Taxation of Individuals (including AMT) and HUF: formula sheet

Key formulas

Basic conditions for an individual (s. 6(2))

Resident if: (a) days in India ≥ 182 in the tax year; OR (b) days in India ≥ 60 in the tax year AND ≥ 365 in the preceding 4 years

Meeting either one is enough. If neither is met, the individual is a non-resident.

Relaxation for leaving or visiting (s. 6(3), (4), (5))

Citizen leaving for employment abroad or as crew of an Indian ship: condition (b) does not apply. Citizen or person of Indian origin visiting India: condition (b) does not apply, but if Indian income (excluding foreign-source income) > ₹15,00,000, 60 days becomes 120 days

Only the 182-day test works for those leaving for employment or as crew. For visitors above ₹15 lakh, the 120-day and 365-day test applies.

Deemed resident citizen (s. 6(7))

Citizen of India + not liable to tax in any other country by reason of domicile or residence + total income (excluding foreign-source income) > ₹15,00,000

Does not apply if the person is already resident under s. 6(2) to (6). Such a person is RNOR.

RNOR test for individual or HUF manager (s. 6(13)(a))

NR in 9 of the 10 preceding tax years; OR in India ≤ 729 days in the 7 preceding tax years

Either condition makes a resident an RNOR. For a HUF, apply the tests to the manager.

Other RNOR cases (s. 6(13)(b), (c))

Citizen or person of Indian origin with Indian income (excluding foreign-source income) > ₹15,00,000 and stay 120 days or more but less than 182 days; OR citizen deemed resident under s. 6(7)

If no RNOR condition is met, the resident is ROR.

HUF, firm, AOP (s. 6(9))

Resident unless control and management is wholly outside India in the tax year

Partly in India means resident.

Scope of total income (s. 5)

ROR: India-received + India-accrued + foreign-accrued. RNOR: India-received + India-accrued + foreign income only from a business controlled in or profession set up in India. NR: India-received + India-accrued only

Income received in India is not taxed again on the basis of receipt if already included as accrued (s. 5(4)).

Five heads of income

Salaries | House property | Profits and gains of business or profession | Capital gains | Income from other sources

Section 13 of the Income-tax Act, 2025. Every taxable income must fall under one of these.

Residuary nature of Other sources

Income not exempt and not under heads (a) to (d) → Income from other sources

Section 92(1). Check the other four heads first.

Gross total income

GTI = Salaries + House property + Business or profession + Capital gains + Other sources (after set-off of losses)

Deductions are then subtracted from GTI to reach total income.

Scope by residential status

ROR: India + foreign income | RNOR: Indian income + foreign income controlled from India | Non-resident: Indian income only

Indian income means received in India or accruing or arising (including deemed) in India. Use the section 5 rules for precise conditions.

Gifts without consideration (money)

Taxable if total received in the tax year from any person or persons exceeds ₹50,000; then the whole sum is taxable

Section 92(2)(m)(i). Exempt if from a relative, on marriage of the individual, under a will or inheritance, and the other cases in section 92(3).

Immovable property received for inadequate consideration

Taxable amount = stamp duty value − consideration, if the excess > higher of ₹50,000 or 10% of consideration

Section 92(2)(m)(ii)(B). Where received without consideration, the whole stamp duty value is taxed if it exceeds ₹50,000.

Core rule of section 43(1)

Forex gain or loss on foreign currency transactions = income or loss, computed as per ICDS notified under section 276(2)

Applies subject to section 42. The gain is income; the loss is a loss.

Scope under section 43(2)

Covers: monetary items and non-monetary items; translation of financial statements of foreign operations; forward exchange contracts; foreign currency translation reserves

Learn the four heads of scope as a list. Examiners often ask which items are covered.

Basic gain/loss working

Rupee difference = Foreign currency amount × (rate on later date − rate on earlier date)

A working aid, not a formula in the Act. For an amount receivable, a higher later rate is a gain; for an amount payable, a higher later rate is a loss. Check the rates and dates the ICDS requires in the question.

Spouse's remuneration (section 99(1)(a)(i))

Clubbed if spouse gets salary, commission, fees or other remuneration from a concern in which the individual has a substantial interest

Not clubbed to the extent solely attributable to the spouse's technical or professional knowledge, experience and qualification. Club in the hands of the spouse whose total income before inclusion is greater.

Substantial interest (section 99(5)(a)(iii))

Company: shares carrying at least 20% voting power (excluding fixed-rate dividend shares) owned beneficially by the individual alone or with relatives at any time in the tax year. Other concern: entitled, alone or with relatives, to at least 20% of profits at any time in the tax year

Test it at any time during the tax year, not at year end.

Assets transferred to spouse (section 99(1)(a)(ii))

Income from assets transferred to spouse without adequate consideration is clubbed

Not clubbed for transfer in connection with an agreement to live apart, subject to section 25(a). Income from assets received for adequate consideration is not clubbed.

Minor child (section 99(1)(c), (5)(b))

Income of minor child is clubbed in the hands of the parent with greater total income (marriage subsisting), or the parent who maintains the child (marriage not subsisting)

Exceptions: income from child's work, from activities using child's skill, talent, specialised knowledge or experience, or child with specified disability. Once clubbed in one parent's hands, it is not clubbed with the other parent in later years unless the Assessing Officer is satisfied after hearing that parent.

Investment of transferred asset in business (section 99(2))

A = B × C ÷ D

A = income clubbed; B = income and interest from the business or firm in the tax year; C = value of transferred asset invested or contributed as capital at the first day of the tax year; D = total investment or total capital contribution of the spouse or son's wife at the first day of the tax year. I am giving this from the defined variables; the official text shows the formula only as an image.

Speculation loss (section 113)

Set off only against speculation profit; carry forward not beyond four tax years immediately succeeding the loss year

A company dealing in shares is deemed to carry on speculation business to that extent, except in the cases listed in section 113(6).

Specified business loss (section 114)

Set off only against profits of another specified business (business referred to in section 46); carry forward to following tax years against specified business profits

The text supplied states no time limit for this loss; do not add one.

Meaning of income in section 99

"Income" includes loss

A loss of the transferred asset or minor child's source is also clubbed.

Total income

Total income = Gross total income − Deductions allowed

Deductions cannot exceed gross total income, so total income is not negative because of them.

Health insurance: individual, self and family

Insurance premium, CGHS contribution or preventive check-up for self, spouse and dependant children ≤ ₹25,000 (₹50,000 if the person insured is a senior citizen)

Family means spouse and dependant children only. Parents are covered separately.

Health insurance: parents

Insurance or preventive check-up for parent(s) ≤ ₹25,000 (₹50,000 if the parent insured is a senior citizen)

The limit is for the parent or parents together in aggregate, not per parent.

Preventive health check-up sub-limit

Preventive health check-up ≤ ₹5,000 in aggregate, within the above limits

Cash is allowed only for check-up. All other payments must be by a mode other than cash.

Medical expenditure

Medical expenditure for self or family ≤ ₹50,000; for a parent ≤ ₹50,000

For a senior citizen, allowed only if no health insurance premium is paid for that person. Total for self and family (insurance plus medical) cannot exceed ₹50,000; same for parents.

HUF health insurance

Insurance for any member ≤ ₹25,000; medical expenditure ≤ ₹50,000; total ≤ ₹50,000

Insurance limit rises to ₹50,000 if the insured member is a senior citizen.

Lump-sum multi-year premium

Annual deduction = Lump sum × 1 ÷ number of relevant tax years

Relevant tax years begin with the year of payment and continue while the policy remains in force.

Interest on higher education loan

Deduction = whole interest paid in the tax year; allowed for the initial tax year + 7 following tax years, or until the interest is fully paid, whichever is earlier

Individual only. Loan from a bank or notified financial institution, or an approved charitable institution, for higher education of self or a relative. Paid out of income chargeable to tax.

New regime slabs, section 202(1)

Nil up to ₹4L | 5% to ₹8L | 10% to ₹12L | 15% to ₹16L | 20% to ₹20L | 25% to ₹24L | 30% above ₹24L

Rates apply band by band. Section 202(1) applies unless the option under section 202(4) is exercised.

Cumulative tax at slab tops (new regime)

₹8L: ₹20,000 | ₹12L: ₹60,000 | ₹16L: ₹1,20,000 | ₹20L: ₹2,00,000 | ₹24L: ₹3,00,000

Above ₹24L, tax = ₹3,00,000 + 30% of income above ₹24,00,000.

Rebate, income up to ₹12 lakh, section 156(2)(a)

Rebate = lower of tax payable or ₹60,000

For a resident individual whose total income is chargeable under section 202(1). Total income up to ₹12L means nil tax on slab tax of ₹60,000 or less.

Rebate, income above ₹12 lakh, section 156(2)(b)

If tax > (income − ₹12,00,000): Rebate = Tax − (Income − ₹12,00,000)

Tax after rebate then equals the income above ₹12 lakh. The rebate cannot exceed the tax payable, section 156(3).

Rebate, income up to ₹5 lakh, section 156(1)

Deduction = lower of 100% of tax or ₹12,500

For a resident individual with total income not above ₹5,00,000. This is the rebate used for the optional (old) regime.

Marginal relief on surcharge

Tax + surcharge after relief ≤ Tax on threshold income + (Income − threshold)

Applies where income just crosses a surcharge threshold. Compute both amounts and take the lower.

Cess

Cess = 4% × (Tax after rebate + surcharge − relief)

Health and education cess. Added last, with no marginal relief.

Surcharge thresholds for individuals (new regime)

10% above ₹50L | 15% above ₹1 crore | 25% above ₹2 crore

Learn from your study material. The older regime has an additional higher rate above ₹5 crore. Surcharge on dividend and capital gains incomes is capped at 15%.

Adjusted total income

Adjusted total income = Total income (before AMT) + Chapter VIII-C deductions claimed (other than section 149) + section 46 deduction (as reduced by depreciation allowable under section 33)

Section 46 add-back is reduced by depreciation allowable under section 33 as if no section 46 deduction was allowed on those assets.

AMT rate

AMT = Adjusted total income × 18.5% (general); 15% for co-operative society; 9% for IFSC unit earning solely in convertible foreign exchange

Use 18.5% unless the question says co-operative society or IFSC unit.

When AMT applies

If regular income-tax < AMT, tax payable = AMT

Applies only to persons other than a company who claimed Chapter VIII-C deductions (other than section 149) or the section 46 deduction.

AMT credit created

AMT credit = AMT − regular income-tax

No interest is payable on the credit. Carry forward is not allowed beyond the fifteenth tax year after the year the credit arises.

Set-off of credit

Credit used in a year ≤ Regular income-tax − AMT of that year

Set-off is possible only in a year when regular tax exceeds AMT, and only up to that excess.

Exclusion for small adjusted total income

Individual / HUF / AOP / BOI / artificial juridical person: AMT not applicable if adjusted total income ≤ ₹20,00,000

Limit is on adjusted total income, not total income.

Status

HUF = separate "person", taxed on its own total income

Own PAN and own return, filed by the Karta. It is a different assessee from each member.

Computation

Income under each head ‒ set off of losses = Gross Total Income; GTI ‒ allowed deductions = Total Income

Same structure as for an individual. Allowed deductions depend on the regime opted for.

Tax rates

Slab rates same as for an individual, plus 4% health and education cess

Under the new regime, the slabs for tax year 2026-27 are: up to ₹4,00,000 nil; ₹4,00,001 to ₹8,00,000 at 5%; ₹8,00,001 to ₹12,00,000 at 10%; ₹12,00,001 to ₹16,00,000 at 15%; ₹16,00,001 to ₹20,00,000 at 20%; ₹20,00,001 to ₹24,00,000 at 25%; above ₹24,00,000 at 30%. Check the slabs and the rules for opting out in your study material.

Rebate

Rebate for low income is available only to resident individuals

An HUF cannot claim it, even if its total income is small.

Share of member

Amount received by a member from HUF income = exempt in the member's hands

The income has already been taxed in the HUF's hands.

Total partition

HUF taxed up to date of partition; members taxed separately after it

The partition must be an actual division by metes and bounds. If the Assessing Officer does not accept it, the HUF is taxed as if there were no partition.

Partial partition

Not recognised for tax (after 31-12-1978)

The HUF continues to be assessed. Income from the property given to members is treated as the HUF's income.

Residential status

HUF is resident if control and management is wholly or partly in India

A resident HUF is ordinarily resident if the Karta satisfies both the extra conditions (resident in at least 2 of the 10 previous years and in India for at least 730 days in the 7 previous years).

Quick revision

• Always fix residential status first; it decides the taxable scope of income.
• Write the full computation in order: heads of income, gross total income, deductions, total income, tax.
• Use the Income-tax Act, 2025 and the term tax year; never write assessment year.
• Under section 43, foreign exchange gain or loss on foreign currency transactions is income or loss, computed per the notified income computation and disclosure standards.
• Section 43 covers monetary and non-monetary items, translation of foreign operations, forward contracts and foreign currency translation reserves.
• Clubbing adds another person's income to the income of the person to whom the clubbing rules apply.
• Set off losses within a head first, then against other heads, and carry forward only what the rules allow.
• Deductions are allowed from gross total income, so claim them only after clubbing and set-off.
• AMT is a comparison between regular tax and tax on adjusted income; check it after the regular computation.
• A HUF is a separate taxable unit; check the partition rules before treating any income as divided.
• Show workings for every figure, since step marks are given even if the final answer is wrong.

Common mistakes

• Applying the 60-day plus 365-day test to a citizen who left India for employment abroad. Fix: Check for employment abroad or crew first. Then only the 182-day test applies.
• Deciding RNOR when the person is non-resident. Fix: RNOR is a sub-class of residents. Prove resident first.
• Taxing foreign income of a non-resident or RNOR in full. Fix: Write the status at the top of the answer. Test every foreign item against it before including it.
• Putting interest on securities or dividend under business income by default. Fix: Section 92(2) puts dividend under Other sources. Interest on securities goes there too, unless it is chargeable as business income.
• Treating forex gain or loss as only an accounting entry with no tax effect. Fix: State that section 43(1) itself treats the gain or loss as income or loss, computed as per ICDS.
• Getting the direction wrong for payables. Fix: Ask first: do I receive or pay foreign currency? A rising rate helps receivables and hurts payables.
• Clubbing a minor's income earned by using the child's own skill or talent. Fix: Always check the three exceptions in section 99(1)(c): the child's work, skill or talent, and disability under section 154.
• Clubbing income from assets bought by the spouse with her own money. Fix: Club only when the individual transferred the asset without adequate consideration. Own funds mean no clubbing.
• Applying one ₹25,000 limit to self and parents together. Fix: Keep two blocks. Self, spouse and dependant children form one block. Parents form another. Each has its own limit.
• Allowing a premium paid in cash. Fix: Only preventive health check-up may be paid in cash. Every other health payment must be by a mode other than cash, or it is disallowed.

Exam tips

• Write the status conclusion in one line before income analysis. Examiners give marks for each test.
• Set out a small table of past years with days. It shows both the 365-day and 729-day tests clearly.
• Look for the words citizen, person of Indian origin, employment abroad and crew. They change which test applies.
• In MCQs, check whether the person is already non-resident before reading RNOR options. No negative marking, so always answer.
• Always state the tax year, such as 2026-27, never assessment year.
• Start every answer with the residential status and the one-line reason. Examiners award marks for it even when later figures slip.
• In MCQs, look for the trap word: relative, marriage, will, or the ₹50,000 threshold. Each flips the answer.
• Quote the section number for the head, such as section 13, 92(2) or 26(4), where you are sure. It supports your classification.