Lecture 1 - Introduction - Income - Tax
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Transcript of Lecture 1 - Introduction - Income - Tax
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INCOME TAXINTRODUCTION
Prof. K.M.V. NambudiriM.Com.; LL.B.; P.G.D.B.M
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WHAT IS INCOME-TAX?
Tax on Income = Income + Tax
Tax is charged at the rates applicable for assessment year on
the Total Income earned during the previous year by anassessee , who is a person.
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DIRECT TAX AND INDIRECT TAX
There are two types of tax Direct tax and
Indirect tax.
Direct tax are those where incidence and impact
on the same person. In Indirect tax incidence is
on one person where as the impact is on another.
(Incidence means the legal responsibility to pay
tax whereas impact is ultimate burden of tax.) Direct tax is used as reign of social economy.
Indirect tax is for revenue for governance.
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VARIOUS TYPES OF TAXES
Direct tax Income-tax, Wealth-tax, Fringe
Benefit tax, (Gift tax, Surtax, Estate Duty,
Expenditure tax, Interest tax etc.), Land
Revenue, Stamp Duty, Registration Charges,
Toll, etc.
Indirect tax Central Excise Duty, Custom
Duty, Service tax, Sales tax, State Excise Duty,Octoi, etc.
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Diferent types of Income-tax
Personal Income-tax
Corporate tax
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HISTORY OF INCOME-TAX
The infamous Capital Fee and Holy cross war.
Indian Income-tax Act of 1922 and Income-tax
Act of 1961.
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HEIRARCHY OF INCOME-TAX
Finance Minister Under FM, Minister of State for Revenueand Minister of State for Expenditure.
Under MOS Revenue, Central Board of Direct taxes andCentral Board of Excise and Customs.
Under CBDT, various Chief Commissioners of Income-tax. Under each CCIT, 3 Commissioners of Income-tax each.
Under each CIT, 3 Addl./Jt. Commissioner of Income-tax.
Under each Addl.CIT/JCIT, one Dy. Commissioner of Income-tax/ Asst. Commissioner of Income-tax, Four Income-tax
Officers and one Tax Recovery Officer. Under each DCIT/ACIT, ITO, TRO, one Inspector and 2-3 staff
members Tax Assistants.
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CHARGE OF INCOME-TAX
Income-tax is levied annually.
It is levied at the tax rates fixed by Finance
Acts of every year for the respective
Assessmet Year (Budget presented on 28th of
February) on the Total Income earned in the
previous year, on every person who is an
assessee.
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PREVIOUS YEAR AND ASSESSMENT
YEAR
Assessment Year is a period is a period of
twelve months starting from 1st April, every
year. u/s.2(9).
Previous Year is Financial Year immediately
preceding Assessment Year.
If a new business is started, the first previous
year means from the date of start to the next
31st March. (Sec.3)
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EXCEPTIONS TO ASSESSMENT YEAR
Income of Non-resident Shipping Companies
Income of person leaving India Permanently
or for a very long time.
Income of a person who is trying to lienate his
assets with a view to avoiding payment of tax.
Income of a discontinued business.
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PERSON
Person includes:
i) an Individual;
ii) a Hindu Undivided Family (HUF);
iii) a Company;
iv) a Firm;
v) an Association of Persons (AOP) or Body of
Individuals (BOI); vi) a Local Authority; and
vii) every Artificial Juridical Person
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ASSESSEE
A Person by whom Income-tax or any other
sum of money is payable under the Act;
Any Person against whom any proceedings
under the Act has been initiated; or
Any Representative Assessee.
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INCOME
Either received or accrued during the year, i.e.
Accrued and Received;
Accrued but not received Received but not accrued
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TOTAL INCOME
Gross Total Income which is the total of
incomes under different Heads of Income
Exclude the exempted Income
Reduce Deductions (Allowables)
The net result is the Total Income which
means the taxable income, on which tax is
worked out.
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HEADS OF INCOME
Salaries;
Income from House Property;
Profits & Gains from Business or Profession; Capital Gains; and
Income from Other Sources
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TAX PAYABLE
Tax is worked out at the rates applicable for
the relevant Assessment Year (AY), less
rebates + Surcharge + Education Cess + Higher
Seco
Interest levied as per law;
Penalty or fine levied for defaults;
Commutation of Prosecutions launched.
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MEHODS OF TAX PAYMENT
Tax Deducted at Source; (deducted at the sourceby the giver of the Income)
Advance tax - (paid by every assessee who
estimates taxable income during the year, atinstalments on 15th Sept.; 15th Dec. and 15thMarch of the Previous Year Pay as you Earn tax)
Self Assessment Tax (balance tax payable to be
paid at the time of filing of Return of Income); Regular tax (Further tax levied by the Income-tax
Officer at the time of assessment, if any)