INCOME TAXAN INTRODUCTION

GROSS TOTAL INCOME

The aggregate of the income of five heads:- Income from salaries Income from house property Profit and gains of business and

profession Capital gains Income from other sources

TOTAL INCOME

GROSS TOTAL INCOME – DEDUCTIONS UNDER SECTIONS 80C TO

80U = TOTAL INCOME

CASUAL INCOME

Any receipt which is of a casual and non-recurring nature i.e. income the receipt of which is accidental and without any stipulation.

Winnings from lottery, crossword puzzles, betting etc. is casual income.

The expenses and losses of these incomes is not adjusted. The TDS rate is 30%.

PERSON

AN INDIVIDUAL A HINDU UNDIVIDED FAMILY A COMPANY A FIRM AN AOP OR BOI A LOCAL AUTHORITY EVERY ARTIFICIAL JURIDICAL PERSON

ASSESSEE

ORDINARY ASSESSEE: who is liable to pay tax on his own income.

DEEMED ASSESSEE: who is deemed to be an assessee for some other person…..any representative of a minor, lunatic person etc.

Assessee in default: when a person is responsible for doing any work under the act and he fails to do it…. An employer who is to deduct the TDS but he does not do it.

ASSESSMENT YEAR

A PERIOD OF 12 MONTHS IN WHICH THE TAX IS ASSESSED ON THE INCOME OF PREVIOUS YEAR.

PREVIOUS YEAR A PERIOD OF 12 MONTHS IN WHICH THE

INCOME IS EARNED ON WHICH THE TAX

IS ASSESSED IN THE ASSESSMENT YEAR.

EXCEPTIONS TO PREVIOUS YEAR

o INCOME OF NON-RESIDENT FROM SHIPPING BUSINESS

o INCOME OF PERSONS LEAVING INDIAo INCOME OF AN AOP, BOI OR AN

ARTIFICIAL JURISDICAL PERSON FORMED FOR A PARTICULAR EVENT OR PURPOSE

o TRANSFER OF PROPERTY TO AVOID TAXo ON DISCONTINUANCE OF A BUSINESS OR

PROFESSION

TAX EVASION

When a person reduces his total income by making false claims or by withholding the information regarding his real income, so that his tax liability is reduced. This is illegal, immoral, anti social and anti national.

The tax evaders face the penalty and prosecution.

TAX AVOIDANCE

This is an art of dodging tax without actually breaking the law, by availing of certain loopholes in the law.

TAX PLANNINGThis is an arrangement of one’s financial

affairs by taking full advantage of all exemptions, deductions, rebates and reliefs permitted under the act, so that the burden on the assessee is the least.