Advanced cost Accounting

   Income  exempted  from  Tax  (Section  10)          Exempted income is that income on which income tax is not chargeable . Some incomes are not even included in total income and some are included in total income but are exempt from income tax. Section 10(1) :  Agricultural income is exempt under section 10(1). However, agricultural income has to be aggregated with non-agricultural income for determining the rate at which non-agricultural income  would be subject to tax, in case of individuals, HUFs, AOP & BOIs etc.,  where the – •agricultural income exceeds 5,000 p.a. and  •non-agricultural income exceeds basic exemption limit. The following are the steps to be followed in computation of tax - Step 1: Tax on non-agricultural income plus agricultural income Step 2: Tax on agricultural income plus basic exemption limit Step 3: Tax payable by the assessee = Step 1 – Step 2 Step 4: Add Surcharge/Deduct Rebate under section 87A, if applicable. Step 5: Add Education cess

                        Concept  of   Taxation ''Tax'' is a fee charged by the government on it's people income & on goods and services produced & utilised by them. It is compulsory contribution made by citizens for their country.               Taxes are main source of income for tbe government. The income obtained from taxes to the government was re- utilised by the government for it's people welfare. Who  is  liable to pay income tax :               Every person, whose taxable income for the previous financial year exceeds the minimum taxable limit is liable to pay to the central government Income tax during the current financial year on the income of the previous financial year at the rates inforce during the current financial year. Kinds  of Taxes :    Taxes are broadly classified into two types. 1. Direct Taxes 2. Indirect Taxes 1. Direct  Taxes :   Direct taxes are paid by the persons directly to the government. The person paying taxe

                         Treatment of  certain Items   1 Interest on capital 2 . Amortization 3. Cost of finance 1. Interest on capital:       (i)Different people have differences of opinion on the question of whether interest on capital should be included in the cost or not. (ii) This is so because, whether a concern pays interest on capital or not, depends upon its method of capitalization.  (iii)This means a company raising finance by equity capital only has not to pay interest whereas a company raising finance partly through debenture has to pay interest. (iv)If interest actually paid is included in the cost, companies not paying any interest will have lower costs, and companies paying interest will show a higher cost of production. (v) This makes difficult the comparison of costs in different companies.  (vi)Therefore, for the sake of uniformity, either interest paid should be included in the cost, or alternatively, interest on the total capital employed (both equi

  Assessment of   Hindu  undivided  family  ( HUF ) Hindu undivided family (HUF) is treated as a person u/s 2( 31) of the income tax Act, 1961. HUF is a separate entity for the purpose of assessment under the act.             Under hindu law, an HUF is a family which consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. An HUF cannot be created under a contract, it is created automatically in a hindu family. Taxability of  HUF :       In order to compute the income of an HUF, one has to first ascertain its income under the different heads of income. The following points should be keep in mind while computing income :  If funds of an HUF are invested in a company/ firm, fees/ remuneration received by the members as a director or a partner in the company/ firm may be treated as income of the family. However, if fees/ remuneration is earned for services rendered by the member in his personal capacity, it will be trea

                             Refund  Of  Tax 'Refund ' means ''to pay back''. If any person satisfies the assessing officer that the amount of tax paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable under the I.T act for that year he shall be entitled to a refund of the excess. Refund. - How arises :              Ordinarily the case of refund arises on account of following : (i) The total tax deducted at source is higher than the amount of tax liability as determined on regular assessment. (ii) The amount of advance tax paid or the tax paid on the basis of self - assessment exceeds the tax liability as determined on regular assessment. (iii) By the rectification of a mistake (iv) By the order of judgement in an appeal (v) Where relief for double taxation is granted. Persons entitled to claim refund in certain special cases :    (1) The assessee, who has paid the tax. (2) Where the income of o