Syllabus - 2016 - icmai.in

1 Syllabus - 2016 PAPER 7 : DIRECT TAXATIONS yllabus StructureAIncome Tax Act Basics10%BHeads of Income and Computation of Total Income and Tax Liability70%CTax Management, Administration Procedure and ICDS20%A 10%C 20%B 70%ASSESSMENT STRATEGYT here will be wirtten examination paper of three To gain knowledge about the direct tax laws in force for the relevant previous year and to provide an insight into procedural aspects for assessment of tax liability for various AimsThe Syllabus aims to test the student s ability to : Understand the basic principles underlying the Income Tax Act, Compute the taxable income of an assessee, Analyze the assessment procedureSkill sets requiredLevel B : Requiring the skill levels of knowledge, comprehension, application and : Subjects related to applicable statutes shall be read with amendments made from time to A : Income Tax Act Basics10%1.

2 Introduction to Income Tax Act, 19612. Income which do not form part of Total Income (Section 10, 11 to 13A)Section B : Heads of Income and Computation of Total Income and Tax Liability70%3. Heads of Income and Computation of Total Income under various heads4. Clubbing Provisions, Set off and Carry forward of Losses, Deductions5. Assessment of Income and tax liability of different personsSection C : Tax Management, Administrative Procedures and ICDS20%6. TDS, TCS and Advance Tax7. Administrative Procedures8. ICDSP aper 7 : Direct taxation (DTX)Section A : Income Tax Act Basics (10 Marks)1. Introduction to Income tax Act, 1961a. Constitutional Validityb.

3 Basic Concepts and definitionsc. Capital and Revenue Receiptsd. Basis of charge and scope of total incomee. Residential status and incidence of tax (excluding section 9A)2. Income, which do not form part of total income [Sec. 10, 11 to 13A]Section B : Heads of Income and computation of total income and tax liability [70 marks]3. Heads of income and computation of total income under various headsa. Salariesb. Income from House Propertyc. Profits and Gains of Business or Profession (excluding 42 to 44DB but including sections 43A, 43B, 43AA, 44AB, 44AD, 44 ADA and 44AE)d. Capital Gainse. Income from Other Sources4. Clubbing Provisions, set off and carry forward of losses, deductionsa.

4 Income of other persons included in assessee s total incomeb. Aggregation of income and set off and carry forward of lossesc. Deductions in computing total incomed. Rebate and Reliefse. Applicable Rates of tax and tax liability5. Assessment of income and tax liability of different personsa. taxation of individual (including AMT but excluding non-resident)b. HUFc. Firms, LLP and Association of Personsd. Co-operatives SocietiesSection C : Tax Management, Administrative Procedure and ICDS [20 Marks]6. TDS, TCS and Advance Taxa. Tax Deduction at Source (excluding sections relevant to non-residents)b. Tax Collected at Sourcec. Advance Tax7. Administrative Proceduresa.

5 Return & PANb. Intimationc. Brief concepts of Assessment u/s 140A, 143 and 1448. ICDSa. Basic Concepts of ICDSC ontentsSection A - INCOME TAX ACT BASICSS tudy Note 1 : Basic Introduction Direct Tax & Indirect Tax Constitutional Validity of Taxes Administration of Tax Laws Sources of Income Tax Law in India Basic principles for charging Income Tax [Sec. 4] Assessment Year ( ) [Sec. 2(9)] Previous Year or Uniform Previous Year [ ] Assessee [Sec 2(7)] Person [Sec. 2 (31)] Income [Sec. 2(24)] Heads of Income [Sec. 14] Gross Total Income (GTI) [Sec. 80B(5)] Rounding-off of total income [Sec. 288A] Rounding-off of tax [Sec. 288B] Capital Revenue Tax Planning, Tax Evasion and Tax Avoidance Diversion & Application of Income 17 Study Note 2 : Residential Introduction General points to be kept in mind regarding residential status of a person Determination of Residential Status Hindu Undivided Family (HUF) [Sec.]

6 6(2)] Company [Sec. 6(3)] Firm or an Association of Persons (AOP) or Body of Individuals (BOI) [Sec. 6(4)] Any other person Incidence of Tax [Sec. 5] Income received in India Income deemed to be received in India Income deemed to accrue or arise in India [Sec. 9] 32 Study Note 3 : AGRICULTURAL Instances of Agricultural (Agro) Income Instances of Non-agricultural (Non-agro) Income Treatment of Partly Agricultural & Partly Non-Agricultural Income [Rule 7] Impact of agricultural income on tax computation 41 Study Note 4 : Income, which do not form part of Total Various Income which do not form part of Total Income 43 Section B - HEADS OF INCOME AND COMPUTATION OF TOTAL INCOME AND TAX LIABILITY Study Note 5 : INCOME UNDER HEAD Basic Elements of Salary Definition of Salary [Sec.

7 17(1)] General Notes Basis of charge [ ] Computation of Salary, at a glance Gratuity Leave Salary Encashment Pension [Sec. 17(1)(ii)] Retrenchment Compensation Compensation received at the time of voluntary retirement [Sec. 10(10C)] Annuity [Sec. 17(1)(ii)] Salary received in lieu of notice period Profits in lieu of salary [Sec. 17(3)] Allowances Perquisite [Sec. 17(2)] Insurance premium payable by employer Valuation of sweat equity shares allotted or transferred to the assessee Valuation of perquisites in respect of Motor Car [Rule 3(2)] Valuation of Perquisite in respect of Vehicle other than Motor Car Valuation of perquisite in respect of Free Domestic Servants [Rule 3(3)] Gas, electricity or water facility [Rule 3(4)] Valuation of perquisite in respect of free education [Rule 3(5)] Valuation of perquisite in respect of Free Transport [Rule 3(6)] Valuation of perquisite in respect of interest free loan or concessional rate of interest [Rule 3(7)(i)

8 ] Travelling/Touring/Holiday Home expenditure on Holiday [Rule 3(7)(ii)] Valuation of perquisite in respect of free meals [Rule 3(7)(iii)] Gift, voucher or token given by employer [Rule 3(7)(iv)] Credit Card [Rule 3(7)(v)] Club Expenditure [Rule 3(7)(vi)] Valuation of perquisite in respect of use of movable assets [Rule 3(7)(vii)] Valuation of the perquisite in respect of movable assets sold by an employer [Rule 3(7)(viii)] Medical Facility [Provisa to Sec. 17(2)] Leave Travel Concession [Sec. 10(5)] Other Perquisites Provident Fund Entertainment Allowance [Sec. 16 (ii)] Tax on employment or professional tax [Sec. 16(iii)] 117 Study Note 6 : INCOME UNDER HEAD INCOME FROM HOUSE Chargeability [Sec.

9 22] Some special cases Exempted properties Computation of Income Let out property [Sec. 23(1)] Taxes levied by local authority (Municipal Tax) [Proviso to Sec. 23(1)] Deductions u/s 24 Self-occupied property [Sec. 23(2)(a)] Unoccupied property [Sec. 23(2)(b)] Deemed to be let-out house property [Sec. 23(4)] Partly self-occupied and partly let-out [Sec. 23(3)] Recovery of unrealised rent and Arrears Rent [Sec. 25A] 148 Study Note 7 : INCOME UNDER HEAD PROFIT AND GAINS OF BUSINESS OR Meaning of Business & Profession Income chargeable under the head Profits & gains of business or profession [Sec. 28] Incomes not taxable under the head Profits and gains of business or profession Expenditures allowed as deduction Specific Deductions Rent, rates, taxes, repairs & insurance for building [Sec.

10 30] Repairs & insurance of machinery, plant & furniture [Sec. 31] Depreciation [Sec. 32] Additional depreciation [Sec. 32(1)(iia)] Treatment of Slump sale Depreciation in case of Power Units Actual cost of assets [Sec. 43(1)] Consequence of changes in rate of exchange of currency [Sec. 43A] Unabsorbed depreciation [Sec. 32(2)] Mandatory provision of Depreciation Depreciation in case of amalgamation, demerger or succession Investment in new plant or machinery in notified backward area [Sec. 32AD] Special deduction for assessee engaged in Tea, Coffee or Rubber growing & manufacturing 174 business [Sec. 33AB and Rule 5AC] Site Restoration Fund [Sec.