Tax treatment of Income from House Property

Read the following illustration, since this is directly from horse's mouth, we can completely rely on this information. This article was captured in July 2010.

http://www.incometaxindia.gov.in/publications/5_house_property/5_house_property.asp
To calculate tax as per 2009-2010 slab, visit this link:
http://financeminister.in/Income-tax-slab-2010-2011

Cheers,
Fighter

Am I an salaried employee or contract employee ??

As per the tax laws:
Contract workers on a daily wage syatem are not contractors. They are employees only even if not in the permanent employees muster register and therefore what wages (whether dily or monthly) is in nature of salary. Please note you have to deduct PF, ESIC and P Tax as applicable in your area on such payments and TDS is applicable only as per slab rates for salary. Please remember that for the payment to be termed as salary it has to be continuous employment and there is any employer employee relationship. You have people on probation for 3 months. They are employees even if not in the register of permanent employees.
A contractor is someone you give a contract to carry out certain work. A contractor can work as a one man show on his own or he can employ people to work for him or can further assign work to sub contractors. If there is office work to be done, you employ a peon and you pay him a salary. This is your employee. You can also call someone for 1 or more days on a daily wage or a temporary priod for a few months. That too would be salary and you are liable to deduct PF, ESIC and PT etc. as applicable to you. If you wish to outsource the functions of your office peon or sepoy you have a service called 'Concierge on Call' . This can be an individual contractor working on his own or he may be working on an organised basis. Payments for these kind of functions are under 194C and limits apply. If the services are more of technical, managerial or secretarial in nature, then 194J. If it relates to marketing of goods or commission or brokerage on sales of goods then 194H. You have to test with the nature of work you are contracting. In such contracts you deduct TDS as per applicable rates to the section whether the contractor works alone or is organised. You are not liable for the PF or ESIC or PTax. However, if the contractor you use employs people who are located inside your premises, you are deemed principal employer and you have to deduct PF, ESIC and PTax for the contractor's payment for his employees in your premises.
Source: http://www.caclubindia.com/forum/tds-on-payments-to-contract-employees-50611.asp

Facts about GDP of India

Date - 22nd July 2010

Currently, the gross domestic product (GDP), which is the sum of total goods and services produced in a year, is over a $ 1 tn (Rs 58.68 lakh crore).

Source: http://economictimes.indiatimes.com/GST-to-make-India-a-2-trillion-economy-Pranab-Mukherjee/articleshow/6201907.cms

Highlights of 2010-11 budget on 26th Feb 2010

This budget was prseneted by Finance Minister Pranab Mukherjee in parliament Friday:

-- Clean energy cess of Rs.50 per tonne on coal produced in India

-- Concessional duty of 4 percent for solar power rickshaw developed by Council of Scientific and Industrial Research

-- Concessional customs duty of 5 percent for cable TV operators for importing equipment

-- Toys fully exempt from central excise duty

-- Service sector tax retained at 10 percent to aid the introduction of GST; more services to be taxed

-- Accredited news agencies exempt from service tax

-- Net revenue gain Rs.22,500 crore

-- Taxes on large cars and SUVs increased 2 percent to 22 percent

-- Basic duty of 5 percent on crude oil restored

-- Tax on cigarettes, cigars and chewing tobacco increased

-- Rs. 26,000 crore revenue loss due to reduction of direct taxes

-- Partial roll back of reduction in central excise duty

-- Income up to Rs.1.6 lakh per year exempt from income tax; up to Rs.5 lakh to be taxed at 10 percent; income of Rs.5-8 lakh to be taxed at 20 percent and income above Rs.8 lakh to be taxed at 30 percent

-- IT returns forms for individual tax payers to be further simplified

-- Expenditure in 2010-11 estimated at 11,l8,749 crore

-- Fiscal deficit estimated at 5.5 percent in 2010-11; an improvement of 1 percent over 2009-10

-- Two more centralised tax processing centres to be set up in addition to the one at Bangalore

-- National Social Security Fund created for workers in unorganised sector with allocation of Rs.1,000 crore

-- Government to give Rs.1,000 for each National Pension Scheme account opened by workers in the unorganised sector

-- Exclusive skill development programme for the textile sector

-- Fifty percent hike in allocation for schemes for women and child development

-- Rs.4,500 crore allocated for ministry of social justice and empowerment, a hike of 80 percent

-- Rs.2,600 crore allocated for ministry of minorities affairs

-- Rs.1,900 crore for Unique Identification Authority of India

-- Rs.147,344 crore allocated for defence

-- 2,000 youth to be recruited in central paramilitary forces

-- Draft Food Security Bill prepared and will be put in the public domain

-- Allocation on primary education raised from Rs.26,800 crore to Rs.31,300 crore

-- Banking facilities to be provided to all habitations with a population of 2,000 and more

-- Rs.66,100 crore allocated for rural development in 2010-11; Rs.40,100 crore for National Rural Employment Scheme; RS.48,000 crore for Bharat Nirman

-- Rs.1,270 crore allocated for Rajiv Awas Yojana for slum dwellers, up from Rs.150 crore, an increase of 700 percent with the aim of creating a slum free India.

-- Forty-six percent of plan allocations in 2010-11 will be for infrastructure development

-- Coal Regulatory Authority to be set up to benchmark standards of performance

-- Allocation for new and renewable energy sector increased 61 percent from Rs.620 crore to Rs.1,000 crore in 2010-11

-- National Clean Energy Fund to be established

-- Rs.200 crore allocated as special package for Goa to prevent erosion and increase green cover

-- Government committed to growth of SEZs

-- Four-pronged strategy for growth of agricultural sector

-- Rs.200 crore to be provided in 2010-11 for climate-resilient agricultural initiative

-- Involvement of private sector in grain storage to continue for another two years

-- In view of drought and floods, debt repayment period extended to June 2010

-- Five more mega food processing projects in addition to 10 existing ones

-- FDI flows in April-December 2009 $20.9 billion

-- FDI policy to be made more user-friendly with one comprehensive document

-- Apex level financial stability council to be set up for banking sector

-- Indian Banking Association to give additional licences to private players

-- Provision for further capital for regional rural banks

-- Roadmap for reducing public debt in six months

-- Implementation of direct tax code from April 2011

-- Government actively engaged in finalising structure of general sales tax regime; hopes to implement it from April 2011

-- New fertiliser policy from April 2010; will lead to improved productively and more income for farmers

-- Economy stabilised in first quarter of 2009-10; strong rebound in second quarter; overall growth at 7.2 and could be higher when Q3 and Q4 are taken into account

-- Export figures for January encouraging

-- Hope to breach 10 percent growth mark in not too distant future

-- Government set in motion steps to bring down food inflation

-- Need to review stimulus package; need to make growth more broad-based

-- India has weathered global economic crisis well; Indian economy in far better position than it was a year ago. In 2009 Indian economy faced grave uncertainty; delay in southwest monsoon had undermined agricultural production

-- First challenge now is to quickly revert to 9 percent growth and then aim for double digit growth; need to make recovery more broadbased

-- Second challenge is to make growth more inclusive; have to strengthen food security

-- Third challenge is to overcome weakness in government's public delivery mechanism; a long way to go in this

Have breakfast or ........ be breakfast !!

Who sells the largest number of cameras in India? Your guess is likely to be Sony, Canon or Nikon. Answer is none of the above. The winner is Nokia whose main line of business in India is not cameras but cell phones. Reason being cameras bundled with cellphones are outselling stand alone cameras. Now, what prevents the cellphone from replacing the camera outright? Nothing at all. One can only hope the Sonys and Canons are taking note.

Try this. Who is the biggest in music business in India? You think it is HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes (that play for 30 seconds) Airtel makes more than what music companies make by selling music albums (that run for hours). Incidentally Airtel is not in music business. It is the mobile service provider with the largest subscriber base in India. That sort of competitor is difficult to detect, even more difficult to beat (by the time you have identified him he has already gone past you). But if you imagine that Nokia and Bharti (Airtel's parent) are breathing easy you can't be farther from truth. Nokia confessed that they all but missed the smartphone bus. They admit that Apple's Iphone and Google's Android can make life difficult in future. But you never thought Google was a mobile company, did you? If these illustrations mean anything, there is a bigger game unfolding. It is not so much about mobile or music or camera or emails?

The "Mahabharat" (the great Indian epic battle) is about "what is tomorrow's personal digital device"? Will it be a souped up mobile or a palmtop with a telephone? All these are little wars that add up to that big battle. Hiding behind all these wars is a gem of a question - "who is my competitor?"

Once in a while, to intrigue my students I toss a question at them. It says "What Apple did to Sony, Sony did to Kodak, explain?" The smart ones get the answer almost immediately. Sony defined its market as audio (music from the walkman). They never expected an IT company like Apple to encroach into their audio domain. Come to think of it, is it really surprising? Apple as a computer maker has both audio and video capabilities. So what made Sony think he won't compete on pure audio? "Elementary Watson". So also Kodak defined its business as film cameras, Sony defines its businesses as "digital." In digital camera the two markets perfectly meshed. Kodak was torn between going digital and sacrificing money on camera film or staying with films and getting left behind in digital technology. Left undecided it lost in both. It had to. It did not ask the question "who is my competitor for tomorrow?"

The same was true for IBM whose mainframe revenue prevented it from seeing the PC. The same was true of Bill Gates who declared "internet is a fad!" and then turned around to bundle the browser with windows to bury Netscape. The point is not who is today's competitor. Today's competitor is obvious. Tomorrow's is not.

In 2008, who was the toughest competitor to British Airways in India? Singapore airlines? Better still, Indian airlines? Maybe, but there are better answers. There are competitors that can hurt all these airlines and others not mentioned. The answer is videoconferencing and telepresence services of HP and Cisco. Travel dropped due to recession. Senior IT executives in India and abroad were compelled by their head quarters to use videoconferencing to shrink travel budget. So much so, that the mad scramble for American visas from Indian techies was nowhere in sight in 2008. (India has a quota of something like 65,000 visas to the U.S. They were going a-begging. Blame it on recession!). So far so good. But to think that the airlines will be back in business post recession is something I would not bet on. In short term yes. In long term a resounding no. Remember, if there is one place where Newton's law of gravity is applicable besides physics it is in electronic hardware. Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray disc player) crashed to one-third of its original level in India. PC's price dropped from hundreds of thousands of rupees to tens of thousands. If this trend repeats then telepresence prices will also crash. Imagine the fate of airlines then. As it is not many are making money. Then it will surely be RIP!

India has two passions. Films and cricket. The two markets were distinctly different. So were the icons. The cricket gods were Sachin and Sehwag. The filmi gods were the Khans (Aamir Khan, Shah Rukh Khan and the other Khans who followed suit). That was, when cricket was fundamentally test cricket or at best 50 over cricket. Then came IPL and the two markets collapsed into one. IPL brought cricket down to 20 overs. Suddenly an IPL match was reduced to the length of a 3 hour movie. Cricket became film's competitor. On the eve of IPL matches movie halls ran empty. Desperate multiplex owners requisitioned the rights for screening IPL matches at movie halls to hang on to the audience. If IPL were to become the mainstay of cricket, as it is likely to be, films have to sequence their releases so as not clash with IPL matches. As far as the audience is concerned both are what in India are called 3 hour "tamasha" (entertainment). Cricket season might push films out of the market.

Look at the products that vanished from India in the last 20 years. When did you last see a black and white movie? When did you last use a fountain pen? When did you last type on a typewriter? The answer for all the above is "I don't remember!" For some time there was a mild substitute for the typewriter called electronic typewriter that had limited memory. Then came the computer and mowed them all. Today most technologically challenged guys like me use the computer as an upgraded typewriter. Typewriters per se are nowhere to be seen. One last illustration. 20 years back what were Indians using to wake them up in the morning? The answer is "alarm clock." The alarm clock was a monster made of mechanical springs. It had to be physically keyed every day to keep it running. It made so much noise by way of alarm, that it woke you up and the rest of the colony. Then came quartz clocks which were sleeker. They were much more gentle though still quaintly called "alarms." What do we use today for waking up in the morning? Cellphone! An entire industry of clocks disappeared without warning thanks to cell phones. Big watch companies like Titan were the losers. You never know in which bush your competitor is hiding! On a lighter vein, who are the competitors for authors? Joke spewing machines? (Steve Wozniak, the co-founder of Apple, himself a Pole, tagged a Polish joke telling machine to a telephone much to the mirth of Silicon Valley). Or will the competition be story telling robots? Future is scary!

The boss of an IT company once said something interesting about the animal called competition. He said "Have breakfast ...or.... be breakfast"! That sums it up rather neatly.

Keep Thinking !!