Different levels of income and expenditure Essay

Different levels of income and expenditure - Essay Examplee, fixed health check allowance, servant allowance, deputation allowance, other allowances like marriage allowance, telephone allowance, city compensatory allowance, family allowance etc. In addition to wages and salary, perquisites below section 17(2) are provided to employees by employer which includes certain benefits or amenities provided either voluntarily or under service contract. The perquisites for income tax purpose are tax free perquisites, rateable perquisites, perquisites taxable under specified cases. Example Amt in GBP Basic pay 40000 Dearness allowance 3000 kick in salary 5400 Professional tax paid by employer 5400 Perquisite for house 15% of salary (40000+3000+5400) 7260 furniture rent grand Less rent recovered by employer 3000 5260 Less artal tax 1000 Gross total income 53660 Less tax deduction under section 80C Contribution to statutory farsighted fund 4000 Taxable income 49660 Inco me from house attribute The verse of charging income tax under this head is the annual honor of property which is the inherent capacity of a create to yield income. Annual value has been defined as per Section 23(1) of Income tax act as (a) the sexual union for which the property is expected to be allow from stratum to year, (b) where the property or part of property is let and annual rent veritable or receivable by the owner is in excess of check as in clause (a), such fare received or receivable, (c) property or any part of property being let and was idle for the whole or part of previous year, owe to such vacancy, the actual rent received or receivable by owner is less than gibe as per clause (a), such amount received or receivable. Example X owned both house properties, one for running business and other... The measure of charging income tax under this head is the annual value of property which is the inherent capacity of a building to yield income. Annual value has b een defined as per Section 23(1) of Income tax act as (a) the sum for which the property is expected to be let from year to year, (b) where the property or part of property is let and annual rent received or receivable by the owner is in excess of sum as in clause (a), such amount received or receivable, (c) property or any part of property being let and was vacant for the whole or part of previous year, owing to such vacancy, the actual rent received or receivable by owner is less than sum as per clause (a), such amount received or receivable. Example X owned two house properties, one for running business and other was let out at 3000 GBP per month. The second property was used as residence by X. Municipal taxes for two properties were 7200 GBP per annum. The business and let out premise were insured against loss by fire and insurance premium was 900 GBP.Sections 28 to 44D deal with computing income under this head. The term business defined in section 2(13) of Income Tax Act inclu des any trade, commerce or manufacture or any concern in nature of trade, commerce or manufacture. The term profession defined under section 2(36) of the Act includes any vocation. Income under this head includes profits and gains from business or profession carried out by an assessee during previous year, income derived by a trader or professional.