Income Tax

Section 44AE

Section 44AE Special provision for computing profits and gains of business of plying, hiring or leasing goods carriages This section applies specifically on assessees carrying on business of plying, hiring or leasing good carriages. This section states that if an assessee is carrying on the above mentioned business then the income of such business chargeable to tax under the head "Profits and gains of business or profession" shall be deemed to be the aggregate of the profits and gains, from all the [...]

Section 44AB vs 44ADA

Section 44AB vs 44ADA As Section 44AD is applicable on business (click here to read in detail), Section 44ADA applies on professionals. It says that if an eligible assessee (professional) who declares 50% or more than that of his gross receipts as profit, then he is not required to get his accounts audited under the Income Tax Act, 1961. But, this section has specified a limit on the gross receipts too. As per this section, the gross receipts should not be more [...]

Tax Audit & The Presumptive Taxation

Section 44AB vs 44AD Tax Audit & The Presumptive Taxation: When we talk about Presumptive Taxation, then it automatically relates to Tax Audit under Income Tax Act, 1961. At student level, I have seen students getting confused in Sections 44AB & 44AD because 44AB says about the limit of Rs. 1 crore while Section 44AD says about the limit of Rs. 2 crore. Don’t worry; today your doubt is going to be resolved permanently.   Let’s begin: Tax Audit comes under the purview of [...]


Hello Readers, Welcome to the SCN series. Today’s term is: Slump Sale As per section 2(42C) of Income -tax Act 1961, ‘slump sale’ means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales. In simple words, it is a sale of whole undertaking for a lump sum amount. Assests and Liabilities are not measured individually. Click here for the previous posts of [...]

An Insight Into Tax Audit AY: 2018-19

Dear Readers, With Extreme Happiness, We are happy to announce that the 3rd edition of Atul Khurana's "An Insight Into Tax Audit" book has been released today in the market. This edition is little late due to some unavoidable situations but as it is said "It is better to be late than never", so we finally did it. The book is published under the publication of Young Global Publications, New Delhi. This handbook is equipped with the following features: Detailed Analysis of Applicability [...]

Income Tax Rules, 2018: Notification 33/2018

The Central Board of Direct Taxes (CBDT) on 20th July, 2018 released a notification stating the amendments/key changes in the Tax Audit Form 3CD. They shall come into force from the 20th day of August, 2018. CLICK HERE to Download the Notification.

International Taxation – FAR Analysis

Hello Readers, Hope you have read the previous parts. Click here to see the previous parts. FAR Analysis Functions, Assets and Risk (‘FAR’) analysis is an analysis of the functions performed, taking into account assets used and risks assumed by associated enterprises (AEs) in controlled transactions. A method of finding and organizing facts about a business in terms of the functions performed, assets used (including intangible property) and risks assumed by such business to: Identify how they are divided among the AEs; and Ø [...]

Become An Informer of Income Tax Dept. and Get Rewards up to Rs 5 Crore

The centre government has launched Income Tax Informants Reward Scheme, 2018, after superseding the 2007 award scheme, under which a person can get reward up to Rs 50 lakh for giving specific information about substantial evasion of tax on income or assets in India. Also, those informing the government about 'undisclosed black money' stashed abroad can win awards up to Rs 5 crore. Anyone who informs about Benami properties can get awards up to Rs 1 crore. The scheme comes [...]

International Taxation – Profit Level Indicators

Hello Readers, Hope you have read the previous parts. Click here to see the previous parts. Profit Level Indicators  A profit level indicator (PLI) is selected to test the profitability of tested party. PLIs are ratios that measure relationships between profits and costs incurred or resources employed. PLI should always have an untainted* base (denominator) like adopting cost as base for export transactions and revenue as base for import transactions. *A tainted income or expense would mean one that is received from an AE paid [...]

International Taxation – Computation of ALP

Hello Readers, Hope you have read the previous parts. Click here to see the previous parts. Let’s proceed further…. Computation of ALP: I had already discussed CUP method of computation of ALP, so now let us discuss other parts: Method 2: Resale Price Method The resale price method (RPM) is a method which compares the gross margins (i.e. gross profit over sales) earned in transactions between related and unrelated parties for the determination of the ALP. The RPM requires high level of functional comparability and [...]

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