Taxation
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Taxation
Syllabus Structure & Scope of Income Tax Act • Definitions •Agricultural Income •Assessees •Assessment Year, Previous Year •Income • Capital & Revenue Expenditure • Person •Residence • Person •Company •Dividend •Total Income
Heads of Income 1. 2. 3. 4. 5.
Salaries Income from House Property Profit & Gains of Business Capital Gains Income from Other Sources
Syllabus ( cont.) •Rebates and Reliefs •Treatment of losses •Computation of Total Income and determination of Tax Liability
Definitions Assessment Year (A.Y.)means a period of 12 months starting from April 1 of every year and ending on March 31 of the next year. An Assessment year is the financial year immediately succeeding the relevant previous year E.g.Current Assessment year is 2008-2009 which started on April 1,2008 and will end on March 31 2009
Previous Year (P.Y.) Section 3 defines Previous Year as the financial year immediately preceding the assessment year ie. the year income is earned Current Financial year is from April 1st 2008 till March 31, 2009. •In case of newly setup business ,Financial year starts on the day the business is setup and ends on March 31 of the next year. •In case a business is closed, Fin. Year is ……………?
Previous Year eg. (Cont.) Income earned in 2007-08 ie. April 1,2007 till March 2008 , is taxable in the following A.Y. 2008-09 at the rates applicable for the A.Y. 2008-09. Income earned in 2008-09 ie. April 1,2008 till March 2009 , is taxable in the following A.Y. 2009-10 at the rates applicable for the A.Y. 2009-10.
Person According to Section 2(31) , the term person includes • An individual • A Hindu Undivided Family • A company • A firm • An association of persons whether incorporated or not • Local authority means a municipal committee, district board, body of port commissioners, or other authority legally entitled to or entrusted by the government with the control and management of a municipal or local fund. f) Every artificial judicial person not falling within any of the preceding categories.
Assessee Assessee Income Tax Act 1961 (Act no. 43) defines 'assessee' as a person by whom any tax or any other sum of money is payable under this Act,
Gross Total Income
According to section 14 ,income of a person is computed under the following five heads: • Salaries • Income from House Property • Profit & Gains of Business • Capital Gains • Income from Other Sources The aggregate of income under each head is known as 'Gross Total Income'
Total Income Total Income of an assessee is the gross total Income received under the five heads of income as reduced by the amount deductible Under Sections 80CCC to 80U. Example: Salary Income from House Property Income from Business Capital Gains Income from Other Sources Gross Total Income Less Deduction under section 88 Total Income
5,00,000 40,000 0 80,000 20,000 6,40,000 1,00,000 5,40,000
Status Resident and ordinarily resident Resident but not ordinarily resident Non-Resident
Indian Income Taxable Taxable Taxable
Foreign Income Taxable Not Taxable Not Taxable
Syllabus Structure & Scope of Income Tax Act • Definitions •Agricultural Income •Assessees •Assessment Year, Previous Year •Income • Capital & Revenue Expenditure • Person •Residence • Person •Company •Dividend •Total Income
Heads of Income 1. 2. 3. 4. 5.
Salaries Income from House Property Profit & Gains of Business Capital Gains Income from Other Sources
Syllabus ( cont.) •Rebates and Reliefs •Treatment of losses •Computation of Total Income and determination of Tax Liability
Definitions Assessment Year (A.Y.)means a period of 12 months starting from April 1 of every year and ending on March 31 of the next year. An Assessment year is the financial year immediately succeeding the relevant previous year E.g.Current Assessment year is 2008-2009 which started on April 1,2008 and will end on March 31 2009
Previous Year (P.Y.) Section 3 defines Previous Year as the financial year immediately preceding the assessment year ie. the year income is earned Current Financial year is from April 1st 2008 till March 31, 2009. •In case of newly setup business ,Financial year starts on the day the business is setup and ends on March 31 of the next year. •In case a business is closed, Fin. Year is ……………?
Previous Year eg. (Cont.) Income earned in 2007-08 ie. April 1,2007 till March 2008 , is taxable in the following A.Y. 2008-09 at the rates applicable for the A.Y. 2008-09. Income earned in 2008-09 ie. April 1,2008 till March 2009 , is taxable in the following A.Y. 2009-10 at the rates applicable for the A.Y. 2009-10.
Person According to Section 2(31) , the term person includes • An individual • A Hindu Undivided Family • A company • A firm • An association of persons whether incorporated or not • Local authority means a municipal committee, district board, body of port commissioners, or other authority legally entitled to or entrusted by the government with the control and management of a municipal or local fund. f) Every artificial judicial person not falling within any of the preceding categories.
Assessee Assessee Income Tax Act 1961 (Act no. 43) defines 'assessee' as a person by whom any tax or any other sum of money is payable under this Act,
Gross Total Income
According to section 14 ,income of a person is computed under the following five heads: • Salaries • Income from House Property • Profit & Gains of Business • Capital Gains • Income from Other Sources The aggregate of income under each head is known as 'Gross Total Income'
Total Income Total Income of an assessee is the gross total Income received under the five heads of income as reduced by the amount deductible Under Sections 80CCC to 80U. Example: Salary Income from House Property Income from Business Capital Gains Income from Other Sources Gross Total Income Less Deduction under section 88 Total Income
5,00,000 40,000 0 80,000 20,000 6,40,000 1,00,000 5,40,000
Status Resident and ordinarily resident Resident but not ordinarily resident Non-Resident
Indian Income Taxable Taxable Taxable
Foreign Income Taxable Not Taxable Not Taxable
