Assessment of different taxpayers involves the practical application of various provisions of the Act in a given situation.
Tax Liability - An individual is liable to pay tax in respect of his own income, and the income of certain other persons by virtue of sections 60 to 65.
How to Compute taxable income -
First, ascertain gross total income, ignoring income exempted under section 10, 10A or 10B or 10BA, etc, if any. Then deduct admissible deductions under sections 80C, 80CCC, 80CCd, 80D, 80DD, 80DDB, 80E, 80G , 80GG, 80GGA, 80GGC, 80-IA, 80-IB, 80-IC, 80-ID, 80-IE, 80JJA, 80QQB, 80RRB, and 80U. For ready reference of different deductions available to individuals under the Income-Tax Act.
Special provisions relating to non- residents -
‘Non- resident Indians’ can take the benefit of special provisions under sections 115C to 115 – I :
Who can claim the benefit of special provisions – The benefit of special provisions can be claimed by non – resident Indians. The following are “non – resident Indians” for this purpose:
a. citizen of India who is a non – resident ; or
b. a person of Indian origin who is a non – resident .
A person shall be deemed to be of Indian origin if he, or either of his parents or any of his grand- parents, was born in undivided India.
Incomes which are qualified for special treatment – The provisions under sections 115C to 115-I are applicable only in respect of the following incomes derived by a non- resident Indian:
a. investment income derived from a “foreign exchange assets”, not being dividends covered under section 115-O;
b. long- term capital gains on sale or transfer of “foreign exchange assets”.
Foreign exchange asset – It means those “specified assets” which the assessee has acquired or purchased with, or subscribed to in, convertible foreign exchange.
The following are “specified assets” for this purpose:
a. Shares in an Indian company (public or private);
b. debentures issued by an Indian company which is not a private company;
c. deposits with an Indian company which is not a private company (for instance , deposit with Indian public limited companies , banks,etc.);
d. any security of the Central Government; and
e. such other assets as the Central Government may specify in this behalf by notification in the official Gazette.
How to calculate investment income – In computing the investment income of a non- resident Indian, no deduction in respect of any expenditure or allowance shall be allowed under any provision of the Act. Moreover, no deduction under section 80C to 80U shall be allowed in respect of investment income of non- resident Indians.
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