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Unit 1: Income Tax: Basic Framework

(ii) Surcharge: The amount of income tax as computed in accordance with above Notes
rates, and after being reduced by the amount of tax rebate shall be increased
by a surcharge as under
At the rate of 2% of such income tax, provided that the total income
exceeds ` 1 crore.

At the rate of 5% of such income tax, provided that the total income
exceeds ` 10 crore.
(iii) Education Cess: 3% of the total of Income Tax and Surcharge.

Did u know? As per 2013 Budget (Finance Act, 2013) section 87A of the Income Tax Act, 1961
rebate of ` 2,000/- will be given to the individual tax payer whose total does not exceed
` 5 lakhs or we can say that Individual Tax Payer whose total income doesn’t exceed
` 5 Lakhs is eligible for deduction of ` 20,000/- from income. Budget of 2013 has levied the
Surcharge of 10 per cent on persons (other than companies) whose taxable income exceed
` 1 crore to augment revenues. Also government has increase the dividend distribution
tax or tax on distributed income, current surcharge increased from 5 to 10 per cent.

Task Compute the tax liability of X Ltd., a domestic company, assuming that the total
income of X Ltd. is ` 1,01,00,000 and the total income does not include any income in the
nature of capital gain.

Self Assessment

Fill in the blanks:
21. ………………………….is governed by the Central Board for Direct Taxes (CBDT) and is
part of the Department of Revenue under the Ministry of Finance.
22. The levy is governed by the ………………………….
23. Income tax is a tax payable, at the rate enacted by ……………………..for every Assessment
Year.
24. The chargeability is based on the ……………………..

Case Study Vodafone Tax Case – Investments in India

ndia Inc. has been surging ahead audaciously with the support of its Information
Technology developments with its repertoire of resources. Global players have been
Ieying the Indian market, owing to immense opportunities that the continent provides;
both in terms of expansion and profit. Investment patterns in India have shown positive
growth over the years with significant process on the de-regulation front. India has been
greatly involved with the G-8 and G-20, including signing of the Double Taxations
Avoidance Agreements/Treaties (DTAA) with various tax-haven countries. This has
boosted the image of India as a ‘lookout destination’ for investment and an emerging hub
for economical activities. World Report 2010 ranked India as the 9th most attractive
Contd...

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