UNIT 1: INCOME TAX CONCEPTS, TYPES OF TAXES, CANONS OF TAXATION

Date: 24 Oct 2024

1. Income Tax Definition

●​ Concept: Tax levied by the government on income earned by individuals,

businesses, and other entities.
●​ Purpose: Primary source of government revenue for funding public services and
infrastructure.
●​ Governing Law: Income Tax Act, 1961 (India).
●​ Financial Year (FY): 1st April to 31st March (tax calculation period).
●​ Tax Calculation: Based on income after deducting exemptions & deductions
under the Income Tax Act.
●​ Income Categories:
○​ Salary income
○​ Business/profession income
○​ Capital gains
○​ Income from other sources

2. Income Tax Rates & Compliance

●​ Rates: Vary based on income level; revised periodically by the government.

●​ Tax Slabs: Adjusted for fairness and equity.
●​ Compliance:
○​ Filing income tax returns by due date.
○​ Penalties: For non-compliance (e.g., late filing, evasion).

TYPES OF TAXES

1. Direct Taxes

●​ Definition: Levied directly on income/wealth of individuals/businesses; burden

borne by the earner.
●​ Nature: Progressive (based on ability to pay; higher income = higher tax %).
 ●​ Examples:
○​ Income Tax: On individual/business income.
○​ Wealth Tax: On net wealth (real estate, jewelry, cars). Abolished in 2015.
○​ Capital Gains Tax: On profit from sale of capital assets (stocks, bonds, real
estate).
○​ Corporate Tax: On company/corporation income.

2. Indirect Taxes

●​ Definition: Levied on consumption of goods/services; burden shifted to

consumers via higher prices.
●​ Nature: Regressive (same rate for all income levels; burdens lower-income
earners more).
●​ Examples:
○​ Goods and Services Tax (GST): Most common indirect tax.
○​ Excise Duty: On production/manufacture (e.g., cigarettes, alcohol).
○​ Customs Duty: On import/export of goods.
○​ Sales Tax: On intra-state sale of goods.

Comparison Table: Direct vs. Indirect Taxes

Tax Type Components

Direct Taxes Income Tax, Corporate Tax, Wealth Tax,

Securities Transaction Tax (STT), Capital

Gains Tax

Indirect Taxes GST, Customs Duty, Excise Duty, Service Tax,

Value Added Tax (VAT)

CANONS OF TAXATION

Principles by Adam Smith (Wealth of Nations, 1776)

 1.​ Canon of Equality:
○​ Taxes proportional to ability to pay (higher income/wealth = higher tax %).
○​ Ensures fair burden distribution and progressive taxation.
○​ Challenges: Difficult to achieve due to factors like family responsibilities,
health issues, tax evasion.
2.​ Canon of Certainty:
○​ Tax amount, payment time, and manner must be clear and predictable.
○​ Importance: Reduces confusion, non-compliance, and administrative
costs.
3.​ Canon of Convenience:
○​ Taxes collected at convenient time/place with simple procedures.
○​ Importance: Encourages compliance and reduces administrative burden.
4.​ Canon of Economy:
○​ Tax administration should be cost-effective; minimize economic impact on
taxpayers.
○​ Importance: Maximizes revenue, promotes economic growth, and avoids
discouraging compliance.
5.​ Canon of Flexibility:
○​ Tax system adaptable to economic/social changes (e.g., new
technologies, crises).
○​ Importance: Enables government to respond to emergencies (e.g., natural
disasters).

DIRECT INCOME TAX: NEED, FEATURES & BASIS OF CHARGE

Date: 11 May 2023

1. Need for Direct Taxes

●​ Essential revenue source for public services/infrastructure.

●​ Ensures fairness via "ability to pay" principle.
●​ Funds rising government expenditures.

2. Features of Direct Taxes

●​ Direct Relationship: Tax liability linked directly to taxpayer’s income/wealth.

●​ Progressive Taxation: Tax rate increases with income/wealth level.
 ●​ Payment: Paid directly to government (self-assessment or by tax authorities).
●​ Assessment: Based on Income Tax Act, 1961.
●​ Deductions/Exemptions: For expenses (medical, education, charity).

3. Basis of Charge

●​ Income: Salary, business income, rent, capital gains.

●​ Wealth: Property, investments, jewelry (net wealth).
●​ Residential Status: Resident/Non-resident (impacts tax liability).
●​ Tax Rates: Higher for higher income/wealth.

INCOME TAX ACT, 1961: BASIC CONCEPTS

Date: 11 May 2023

Key Definitions

●​ Income: Salaries, profits, capital gains, rent, interest, dividends.

●​ Assessment Year (AY): Year following FY in which income is earned (e.g., FY
2021-22 → AY 2022-23).
●​ Residential Status:
○​ Resident: Stays ≥182 days in FY or ≥60 days in FY + 365 days in preceding
4 FYs.
○​ Non-Resident (NR): Fails both conditions above.
○​ Resident but Not Ordinarily Resident (RNOR):
■​ Non-resident in 9 of 10 preceding FYs, or
■​ Stays ≤729 days in preceding 7 FYs.

Tax Implications by Residential Status

Status Taxable Income Tax Rate

Resident Global income (India + abroad) Progressive

slabs
Non-Resident Only income earned in India 30% (most

cases)

RNOR India income + foreign income received in 30% (most

India cases)

Other Concepts

●​ Tax Deductions: For medical/education expenses, charity.

●​ Tax Slabs: Progressive rates based on income.
●​ Advance Tax: For estimated tax liability > ₹10,000 (paid in installments).
●​ Tax Refunds: If tax paid > liability.
●​ Penalties: For non-filing, late payment, false declarations.
●​ Tax Audit: Mandatory for businesses/professionals above turnover threshold (by
Chartered Accountant).

SCOPE OF TOTAL INCOME & HEADS OF INCOME

Scope of Total Income

●​ Total taxable income earned in a FY (all sources).

●​ Includes:
1.​ Global income for residents.
2.​ Non-cash benefits (e.g., rent-free accommodation, company car).
●​ Categories:
1.​ Income from Salaries
2.​ Income from House Property
3.​ Income from Business/Profession
4.​ Capital Gains
5.​ Income from Other Sources (interest, dividends).
●​ Deductions: Provident Fund, PPF, Life Insurance, NPS.
●​ Exemptions: Agricultural income, long-term capital gains.
Heads of Income

1.​ Income from Salaries: Wages, bonus, pension, perks.

2.​ Income from House Property: Rent, property transfer income.
3.​ Profits/Gains from Business/Profession: Trade, commerce, services.
4.​ Capital Gains: Profit from sale of assets (property, stocks).
5.​ Income from Other Sources: Interest, dividends, royalties.

EXEMPT INCOMES (Non-Taxable)

●​ Agricultural Income: From Indian agricultural land (exempt but disclosed if >
₹5,000).
●​ Interest on Tax-Free Bonds: Government-issued bonds.
●​ Dividends from Domestic Companies: Exempt for recipients (tax paid by
company).
●​ Long-Term Capital Gains on Listed Securities: If held >1 year.
●​ Gifts: From relatives/marriage/inheritance.
●​ Leave Travel Allowance (LTA): For holiday travel (conditions apply).
●​ Gratuity: On retirement (up to limit).
●​ Scholarships: For education.
●​ Provident Fund: Employer contributions (up to limit).
●​ Life Insurance Proceeds: Maturity/death benefits.

AGRICULTURAL INCOME & TAXABILITY

Date: 24 Oct 2024

Definition

●​ Income from land in India used for agriculture (crops, rent, farm buildings).

Taxability Rules

●​ General Rule: Exempt from tax (to support farmers).

●​ Exceptions:
 1.​ Income > ₹5,000: Must file return and disclose.
2.​ Foreign Agricultural Income:
■​ Earned outside India by Indian residents → Taxable.
■​ From land outside India → Taxable.
3.​ Companies/Entities: Agricultural income → Taxable.

Net Agricultural Income Calculation

●​ Gross Income – Allowed Deductions:

○​ Agriculture expenses (seeds, fertilizers, labor).
○​ Rent for leased land.
○​ Interest on agricultural loans.
○​ Depreciation on farm machinery.

KEY TABLES & SUMMARY

Residential Status Criteria

Status Conditions

Resident ≥182 days in FY or ≥60 days in FY + 365 days

in last 4 FYs.

RNOR Non-resident for 9 of 10 preceding FYs or ≤729

days in last 7 FYs.

Non-Resident Fails both Resident criteria.

Taxability of Agricultural Income

Scenario Taxability in India

Agriculture in India Exempt

(Individuals/HUF)

Income > ₹5,000 Exempt but

disclosed

Foreign agriculture (by residents) Taxable

Agriculture by companies Taxable

UNIT 2: SALARY INCOME

1. Definition of Salary

●​ Salary: Payment received by an employee from an employer for services

rendered.
●​ Legal Framework: Governed by the Payment of Wages Act, 1936 and Code on
Wages, 2019.

2. Components of Salary

Component Description Taxability

Basic Salary Fixed core compensation paid Fully taxable.

regularly (monthly/annually).

Dearness Allowance Allowance to offset inflation; Fully taxable.

(DA) calculated as a % of basic salary.

House Rent Covers rental expenses; varies Partially exempt (conditions

Allowance (HRA) by salary level and city. apply).

Conveyance Reimburses travel costs Exempt up to ₹9,600/year (as

Allowance between residence and per example).

workplace.

Medical Allowance Covers medical expenses Fully taxable unless

(amount varies by employer exempted.

policy).
Special Allowances Discretionary allowances (e.g., Varies by type.

food, entertainment).

3. Conditions of Chargeability

●​ Residential Status: Determines tax liability based on days spent in India.

●​ Income Threshold: Minimum income level for tax liability (revised periodically).
●​ Source of Income: Salary earned in India is taxable irrespective of residential
status.
●​ Exemptions/Deductions: Reduce taxable income (e.g., HRA, LTA, Section 80C).
●​ Compliance: Accurate income reporting in tax returns is mandatory.

4. Perquisites (Non-Monetary Benefits)

●​ Taxable based on nature/value. Examples:

○​ Rent-free/concessional accommodation.
○​ Company vehicles/club memberships.
○​ Interest-free loans, ESOPs, subsidized meals, gift vouchers.

5. Deductions & Exemptions

Type Description Limit/Condition

Standard Deduction Flat deduction for salaried ₹50,000 (as per example).

individuals/pensioners.

Section 80C Investments in PF, PPF, NSC, ₹1.5 lakh/year.

ELSS, life insurance premiums.

Home Loan Interest Interest on self-occupied ₹2 lakh/year.

(Sec 24b) property.

Medical Insurance Premiums for health insurance. Varies by age.

(Sec 80D)

HRA Exemption Exempt portion of HRA based Least of: 50% salary

on rent paid, salary, and city. (metro)/40% (non-metro),

actual HRA, or rent paid - 10%

salary.

LTA Exemption Exemption for travel expenses Subject to conditions.

during leave (Sec 10(5)).

Gratuity Exemption Tax-free on Subject to limits.

retirement/resignation/death

(as per Payment of Gratuity

Act).

6. Computation of Taxable Salary Income

1.​ Gross Salary: Sum of basic salary + allowances + perquisites + bonuses.

2.​ Exempt Allowances: Subtract exempt portions (e.g., HRA, conveyance, medical).
3.​ Taxable Salary: Gross Salary – Exempt Allowances.
4.​ Add Taxable Perquisites: Include value of non-exempt benefits.
5.​ Apply Standard Deduction: Deduct ₹50,000.
6.​ Deductions (Sec 80C, 80D, etc.): Subtract eligible amounts (within limits).
7.​ Net Taxable Income: Taxable Salary – Total Deductions.
8.​ Apply Tax Slabs: Calculate tax based on income slabs.
9.​ Rebates/Credits: Subtract applicable rebates (e.g., Sec 87A).

Example Calculation (Pages 8-12):

Component Amount (₹)

Basic Salary 500,000

DA 50,000

HRA 60,000

Conveyance Allowance 15,000

Medical Allowance 10,000

Gross Salary 635,000

Exemptions:

HRA 36,000

Conveyance 9,600

Medical 10,000

Taxable Salary 579,400

Deductions:

Standard Deduction 50,000

Section 80C 150,000

Section 80D 25,000

Total Deductions 225,000

Net Taxable Income 354,400

Tax Liability 60,880

(Slabs: 10% on first ₹5L; 20% on

balance)

INCOME FROM HOUSE PROPERTY

1. Basis of Charge (Page 20)

●​ Arises from ownership of property (actual/deemed rental income).

●​ Key Elements:
○​ Ownership: Taxable to legal owner (individual/HUF/company).
○​ Property Type: Residential/commercial buildings + appurtenant land.
○​ Accrual/Receipt: Income taxed when due or received (whichever earlier).
○​ Deemed Rental Income: Applicable if self-occupied/vacant.
○​ Annual Value: Higher of actual rent or fair market rent.

2. Determinants of Annual Value (Pages 22-24)

1.​ Actual Rent Received/Receivable.

2.​ Municipal Valuation (for local tax purposes).
3.​ Fair Rent (market rent of similar property).
4.​ Standard Rent (if regulated by Rent Control Act).
5.​ Unrealized Rent (rent default/vacancy).
6.​ Self-Occupation: Deemed rental value used.

3. Computation of Taxable Income (Pages 27-29)

1.​ Gross Annual Value (GAV): Higher of actual rent or fair market value.
○​ Self-occupied: GAV = Nil.
2.​ Net Annual Value (NAV): GAV – Municipal Taxes Paid.
 3.​ Standard Deduction: 30% of NAV (for repairs/maintenance).
4.​ Interest on Home Loan:
○​ Self-occupied: Deduction capped at ₹2 lakh/year.
○​ Let-out: No upper limit.
5.​ Income/Loss: NAV – Standard Deduction – Interest.
6.​ Set-off Loss: Loss can be adjusted against other income heads; balance carried
forward 8 years (only against house property income).

4. Deductions & Exemptions (Pages 25-26)

●​ Standard Deduction: 30% of NAV.

●​ Municipal Taxes: Deducted from GAV.
●​ Home Loan Interest:
○​ Self-occupied: ₹2 lakh/year.
○​ Let-out: Full interest deductible.
●​ Pre-construction Interest: Amortized over 5 years post-construction.
●​ Co-ownership: Deductions split by ownership share.
●​ Self-occupied Property: Taxable income = Nil (but deductions allowed).

Example Calculation (Pages 30-32):

Step Calculation Amount (₹)

Gross Annual Value (GAV) Actual Rent Received 3,00,000

Deduct Municipal Taxes 20,000 20,000

Net Annual Value (NAV) GAV – Municipal 2,80,000

Taxes

Standard Deduction (30% 30% × 2,80,000 84,000

NAV)

Deduct Home Loan Interest 1,50,000 1,50,000

Income from House Property NAV – Deductions 1,46,000

5. Special Cases

●​ NRIs: Rental income taxable in India; TDS applicable.

●​ Joint Home Loans: Co-owners claim deductions proportionate to ownership.
●​ Loss from Let-out Property: Fully adjustable against other income.

6. Compliance

●​ File ITR with property income details.

●​ Maintain records: Rent agreements, municipal tax receipts, loan statements.
●​ Note: Tax laws change; verify latest provisions via Income Tax Act, 1961 or a
professional.
UNIT 3 :

1. Business Income

Meaning & Key Features

●​ Definition: Profits/gains from business activities (trade, profession, commerce)

by individuals, partnerships, or companies.
●​ Scope: Manufacturing, trading, services, consultancy, professional practice.
●​ Profit Motive: Primary objective is income generation.
●​ Regularity & Continuity: Ongoing activities (not sporadic).
●​ Control & Management: Taxpayer must own assets, bear risks, and make
decisions.
●​ Separate Entity: Business is distinct from the owner (even for sole
proprietorships).
●​ Taxation: One of the 5 heads of income under the Income Tax Act, 1961.

2. Methods of Accounting

Method Key Features Applicability

Cash Basis Income/expenses recorded on Small businesses with turnover

actual receipt/payment. Ignores below specified limits.

credit transactions.

Accrual Income/expenses recognized when Mandatory for most businesses in

Basis earned/incurred (regardless of India.

cash flow).

Hybrid Modified cash basis or percentage Construction, real estate.

Methods completion (industry-specific).

3. Deductions & Disallowances

Permissible Deductions

●​ Business Expenses: Rent, salaries, depreciation, repairs, marketing, insurance.

●​ Depreciation: Based on asset type and prescribed rates.
●​ Interest: On business loans/borrowings.
●​ Bad Debts: Irrecoverable debts (written off as per rules).
●​ Contributions: To PF, superannuation funds.
●​ Donations: To specified charities (subject to limits).

Impermissible Deductions

●​ Personal Expenses: Clothing, travel, entertainment.

●​ Capital Expenditure: Acquisition/improvement of assets (eligible for depreciation
only).
●​ Fines/Penalties: Illegal activities.
●​ Unauthorized Loans: Interest on loans from specified entities.
●​ Specific Disallowances: Club memberships, excessive entertainment expenses.

4. Presumptive Income Scheme

Applicability

●​ Businesses: Turnover ≤ ₹2 crore.

●​ Professionals (doctors, lawyers, etc.): Gross receipts ≤ ₹50 lakh.

Computation

Entity Type Presumptive Rate Taxable Income

Businesses 8% of turnover No expense deductions

allowed.

Professionals 50% of gross Deemed deductions included.

receipts

Conditions

●​ No books of accounts required.

●​ Tax filing in prescribed forms.

5. Computation of Taxable Business Income

Steps

1.​ Gross Receipts: Total sales, fees, commissions.

2.​ Deductible Expenses:
○​ Cost of goods sold (COGS).
○​ Rent, salaries, repairs, depreciation, interest, insurance.
○​ Advertising, travel, bad debts.
3.​ Depreciation Adjustment:
○​ Add back depreciation from previous years.
○​ Subtract current year’s depreciation (as per IT Act rates).
4.​ Other Incomes: Rental income, interest, etc.
5.​ Chapter VI-A Deductions:
○​ Section 80C (PF, PPF, insurance), 80D (medical insurance), 80G
(donations).
6.​ Set-off Losses:
○​ Current year losses adjusted against other heads of income.
○​ Unadjusted losses carried forward (up to 8 years).

6. Capital Gains
Capital Asset Classification

Asset Type Holding Period Examples

Short-Term ≤ 36 months (≤24 for Shares, securities, property.

property)

Long-Term > 36 months (>24 for Real estate, mutual funds,

property) jewelry.

Exemptions

●​ Section 54: Reinvest LTCG from residential property in another house.

●​ Section 54F: Reinvest LTCG (any asset) in residential property.
●​ Section 54EC: Invest LTCG in NHAI/REC bonds (within 6 months).
●​ Section 10(38): LTCG from equity shares (STT paid) fully exempt.

Computation of Taxable Capital Gains

1.​ Full Value of Consideration: Sale price.

2.​ Cost of Acquisition: Purchase price + incidental expenses.
3.​ Cost of Improvement: Post-acquisition enhancements.
4.​ Indexation: Adjust costs for inflation (for long-term assets).​
Formula:​
Indexed Cost = (Cost × CII Year of Transfer) ÷ CII Year of Acquisition
5.​ Capital Gain:​
Gain = Full Value – (Indexed Cost of Acquisition + Indexed Cost of Improvement)

Example Calculation

Component Amount (₹)

Sale Consideration 50,00,000

Less: Indexed Acquisition 20,00,000

Less: Indexed 5,00,000

Improvement

Capital Gain 25,00,000

Less: Section 54 10,00,000

Exemption

Taxable Capital Gain 15,00,000

7. Income from Other Sources

Covered Incomes

●​ Interest (savings accounts, securities).

●​ Dividends (post-abolition of DDT).
●​ Lottery, crossword puzzles, horse races, card games.
●​ Gifts > ₹50,000 (except from relatives/wedding).

Taxation Rules

Income Type Tax Rate TDS Deductions

Dividends Slab rates (for 10% (>₹5,000) Section 80TTA

individuals) (≤₹5,000)

Lottery Winnings 31.2% (including 31.2% None

cess) (>₹10,000)
Interest (Securities) Slab rates As per income Section

80TTA/80TTB

Horse Races/Card Slab rates Varies None

Games

Deductions

●​ Section 80TTA: ₹10,000 (interest on savings accounts).

●​ Section 80TTB: ₹50,000 (for senior citizens on interest income).

8. Key Amendments & Dates

●​ Presumptive Threshold: ₹2 crore (businesses), ₹50 lakh (professionals) [Updated

2024].
●​ Dividend Taxation: DDT abolished (FY 2020-21); now taxable in hands of
shareholders.
●​ Capital Gains Holding Period: 24 months for immovable property (from 36
months).
UNIT 4: Computation of Total Income and Tax Liability

Date: 11 May 2023

1. Computation for Individuals & HUFs

Steps Involved:

1.​ Determine Residential Status

○​ Categories:
■​ Resident
■​ Non-Resident
■​ Resident but Not Ordinarily Resident (based on duration of stay in
India).
2.​ Categorize Income​
Income is classified under 5 heads:
○​ Income from Salary: Employment income, allowances, perquisites.
○​ Income from House Property: Rental income from owned properties.
○​ Income from Business/Profession: Business activities or professional
services.
○​ Capital Gains: Gains from sale of capital assets (property, stocks, mutual
funds).
○​ Income from Other Sources: Interest, dividends, lottery winnings.
3.​ Calculate Gross Total Income
○​ Sum of income from all 5 heads.
4.​ Deductions from Gross Total Income​
Permissible deductions under the Income Tax Act:
○​ Section 80C: Up to ₹1.5 lakh (e.g., life insurance, EPF, PPF, NSC, home loan
principal, ELSS).
○​ Section 80D: Health insurance premiums (limits vary by age).
○​ Section 80G: Donations to charities (percentage-based).
○​ Section 80E: Interest on education loans (max 8 years).
○​ Section 24: Home loan interest (₹2 lakh for self-occupied property).
○​ Others:
■​ Section 80TTA: ₹10,000 on savings account interest.
■​ Section 80GGA: Donations for scientific research/rural
development.
■​ Section 80U: For persons with disabilities.
 5.​ Compute Total Taxable Income
○​ Gross Total Income – Total Deductions.
6.​ Apply Tax Slabs & Rates
○​ Based on total taxable income (slabs vary yearly).
7.​ Calculate Tax Liability
○​ Tax = Applicable rate × Total Taxable Income.
8.​ Add Cess
○​ Health and Education Cess (e.g., 4% of tax liability).
9.​ Claim Rebates & Credits
○​ Section 87A: Rebate up to ₹12,500 if income ≤ ₹5 lakh.
10.​Pay Tax or Claim Refunds
○​ Via advance tax, self-assessment tax, or TDS. Refund if excess tax paid.

2. Income of Other Persons Included in Assessee’s Income

Clubbing of Income (Section 64)

●​ Purpose: Prevents tax avoidance by transferring income to others.

●​ Scenarios:
○​ Spouse’s Income:
■​ Transferred directly/indirectly (excludes separation agreements).
■​ Taxed in transferor’s hands.
○​ Minor Child’s Income (Section 64(1A)):
■​ Included in higher-income parent’s total income.
■​ Applies to income from:
1.​ Manual work/skilled activity.
2.​ Assets transferred by parent.
3.​ Parent’s investments in child’s name.
○​ Transfer of Assets:
■​ Income from assets transferred without adequate consideration (to
avoid tax) is taxed in transferor’s hands.

3. Aggregation of Income & Loss Adjustment

Aggregation of Income
 ●​ Combine income from all 5 heads (after deductions/exemptions).

Set-off of Losses

●​ Inter-head: Loss from one head set off against income from another head (e.g.,
house property loss vs. salary).
●​ Intra-head: Loss set off against income under the same head (e.g., business loss
vs. business income).

Carry Forward of Losses

●​ Unabsorbed losses carried to future years:

Loss Type Max Years

House Property 8

Capital Gains 8

Business 8

(non-speculation)

Speculation Business 4

Owning Racehorses 4
4. Deductions from Gross Total Income (Detailed)

●​ Section 80C:
○​ Eligible Investments: Life insurance, EPF, PPF, NSC, tax-saving FDs, tuition
fees, home loan principal, ELSS, SSY.
○​ Max: ₹1.5 lakh.
●​ Section 80D: Health insurance premiums (limits based on age).
●​ Section 80G: Charitable donations (50%/100% of amount, subject to 10% of
adjusted gross income).
●​ Section 80E: Education loan interest (no upper limit; max 8 years).
●​ Section 80TTA: ₹10,000 on savings account interest.
●​ Section 80U: Fixed deductions for persons with disabilities (₹75,000–₹1.25 lakh).
●​ Section 24: Home loan interest (₹2 lakh for self-occupied property).

5. Rebates and Reliefs

●​ Section 87A Rebate:

○​ Up to ₹12,500 if total income ≤ ₹5 lakh.
●​ Senior Citizens (≥60 years): Higher exemption thresholds.
●​ Very Senior Citizens (≥80 years): Further reduced tax rates.
●​ Medical Treatment (Section 80DDB): Deduction for specified diseases
(self/dependents/HUF).
●​ Rent Paid (Section 80GG): For non-HRA recipients (subject to conditions).
●​ Donations to Political Parties (Section 80GGC): 100% deduction.
●​ Start-ups: Tax holidays for eligible entities.
●​ EOUs & SEZs: Tax incentives for export-oriented units.

Key Takeaways

●​ Residential status dictates tax applicability.

●​ Losses can be adjusted within/across heads or carried forward (time limits
apply).
●​ Deductions (e.g., 80C, 80D) reduce taxable income; rebates (e.g., 87A) reduce tax
liability directly.
●​ Clubbing provisions prevent income-shifting to lower-tax entities.