PHONE NO: 9811854308 Assignment GURU ‘SOLVED ASSIGNMENTS Zz a sisstiesot fsSiannen cuRw | funvw.ignousssi ru.com TUTOR MARKED ASSIGNMENT. COURSE CODE. : BCOC-136 COURSE TITLE INCOME TAX LAW AND PRACTICE ASSIGNMENT CODE BCOC-136/TMA/2024-25, COVERAGE z ALL BLOCKS Maximum Marks: 100 Note: Attempt all the questions. Section-A. (Attempt all the questions. Each question carries 10 marks.) 1, Explain the procedure for E-Filing of Return 2. Explain the provisions relating to House Rent Allowance u/s 10 (BA) 3. Explain the certain incomes for which the tax is paid in the same (10) year 4. Explain the provisions relating to exemption of incomes of ( Charitable and Religious Trust and a Political Party ‘Compute the total Income of Mr. Manas from the following (10) particulars of his income for A.Y. 2023-24. Particular RS. 1D [Salary 180,000 Il) _ | Dividend received from Indian Company | 10,000 TH) _| Share of profits from HUF 12,000 TV) _ | Dividend from a Co-operative Society | 6,000 V)__[ Rental Income from home property 10,000 Section-B (Attempt all the questions. Each question carries 6 marks.) 6. Explain the Provisions of commutation of Pension ws 10(10A) (6) ‘What is ITR-I (SAHAJ)? © ay 8% Write the Provisions relating to Clubbing of minor's income (6) YwG3@ Ei /IGNOUASSIGNMENTGURU \GNMENT GURU_Page- 1 NOU.PHONE NO: 9811854308 Assignment GURU . ‘SOLVED ASSIGNMENTS ian 1919611854308 fsSioumenr cuRu : {wow gross com 9. Explain the Provisions relating to Gratuity u/s 10(10) in case of (6) employees is covered by Payment of Gratuity Act, 1972. 10. After 25 years stay in India, Mr. Ram went to U.S.A. on April (6) 15, 2012 and came back to India on March 12, 2023. Determine his residential status for the assessment year 2023-24. Section-C (Attempt all the questions. Each question carries 5 marks.) 11. Write short note on following: (4x5) a) Partial Integration of Agricultural and Non-Agricultural Income. b) Deduction w/s 80D. ©) “Defective return is no return” d) Standard Deduction w/s 16(i) YwG3@ Ei /IGNOUASSIGNMENTGURU JGNMENT GURU Page-2 NOU.PHONE NO: 9811854308 Assignment GURU igneu 918811854308 5 Sareea ez... a IGNOU ASSIGNMENT GURU 2024-25 _ TUTOR MARKED ASSIGNMENT COURSE CODE : BCOC-136 COURSE TITLE : INCOME TAX LAW AND PRACTICE ‘Die Spo Mats HSS ar pl he Ass Surina ers oths Oven gone AAT Ts SSE RIO TRANS ‘ee propaed yr Tncer Tutor rho fr te help ar kine of ho stn to gan Ko ho nea ae ths Catone gen he [eager gyre ns cach De actrteyof hese core urs one wetmton te sages xp of Pro enous ‘Srl srnan ay UosmnatoCaerperterlones pra isaac sas ghen chasm Seton cmos ms Supp tn pe tunch ter Cn torr cacti Any Gris a Ear sof rye gh cy eee ‘eh tana pep thse samp rsa, Ree cara your aw Tesh eee ys pepe aoa hse fr Up -e otro a ante ee ete ace tr ca dy res rondeaty feat anager p th ‘etait study rats ondaer aces ‘Aus: The process of E-Filing of Income Tax Retum (ITR) is an electronic method of submitting income tax retums online to the Income Tax Department. It is a secure and efficient way to file returns without the need for physical paperwork. Here's a step-by-step procedure to guide through the E-Filing process 1. Prepare Documents Before initiating the filing process, gather all the necessary documents, such as: - PAN (Permanent Account Number): A mandatory identification number forall taxpayers. - Form 16: Issued by employers, it details the salary and taxes deducted at source. - Banik Stiteinients: These help in Verifying income, deduictions, and intetest eamied - Investment Proofs: Documents like insurance premiums, Public Provident Fund (PPE), and other savings that qualify for deductions - Form 26AS: This is a consolidated statement that contains details of taxes deducted at source (TDS), taxes collected at source (TCS), and other advance tax payments. Having these documents handy helps to ensure that the information filled in the return form is accurate. ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU_Page-3PHONE NO: 9811854308 Assignment GURU igneu ‘819811854308 | a ‘SOLVED ASSIGNMENTS ASSowasi cry ets//www.ignouassignmentguru.com 2. Create an Account on the Income Tax Website Visit the official e-filing portal of the Income Tax Department. If you're a first-time user, you need to register on the portal using your PAN, which acts as your user ID. Once registered, log in to your account using your credentials. 3. Select the Appropriate ITR Form Based on your income sources, you will need to select the appropriate ITR form. For instance - TTR-1 (Sahaj): For individuals with income from salary, one house property, and other sources (excluding winnings from the lottery). - ITR-2: For individuals and HUFs not having income from business or profession. - ITR-3: For individuals and HUFs with income from business or profession It's essential to choose the correct form as filing the wrong form may lead to rejection or a defective return notice. 4. Filling the Return Form Affer selecting the correct form, the next step is to fill in the details. You ean either download the form and fill it offline or directly fill it online. Enter details of your income, deductions, and taxes paid, including: - Income from all sources: Salary, Louse property, capital gains, business income, etc - Tax Deductions: Under sections like 80C (investments in PPF, ELSS, ete.), 80D (medical insurance), and others. - Tax Payments: Include details of TDS, advance tax, or self-assessment tax paid. 5. Validate the Form Afier filling in all the necessary details, ensure that the form is validated-In case of any errors, the system will notify you for corrections. Correct arly, ertors, if indicated: 6. Compute Tax Liability ‘The system automatically computes the tax liability or refimnd based on the details provided. Review the computation to ensure that everything is accurate. 7. Pay Additional Tax (if applicable) If any additional tax is due, it can be paid online through the income tax website using the available online banking facilities. Once the payment is made, ensure to enter the challan details in the return form. 8, Submit the TR ‘Once all details are correctly filled and verified, submit the ITR. After submission, an acknowledgment called the ITR-V is generated. ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU_Page-4PHONE NO: 9811854308 Assignment GURU igneu ‘819811854308 | a ‘SOLVED ASSIGNMENTS ASSowasi cry ets//www.ignouassignmentguru.com 9. Verify the ITR ‘The fimal step is to verify the ITR. This can be done either through Electronic Verification Code (EVC) using methods such as Aadhaar OTP, net banking, or by sending a signed physical copy of the ITR-V to the Central Processing Centre (CPC) within 120 days. 10. Refiund (if any) After successfil verification, the Income Tax Department processes the return and any refund (if applicable) is credited to the taxpayer's bank account. Ans: House Rent Allowance (HRA) is a crucial component of salary for employees who receive it as part of their compensation, The provisions relating to HRA are outlined under Section 10(13A) of the Income Tax Act, 1961, which offers tax exemptions on the HRA component of an individual's salary, subject to certain conditions. These provisions are designed to provide tax relief to employees who live in rented accommodation. Here’s a detailed explanation of the provisions regarding HRA. under this section: 1. Eligibility for Exemption To claim an exemption under Section 10(13A), the individual must satisfy the following basie conditions - The individual should be a salaried employee and should receive HRA as pait of their salary. - The employee must reside in rented accommodation, i.e., they should be paying rent to a landlord. - The employee must actually incur expenditure on rent, If the employee lives in a house owned by them, uo exemption under HRA is allowed If these conditions aré not met, the employee cannot claint'an exemption om HRA. 2. Quantum of Exemption The amount of exemption available under Section 10(13A) is not fixed but is calculated based on several factors. The least of the following three amounts is exempt from tax: - Actual HRA received: This is the amount of HRA that the employee receives from the employer during the financial year - Rent paid in excess of 10% of salary: The excess of rent paid over 10% of the salary is considered for exemption. Here, salary includes basic salary, dearness allowance (if it fonms part of retirement benefits), and commission based on a fixed percentage of turnover ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU_Page-DPHONE NO: 9811854308 Assignment GURU igneu ‘819811854308 | a ‘SOLVED ASSIGNMENTS ASSowasi cry ets//www.ignouassignmentguru.com - 50% of salary (if the employee resides in a metro city) or 40% of salary (if the employee resides in a non-metro city): For employees residing in metropolitan cities like Delhi, Mumbai, Kolkata, and Chennai, the exemption limit is 50% of salary. For others residing in non-metro cities, it is restricted to 40% of salary. Among these thtee, the least amount will be considered for exemption. The balance amount, if any, will be included in the employee's taxable income. 3. Meaning of Salary for HRA Calculation For calculating the HRA exemption, the term "salary" is important and is specifically defined for this purpose. It includes: - Basic salary - Dearness Allowance (if it is part of the retirement benefits) - Commission (if it is based on a fixed percentage of tumover achieved by the employee) Other allowances, bonuses, and perquisites are not considered while calculating the salary for HRA purposes, 4, HRA and Self-Occupied Property If the employee resides in a house owned by them, they are not entitled to any HRA. exemption. The rationale behind this is that HRA is intended to provide relief to those employees who incur an expenditure on renting accommodation. Thus, an employee cannot claim HRA exemption for staying in their own house. 5. Submission of Rent Receipts and PAN of Landlord In order to claim HRA exemption, the employee must submit proof of rent paid to the employer. Generally, rent receipts or a rent agreement are required as evidence. If the anmual rent paid exceeds 21,00,000, it is mandatory for the employee to fumish the PAN (Permanent Account Number) of the landlord. This requirement was introduced to curb tax evasion and ensure that rent payments are genuine. If the landlord does not have a PAN, the employee carrobtain a declaration fiom the landlord stating the reason for non-availability of the PAN. However, the employer may still insist on proof of rent payment. 6. HRA Exemption and Deduetion under Section 80GG While Section 10(13A) provides an exemption to employees receiving HRA, individuals who do not receive HRA but still incur rent expenses can claim a deduction under Section 80GG. However, an individual cannot claim both HRA exemption under Section 10(13A) and deduction under Section 80GG for the same financial year. These two provisions are mnutually exclusive ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU_Page-6PHONE NO: 9811854308 Assignment GURU igneu 918811854308 5 Sareea ez... a ‘Ans: In the realm of taxation, certain types of income are subject to taxation in the same year in which they are eared. These are known as incomes that follow the principle of “accrual” or "due basis" taxation, where the liability arises immediately upon earning, irrespective of when the payment is actually received. These incomes are reported in the tax year in which they are earned, rather than when they are paid. 1. Salary Income Salary is one of the most straightforward examples of income that is taxed in the same year it is eared, Employees receive their salary at regular intervals, and taxes are typically deducted at the source (TDS) by the employer before the employee even receives the payment, The law requires the employer to compute the tax liability based on the salary payable and deduct the appropriate amount as tax. This method ensures that salary income is taxed in the same year of receipt. Furthermore, certain components of salary such as bonuses, incentives, and allowances, which are also part of the taxable income, are taxed in the same financial year in which they are credited to the employee, even if the actual payment is delayed. 2. Rental Income Income derived from letting out property, whether residential or commercial, is subject to tax in the same year that the rent becomes due or is received, whichever is earlier: This income is taxed under the head "Income from House Property." Even ia landlord does not receive the rent in a particular year, the rent that becomes due during the financial year is still taxed in that year unless it is considered irrecoverable: Additionally, rental income is often accompanied by deductions for repairs, maintenance, and other relevant expenses, but the taxable portion must be declared in the same year as the rental income is earned or becomes due 3. Business and Professional Income For individuals or entities engaged in business or practicing a profession, the inoome they generate is also taxed in the same year Income from a-business is calculated after accounting for all revenues, expenses, and allowable deductions incurred during the financial year. This income is then taxed in that particular year, regardless of when the payments are actually made or received. The accrual metliod of accounting, coninionly used by businesses, enstues that revenue is recorded when eamed and expenses are recorded when incurred. This method allows the business income to be accurately taxed in the year it is generated, aligning the tax liability with the financial period in which the economic activity took place 4. Capital Gains Capital gains arise from the sale or transfer of capital assets such as property, shares, or bonds. These gains are taxed in the same year in which the transaction takes place. For example, if an individual sells a piece of property in March 2023, any capital gain resulting ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU_Page- 7PHONE NO: 9811854308 Assignment GURU igneu ‘819811854308 | a ‘SOLVED ASSIGNMENTS ASSowasi cry ets//www.ignouassignmentguru.com from that sale will be taxable in the financial year 2022-2023, even if the payment for the property is received later. Capital gains are classified as either short-term or long-term, depending on the holding period of the asset. In either case, the taxable gain must be reported in the year the sale or transfer occurs, ensuring the tax liability aligns with the event that triggers the gain. 5. Dividend Income Dividends distributed by companies to their shareholders are taxed in the same financial year in which they are declared. Once the dividend is declared by a company and credited toa shareholder's account, it is considered taxable income for that financial year, even if the actual payout happens later. In recent years, changes have been made in the way dividends are taxed, with the responsibility now shifted to shareholders rather than the company, but the principle remains that the income is taxed in the same year it becomes due. ‘Anis? In the realm of taxation, certain incomes earned by specific organizations such as charitable and religious trusts, as well as political parties, are granted exemptions under the law. These exemptions are based on the principle that the activities conducted by these entities serve a broader public interest, either by contributing to the social good or supporting democratic processes. However, these exemptions come with detailed provisions that must be carefully understood and adhered to by these organizations, Exemption of Income for Charitable and Religious Trusts Charitable and religious trusts are established to serve social, educational, medical, and religious purposes. To encourage these activities, the income of these trusts is often exempt from tax, provided they meet specific conditions as laid out in the relevant law. 1. Purpose of the Trust: The income eamed by a charitable or religious trust mnst be applied exclusively towards the objectives for which the trust was established. Charitable purposes typically include activities related to relief for the poor, education, medical relief, and any other activities that promote public welfare, Religious trusts, on the other hand, are dedicated to the promotion of religious causes. 2. Registration Requirement: For a trust to claim tax exemption, it must be registered under the applicable laws. Registration is a prerequisite for gaining exemption. Failure to secure proper registration disqualifies the trust from availing of the exemption benefits, even if the trust is genuinely engaged in charitable or religious activities. 3. Application of Income ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU_Page-8PHONE NO: 9811854308 Assignment GURU igneu ‘819811854308 | a ‘SOLVED ASSIGNMENTS ASSowasi cry ets//www.ignouassignmentguru.com One of the key conditions for exemption is the proper application of income. The trust mnust ensure that at least 85% of its total income is applied or used for the specified purposes during the relevant financial year. If the trust is unable to spend this amount for any reason, it is allowed to accumulate the unspent income for a future period, subject to certain rules and filing of the necessary declarations with the authorities. 4, Accumulation of Income: ‘Trusts can accumulate ineome for specific future purposes under certain conditions. The trust mist submit a declaration stating the reasons for such accumulation. The accumulated. income must be used for the specified purpose within a limited time frame, usually five years. If the accumulated income is uot utilized within this time or is used for non- approved purposes, it will become taxable. 5. Investment of Funds: ‘The law also specifies how the funds of a charitable or religious trust should be invested The income or assets of the trust must be invested only in modes prescribed under the law, such as government securities or deposits with scheduled banks. Investments in non- approved forms can lead to the forfeiture of the exemption and the income may become taxable. Exemption of Income for Political Parties Political parties play an important role in the democratic process, and to ensure that they can fimetion effectively, certain exemptions are provided to them in relation to the income they eam. The law contains specific provisions that govern these exemptions. 1. Registration Requirement: Like charitable trusts, political parties must also be registered. Only registered political parties are eligible for tax exemptions on their income, The registration is typically done with the Election Commission and is a mandatory prerequisite for claiming any exemption. 2. Sources of Income: ‘The income of political parties that can be exempt from tax primarily ineludes voluntary contributions, membership fees, and income from property. However, certain conditions apply to these sources of income to qualify for exemption. 3. Maintenance of Records: A political party must maintain proper records and account for all contributions it receives. Donations of over a specified amount must be received through a prescribed mode, such as a bank draft, account transfer, or cheque. Cash douations beyond the set limit may lead to the loss of exemption for that amount. Additionally, parties must file an annual report with detailed information regarding the donations and sources of income 4, Conditions for Exemption: ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU_Page-9PHONE NO: 9811854308 Assignment GURU igneu 918811854308 5 Sareea ez... a ‘The exemption is granted provided that the political party files its retums within the specified due dates. These retums should include detailed records of the income and expenditure, as well as the particulars of donors and their coutributions. Failure to file retums or maintain proper documentation can result in the loss of exemption. 5. Donations from Corporate Entities: Donations made to political parties by corporate entities are also exempt from taxation for the donor company, provided the donation is made through legitimate channels and the amount does not exceed the statutory limit of the company’s profits. This provision encourages transparency in the political finding process. i Ans: To compute the total income of Mr. Manas for the Assessment Year (A.Y,) 2023-: it is important to classify his income into the respective heads as per the provisions of the Income Tax Act, 1961. The income tax laws categorize income under five broad heads: 1, Income from Salary Income from House Property 3. Profits and Gains fiom Business or Profession 4. Capital Gains 5. Income from Other Sources Each type of income listed. for Mr. Manas will be assigned to its appropriate head, and deductions and exemptions, if applicable, will be considered I Salary Income The income under this head includes any income received by an employee from an employer. In this case, Mr. Manas has earned a salary of Rs. 1,80,000 during the financial year 2022-23. No deductions under section 16 (ike standard deduction) are specified in the problem, so we will assume the gross salary to be fully taxable under the head of "Income from Salary.” Income from Salary = Rs. 1,80,000 ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU _Page-1OPHONE NO: 9811854308 Assignment GURU igneu ‘819811854308 | a ‘SOLVED ASSIGNMENTS ASSowasi cry ets//www.ignouassignmentguru.com IL. Dividend Received from an Indian Company Dividend income received from an Indian company is taxable under the head "Income from Other Sources." However, under current tax laws, dividend income up to Rs. 10,000 is exempt from tax under section 10(34). In this case, Mr. Manas has received Rs. 10,000 as dividend from an Indian company, so this amount is exempt from taxation. Taxable Dividend from Indian Company = Rs. 0 III, Share of Profits from HUF (Hindu Undivided Family) The share of profits received by a member of an HUF is exempt from tax under section 10(2) of the Income Tax Act, 1961. This exemption applies because the income of the HUF is taxed in the hands of the HUF, and the share of such income received by a member is not subject to further tax. Therefore, the Rs. 12,000 received by Mr. Manas from the HUF will not be taxable. Taxable Share of Profits from HUF = Rs. 0 IV. Dividend from a Co-operative Society Dividend income received from a co-operative society is taxable under the head "Income from Other Sources." There is no specific exemption available for dividends received from co-operative societies. Therefore, the Rs. 6,000 dividend received from the co-operative society will be fully taxable under this head, Taxable Dividend from Co-operative Society = Rs. 6,000 V. Rental Income from House Property Rental income from house property is taxable under the head "Income from House Property.” The gross annual value of the property, which is the rental income in this case, is Rs. 10,000. Under section 24(b) of the Income Tax Act, a standard deduction of 30% of the gross annual value is allowed on account of repairs and maintenance, irrespective of the actual expenses incurred. The calculation for taxable income from house property is as follows: - Gross Annual Value (GAV) = Rs. 10,000 - Standard Deduction @ 30% of GAV =R3s_3,000 (30% of Rs. 10,000) Therefore, the taxable income from house property is Rs. 7,000 after applying the deduction. Taxable Income from House Property = Rs. 7,000 Computation of Total Income Now that each item of income has been classified and the taxable portions have been determined, the total income of Mr. Manas for the A.Y. 2023-24 can be computed as follows: ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU_Page-1 1PHONE NO: 9811854308 Assignment GURU /ntt://wwwwignouassignmentguru.com ‘SOLVED ASSIGNMENTS ‘819811854308 Amount Particulars (Rs.) Income from Salary 1,80,000 Dividend from Indian oO Company Share of Profits from HUF | 0 Dividend from Co- operative Society 6.000. Income from House Braet 7,000 Total Taxable Income | 1,93,000 ‘Ans: The provisions for the commutation of pension under Section 10(10A) of the Income Tax Act address the tax implications of receiving a commuted pension. This section deals with how the commuted portion of'a pension is treated for tax purposes. 1. Definition and Scope: Commutation of pension refers to the process where a portion of a pension is converted into a lump sum amount. This lump sum payment is received by an individual in lieu of a part of their regular pension. Section 10(10A) specifically covers the tax treatment of this, comnmited pension for government employees and employees of local authorities. 2. Tax Exemption for Government Employees: For government employees, the entire amount received as a commuted pension is exempt from tax under Section 10(10A). This exemption is applicable provided that the pension is commuted in accordance with the rules and regulations governing the pension Sclieme. Government eiuployees, including those who work for centyal or state governments, and employees of local authorities, are fully relieved from tax on the commuted portion of their pension. 3. Tax Exeiption for Non'Governnient Employees: For non-government employees, such as those working in private sector organizations, the tax treatment differs slightly. The exemption available is limited to the commuted value of one-third of the pension. This means that if a non-government employee commmtes a portion of their pension, one-third of the commuted value is exempt from tax, while the remaining two-thirds of the commuted pension is taxable. This is in line with the principle that the commutation of pension for non-government employees does not fully enjoy the same tax benefits as for government employees. 4. Conditions for Exemption: ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU _Page-1 2PHONE NO: 9811854308 Assignment GURU igneu ‘819811854308 | a ‘SOLVED ASSIGNMENTS ASSowasi cry ets//www.ignouassignmentguru.com To avail of the tax exemption, certain conditions must be met: - The commuted pension must be received in accordance with the pension rules established by the employer - The exemption applies only to the commuted portion of the pension and not to any other pension payments received. 5. Documentation and Compliance: Itis important for individuals to maintain proper documentation related to the commutation of their pension. This includes records of the commutation amount, the pension rules under which it was commuted, and any related correspondence with the pension authority. Accurate documentation ensures that the correct amount of exemption is claimed and helps in compliance with tax regulations. 6. Impact on Tax Planning: Understanding the tax implications of pension commutation is crucial for effective tax planning. Government employees benefit from a full tax exemption, while non-government employees need to account for the portion of the commuted pension that remains taxable. This distinction impacts the overall tax liability and should be considered when planning financial and retirement strategies ‘Ans: ITR-1, also known as Sahaj, is a simplified income tax return form designed for individual taxpayers in India. It is specifically intended for those with straightforward financial situations. This form is part of the Indian govemment's efforts to streamline the tax filing process and make it more accessible to a broader range of taxpayers The ITR-1 form is applicable for residents of India who have income from the following sources: salary, pension, or family pension; income from a single house property; and income from other sources such as interest, dividends,-or winnings from lotteries. It is also meant for individuals who do not have business ot professional income, and those who do not have capital gains. In essence; ITR~1 is designed for individuals with relatively simple financial portfolios and without complex financial transactions. To file ITR-1, taxpayers need to report their total. income from the aforementioned sources. This includes details such as salary or pension received, income from house property, and any additional income like interest from bank accounts. The form also requires information about deductions and exemptions claimed under various sections of the Income Tax Act, such as deductions for investments under Section 80C or deductions for medical expenses under Section 80D. By claiming these deductions, taxpayers can reduce their taxable income and thereby lower their tax liability The form also includes sections for reporting tax already paid or dedueted at source. This is relevant for taxpayers whose employers or other entities have already withheld tax on their ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU _Page-1 3PHONE NO: 9811854308 Assignment GURU igneu 918811854308 5 Sareea ez... a behalf. The details provided in this section help in reconciling the tax paid with the tax payable, ensuring that the taxpayer does not end up paying more or less tax than required. One of the key features of ITR-1 is its simplicity. Unlike other forms that might require extensive documentation and detailed financial disclosures, ITR-1 is streamlined to accommodate the basic needs of taxpayers with straightforward income sources. This makes it an ideal choice for many individuals who find the tax filing process cumbersome and time-consuming. Filing ITR-1 is usually done online through the official website of the Income Tax Department. This online facility allows taxpayers to fill out the form, validate it, and submit it electronically, making the process more convenient aud efficient. ‘Ans: In the context of income tax legislation, provisions regarding the aggregation of a minor's income are crucial in determining the tax liability for such income. These provisions aim to ensure that income eamed by minors, which is typically fiom sources like investments or property, is taxed appropriately, and to prevent the use of minor’s income for tax avoidance purposes. Provisions Related to Clubbing of Minor’s Income 1. General Rule for Clubbing: According to tax regulations, if'a minor earns income, it is generally included in the income of their parent or guardian. This rule is intended to prevent the evasion of tax liabilities through the exploitation of a minor’s lower tax rate, The income of a minor, typically derived from investments or assets transferred to them, is thus considered part of the income of the parent who is responsible for the minor’s maintenance. 2. Exceptions and Exemptions: However, there are exceptions to this general rule. For instance, if the minor's income arises from their own skills, talents) of specialized activities (such as eamings from a business or profession), stich income is not chibbed with the parent's income, In this case, the minor is treated as an independent taxpayer, and the income is taxed according to the minor's own tax bracket. 3. Specific Provisions: - Section on Income from Property: When a minor’s income comes from property that is transferred to them withont adequate consideration, this income is typically added to the income of the parent whose income is greater. - Section on Investments: If a minor's income arises from investments made by the parent or guardian, such as interest or dividends from a minor’s bank account or securities, the income is usually taxed as part of the parent’s income. 4. Income from Skill-Based Activities: ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU _Page-1 4PHONE NO: 9811854308 Assignment GURU igneu 918811854308 5 Sareea ez... a It is important to note that if the minor's income results from activities directly related to their personal skills, such as professional sports or artistic performance, these eamings are treated separately. This provision ensures that a minor’s talent is uot overshadowed by their parent’s tax liability and is taxed as per the minor’s own tax rate, 5. Tax Planning and Compliance: Taxpayers should be aware that these provisions are designed to ensure fairness in taxation and to prevent misuse of minor’s income for tax benefits. Proper documentation and adherence to these regulations are essential for compliance. Taxpayers must ensure that they accurately report the income of minors and apply the relevant provisions to avoid potential penalties. 6. Practical Implications: Parents and guardians must keep thorough records of all income sources for minors and determine the appropriate tax treatment based on the nature of the income. Regular updates and awareness of any changes in tax laws are necessary to mainitain compliance and effectively manage tax liabilities related to minor's income. ‘Ans! Under the Income Tax Act, 1961, provisions relating to gratuity are detailed in Section 10(10), which specifically addresses the taxation of gratuity received by employees, The Payment of Gratuity Act, 1972, governs the payment of gratuity to employees in certain establishments. Here’s a comprehensive overview of how gratuity is treated under Section 10(10) when an employee is covered by the Payment of Gratuity Act, 1972. Gratuity Exemption under Section 10(10) Section 10(10) of the Income Tax Act, 1961, provides for the exemption of gratuity received by employees, subject to-certain conditions. This section has two main sub- sections relevant to employees covered under the Payment of Gratuity Act, 1972 1. Section 10(10)(i): This applies to employees covered by the Payment of Gratuity Act, 1972. The key provision here is that any amount of gratuity received by an employee from an employer is exemipt from income tax, up to a specified limit, provided the employee has rendered continuons service of five or inore years. The exempt amount is the least of the following: - The actual amount of gratuity received. - The amount calculated as per the provisions of the Payment of Gratuity Act, 1972. - The prescribed limit which, as of the latest update, is Rs. 20 lakh, This limit is subject to periodic revision by the government. ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU_Page-15PHONE NO: 9811854308 Assignment GURU igneu ‘819811854308 | a ‘SOLVED ASSIGNMENTS ASSowasi cry ets//www.ignouassignmentguru.com ‘The Payment of Gratuity Act, 1972, mandates that the gratuity amount payable to an employee should be calculated based on a formula: (Last drawn salary « 15/26) x Number of years of service. The exemption provided under Section 10(10)(i) ensures that the employee is not taxed on the gratuity amount received, up to the limit specified by the goverment, 2. Section 10(10)(ii): This sub-section pertains to employees not covered under the Payment of Gratuity Act, 1972, such as employees working in establishments not govemed by this Act. For such employees, the gratuity amount is exempt up to Rs. 10 lakh, regardless of the gratuity calculation fonmula Important Considerations - Continuous Service: For the gratuity to be exempt, the employee must ave completed a minimum of five years of continuous service with the employer, except in cases of death or disability where this requirement is waived. - Tax Treatment: Any gratuity received over and above the exempt limit is considered taxable and must be included in the employee’s income for the assessment year. - Revised Limits: The government periodically revises the limit of exemption under Section 10(10)(i) and Section 10(10)(i). It is crucial for both employers and employees to stay updated with the latest amendments to ensure compliance and accurate tax calculations. ‘Ans? To determine Mr. Ram's residential status for the assessment year 2023-24, we must apply the criteria established under the Income Tax Act. The residential status is essential for ascertaining the scope of income that will be subject to tax in India, The detenmination hinges on two primary conditions related to the individual's stay in India during the financial year and the preceding years 1. Basie Conditions: Accoidinig fo thé Indonie'Tax Act, a person is cbisideted a resident in India if they meet any of the following conditions: - Condition A: They are in India for at least 182 days during the financial year under consideration, or - Condition B: They are in India for at least 60 days during the financial year and 365 days during the four years preceding that year 2. Additional Conditions for Determining Residency: ‘wD @ Ei /IGNOUASSIGNMENTGURU IGNOU ASSIGNMENT GURU _Page-16PHONE NO: 9811854308 Assignment GURU 1919011854308 3 ‘SOLVED ASSIGNMENTS. i ASSowasi cry ets//www.ignouassignmentguru.com In addition to the basic conditions, further criteria are applied to classify someone as a resident or non-resident based on their stay in India over the past years. For an individual to be classified as a resident in India, they must also meet one of the following couditions: - They must have been in India for at least 182 days during the financial year, or - They must have been in India for at least 60 days in the financial year and 365 days in the preceding four years combined. Let's analyze Mr. Ram's case with these criteria: a, Stay in Financial Year 2022-23: Mr. Ram was in the U.S.A. from April 15, 2012, to March 12, 2023. This period covers almost the entire financial year of 2022-23, with his retum to India occurring just before the end of the finaneial year Given this timeline, Mr. Ram was not in India during the financial year 2022-23, making it clear that he did not fulfill the 182-day stay requirement for that specific year. b. Stay in Previous Years: To establish his residential stams, we also need to consider Mr. Ram’s stay in India in the four years preceding the financial year 2022-23. If he did not meet the basic residency condition in the financial year 2022-23, we must assess his presence in India during the financial years 2018-19 to 2021-22 - For the year 2018-19: Mr. Ram was in India until April 15, 2018. Hence, he had a presence in India during this year - For the year 2019-20: He was in India until April 15, 2019. - For the year 2020-21: He was in India until April 15, 2020. - For the year 2021-22: He was in India until April 15, 2021, Adding these periods, Mr, Ram's total stay int India int the four preceding financial years would be substantial. IGNOU ASSIGNMENT GURU Page-1 7 Ans: In many tax systems, income derived from agriculture and non-agriculture sources are treated differently. The principle of partial integration of agricultural and non-agricultural income involves calculating tax liabilities by combining these two income streams, but with certain adjustments to account for their distinct nature. Fi/IGNOUASSIGNMENTGURUPHONE NO: 9811854308 Assignment GURU | a ‘SOLVED ASSIGNMENTS igneu 918811854308 fsSiannen cuRw /ntt://wwwwignouassignmentguru.com Agricultural income, typically derived from farming, has special tax treatment in various jurisdictions. It may be exempt from tax or subject to lower tax rates. Non-agricultural income, such as wages, business profits, or interest, is generally taxed according to the prevailing tax rates, When integrating these incomes, the aim is to reflect the total financial position of the taxpayer while acknowledging the special tax treatment of agricultural income. For instance, agricultural income might be considered in calculating the tax rate applicable to non-agricultural income, but the agricultural income itself might not be taxed directly A common approach involves determining the tax on non-agricultural income using the progressive tax rates. The agricultural income is then added to the non-agricultural income to ascertain the effective rate of tax. This helps in adjusting the tax liability based on the total income, while still allowing for the preferential treatment of agricultural earnings. The integration process also cousiders various deduetious and exemptions. For example, agricultural income might impact the eligibility for certain deductions or credits related to non-agricultural income. The interplay between these incomes requires careful calculation to ensure that the tax liability is comeetly assessed, ‘Ans: Section 80D of the tax code provides deductions for premiums paid on health insurance policies and certain other related expenses. This provision aims to promote financial responsibility for health care and alleviate the burden of medical expenses. Under Section 80D, taxpayers can claim deductions for premiums paid on policies covering themselves, their spouse, children, and parents. The deduction amount ean vary based on the age of the insured and the nature of the policy. For example, there might be different deduction limits for policies covering individuals versus those covering senior citizens. In addition to health insurance premiums, the section often allows deductions for preventive health check-ups, provided they are part of the overall insurance expenditure The preventive check-up expensés ustilly have a/cap, and they afé iftchnded within the broader limit of dediictions available tmder this section ‘Taxpayers can also benefit from deductions if they incur expenses related to the treatment of specified diseases. These provisions are designed to encourage taxpayers to invest in healthi insivanee and manage their medical éxpenses| proactively. The deduction is available to both individuals and Hindu Undivided Families (HUFs), with different limits applying based on the number of insured persons and their age. The aim is to provide financial relief for taxpayers and incentivize them to secure health insurance coverage for themselves and their dependents. ‘Ans: The concept of "defective return is no return" underscores the principle that a retum. which is incomplete or fails to meet the requixements set forth by tax authorities is not IGNOU ASSIGNMENT GURU _Page-1B ‘wD @ Ei /IGNOUASSIGNMENTGURUPHONE NO: 9811854308 Assignment GURU | a ‘SOLVED ASSIGNMENTS igneu 918811854308 fsSiannen cuRw /ntt://wwwwignouassignmentguru.com considered a valid return. This principle ensures that taxpayers adhere to the standards and obligations stipulated in tax regulations. A retum may be deemed defective if it lacks essential details or documentation required for accurate assessment. For instance, if a return fails to include mandatory information or supporting documents, it may be classified as defective. In such cases, tax authorities may reject the return and require the taxpayer to resubmit a corrected version. The principle also applies to returns that do not comply with specific formatting or procedural requirements. This ensures that returns are processed efficiently and accurately, maintaining the integrity of the tax system. Taxpayers are typically given a timeframe to rectify defective retums. During this period, they can provide the missing information or correct any errors to meet the regulatory standards. Failure to address the defects within the stipulated timefiame can result in peualties or other consequences. The rationale behind this principle is to enforce compliance and ensure that all returns are complete and accurate. It prevents the submission of returns that might hinder the effective administration and assessment of taxes. By maintaining strict standards, tax authorities can ensure that all returns are properly evaluated, and taxpayers are held accountable for their tax obligations [Alns: Scction 16(i) of the tax code provides fora standard deduction for salaried individuals and pensioners. This deduction is intended to simplify the tax calculation process and provide some relief to taxpayers by reducing their taxable income. The standard deduction under this section is a fixed amount that is automatically available to eligible taxpayers without the need to itemize specific deductions. This means that individuals can claim this deduction directly from their gross income, which reduces their taxable income and consequently the amount of tax they owe. The purpose of the standard deduction‘is to account for general expenses incurred by taxpayers in earning their salary or pension. It provides-a straightforward way to reduce taxable income without requiring detailed documentation of individual expenses The standard deduction is often revised periodically, with changes reflecting inflationary adjustments or policy updates. Taxpayers should check the current limit applicable for the relevant financial year, as it may vary based on legislative changes. For salaried individuals, the standard deduction simplifies the process of tax calculation and ensures that taxpayers receive some basic relief. It also benefits pensioners by reducing, their taxable income, considering the generally fixed nature of their income. IGNOU ASSIGNMENT GURU _Page-19 ‘wD @ Ei /IGNOUASSIGNMENTGURUPHONE NO: 9811854308 Assignment GURU ‘SOLVED ASSIGNMENTS 919011854308 /ntt://wwwwignouassignmentguru.com You can also Buy Solved Previous Year Question Papers and Solved Guess Papers and |mpotent Question Answer which can help you in your exam time for more details visit shop.ignouassignmentguru.com tz ASSIGNMENT GURU Enttps://www.-facebook.com/IGNOUAssignmentGURU Fbntepsi7/ewitter.comvignou guru used ttps-//in.linkedin.com/in/ignouassignmentguru ittps://www.instagram.com/IGNOUAssignmentGURU/ YoulTE etps:// www youtube.com/chaninel/UC_hUtEEOLZAXHYFp7awbaA For Free Classroom and Education video. https://www.youtube.com/channel/UCFbW4eisOfNSWUSI1C8OLmg mes D EARN ONLINE https://bit.ly/Passive_Income_Financial_Freedom https://bit.ly/3r56uPv Yui @ Fi /IGNOUASSIGNMENTGURU e211 IGNOU ASSIGNMENT GURU _Pat