Basics of Income Tax in India

Basics of Income Tax in India

Meaning of assessment Year(section 2(9)) Assessment Year comprises of period of 12months which commences from 1st April immediately after the previous year.For example for previous year ended 31-3-2010 the assessment year 2010-2011. ILLUSTRATION Ramesh earns an income of Rs. 2,00,000 during the financial period 1-4-2009 to 31-03-2010. Thus his income becomes taxable during the assessment year 2010-2011. Meaning of previous Year (section 3) There will be only one previous year for all assesses ending on 31st March, for all sources of income .In other words the financial year immediately preceding the assessment year shall be the uniform previous year. Assesses: Section 2(7) The assesses is a person by whom any tax or any other sum of money (such as interest,penalty) is payable under the Income-Tax Act or in respect of whom any proceeding under the Act has been taken for the assessment of his income or loss or of any other person in respect of which he is assessable or of refund due to him or to such other person.It also includes every person deemed to be an assesses under of the income –Tax,1961.

Category of Assesses Under Section 2(31) of the Income Tax Act,persons(i.e.assesses) are divided into following categories: Individuals Hindu undivided family Company Firm Association of person or a body of individuals Local authority Every artificial juridical person,not falling in any of the preceding categories (i.e a Hindu deity) Residential status of an Assesses:[section 6]:- The income liable to tax in the hands of an assessee is determined on the basis of his residential status.For this purpose,the assesses are divided into the following categories; Resident of India Non-Resident in India Individuals and hindu undivided families who are resident in india are again classified as: Ordinary resident Not ordinarily resident

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