June 2024 – Page 7 – Sailesh Bhandari & Associates

EMPLOYERS CONTRIBUTION TOWARDS A FEW RETIREMENTS BENEFITS FUNS (SEC 17(2) (Vii)/ (Viia))

Section 17(2)(vii) of the Income Tax Act exempts from tax the employer’s contribution to a recognized provident fund, a scheme referred to in section 80CCD, or an approved superannuation fund, to the extent it does not exceed Rs. 7.5 lakhs in a financial year. Section 17(2)(viia) of the Income Tax Act was inserted in the

HOSPITAL APPROVED BY THE CHIEF COMMISSIONER (SD)

A hospital approved by the Chief Commissioner under the Income Tax Actis a hospital that has been certified by the Chief Commissioner of Income Tax as meeting the required standards for providing medical treatment. The Chief Commissioner of Income Tax grants approval to hospitals that meet the following criteria: The approval of a hospital by

VALUATION OF PERQUISITE IN RESPECT OF INTEREST – FREE LOAN AT CONCESSIONAL RATE OF INTEREST

For example, if an employee takes an interest-free loan of Rs. 100,000 from his employer in April 2023, the prescribed interest rate for that month is 7.5%. The value of the perquisite for the month of April 2023 will be Rs. 750 (100,000 x 7.5%). The value of the perquisite is to be calculated for

VALUATION OF PERQUISITE IN RESPECT OF GAS, ELECTRICITY OR WATER SUPPLY PROVIDED FREE OF COST

The valuation of perquisite in respect of gas, electricity or water supply provided free of cost under the Income Tax Act is as follows: For example, if an employee consumes 100 units of electricity per month, and the prevailing rate is Rs. 2 per unit, then the value of the perquisite would be Rs. 200

PRESCRIBED GUIDELINES

The prescribed guidelines under Section 17(2) of the Income Tax Act are as follows: The prescribed guidelines under Section 17(2) of the Income Tax Act are complex and may vary depending on the specific circumstances. It is advisable to consult a tax expert to determine the taxability of any perquisite. CASE LAWS FAQ QUESTIONS The

TAX TREATMENT IN THE HANDS OF COMPANY ISSUING SUCH BONDS

Zero-coupon bonds under Income Tax Act: A zero-coupon bond is a bond that does not pay interest until maturity. The interest is paid in the form of the difference between the issue price and the redemption price. The company issuing a zero-coupon bond can claim a deduction for the annual accrual of the liability in respect

INTREST ON BORROWED CAPTIAL [SEC.36(1)(iii)]

Section 36(1)(iii) of the Income Tax Act, 1961 allows a deduction for the amount of interest paid in respect of capital borrowed for the purposes of the business or profession. The deduction is allowed under the section, once it is established that the borrowing is for the purposes of business and that the interest is

INSURANCE PREMIUM PAID BY A FEDERAL MILK CO – OPREATIVE SOCIETY

The insurance premium paid by a federal milk cooperative society for the life of cattle owned by the members of the primary society supplying milk to it is allowed as a deduction under Section 36(1) (IA) of the Income Tax Act, 1961. This deduction is available to federal milk cooperative societies that are engaged in

AMORTISATION OF EXPENDITURE UNDER VOLUNTARY RETIREMENT SCHEME (SEC 35DDA)

Section 35DDA of the Income Tax Act, 1961 allows a deduction for the amortization of expenditure incurred by an assesses in any previous year by way of payment of any sum to an employee in connection with his voluntary retirement, in accordance with any scheme or schemes of voluntary retirement. The deduction is allowed in

Expenditure on acquisition of patent rights, copyright, know-how of section 35A

Section 35A of the Income Tax Act, 1961 allows a deduction for expenditure incurred on the acquisition of patent rights, copyrights, or know-how, used for the purposes of the business. The deduction is allowed in equal instalments over a period of 14 years, beginning with the year in which the expenditure is incurred. The following

2024 June