What is Section 14A disallowance?

What is Section 14A disallowance?

Section 14A of the Income Tax Act, 1961 (‘the Act’) provides that no deduction shall be allowed of any expenditure incurred in relation to income not includible in total income i.e. expenditure related to exempt income is not tax deductible.

What is Section 115JB of Income Tax Act?

As per section 115JB, every taxpayer being a company is liable to pay MAT, if the Income- tax(including surcharge and cess) payable on the total income, computed as per the provisions of the Income-tax Act in respect of any year is less than 15% of its book-profit + surcharge (SC) + health & education cess.

What are the heads of income under Income Tax Act?

Five main Income tax heads

• Income from Salary.
• Income from House Property.
• Income from Profits and Gains of Profession or Business.
• Income from Capital Gains.
• Income from Other Sources.

What are the income that are chargeable to income tax under the head salaries?

Income from salary includes wages, pension, annuity, gratuity, fees, commission, profits, leave encashment, annual accretion and transferred balance in recognised Provident Fund (PF) and contribution to employees pension account.

What is difference between Mat and AMT?

Alternate taxation is a taxation concept that is applicable to both companies and individual taxpayers. The norms of MAT are applicable for companies whereas, the norms of AMT are applicable for individuals. This article briefly discusses the provisions of Minimum Alternate Tax and Alternate Minimum Tax.

Is Mat applicable in case of loss?

MAT is only for companies but an identical concept applies to other taxpayers in the form of Alternate Minimum Tax (AMT). They declare huge profits in the AGM however, when tax is calculated as per the Income Tax Act, 1961 (the Act), it shows loss.

What are 4 types of income?

TYPES OF INCOME

• Wages. This is income you earn from a job, where you are paid an hourly rate to complete set tasks.
• Salary. Similar to wages, this is money you earn from a job.
• Commission.
• Interest.
• Selling something you create or own.
• Investments.
• Gifts.
• Allowance/Pocket Money.

What are the 5 heads of income?

As per the income tax act 1961, one’s income is divided into 5 categories — income from Salary, income from house property, income from business profit, income from investments/capital assets and income from other sources.

What is salary for rent free accommodation?

Under the Income Tax Act, rent-free accommodation is treated as a perquisite or non-cash component of salary granted by the employer to an employee. Hence, Income Tax is applicable on rent-free accommodation received by an employee, including the Key Managerial Personnel of a company.

What is tax free salary?

# Salary paid tax free – Tax free salary means the salary on which income tax is borne not by the employee but by the employer. Tax free salary is also taxable in the hands of the employee. Salary is taxable in the year of receipt or in the year of earning of the salary income, whichever is earlier.

Do I have to pay AMT?

Who Has to Pay the AMT? You only have to worry about the AMT if your adjusted gross income exceeds the exemption. If you make that much income or more, that’s the AMT taxable income. You may have to calculate your alternative minimum taxable income and pay the higher tax.

Who pays the alternative minimum tax?

Taxpayers pay the higher of their tax calculated under regular income tax rules or under the rules for the alternative minimum tax (AMT). In 2017—before enactment of the Tax Cuts and Jobs Act (TCJA)— the 39.6 percent top rate under the regular income tax was much higher than the 28 percent top statutory AMT rate.

Can a disallowance be applied to section 115jb?

Thus, it can be concluded that the disallowance made under Section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under Clause (f) to Explanation 1 to Section 115JB of the Act.

Which is disallowance under the provisions of Section 14a?

The AO during the assessment proceedings has made the disallowance of Rs.50.85 crores in determining the income under normal computation of income under the provisions of Section 14A read with Rule 8D of Income Tax Rule.

Which is disallowance you / s 14A r.w.r.8d?

The AO in the instant case has made the disallowance u/s 14A r.w.r. 8D of the Income Tax Rules for Rs.50.85 crores while determining the income under normal computation of income.

Is the disallowance of you / s 14A upheld by the CIT?

Thus, the CIT (A) confirmed the action of the AO in computing disallowance u/s 14A read with Rule 8D of Income Tax Rules , 1962 , as mandated by the statute from the assessment year 2008-09 and onwards and hence, the CIT (A) upheld the disallowance of Rs.73,07,018/- u/s 14A read with Rule 8D of Income Tax Rules, 1962.