basic concepts dr.n.k.gupta. income – tax act of 1961: on the basis of the recommendations made by...
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BASIC CONCEPTS DR.N.K.GUPTA
Income – tax Act of 1961:
On the basis of the recommendations made by the various committees, a new Act of Income-tax had been passed during the year 1961 termed as the “Income - Tax Act, 1961”..
INTRODUCTIONINTRODUCTION This Act came into force from 1st April, 1962.
This Act contains more than 400 sections and a number of sub-sections and 10 schedules. The Income – Tax department framed 121 rules for the effective application of this Act. These rules are termed as “Income - Tax Rules of 1962”. It also includes a number of sub - rules
BASIC CONCEPTS
INCOME SECTION 2(24)
ANY AMOUNT RECEIVED OR DEEMED TO BE RECEIVED OR EARNED OR DEEMED TO BE EARNED DURING THE PREVIOUS YEAR.
INCLUDES SALARY RENT BUSINESS PROFITS CAPITAL PROFITS INTEREST ANY OTHER SOURCE
INCOME (CONTD.)IN GENERAL INCOME SHOULD BE OF
REVENUE NATUREHOWEVER CAPITAL GAINS ARE ALSO
TREATED AS INCOME
FEATURES OF INCOME DEFINITE SOURCE LEGAL /ILLEGAL BOTH RECEIPT OR ACCRUE WHICH EVER IS
EARLIER MEASURABLE IN TERMS OF MONEY FROM OUTSIDE INCLUDES GIFTS
TREATMENT OF GIFTS GIFTS BEYOND RS. 50,000 IN ALL IN
A YEAR EXEMPT BEYOND WHICH IT IS TREATED AS INCOME
EXEMPTED GIFTS
• FROM A RELATIVE• SP0USE OF INDIVIDUAL• BROTHER OR SISTER OF THE INDIVIDUAL• BROTHER OR SISTER OF THE SPOUSE OF
THE INDIVIDUAL• BROTHER OR SISTER OF EITHER OF THE
PARENTS OF THE INDIVIDUAL• ANY LINEAL ASCENDANT OR DESCENDANT
OF THE INDIVIDUAL OR SPOUSE OF THEINDIVIDUAL
• SPOUSE OR THE PERSONS REFERRED ABOVE
EXEMPTED GIFTS
UNDER A WILL OR BY WAY OF INHERETANCE
ON THE OCCASIONOF THE MARRIAGE OF THE INDIVIDUAL
IN CONTEMPLATIONOF DEATH OF THE PAYER
LOCAL AUTHORITY ANY OTHE FUND, TRUST OR
INSTITUTION MENTIONED IN SEC.10(23C) OR 12 AA
TYPES OF INCOME REGULAR INCOME
CASUAL INCOME
CAPITAL GAINS
ILLEGAL INCOME
AssessmentThe Act provides a mechanism for computing the tax relating to the income of an assessee pertaining to an assessment year. Such computation is made after allowing various deductions, exemptions, and rebates to the assessee, and is called assessment.
Assessment yearAssessment year is the year in which the income of the previous year is to be assessed to tax. Got more confused? An illustration will clarify the matter. Income of the Financial Year 2009-10 will be assessed to tax in the assessment year 2010-11, that is to say , the rates of Assessment year 2010-11, will be applied to income of the Financial year 2009-10. Incidentally, Financial Year is referred to as the Previous Year in the Act.
Previous year defined. For the purposes of this Act, previous year means the financial year immediately preceding the assessment year :Provided that, in the case of a business or profession newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending with the said financial year.
EXCEPTIONS TO THE PREVIOUS YEAR
N.R.SHIPPING COMPANIES (172) PERSON LEAVING INDIA ( 174) BODY FORMED FOR SPECIFIC EVENT
(174A) PERSON TRANSFERING THE ASSETS
TO SAVE TAX (175) DISCONTINUED BUSINESS (176)
AssesseeAssessee is a person by whom any tax or any other sum of money is payable under the Act.
ASSESSEE 2 (7) AN ASSESSEE IS A PERSON WHO IS LIABLE TO PAY TAX LIABLE TO FILE RETURN OF INCOME
OR LOSS LIABLE TO APPEAR BEFORE THE TAX
AUTHORITIES EWITHER ON HIS OWN BEHALF OR ON BEHALF OT OTHERS
ASSESSEE IN DEFAULT
PersonIts include An individual A Hindu undivided family A company A firm An association of persons or a body of individuals whether incorporated or not A local authority, and Every artificial juridical person, not falling within any of the preceding sub-clauses
GROSS TOTAL INCOME 80 B (5)
INCOME FROM SALARIES+ INCOME FROM HOUSE PROPERTIES+ PROFITS FROM BUSINESS AND
PROFESSION+ CAPITAL GAINS+ INCOME FROM OTHER SOURCES
TAXABLE INCOME 2(45) GROSS TOTAL INCOME LESS: DEDUCTION FROM SECTION 80 C TO 80 U
AGRICULTURAL INCOME 2(1A)
ANY RENT OR REVENUE DERIVED FROM AGRICULTURAL LAND USED FOR
AGRICULTURAL PURPOSE AGRICULTURAL PROCESS AND SALE OF AGRICULTURAL PRODUCT
ON WHICH ABOVE PROCESS IS DONE
INCLUDES INCOME FROM HOUSE PROPERTY
WHICH IS SITUATED ON THE AGRICULTURAL LAND OR IN THE IMMEDIATE VICINITY OF AGRICULTURAL LAND AND USED FOR
STORE HOUSE OR OUT HOUSE
PARTLY AGRICULTURAL INCOME
SUGAR FACTORYTOTAL INCOME LESS MARKET PRICE OF
SUGAR CANE TEA ESTATES60 % AGRICULTURAL INCOME LATEX 65% AGRICULTURAL INCOME
CONTINUED COFEE IF COFEE IS GROWN ,CURED AND
SOLD THEN 75% AGRICULTURAL IF COFEE GROWN, CURED,
ROASTED,GROUNDED AND SOLD THEN 60% IS AGRICULTURAL
INTEGRTATION OF INCOME STEP 1- ADD AGRICULTURAL INCOME
AND NON AGRICULTURAL INCOME THEN CALCULATE TAX
STEP 2- ADD AGRICULTURAL INCOME AND TAX FREE INCOME THEN CALCULATE TAX
STEP 3- TAX= STEP1-STEP 2
Total Income of an assessee is calculated as under: Income of the assessee is computed under the following heads:
Income from SalariesIncome from House PropertyProfits or gains of Business or ProfessionCapital gainsIncome from other sources