Deemed income relating to certain companies

Despite any other provisions of this Act, if an assessee is a company and its total income computed under this Act for any prior year relevant to the assessment year beginning on or after the first day of April 1997 is less than 30% of its book profit, the assessee's total income chargeable to tax for such prior year shall be deemed to be an amount equal to 30% of its book profit. Given that the profit and loss account will be prepared in accordance with the provisions of Section 210 of the Companies Act, 1956 (1 of 1956), the depreciation will be calculated using the same method and rates that have been implemented for determining the depreciation for the purpose of developing the profit and loss account laid before the firm at its annual general meeting.

The benefits of registration of 80g are applicable in the next financial year when one prepares to file income tax return when they have 80g tax receipts provided by NGOs.

The technique and rates for determining depreciation shall correspond to the technique and rates which have been implemented for estimating the depreciation for such financial year or part of such economic year falling within the relevant previous year if a company has adopted or adopts the financial year under the Companies Act, 1956 (1 of 1956), which is different from the previous year under the Act.

Know more on section 12a of income tax act.

"Book profit" refers to the net profit as reported in the profit and loss account for the relevant prior year prepared in accordance with the aforementioned subparagraph, increased by the amount of income tax paid or payable, the amounts carried to any reserves, regardless of their name, the amount or amounts set aside to meet liabilities through provisions, the amount as a result of a provision for losses of subsidiary companies, and the amount or amounts of payment of dividends.

It is important that one should know about tax exemption.

When a sum is discovered credited in the books of an assessee kept for a previous year and the assessee fails to explain the nature and source of the sum or his explanation is deemed unsatisfactory by the assessor, the sum so attributed may be charged to revenue as the assessee's income for that prior year. Such financial credits can be calculated as either business profits or other types of revenue. It is typically seen as business profit in the context of the business community. It will be subject to taxation in the year that these cash credits are discovered.

There is a lot to know about 80g exemption list.