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| Attention Student Of C.A |
Posted
by : Darpan aggarwal on 18 March 2010
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| SM Notes Margin free collection Dont miss it |
| Posted by : natashaon 18 March 2010 |
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| All About Setoff Of Losses |
| Posted
by : Uday Kiranon 18 March 2010
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All about carry forward and set off of losses under the Income Tax Act While one endeavors to derive income, the possibility of incurring losses cannot be ruled out. Based on the principles of natural justice, a set-off should be available for loss incurred. The income tax laws in India recognise this and provide for adjustment and utilisation of the losses. However, there are conditions which have been introduced to prevent misuse of such provisions. To the common taxpayer, income tax is a crunch into the income earned. Accordingly, awareness of the relevant provisions pertaining to set off and carry forward of losses is essential in order to maximize tax benefits. The relevant provisions have been summarised here: A) Set off of loss under the same head of income.(section 70) (Intra-head set off) Income of a person is computed under five heads. ‘Sources’ of income derived by an individual may be many but yet they could be classified under the same head. For instance, an individual may have a dual employment, yet the income would be classified under the head ‘Salaries’. However, given the mechanism of computing taxable salary income, it would be safe to say that an individual cannot incur losses under this head of income. Consider a situation where Harsh has two properties – one, occupied by him and the other, let out. Harsh pays interest on loan of Rs 1.50 lakh on the property occupied and derives net rental income of Rs 1.50 lakh from the let-out property. In case of a self-occupied property, income is computed as nil and interest expenditure results in loss. The loss of Rs 1.50 lakh can be set offagainst rent income of Rs 1.50 lakh; the income chargeable under the head ‘House property’ will be ‘Nil’. An exception to intra head set off is loss under the head ‘Capital gains’, which may arise from transfer of any capital asset. Long-term capital loss arises from transfer of shares or units where holding period is more than 12 months and in respect of other assets holding period is more than 36 months prior to sale. Transfer of assets held for less than prescribed period results in short-term capital loss. Long-term capital loss cannot be set off against short-term capital gains. Further, loss incurred from speculation loss (eg. from shares or commodities) cannot be set off against any other income. Also, it is unlikely that the benefit of set off of loss under an activity or source will be available, where the income from an activity or source is exempt from taxation. Summary of exceptions to Intra-head set off: 1. Loss from speculation business cannot be set of against profit from an non speculation business (Interpretation: Loss from non speculative business can be set-off against speculation income) 2. LTCL can only be set off against LTCG and cannot be set off against STCG (Interpretation: STCL can be set off against LTCG) 3. No loss can be set-off against casual income i.e. Income from lotteries, cross word puzzles, betting gambling and other similar games. 4. No expenses can be claimed against casual income 5. Loss from the activity of owning and maintaining race horses cannot be set off against other incomes 6. Loss from an exempted source cannot be set off (e.g. Share of loss of firm, agricultural losses, cultivation expenses) B) Set off Loss from one head against Income from another Head (Inter head set off) A person may have various sources of income computed under different heads of income. Loss under one head of income is generally allowed to be set off against income under another head. For instance, X has only one property, which is occupied by him and the loss is Rs 1.50 lakh. He derives salary of Rs 10 lakh during the year. Here, he can set off the loss of Rs 1.50 lakh against his salary income by making appropriate declarations to his employer, thereby making his net taxable income Rs 8.50 lakh. Certain exceptions to the provisions are that the loss from business or profession cannot be set off against salary income. Capital loss, whether long term or short term, can be set off only against capital gains income. Where during a given year, there is no sufficient income to absorb the loss, unabsorbed loss can be carried forward and set off against income, in the future years as explained here. Summary of exceptions to Inter-head set off: 1. Loss from speculation cannot be set of against any other head. (Interpretation: Loss from other heads can be set-off against business income.) For Example: House property loss can be set-off against Speculative Incomes but speculation loss cannot be set off against House property) 2. Business loss cannot be set-off against salary income. (It can be set-off against other incomes) 3. Loss under the head Capital Gains (LTCL or STCL) cannot be set-off against any other head. (Interpretation: Loss from other heads can be set-off against Capital Gains) For Example: HP loss can be set-off against CG but LTCL or STCL cannot be set off against HP 4. No loss can be set-off against casual income 5. No expenses can be claimed against casual income 6. Loss from the activity of owning and maintaining race horses cannot be set off 7. Loss from an exempted source cannot be set off (e.g. Share of loss of firm, agricultural income, cultivation expenses) C) Carry forward and set off of losses Unabsorbed loss under house property, capital loss and business loss can be carried forward for 8 years. Unabsorbed speculation business loss can be carried forward only for a period of 4 years. Loss can be carried forward and set off even if the business in respect of which it was incurred has been discontinued. However, such loss cannot be set off against income under any other head. An exception exists in respect of unabsorbed depreciation from business which can be set off against any other source of income in the absence of business income and can be carried forward indefinitely, even if the business through which depreciation was incurred has ceased to exist. Carry forward of losses (other than loss from house property and unabsorbed depreciation) is permissible if the return of income for the year, in which loss is incurred, is filed in time. The late filing of return should not impact the status of carry forward of loss of previous years. When clubbing provisions apply, loss is required to be clubbed in the same manner as income. Such clubbed loss can be set off and carried forward, as if it is loss determined in the taxpayer’s own case. The successor of business can carry forward and set off the loss of his predecessor, if such succession is by way of inheritance. In light of the above, taxpayers are advised to be mindful of the relevant provisions and seek guidance, where required, to effectively utilise their losses and achieve optimum tax results. Conditions in brief related to carry forward and set-off of losses :- 1. Past year losses can be set-off against income from that respective head of income (Inter head adjustment is not possible) (e. g. Unadjusted loss of HP for the year 2004-05 c/f Rs. 20,000. This loss can be set-off only against HP income of the year 2007-08 and not under any other head) 2. The above rule (1) is not applicable to unabsorbed depreciation, which can be set-off against any other head 3. All losses (Except loss due to owning and maintaining of race horses) can be carried forward and set-off for 8 subsequent financial years following the Previous Year in which such loss arose. 4. Unadjusted loss due to owning and maintaining of race horses can be carried forward and set-off for 4 subsequent financial years following the Previous Year in which such loss arose. 5. Unabsorbed depreciation can be carried forward for an unlimited period. D) Order of Set-off of losses In case where profits are insufficient to absorb brought forward losses, current depreciation and current business losses, the same should be deducted in the following order
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| Introducing CA Pariwar |
| Posted by : SAN...on 18 March 2010 |
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| SFIO COMPLETED INVESTIGATION OF 49 COMPANIES |
| Posted
by : Uday Kiranon 18 March 2010
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| Mock Test Papers -PCC/PEII/IPCC |
| Posted
by : Uday Kiranon 18 March 2010
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| Question on Firm Assessment |
| Posted
by : Uday Kiranon 18 March 2010
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| Wonder Collection of Notes Must See for IPCC PCC Pe II S |
| Posted by : kushal dason 18 March 2010 |
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| Attention Student Of C.A |
| Posted by : Himanshu bansalon 18 March 2010 |
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| Why i am not interested in CA |
| Posted by : Kiran Bhat Kon 18 March 2010 |
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| Attention Student Of C A |
| Posted by : Rohit Singhon 18 March 2010 |
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| Wonder Collection of Notes Must See for IPCC PCC Pe II S |
| Posted by : Krishnaon 18 March 2010 |
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| Ca Final Nov 2011!!!!! |
| Posted by : Rohit Singhon 18 March 2010 |
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| CA Shiksha vs CAclub India...!! |
| Posted by : GS Shikshaon 18 March 2010 |
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| Best STock Tips For Day Trading |
| Posted by : Vijay Don 18 March 2010 |
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| Introducing CA Pariwar |
| Posted by : GS Shikshaon 18 March 2010 |
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| Pls Give me 2 minutes |
| Posted by : dípểکh- THE WHITE HAT HACKERon 18 March 2010 |
It is really praiseworthy that you are managing study along with working. I have the following Tips which I used in my PCC and may be helpful to you in your studies:
INFO. TECH AND SM STUDY: IN INFO. TECH. AND SM, USE ONLY PADHUKA’S BOOK. NO OTHER THINGS. ALWAYS THEY ASK 10 MARK QUESTION OF FLOWCHART OR/AND DECISION TABLE. MAKE A SEPARATE NOTE FOR THESE TWO CHAPTERS. PRACTISE ONLY 5 FLOWCHARTS DAILY. FIRST READ AND UNDERSTAND ALL FLOWCHARTS FROM MODULE AND PADHUKA. THEN DO THEM ALL YOURSELF. UNDERSTAND YOUR MISTAKES AND TRY TO RECTIFY THEM. MAKE A VERY SMALL BOOK FOR ALL SHORT FORMS OF IT AND SM LONG QUESTIONS AND CRAM THEM ALL. READ ONLY THOSE SHORT FORMS ON THE DAY BE4 EXAM. PADHUKAS BOOK INCLUDES 100% COURSE. SO U NEED NOT TO OPEN MODULE FOR THEORY. COST AND FM: USE MODULES FOR COST AND FM. FINISH ALL CHAPTERS FROM MODULES FIRST, THEN SOLVE ALL CHAPTERS FROM PADHUKA BOOK. MAKE A SEPARATE BOOK FOR ALL FORMULAES OF COST AND FM TO READ IT ON THE DAY BE4 EXAM. MARK OUT DIFFERENT KINDS OF SOLVED SUMS FROM PADHUKA AND MODULE. AND JUST READ THE SUMS AND FORMULAES ON THE DAY BE4 EXAM. ALSO IN COST AND FM THEORY QUESTIONS ARE OF ABOUT 40 MARKS. MAKE A SEPARATE BOOK FOR SHORT FORMS OF THOSE THEORY QUESTIONS THAT WERE ASKED IN PAST EXAMS. PADHUKA’S BOOK WILL HELP U IN UNDERSTANDING THE WEIGHTAGE OF QUESTION AS IT CONTAINS THE YEARS IN WHICH THE QUESTION WAS ASKED IN CA EXAM. INCOME TAX: USE ONLY TAXMANN’S BOOK FOR INCOME TAX. READ ALL THEORY AND HIGHLIGHT MAIN POINTS TO REFER THEM ON THE DAY BE4 EXAMINATION. THE CHAPTER OF SERVICE TAX AND VAT IS OF 25 MARKS. SO DO NOT LEAVE ANYTHING FROM THOSE CHAPTERS AND MAKE A BOOK OF ALL THEORY SHORT FORMS OF SERVICE TAX AND VAT. ONLY TAXMANN IS ENOUGH FOR SECURING AS MANY MARKS AS U CAN.
STUDY BOOKS FOR THE FIRST GROUP OF IPCC IN MY OPINION ARE AS UNDER:
ACCOUNT:
PADHUKA'S REFERENCE BOOKS AND MODULES ARE ENOUGH FOR CLEARING ACCOUNT SUBJECT.
AUDIT:
PADHUKA' S BOOK IS TO THE POINT FOR AUDITING.
LAW, ETHICS AND COMMUNICATION:
PADHUKA' S BOOK IS TO THE POINT FOR LAW, ETHICS AND COMMUNICATION.
FOR MORE STUDY TIPS, U CAN VISIT:
BEST OF LUCK.......... |
| Computer training course in cs course |
| Posted by : Deepak kumar.Gon 18 March 2010 |
Hi to all, I hav my cs executive 1st group exams on june 2010 and i hav still not finished my computer training course from aptech.. Will it be enough if i write the online exemption test? Pls help me out.... Its Urgent... Thanks in Advance.... |
| Income Tax Question Give a Try |
| Posted by : SRINIVAS SRIRAJon 18 March 2010 |
"Every person,— (a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds forty lakh rupees in any previous year " (Emphasis supplied) Whatever business/es the assessee does only have to be considered here and that is the reason why, I feel the ICAI also has given such an opinion. The first/final thing that has to be considered is the wordings of the Sec. only. In my opinion, the turnover/receipts from the business carried on by him only should be considered in this context. Even in a case, where the Turnover of business is Rs.39.50 lacs and the taxable remuneration from the firm is Rs.200000/-, the provisions of Sec.44AB is not attracted, in the light of the above argument. As far as the three businesses (each having a turnover of Rs.20 lacs) are concerned, their combined t/o should be taken and provisions of Sec.44AB are attracted unless the assessee has agreed to accept 8%/5% as income u/s.44AD/44AF in individual cases. If the assessee has opted for Sec.44AD/AE/AF, the turnover of such businesses need not be considered for determining the turnover u/s.44AB. |
| TDS on Rent |
| Posted by : Sanjayon 18 March 2010 |
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