amount paid or payable during the financial year does not exceed Rs. 30,000
|
Resident persons
|
23.
|
194-I
|
No TDS from payment of rent in respect of land &building, furniture or fittings or plant and machinery
|
If amount paid or payable during the financial year does not exceed Rs. 1,80,000
|
Resident persons
|
24.
|
194-IA
|
No TDS from payment of consideration for purchase of an immovable property (other than agriculture land)
|
If amount paid or payable during the financial year does not exceed Rs. 50 Lakhs
|
Resident Transferor
|
25.
|
201
|
Payer shall not be deemed to be an assessee-in-default on failure to deduct or collect taxes from payment made to a resident payee (Subject to certain conditions).
|
If payee includes such income in its return of income, pays taxes thereon and submits a certificate to the payer in Form 26A/27BA to this effect from a Chartered Accountant.
|
Payment to resident persons
|
F.
|
Advance Tax
| |||
1.
|
207(2)
|
Exemption from payment of advance tax by a resident senior citizen or resident super senior citizen not having any income from business or profession
(who is at least 60 Years of age at any time during the previous year)
|
Not liable to pay advance tax
|
Resident Senior Citizen and Resident Super Senior Citizen
|
2.
|
44AD
|
Exemption from payment of advance tax by a taxpayer who has opted for presumptive taxation scheme under Section 44AD
|
Not liable to pay advance tax
|
Resident Individual, Resident HUF or Resident Partnership Firm (Other than LLP)
|
G.
|
Exemptions
| |||
1.
|
-
|
Maximum amount of income which is not chargeable to Income-tax in the hands of a resident senior citizen
(who is at least 60 Years of age at any time during the previous year but less than 80 Years of age on the last day of the previous year)
|
Rs. 3,00,000
|
Resident Senior Citizen
|
2.
|
-
|
Maximum amount of income which is not chargeable to Income-tax in the hands of a resident super senior citizen
(who is at least 80 Years of age at any time during the previous year)
|
Rs. 5,00,000
|
Resident Super Senior Citizen
|
3.
|
87A
|
Rebate to resident individual whose total income does not exceed Rs. 5,00,000
|
Rebate shall be limited to tax payable or Rs. 2,000, whichever is less
|
Resident Individual
|
H.
|
Tonnage Taxation
| |||
1.
|
115V to115VZC
(Tonnage Taxation)
|
Qualifying Company may opt for computation of income from business of operating qualifying ship on presumptive basis.
* A company is a ‘Qualifying Company’ if:
a) It is an Indian Company;
b) The place of effective management of it is in India;
c) It owns at least one qualifying ship; and
d) The main object of it is to carry on business of operating ships.
|
The income from operating ships shall be computed on basis of tonnage of each qualifying ship.
|
Indian Company
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