Different levels of income and expenditure - Essay Example

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Different levels of income and expenditure

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 been 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 premises 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 includes 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. ...
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Summary

In the paper “Different levels of income and expenditure” the author examines the taxability of income of a person, which depends on the chargeability of the following heads of income: Income from salaries (sections 15 to 17) and Income from house property (sections 22 to 27).

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