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Income tax

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Income tax

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  1. Income tax DR.J.ARUL SURESH DEPARTMENT OF COMMERCE LOYOLA COLLEGE CHENNAI

  2. ASSESSEE It is defined broadly to include the following: In Simple terms any Person whose income is assessable under any Tax law is called an Assessee. ASSESSMENT YEAR Assessment year in simple terms means the financial year immediately succeeding the previous year. In other words it is the year in which one is assessed for his/ her income.    • Previous year and Assessment year will always be starting from 1st April and ending on 31st March, In no case it can be followed as a Calendar year i.e. 1st January to 31st December. Mr. B, a salaried individual earned an income of Rs. 3, 50,000/- in the previous year starting from 1st April’ 2009 to 31st March’ 2010 (i.e. 2009-10). Now he has to pay tax on income earned, at applicable rates for assessment year starting from 1st April’ 2010 to 31st March’ 2011 (i.e. 2010-11).

  3. PREVIOUS YEAR • Previous year means the financial year immediately preceding the assessment year, i.e. the year in which income is actually earned. • Below mentioned example will help you gain more clarity on these terms: • Mr. Z, a sole proprietor earned a profit of Rs. 20,000/- for the previous year 2009-10, His income for previous year 2009-10 will however be chargeable to tax at rates applicable for Assessment year 2010-11.

  4. However there are certain exceptions to the above Rule, those being: • Income of a Non-resident from Shipping. • Income of persons leaving India either permanently or for a long period of time. • Income of Bodies formed for a short duration says for a particular event or purpose. • Income of a person trying to either Charge, Sell, Transfer or dispose of or otherwise part with any assets with a view to avoid any tax liability. • Income earned from a discontinued business.

  5. GROSS TOTAL INCOME As per the Income Tax Act Income is Chargeable to tax under five heads, those being:  1)    Salaries 2)    Income from House Property 3)     Profits and Gains from Business or Profession 4)     Capital Gains. 5)     Income from Other Sources  The aggregate income under these heads is termed as ‘Gross Total Income’. It is always calculated before providing exemptions under Chapter VIA, i.e., deductions from Section 80CCC to 80U.  TOTAL INCOME Total Income stated simply is the Gross Total Income as reduced by amount permissible as deduction under Sections 80CCC to 80U.

  6. PERSON/ TYPES OF ASSESSEE • The term person as per Income Tax law is defined to include: - 1) An Individual. e.g. Mr. A or Mr. B. 2) A Hindu Undivided Family. e.g. Mr. A (HUF) or Mr. B (HUF). 3) A Company. e.g. XYZ Pvt. Ltd. Or ABC Ltd. 4) A Partnership firm. e.g. M/s ABC or M/s XYZ and Co. 5) An Association of persons or a body of Individuals, whether incorporated or not. e.g. ABC Sangh or XYZ Dal. 6) A Local Authority. e.g. Pune Municipal Corporation or PCMC Municipal Corporation. 7) Every Artificial Juridical persons not falling within any of the above categories. (Residual Category)

  7. However there are certain exceptions to the above Rule, those being: • Income of a Non-resident from Shipping. • Income of persons leaving India either permanently or for a long period of time. • Income of Bodies formed for a short duration says for a particular event or purpose. •  Income of a person trying to either Charge, Sell, Transfer or Dispose of or otherwise part with any assets with a view to avoid any tax liability. • Income earned from a discontinued business