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61 views19 pagesIncome Tax
income tax introduction and important definitions
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" INCOME TAX
INTRODUCTION AND
IMPORTANT DEFINITIONS
‘Amendment of Sec. 877A. : Rebate of income tax "wef. 14.2024) |
Amendment of Sec. 115BAC 1 Tax rates (wef. 1.4.2024))
INTRODUCTION
Income tax is an important direct tax. It is a prominent and the most significant source of
revenue of the Government. The Government needs money to maintain law and order in the
country, safeguard the security of the country from foreign powers and promote the welfare
of the people. Since our Government is wedded to the socialistic pattern of society it is the
foremost duty of the Government to bring out such welfare and development programmes
which will bridge the gap between the rich and the poor. All this requires mobilisation of funds
from various sources. These sources may be direct or indirect. Income tax, being a direct tax,
is an important tool to achieve balanced socio-economic growth by providing concessions and
incentives in income tax for various developmental purposes,
Q Who is liable to pay income tax
Every person, whose taxable income for the previous financial year exceeds the minimum
taxable limit is liable to pay income tax during the current financial year on the income of the
previous financial year at the rates applicable during the current financial year.
BRIEF HISTORY OF INCOME TAX IN INDIA
(1) In India, this tax was introduced for the first time in 1860, by Sir James Wilson in
order to meet the losses sustained by the Government on account of the Military Mutiny of
1857.
(2) In 1886, a separate Income Tax Act was passed. This Act remained in force up to 1917,
with various amendments from time to time.
(8) In 1918, a new Income Tax Act was passed and again it was replaced by another new
‘Act which was passed in 1922. This Act remained in force up to the Assessment Year 1961-62
with numerous amendments.
(4) The Income Tax Act of 1922 had become very complicated on account of innumerable
amendments, The Government of India, therefore, referred it to the Law Commission in 1956
with a view to simplify and prevent the tax evasion. The Law Commission submitted its report
in September 1958, but in the meantime, the Government of India had appointed the Direct
Taxes Administration Enquiry Committee to suggest measures to minimise inconveniences
f tax. This Committee submitted its report in 1959. In
to assesses and to prevent evasion o
consultation with the Ministry of Law finally the Income Tax Act, 1961 was passed. INCOME TAX
(5) The Income Tay 2 into for Ae
Werteatat ne See has been brought into force with effect from 1st April, 1993
(6) Since 1962 several amendments of far-reaching nature have been
Tax tate Finance Act every year.
- esides this, amendments have also been made various ni
Te The Taxation Laws Amendment: Act, 1984; The Deer Taxes Karan oat
‘he Direct Taxes Law (Amendment) Acts of 1988 and 1989; The Direct Taxes Law (08%
Amendment) Act, 1989; The Taxation Laws (Amendment) Act, 1991; The Taxation v; (Second
Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and at last The’ ™ Ae
oe (Amendment) Act, 2021. meee bee!
a matter of fact, the Income Tax Act, 1961; which came into force
has been amended and re-amended widely. It has, therefore, become very complcat yee
the administering authorities and the tax-payers. th for
BASIS AND PROCEDURE OF CHARGING INCOME TAX
‘The following basic principles are the basis of charging income tax :
1. Income tax is an annual tax charged on income.
2. Income of the previous year is taxable in the next following assessment year at
rate or rates applicable to that assessment year. However, there are certain excongt =
to this rule. ccd
Tax rates are fixed by the Annual Finance Act.
Tax is charged on every person as defined in section 2(31).
Tax is charged on the total income of every person computed in accordance with th
provisions of this Act. e
Income tax is to be deducted at the sources of income or paid in advance as provided
under provisions of the Act.
The total income is computed on the basis of the residential status of the assessee, The
income is classified into the following five heads :
1. Income from Salaries;
2. Income from House Property;
3. Profits and Gains of Business or Profession;
4. Capital Gains; and
5. Income from Other Sources.
For computing the total income of an assessee and the tax payable by him, following
procedure is followed :
(1) Classify the income under each of the above five heads and then deduct from the income
under each head the deductions permissible under the Act in respect of that head of income.
The balance of amount left under each head of income is its assessable income.
(2) Total of the assessable income of each head or the aggregate of all these assessable
incomes is called the Gross Total Income.
(3)From the Gross Total Income, thus arrived at, deduct the deductions permissible
under sections 80C to 80U of the Act for computing the total income. The balance left after
subtracting the allowable deductions is called the Total Income. fi
(4) The amount of income tax payable is then calculated on this total income according
to the rates prescribed by the Finance Act for the relevant assessment year and the rates
prescribed under different sections of the Act.
CHARACTERISTICS OF INCOME TAX ee aire
1. Direct Tax : Income Tax is a Direct Tax. Direct Tax means such tax which is paid by
person who bears the tax burden.
2. Central Tax : Income Tax is imposed and recovered by the Central Government
3. Tax on Total Income : Income Tax is calculated on total income. Total ineome
oe Tax
called taxable ineome, Total income i caleulated according to the provisions of!he ae
made in the Incon,
er
ion
(See 4
2 Ee
4,
Tax-exc
(A)
less the
B
more ai INCOME TAX (INTRODUCTION AND IMPORTANT DEFINITIONS) 3
4. Tax-Exempted Limit : i 7
man decree Rvempte Limit: income exconds tax exempt limit ofincome, then taxis imposed.
exempt mit of income for the Assessment Year 2024-25, areas follows:
teas (a Undividuat : Senior citizen (reaident in India), who eof th age of 60 years oF more but
than 80 years at any time during the previous year ®3,00,000,
I Sve eon caren Genito of the age of 80 years or
(C) Other Individuals, HUF, Association of P
D) Firm, Conan Aaa Ean of Persons and Body of Individuals % 2,50,000.
5. Progressive Tax Rates aa
aclinlividael HUF, AOP ov BOL Tas cates Inroans with an ineeete fa inoweaa! Minin zt
fatiats in OR and taacknom tac velo le 305, Hees’ Cope arb taal ot users OF 20
epee ee lane Las ao oO Dera oc ener the rate of 30%
eaten 1 rate of 15% or 22% or 25% or 30% (whichever is
6. Surcharge : Surcharge’ is i i
dais Berchorge: Surcharges isopesed on the amount ofincome tax Surcharge ates nr a8
() For individuals, HUF, AOP or BOI : is
reese eaereret (i) loaeie Goel iaoema cca Cera bat Seema C2
: ‘ » es not excee
eT Ke ieee B en ames exceeds & 2 crore but does not exceed % 5 crore; (d) @ 37%, if
Gi) For Firms :@ 12%, if total income exceeds € 1 crore.
iii) For Domestic Company : (a) @ 7% if total ine
cro crore. (b) @ 12% if tote income exceeds €10 crore. sete Sra A
‘Note : In above all three conditions, provision of marginal relief will also be applica
T Health ond: Education Cess All assescoes are lable to. pay heal
cess @ 4% onthe total amount Sear ora ae
. Tax Burden : Tax is imposed at a progressive rate on the i individual and HUF
therefore, rich person bear more tax area Oo
9, Administration : Tax is imposed and recovered by the income tax department, Income
‘Tax Department works under the control of the Central Board of Direct Taxes (CBDT).
10 Allocation of Amount of Income Tax : The total amount of income tax recovered
by Government is allocated among the Central Government and the State Government
according to the recommendation ofthe Finance Commission, The State Government will not
be given any share of income tax revenue from the following amounts :
(Income tax amount recovered from companies.
Gi) Amount of surcharge.
Gii) Amount of health and education cess.
‘TAK RATES
(Normal Tax Regime)
Q 1. Rates of Tax for the Assessment Year 2024-25
Faas oor an Individual, Hindu Undivided Family, Association of Persons (othey
than es operative society), Body of Individuals or every Artificial Juridical Person prescribed
by the Annual Finance Act for normal tax regime :
1. General Rates:
Dacluding short-term capital gains, specified in Sec. 111A, long-term capital gains,
winnings from lotteries, crossword puzzles, races, ete.
ta Ptdividual- Senior citizen (resident in India, who is ofthe a¢~ of 60 years
dacmnore but less than 80 years at any time during the previous year):
On € 3,00,000 (Minimum exemption limit) Nil
Next on % 2,00,000 5%
"No Deduction : The term ‘Tax’ referred ‘u/s 40(aXii), shall
any surcharge or cess on such tax, by whatever name called,
any surcharge yoo cess paid on the Tax as specified u/s 4XaXii)
acto and shal be deemed to bave aayectuded
inca and sal ey hal allowed with rest INCOME TAX
_ (resident in India, who is of the age
the previous yea
Paar 000 (Minimum exemption limi
Next on € 5,00,000
Next—Balance a
‘duals, HUF, AOP or oo)
Next on & 2,50,000
Next on & 5,00,000
Next—Balance
REBATE OF INCOME TAX
1
In case of an individual
i deductioi
om ofrebate of Income Tax are as under
oer nv
to HUB AOBOV Fm/Company and Non-resident Individual.
‘0
{in India, whose total income does not exceed ? 5,00,0
resident i amount of income tax payable up to € 12,500 ee
only to a Resident Individual. Rebate u/s 87A is
20%,
30%,
of 80 years
Nil
20%,
30%,
Nil
5%
20%
30%,
(See. 874)
not available
Peso tis. ceiling on the total income for claiming rebate u/s 87A. The total income after
ions i id: a aoe
all deductions eee, then no rebate w/s 87 will be admissible,
3. Total rebate is au
liability or ¢ 12,500 is available as deduction u/s 87A.
Cess which is 4% at present
ling deductions under Chapter VIA should not exceed ® 5 lakh. If the total
limited to a maximum of % 12,500. In short, lower of actual income tax
’4, This rebate is available on the tax computed before charging of Health and Education
SURCHARGE
Particulars
@/| Where the total income (including dividend income and capital gains
chargeable to tax u/s 111A, 112 and 112A) > @ 50 lakhs but <% 1 crore
Gi) | Where total income (including dividend income and capital gains chargeable
to tax u/s 111A, 112 and 112A) > @ 1 crore but <% 2 crore
(iii) | Where total income (excluding dividend income and capital gains chargeable
to tax w/s 111A, 112 and 112A) > ® 2 crore but < % 5 crore
The rate of surcharge on the income tax payable on the portion of dividend
income and capital gains chargeable to tax ws 111A, 112 and 112A included
in total income
(iv) | Where ‘otal income (excluding dividend income and capital gains chargeable
to tax w/s 111A, 112 and 112A) > 5 crore
The rate of surcharge on the income tax payable on the portion of dividend
income and capital gains chargeable to tax w/s 111A, 112 and 112A included
in total income
(v) | Where total income
to tax w/s 111A, 112
(iv) above
(including dividend income and capital gains chargeable
and 112A) >% 2 crore in cases not covered under (iii) and
Health and Ed:
mount of income-tax and surcharge,
Rate of
Surcharge on
income tax
10%
15%
25%
Not exceeding
15%
37%
Not exceeding
15%
15%
jueation Cess. Health and Education Cess @ 4% shall be charged on t PINETIONS)
INCOM TAX (INTRODUCTION AND IMPORTANT DI
aoe 2 MARGINAL RELIEF e ible
alte, nare of anginal i tema a the inerense fama of aya
Gaeluding surchange) due to increase in total in ts e bayond the proscribed! Tim!
should not exceed the amount of iner aa ae
aS
Bxceeds ¢ 50 lakh ‘The &
Marginal Ret
fable as income tax and
excoad the fotal amount payabl me tx on net income of €50 lakh by more
"8 ‘than the amount of income that exceeds & 50 Inkh, ‘
Above f Lerore The total rable as income tax and surcharge
No marginal relief will be allowed on health and education cess.
“PAX RATES UNDER THE DEFAULT TAX REGIME
for Individual or HUF or AOP (other than a Co-operative Society)
or BOI or Artificial Juridical Person for the Financial Year 2023-24
(Assessment Year 2024-25) (Sec. 115BAC)
Total Income "Applicable Tax Rate
Up to € 3.00,000, Nil |
¥ 3,00,001 to 6,00,000 5%. |
6,00,001 to 9,00.000 10%
9,00,001 to 12,00,000 15%
%12,00,001 to 15,00,000 20%
above ® 15,00,000 30%
Tadividuals and HUF are not liable to pay alternate minimum tax (AMT) under section 115BAC.
2This regime applies to persons other than companies and firms as a default regime from
the financial year 2023-24 (Assessment Year 2024-25). Although the new tax regime is the
default tax regime. The option for opting out from the new tax regime is available till the filing
of the return for the Assessment Year 2024-25. Eligible persons without any business income
will hance the option to choose the regime for each financial year.
I. Certain Deductions and Exemptions Not Permitted U/s 115BAC
‘Section | Particulars of restricted exemptionideduction
105) [Leave travel concession
10(13A) [House rent allowance
40(14) |Special allowances are not deductible. However, the following specific allowances provided
‘ws 10(14) are allowed under default tax regime :
{@ Transport allowance granted to certain employees who are blind or deaf or dumb, ete:
to meet expenditure for the purpose of commuting between place of residence and place of
duty to an extent of ¢ 3,200 p.m; : ‘
Gi) Conveyance allowance granted to meet the expenditure on conveyance in performance of
duties of an office or employment of profit;
\Gii) Allowance to meet the cost of travel on tour or on transfer;
(Gh) Ano allowance to meet ordinary daily charges incurred by an employee on account of
absence from his normal place of duty.
10117) _| Allowances to MPs and MLAs
16(ii) __ [Deduction for entertainment allowance
260i) __[Deducn
1 The Finance Act, 2023 (w.e,f. 1.4.2024)
2 Press Release, dated 31.3.2024 e INCOME
F professional
Interest on loan borrowed in the case of 7
32(1) (iia) |Additional depreciation provided for certain asset
S82AD [Investment allowance in the case of certain areas |
3348 [Deduction for teweoffe/rubber development aecour
ae peti Frit estat Muonrch: See. 95H); 95(1Gia; B5(0XH) and 352AA)
35AD [Deduction for capital expenditure pertaining to specified business
35CCC | Deduction for Agriculture extension projects
10(82) | Allowances for income of minor upon clubbing
fone or two self-occupied properties
liday for units established in SEZ
etn nc ec ae Eee cept ear recra) cee ae
off with business income of current year. !
80 Deductions cinder sections 80C to 80U are not permitted. However, the following deductions
lare not restricted for Sec. 115BAC : :
if ‘Sec. 80CCD(2) : Deduction for Employer's contribution to NPS;
|(b) 80CCHI2) ; Agnipath Scheme
Ose SOTA Deduction for employment of new employees:
Special Rates : :
On specified incomes the tax is charged at a specified flat rate :
(a) On short-term capital gains Sec. 111A—@ 15%;
(b) On long-term capital gains Sec. 112—@ 20%;
(©) On gain from listed shares without indexing the cost of acquisition Sec. 112 —@ 10%
(ci) On long-term capital gains Sec. 112A—@ 10%. 3
(@) On winnings from lotteries, crossword puzzles, horse races, ete. Sec. 115BB—@ 30%,
1 eel ere OF INCOME TAX (See, 874)
ere the total income of the assessee is chargeable to ts See
section LISBAC, and the total income: weable to tax under sub-section (1A) of
(@) does not exceed @ 7 lakh, the assessee shall be entitled to a deducti
. lucti
ofincome tax (as computed before allowing for the deductions under tha ween noun
the Act) on his total income with which he is chargeable for any asc
SURCHARGE
Particulars ae
Surchan
| Where the total Income urcharge on
chargeal income (including divi - income tax
Gi) | Where ae texus 111A, 112 and fisays sy ingame and capital gains Tae
totaxws 111A, 113 and G08 dividend income and capital gain, a,
Where total inco ies M2A)>@ 1 crore but < ¢ crept Bains chargeable 15%
ome (excluding dividend «
ve 1114 TH an RS iden income and capital gains o Dale ee
fhe rate of surcharge : harge:
income and cay On the income
ae Irom Fn charge ar ae Ei Sas Portion of dividend | Not exceeding
1?) | Where total income ( : included ise
come i an
cus 1 Tang aang lvidend income and capital gai
SUTIN cases not covered under (ap mesble to | 15%
1 The
Finance Act, 2023 wef 1.42024)
eee INCOME TAX (1
RODUCTION AND IMPORTANT DEFINITIONS)
Health and Rducation Cess. On the amount of income tax and Surcharge, health and
education cess @ 4% shall be charged.
The : MARGINAL RELIEF
\© purpose of marginal relief is to ensure that the increase in amount of tax payable
(including surcharge) due to increase in total income of an assessee beyond the prescribed limit
should not exceed the amount of increase in total income.
Income Marginal Relief
Exceeds ¢ 50 lakh |The total amount payable as income tax and surcharge on such income shall not
exceed the total amount payable as income tax on net income of 50 lalkh by more
than the amount of income that exceeds ® 50 lakh,
Above ®1erore |The total amount payable as income tax and surcharge on such income shall not
‘exceed the total amount payable as income tax and surcharge on net income of
€ Lerore by more than the amount of income that exceeds @ 1 crore.
Above % 2 crore ‘The total amount payable as income tax and surcharge on such income shall not
‘exceed the total amount payable as income tax and surcharge on net income of
@2 crore by more than the amount of income that exceeds % 2 crore.
No marginal relief will be allowed on health and education cess.
O (i) Certain losses not allowed bo be set-off
‘While computing total income, set-off of any loss
(i) carried forward or depreciation from any earlier assessment year, if such loss or
depreciation is attributable to any of the deductions referred to in (I) above; or
(ii) under the head house property with any other head of income;
would not be allowed.
Q (M1) Depreciation or additional depreciation
Depreciation u/s 32 is to be determined in the prescribed manner, Depreciation in respect
of any block of assets entitled to more than 40%, would be restricted to 40% on the written
down value of such block of assets. Additional depreciation ws 32(1)(iia), however, cannot be
claimed.
Q (GV) Exemption or deduction for allowances or perquisite
While computing total income, any exemption or deduction for allowances or perquisite,
by whatever name called, provided under any other law for the time being foree in India would
not be allowed.
Q (W) Incase of a person having a unit in IFSC referred to in section SOLA(LA), whose
income is chargeable to tax under section 115BAC(1A), deduction under section
BOLA would be allowed subject to fulfilment of the conditions specified in that
section.
Additional Points : ‘
(@) An individual, being an employee paying tax as per section 115BAC, would not be
entitled for exemption of perquisite of free food and non-alcoholic beverages provided
py an employer through paid vouchers. 4
Gi) Total ace under default tax regime should be computed without set-off of any loss
brought forward or depreciation from any earlier assessment year, where such loss
or depreciation is attributable to any of the deductions listed in (1) above. Such loss
and depreciation would be deemed to have been already given effect to and no further
ich loss or depreciation shall be allowed for any subsequent year.
ion for su u e
Pee tax on total income of the assessee is computed under this section and
there is a depreciation allowance in respect of a block of asset from an earlier assessment ee
8 INCOME TAX
year attributable to additional depreci
to prior to Assessment Year 2024-25 and which is not al
iii n given full ¢
ination u/s 32(1)(iia), which has not been given full ef,
Hon ch is not allowed to be set-off in the Assesgm®
i
Year 2024.25 due to section 115BAC, corresponding adjustment Se =
such block of assets as on 1.4.2023 in the preseribed manner é., the WV as ra %
be increased by the unabsorbed additional depreciation not allow
© Example : Computation of Marginal Reliof , re
‘The tatal income of R for the Assessment Year 2024-25 i © 50,90,000, Compute thet, zr
payable by R for the Assessment Year 2024-25. Assume he does not op\ ed sectin
LIBBAC (ice, default tax regime). on
Solution A
S Particulars Cay 1
Tax on © 50; a
On first & 2,60,000 i
Next ¥ 2,50,000 — 5% i eo
Next & 500,000 — 20% ang
lance & 40,90,000 — 30% 27,
Balance & 40,90, Baty
1.33.95) Mare
= 10% :
Add : Surcharge ee :
Marginal relief aser
Income tax on ® 50,00,000 ' 13,1250)
Tax and surcharge as per marginal relief, 100% of income exceeding 50,00,000 one
(60,90,000 — 50,00,000) : 90,000
Total tax including surcharge payable under marginal relief Ti 02,500
Tax payable as per normal provisions or as per provisions of marginal relief whichever is| 1409.50)
less (i.e, €14,78,450 or € 14,02,500 whichever is less)
Add : Health and Education Cess @ 4% 56,0
‘Total Tax Payable| _14,58,600
Note : The total income and the tax payable is rounded off to the nearest multiple of ® 10.
> Example ;
Total income of Mr. X for the Assessment Year 2024-25 is & 1,02,00,000. Compute the tax pee
payable by X for the Assessment Year 2024-25. Assume he does not opt to be taxed sectim ®%
115BAC (i.e., default tax regime), er
Solution
Tax on ¥ 2,50,000
Tax on @ 2,50,000 @ 5%
Tax on 2 5,00,000 @ 20%
Tax on % 92,00,000 @ 30%
Add : Surcharge @ 15%
Less : Marginal relief
Add : Health and Education Cess @ 4%
t
12,500
100,000
27,60,000
28,72,500
3
33,03,315
32,93,750
L
Tax Payable 34,25,500
: INCOME ‘TAX (INTRODUCTION AND IMPORTANT DEFINITIONS) __——~
Marginal relief has been computed der :
M 1s been computed as unde 000
Tax on F 2,00,000 @ 30% (excess over & 1 crore) WS
Add : Surcharge (4,380,875 ~ 2,81,250) Fae
x and surcharge cannot exceed the amount. 2,00,000
income that exceeds & 1 crore
Marginal Relief __ 9,625,
UO Health and Education Cess
Add Health and Education Cess @ 4% on the amount of income tax and surcharge.
In brief
Income tax on total income at the prescribed rates
Add : Surcharge, if any
Add : Health and Education
88 @ 4%
‘Tax Payable
A person born on 1st April would be considered to have attained a particular age on 31st
March, the day preceding the anniversary of his birthday.
In particular, the question of attainment of the age of eligibility for being considered is as
a senior citizen would, therefore be decided on the basis of the above criteria.
For example, date of birth of Mr. X (resident in India) is 1.4.1964. He will be a senior
citizen on 31.3.2024. He will get tax benefit w.e,f. the Assessment Year 2024-25.
Firm : A firm is liable to pay tax for the Assessment Year 2024-25 at the following rates :
(On short-term capital gains specified in Sec. 111A—@ 15%;
(ii) On long-term capital gains Sec. 112—@ 10%/20%;
Gia) On long-term capital gains Sec. 112A—@ 10%
(iii) On winnings from lotteries, crossword puzzles, horse races, etc. Sec. 115BB—@ 30%;
(iv) On other income—@ 30%.
Surcharge : If total income exceeds % 1 crore @ 12%.
Marginal Relief : Where the total income exceeds ® 1 crore, the total amount payable as
income-tax and surcharge on such income shall not exceed the total amount payable as income
tax on net income of % 1 crore by more than the amount of income that exceeds & 1 crore.
Health and Education Cess : On the amount of income tax and surcharge @ 4%.
‘Notes (1) In computing the income of the firma, whatever deduction is allowed to the firm as interest, salary or
remuneration to partners, such amount will be treated as income of the partners under the head ‘Profits
and gains of business or profession’.
(2) Whatever share of prof (total income less tax paid by the firm) from the firm is received by a partner, it
is not included in the income of the partner.
Important Note : On Deemed Income (under sections 68, 69, 694, 69B, 69C or 69D) tax shall be charged under
section 1SBBE as : Income Tax @ 60%, Surcharge @ 25%, Health and Education Cess 4%. INCOME TAX
IMPORTANT a i
mac Ach 1961, defmibons of important terms ug
income
: nder =
ff which are as 0
a INCOME , et Be 2124
‘Tax Act as income tax is charged
4 , i ms of the Income i
the i coast Sen Se aa been defined in the Income Tax Act, except that
e income of a .
states as to what is included in income.
‘Under this section income includes *
(i) profits and gains;
ii) dividend; : :
(iii) voluntary contributions received
‘Under sections 2 and 3 of the
in the Act have been given, some 0}
by (a) a trust created for charitable or religioy,
iat (©) by a games or 5
ientific research association, OF f n 5 Sports
Satie » (OI ation, or (2) any university or oben eatucational institution, o
e insti jectoral trust;
ital or other institution, or o om el
@v) (o) any hostrany perquisite or profits in lieu of salary taxable under the hea
‘Income from Salaries’
(w) any special allowance or b
expenses wholly, necessarily an‘
penefit specifically granted to the assessee to meet his
id exclusively for the performance of his duties;
(wi) any allowance granted to the assessee either to meet his personal expenses at the
place where he performs his duties or compensate him for the increased cost of
living, for example, City Compensatory Allowance;
(vii) the value of any benefit or perquisite which is obtained by any representative
assessee;
(iti) any sum chargeable to income tax under the head ‘Profits and Gains of Business
or Profits and Gains of Profession’;
(ix) any capital gains;
(x) the profits and gains of any business of insurance carried on by a mutual insurance
company or by a co-operative society;
(xi) a, ae a ea crossword puzzles, races including horse races, card-
es and other games of any sort or from) gamblin; af a
peace gambling or betting of any form or
Explanation :
(a) ‘Lottery’ includes winnings from pri:
Beye ie ctnee ane yA corer
(b) “Card game and other gam > icltides
Bete ree @ laden a
win prizes or any other simil: pieenatneanrulneereee nae
(xii) any sum received by the assessee from hi
eee ares brates aasseaee from his employees as contribution to any
fund or any fund set-up under the Employees
State Ins
hs mae any other fund for the welfare of such employees;
See ae a Insurance Policy including the sum received by
Keyman Insi i
oe ie means a life insurance policy taken by a person on the
F ‘who is or was (a) an employee of the first person, or (b)
(a) When the sum is pte « Policy is assessable as following :
assessable under the head aisation, sho has taken the policy, it #
Bains of business or profession’.
¢
G
from
taxa %
it
is
of
ve
INCOM
(b) When the amount is recei
of salary.
(c) When the amount is received by a person,
relationship does not subsist (Chairman or Direct
assessable under the head ‘Income from Other Sources ‘
(xiv) the profits and gains of any business of banking (including credit facilities) carried
on by a co-operative society with its members;
any consideration received for issuing shares as exces
the shares.
(xvi) any sum of money received os an advance in the course of negotiations for the
transfer of a capital asset and such negotiation fails, the amount so forfeited;
vii) ifthe assessee receives (in cash or kind) the following from the Central Government
or the State Government or any authority or body or agency it will be treated
as income : Subsidy or grant or cash incentive or duty drawback, or waiver Or
concession or reimbursement.
However, if such subsidy or grant or reimbursement is taken into account for
determination of the actual cost of the asset, it will not be treated as income.
The subsidy or grant by the Central Government for the purpose of the corpus
of a trust or institution established by the Central Government or the State
Government, will not be treated as income.
The LPG subsidy and other welfare subsidies received by individuals shall not be
included in income.
(viii) Any sum of money or value of property recsived without consideration oF for
inadequate consideration by any person, from any person or persons on or after
14.2017 (For details see chapter 12).
(ix) Compensation or other payment, due or received by any person in connection with
the termination of his employment or modification of the terms and conditions
relating thereto.
(ax) The fair market value of inventory as on the date on which itis converted into, or
treated as, a capital asset.
ON AND IMPORTANT DE}
TAX. (INTRODU'
by the employee, it i
where an employer-employee
tor ete. of a company), it 18
es eds the fair market value of
O Concept of Income
‘The above definition of income is not conclusive. It includes some other receipts also which
are ordinarily treated as income. In fact, income means a monetary income which is derived
fom definite sources with some eort of regularity or expected regularity. ‘These definite
sources of ineome are : Income from Salaries, Income from House Property, Profits and Gains
of Business or Profession, Capital Gains and Income from Other Sources.
Besides this, there are some other important rules regarding income, which are as under :
(1) There should be a definite source of income
(@) An income earned, whether legally or illegally, is taxable under the Income Tax Act.
‘The Income Tax Act does not make any distinction between legal and illegal income. However,
any expenditure incurred to earn an illegal income is allowed to be deducted out of such income
only.
(8) It is not necessary that the income should be received regularly and periodically, say,
weekly, monthly or quarterly. Lump-sum receipts can also be income, provided it is income in
view of other factors and considerations.
(4) Income should be received from outside. Inan institution, iftheincome from subscription
from its members exceeds its expenditure on its ‘members the excess cannot be treated as
taxable income, because the subscription was received from amongst the members themselves 12
of income over expenditure iene fee own beney
ai outside, and will not income. 3
or well-being, hence this excess is not received from out i a
Similarly, ay .s over expenditure, received by eal es aD ; memben
as part of advantages attached to such membership, is petal ae eee
income must be received in the form of money. Receipts ,
‘nt can also be income. -
‘Whether the income is temporary oF Permanent,
and the excess represents the exce:
(5) It is not essential that the
kind or service having money equivale:
(6) Temporary or Permanent Income :
ial from the tax point of view. wenn
a Tad idea Ist has noe ectual'/mecat aus SOL cee
as the income of the assessee, because he is entitled to receive it
(8) Reimbursement of expenses : Reimbursement of actual
mployee is not his income. ‘
er ro) Where under a legal obligation a charge is created on the income of a person, then 4,
i his income.
the extent of such charge it will be deducted from ome.
(10) Receipt on account of dharmada, gaushala, ete. is not incom®.
(11) Pin Money received by wife for her personal expenses and small savings made by q
woman out of money received from her husband for meeting household expenses is not her
avelling expenses to a,
income. , r :
12) Disputed Income : Any dispute regarding the title of income will not postpone or held
up the assessment of such income. It will be taxed in the hands of the recipient of such income,
‘he application of income : Diversion of income means that
(13) Diversion of income vs. tl ion 0
the ineome is diverted to some other person under some legal obligation. If after receiving
the income it is given to someone else it is the application of income. Similarly, if an income
is diverted to some other person voluntarily, it is an application of income. Where by an
obligation, income is diverted before it reaches the assessee, it is diversion of income and not
taxable; but where the income is required to be applied to discharge an obligation after such digi
income reaches the assessee, the same is merely an application of income and tax liability
cannot be avoided.
(14) Income may be in plus or minus. Minus income means loss, hence losses are also
included in the term ‘Income’.
GROSS TOTAL INCOME [Sec, 80B(5]
‘The aggregate of the income under the following heads is known as gross total income:
(i) Income from salaries;
i) Income from house property;
(iii) Profits and gains of business or profession;
(iv) Capital gains; and cas
(¥) Income from other sources. isi
‘ ae income under each head is computed after making deductions permissible under tht!
ead. fro
Further, the brought forward losses shall be deducted (as provided in the Act) to arrivet! fro
the assessable income,
TOTAL INCOME [Sec. 2148
Total income means the amount left after i i ions 800"
80U from the gross total income. r making the deductions under sections
The amount so arrived is rounded off to the nearest multiple of t 10.
eg INCONLE TAN,
Conn Non N NIHON)
A i
ND IMPORTANT 1
1. | Aagregate
of various
Grosa T 8 hoads of income is called
‘otal Income,
2. | Gross Total Income
Altor deductions
or nections BOC to BOU, the
balance ix called otal In
48 not rounded off a)
‘Total Incon r
; ne is rounded off to the noarent multiple
8. | Taxis not levied on Gross ‘Total cs : bere
ross ‘Total Income, "
ne Tax is levied on the otal fy
Pec ea ncome at the preweribed
oe annot be Tess than otal | Total Income: H
: me ean ial to GPL or loss than GIP
5. | Agricultural inco:
ral income is not included in GTI. — | If agricultural
cultural income exceeds € 5,000, it ix
included in the Total Income of an invlual o
HUF to determine the tax payable by the assesvee.
VIRTUAL DIGITAL ASSET [See. 247A)]
Virtual digital a
(a)
al digital asset means:
ny information or code
r or code or number or token (not being
Rerretis uensrated thivagh aoe as ing Indian currency or any foreign
Sere ad eine Salta on graphic means or otherwise, by whatever
pee ace ung a dip representation of value which is exchanged with
a peenc erations with the procs a representation of having inherent
financial transaction or investment, vert ita tO a eeu aueneg ina
, but not limited to, investme
- 5 Baba stored or traded electronically; ee a
a non fungible tok: imi
pees et en or any other token of similar nature by whatever name calle
a .y other digital asset, as the Central Government may specify :
__ The Central Government may exclude any digital asset from the definition of vi
digital asset subject to certain conditions. al
Explanation :
(a) “non-fungible token” means such digi
Cee pucign cateocy eee
*, foreign currency” and “Indian currency” shall have the
same meanings as respectively assigned to them in clauses (h), (m) and (q) of section
2 of the Foreign Exchange Management Act, 1999.
AGRICULTURAL INCOME (Sec. 2(1A)]
See chapter on “Agricultural Income”.
CASUAL INCOME
ich is of a casual and non-recurring nature is casual income. In other words,
casual income is that income, the receipt of which is accidental and without any stipulation. It
fe in nature of an unexpected wind-fall.
Winnings from lotteries, crossword puzzles, card games and other games of any sort or
from gambling or betting of any form oF nature, whatsoever are casual incomes. Receipts even
from habitual betting are non-recurring receipts and assessable as casual income.
‘The casual income does not include :
G@) (a) capital gains; or , “
(b) receipts arising from business °° the exerci
(c) receipts, by way of addition to remuneral
‘tuity, perquisites, ete. ; ‘
Gi) ere eal received in exercise of occupation are not oe Ls ene jneoes
eg., tips given in an ordinary Way to taxi-drivers in the employ of taxi-o
Any receipt w!
ce of a profession or occupation; oF
‘ion of an employee, such as bonus, 1 SOME TAX
4 INC to waiters in a hotel ,
ly, grat of the profess;
ng from the exerese of an occupation. Simian, sean the legal Services ye
taxable. A receipt may be taxable as incom ird party to w! 2
: : i the third party 1.
even if the amount is received as a gift from anything at all. ee
i to pay mn of a building
aenaeed erates lao ob ee lidon for the construction Bs th,
an architect submitte é sae eterol tne ai
prize won by him, is income from profession. | Birthday and wedding gifts are th Mey
iii) A gift fro lative is not income at all. Birtheay tr merely because it is Tepeate
instances point Ait rom a relative doesnot become ine ‘r purely as a voluntary gift by,
ese falar allowance is given year after year P to another, is merely a fre
ae ae yea id "by a husband to his wife, or by one relation
int to a child or oes ;
Bee ono ease bic an cae oH Sear eragreement to live apart as maintenan,
is wife w
(iv) Payment by the husband to his wi
; it is taxable.
allowance is neither casual income nor a personal gift. aes a
eo a erase mnible Irexpenses are incurred to receive casual income,
Hee ee ee ere ely Pe Wor example jaulindiyiduall surch iaee lottey
expe ictible from any income. For example, uate
eceayta cat tl ie tickets is not deductible from any income ise Similar, i
stad charges have been paid for sending crossword puzzles, such charges (expt arom Aes
i i ‘, asé
Masi oy cose ae ce : If instead of casual income there is a casual loss, suc, fof
loss cannot be set-off from any income. For example, ifa person wins in a card game on the fin; aes
day and loses the next day, he cannot set-off the loss against any income. =
(iii) Tax deduction at source : If the winnings from any lottery, horse Tace, crosswori
Puzzle, card game and other game of any sort exceed % 10,000, the tax will be deducted g
call
source at the prescribed rate. ‘ is
(iv) Rate of tax : On winnings from lotteries, crossword puzzles, races, gambling, betting or ]
ete. tax is chargeable @ 30%. a
> Mlustration 1
State whether the following receipts are casual incomes :
(@ Mr. X received % 5,000 for acting once as an arbitrator without any stipulation ast! Ap
remuneration,
Gi)Mr. Y received % 5,000 for acting as an arbitrator with a clear and definite stipulation
for the said Temuneration.
Gi) Mr. X, a decree-holder, received interest of & 500 under an order of the court grantiny
4 stay of execution of the decree on judgment-debtor Mr. Y.
(iv) Mr. X is in the service of Mr. Y. Mr. Y’s son was lost and Mr. X. traced him out withol lay
im a reward of & 500.
chi X_ INTRODUCTION AND IMPORTANT
Assi
An assessee means a person ana Wee. 207)
2 ee) is liable to pay any tax; or
ii) who is liable to pay any other sum of mone: is
eter Pay any other sum of money under this Act (e.., interest, penalty,
(ii)_in respect of whom any proceedi
any proceeding under this Act has been taken for
Gy) {alts income or assessment of fringe benefits; ist has been taken for the assessment
(iv) in respect of whom an; g a
ae ieee a yous under this Act has been taken for the assessment
1e of any other person in respect of which h e;
(¥) in respect of whom any i potas
wi proceeding under this Act has been. n for
as of the loss sustained by him or by such other eae = vote feet ateenement
vi) in respect of whom any proceeding under this Act has
refund due to him or to such other person; or Le eae ae
who is deemed to be an assessee under any provision of this Act; or
who is deemed to be an assessee in default under any provision of this Act,
Q DEEMED ASSESSEE
A person who is deemed to be an assessee for some other i ‘
e a person is called ‘Deemed
Assessee’. For example, (i) after the death of a person, his legal representative will be treated
as an assessee for that income of the deceased on which tax has not been paid by the deceased
before his death; (ii) a person representing a foreigner or a minor or a lunatic is treated as an
assessee for the income of such foreigner or minor or lunatic.
Q ASSESSEE IN DEFAULT
When a person is responsible for doing any work under the Act and he fails to do it, he is
called an ‘Assessee in Default’. For example, if a person while making any payment to another
person, is liable to deduct income tax thereon at source, does not deduct income tax therefrom,
or having deducted, does not deposit it in the Government Treasury, he will be treated as an
g b po
assessee in default for that income tax
ASSESSMENT YEAR (Sec. 2(9)]
The assessment year means the period of twelve months commencing on the first day of
April every year and ending on 31st March of the next year. An assessee is liable to pay tax
on the income of the previous year during the following financial year (the assessment year).
LIABLE TO TAX {See. 2(29A)]
“Liable to tax,” in relation to a person and with reference to a country, means that there is
an income tax liability on such person under the law of that country for the time being in force
and shall include a person who has subsequently been exempted from such liability under the
law of that country.
PERSON
‘Person’ includes the following :
(i) an individual;
(ii) a Hindu Undivided Family;
(iii) a company; :
i ding Limited Liability Partnership); : :
Fa toe a Persons ora Body of Individuals whether incorporated orn
i cal authority; and er j i
& Bes artificial juridical person, not falling within any of the preceding aed
‘An individual means a natural person or a human being, who may be male, female, minor
a Hi san ndivided Family means a Hindu family which consists otal oe lineally
Pee ied | for a common ancestor including their wives and unmarried daughters.
[Sec. 2(31)] * INCOME TAX a ———
A company may be defined as an artificial person created by law with perpetual successio,
common seal and shares carrying limited liability. ,
ot bet section 2(17) of the Income Tax Act, a company means +
() any Indian company, or %
(ii) any body corporate incorporated under the law of a foretan oun ae
Gi) any institution, association or body, whether incorporated oF ot Aid whet,
Indian or non-Indian, which is declared by general or special order of the Centr,
Board of Direct Taxes to be acompany. .
A firm means a partnership firm (Including Limited Liability
defined under the Partnership Act: “ 5
An Association Re Persoc means two or more persons joining for a ¢ a Purpose fy,
the purpose of earning income. The A.0.P. may consist of two or more individuals or any oth,
rson, i.e., an individual and a company or two or more companies: y
pore Body of Individuals means a conglomeration of individuals who come together by chang
e.g., by birth or testamentary dispositions. ’
> eel Authority means an authority legally entitled to or entrusted by the Governme,
with the management or control of a municipal or local fund. Such authority include,
M ality, Municipal Corporation, District Board, etc.
MiArhifieial Juridical Person includes a public corporation which is established under speci
Act of legislature, an idol or deity, university, ete.
PREVIOUS YEAR (See, 3
‘The year in which income is earned is known as the previous year and the next year i
which this income is taxable is known as the assessment year. Income tax is charged on the
total income of the previous year at the rates prescribed by the relevant Finance Act for th,
assessment year :
(1) Generally, the previous year means the financial year immediately preceding thy
Assessment Year. The Financial Year begins on 1st April and ends on 31st March.
(2) The financial year (year ending on 31st March) will be uniform for the previous yea
for all the assessees and for all sources of income.
(3) In the case of a newly set-up business or profession or any other new source of incom:
during the financial year, the previous year will begin from the date of setting up of the nev
business or profession or from the date of coming into existence of the new source of incont
and will end with the said financial year. In this case, the first previous year may be of le
than 12 months.
In other words, the financial year is both the previous year as well as the assessment yest
It is the previous year for the income earned during that financial year and the assessm¢t!
year for the income earned during the preceding financial year, eg., the Financial Yeo!
2024-25 is the previous year for current income and is the assessment year for the incom?
earned during the Financial Year 2023-24.
Note : There is no compulsion on any assessee to close his accounts on 31st March only. If for any reason, perso
religious or any other ground an assessee wants to close his accounts on a date different from 3ist Net!
he can do so. However, he would be required to make up his accounts on 31st March also, for the purpo*!
submitting the Income Tax Return,
rhe meaning of the term the previous year can be better understood by the followit
illustrations :
> Ilustration 2
‘An assessee commences his business on :
(i Ist July, 2023;
(Gi) 1st October, 2023; and
(iii) Ist January, 2024,
In each case, what will be his assessment oe av
Previous year for the concerned assessment sear} ont "hat period will be treated
Partnership) which
Solution
Inev
will be hi
(i) 1s
January,
> Mus
as
was confi
Q)s
Ram Nati
()M
calendar:
Und
Assessme
Solution
OT
Tr
@)T
‘They are
return of
Inco
previous
Cases wh
Inco
However,
to be ass
@ mr
shipping
shipped ¢
payable c
Gi) 1
current a
returning
previous
shall be c
Git)
Person fo
juridical
and is lil
incorpora
the perio
dissolutic
(iv) 1
to avoid t
for the a:
section 1
(v) ¢
business the,
net
h ig
© for
ther
Nee,
nent
deg
3)
ir in,
the
‘the
the
year
ome
new
ome
less
ear.
rent
‘ear
ome
onal,
arch,
se of
ing
his
INCOME
X (INTRODUCTION AND IMPORTANT
RFINETIONS) He
ry case hi
willbe his Brovious vanes
) Ist July, 2028 4
ante St July, 2023 to Sst March,
January, 2024 to 31st March, 2024"
© Mlustration
(@) Shri Ram Gopal was
was confirmed on 30:6.2024
2) Shri Amar Nath was appoi
amg sori Amar as appointed on 1.9.2023 as a lecture
(3) Me Fan Nath joined the college on 12.2024 sib rester amend
calendae yoga Lal Bhajan Lal maintain the books of accou
Tings the aa, They prepared theie final acounts on istz2025, =o Mesiote om the
he above mentioned cases what w 1 duration of
Asso ener the above mentione /hat would be the duration of the previous year for the
Solution
(1) The previous year for S| 5
(2) The previous Year for Shri Ram Gopal shall be from 1.7.2028 to 91.9.2024
GB) The prewints Year for Shri Amar Nath shal be from 1.9.2028 to 31.1 2024
‘They are roqaied oe cae for M/s Ram Lal Bhajan Lal shall be from 1.42029 to 91.8,2024,
Ret aitoome ip their accounts up to 31.3.2024 for the purpose of submitting the
ment Year will be 202.
and ine
th case, the preceding period
2024, (i) Ist October, 2023 to 31s Mare
1024, (ii) Ist
Appointed on 1.7,2023 as a lecturer in a eolleg. bation. Hi
college on probation. He
Income of previous er fea
ee S year is assessed in the assessment year immediately following the
EXCEPTIONS TO THE GENERAL RULE
Cases where income of a previous year is assesse i
et where income of a previous year id in the previous year itself
es ta ged on the income of the previous year during the assessment year.
lowever, there are certain exceptions to this rule. In the following cases, the assessee is liable
to be assessed to tax in the same year in which he earns the income :
() Income of non-resident from shipping business : In the case of a non-resident carrying
shipping business, any income derived from carrying passengers, livestock, mail or goods
shipped at a port in India, will be taxed in the year of its earning. 7.5% of the amount paid or
payable on account of such carriage will be deemed to be the income. (Sec. 172)
(ii) Income of persons leaving India : When an individual may leave India during the
current assessment year or shortly after its expiry, and that he has no present intention of
returning to India, the total income of such individual for the period from the expiry of the
previous year for that assessment year up to the probable date of his departure from India
(Sec. 174)
shall be charged to tax in the same assessment year.
(iii) Income of an Association of Persons or a Body of Individuals or an Artificial Juridical
Person formed for a particular event or purpose : Where any A.O.P or B.O.1 or an artificial
juridical person is formed or established or incorporated for a particular event or purpose
ca oem be dissolved in the assessment year in which it is formed or established or
Sie iain ‘ent year, the total income of such assessee for
i ted or immediately after such assessm f
Mieeied from the expiry of the previous year for that assessment year up to the date, st is
i | be chargeable to tax in that assessment year. Sec.
Ce pee " avoid tax : Where an assessee is likely to transfer his property
to aveid tox, the total income of such person for the period from the expiry ofthe previous year
for the assessment year to the date when the Assessing Officer commences proceeding under
i er year. 6
section 175 shall be chargeable to tax in the same assessment y¢ are
discont i ion : In the cas
is tinuance of a business or profession : In
ae Sree "Tho income of the period from the expiry of the previous year for the oa
scontinued UI
Fe nin as Sse ca ec
p to the date of sy,
assessment year in which the business ¢F profes:
discontinuance may be charged
‘ ‘The tax on the incomes discussed
for payment of advance ti Fi
‘The tax on the ineome for the Previn
‘Assessment Year 2024-25 ant
India on 1
at the rates prescribed for the
to 10.7.2024 shall be charged at the
to tax in the same
under (i) to (W)
Oth July, 2024.
rates prescribed
‘assessment year
ax during the relevant financial year. Fo
16)
yenyged at the rates Prescr
shall be es ezxample, Mr. A is leavi
or Year 2023-24 shall be charg
‘on income from 1.4.2
repayment one a during the
Financial Year 2024-25. cea
i .d the Assessment
ot pete previous Year an‘ — poaane Tear a
[The Previous Year 5 hge, 0) 18 f es
1. |Sec. 3 of the Toco hax Act is formed for the|See. Gio) is formed for the Assess .
3
4.
jas the
Previous Year.
Iprevious Year means the financial year)
immediately preceding the assessment year:
Previous Year may be less than 12 months in
case of newly set-up business or profession.
IThe year in which income is earned is known]
months
‘months.
Previous Year.
‘year and ending on ;
yea aeent Year will always be for a period of 12
IThe next year in
|become taxable is known a8.
JAscessment Year means the period of twelve
vevmmencing on the first day of April every
ist March of the next year,
which the previous year’s income
the Assessment Year.
© Ilustration 4
‘The total income of Mr. A for
the appointment letter from a foreign country. He wil
estimated income from 1.4.2024 to 20th Sept.,
2024 is ®
before leaving India?
Solution
‘Mr. A has to pay tax on his income as under during the Financial Year 2024-25
(i) Tax on & 10,60,000 i.e., total income for the Assessment Year 2024-25 :
the Assessment Year 2024-25 is % 10,60,000. Mr. A got
1 leave India on 20th Sept., 2024. His
6,60,000. How much tax he has to pay
‘Tax on & 2,50,000 Ni
Tax on % 2,50,000 @ 5% :
Tax on € 5,00,000 @ 20% nae
‘Tax on & 60,000 @ 30% ne
Add : Health and Education C road
: ion Cess @ 4% 5.220
i) ES a Game cae up to the date of leaving India) at the rates ane
ae : :
Pane advance tax during the Financial Year 2024-25 : z
Tax on Z 2,50,000 @ 5% ni
Tax on ¥ 1,60,000 @ 20% 12,500
a 32,000
2 : Health and Education Cess @ 4% os)
fote : The tax: p 1780
is payable in the same year (2024-95) in which the is 5 f
which the income is 46,280
ine earned (2024-25). ee
in rae the rate of income tax (includi Sen ATE,
rte of income tx including a sureh (See, 21290)
psieeatan slab of income in the case of ‘arge on income tax, if any) applicable
The ndividuals as specified in the Finance Act of (rece ues Associat
15%, 25%, 37% as ther tee highest slab of Act of the relevant eran
iS ATS asthe cae may be Forth ag the Assessment Year 200
of ic
he |
als
suc
dis INCOME TAX (INTRODUCTION AND IMPORTANT DEFINITIONS) 19
PERMANENT ACCOUNT NUMBER (PAN)
PAN means a number which the Assessing Office coe {
of identification.
BN has ten alphanumeric characters.
Application for PAN : If an assessee has not been allotted a P
i s 1s not been allotted a Permanent Account Number
ye Anptarion fc FANT fan cee i vbr Une Toe Asbsing ew Bs
‘also got power to allot to any other person a Permanent Account Number, if tax
such person. Y soon
1c. VB9A)
may allot to any person for the purpose
Quoting PAN : Once a P ent Account Number k
ermanent Account Number has been allotted, such number must
be quoted in all Returns, correspondence with Income Tax Authorities, challans for payment
and in all documents prescribed by the Board.
Tt helps in linking the aforesaid documents to his assessment records to facil
aforesaid documents to his assessment records to facilitate quick
disposal of his assessment and refund claim ie
cae usecase must intimate to the Assessing Officer about any change in the address,
name or nature of business carried on by him.
‘Now an assessee may use his Aadhaar number in lieu of PAN,
Note : For details see Chapter “Assessment Procedure”
"TAX DEDUCTION AND COLLECTION ACCOUNT NUMBER (TAN) (See 203A)
Every person, deducting tax or collecting tax at source, who has not been allotted a tax
deduction account number or a tax collection account number shall apply, in duplicate in Form
SeeMOB within one month from the end of the month in which the tar wit deducted or collected
to the Assessing Officer for the allotment of a ‘tax deduction and collection account number’
Where a "tax deduction and collection account number” has been allotted to a person, he
shall quote such number in the prescribed documents
a cor details see Chapter “Deduction and Collection of Tax at Source
QUESTIONS
CO Long Answer Questions
1. Discuss the evolution of Income Tax Law in India.
2. What is Income ‘tax? Describe the history of Income
of charging Income tax?
Explain the following terms
(@) Assessment Year.
4, “Income tax is a taxon income and not on receipts.” Discuss this statement and give the essential
characteristics of the term ‘Income’. oo
5. “Income tax is charged on income but there is ee ee of the oe