Posted in Business Finance

Income Tax Basic Concepts

on
Akash Singh

Introduction

The Central Government of India is authorised under the Indian Constitution to impose income taxes. As a result, the Central Government adopted the Income Tax Act of 1961. The Act establishes the scope and apparatus for the imposition of income tax in India. The Income Tax Act is backed by the Income Tax Rules, 1961, as well as various additional rules and regulations. 

Furthermore, the Central Board of Direct Taxes (CBDT) and, on occasion, the Ministry of Finance, Government of India, release circulars and notifications dealing with different elements of income tax levy. Unless otherwise specified, all references to sections are to the provisions of the Income Tax Act of 1961. Income tax is a tax levied on a person’s total income for the preceding year relevant to the assessment year at the rates specified in the applicable Finance Act.

What is the Assessment Year Under Income Tax Act?

“Assessment year” refers to the twelve months beginning on April 1st of each year and concluding on March 31st of the following year. An assessee’s prior year’s income is taxed at the rates provided by the applicable Finance Act during the subsequent assessment year.

Who is an Assessee Under Income Tax Act?

According to Section 2(7) of the Act, an assessee is a person to whom any tax or other sum of money (such as interest, penalty, etc.) is payable under the Act, and this includes:

  1. a) Any person in relation to whom any proceeding under this Act has been instituted for the assessment of his income or fringe benefits, or the income of any other person in respect of which he is assessable, or to determine the loss sustained by him or such other person, or to determine the amount of refund due to him or such other person.
  2. b) Anybody who is considered to be an assessee under any provision of this Act.
  3. c) Anybody who is considered an assessee in default under any provision of this Act.

What is Income Tax Return (ITR)? 

Is a form that must be submitted to the Income Tax Department of India. It comprises information on the individual’s income and the taxes that must be paid on it during the year. The information filed in ITR should be for a certain fiscal year, beginning on April 1st and ending on March 31st of the following year.

Income can take several forms, including:

  • Salary earnings- Gains and profits from business and vocation
  • House property income- Gains on capital investments Other sources of income include dividends, interest on deposits, royalties, lottery winnings, and so on.

Scheme of Charging Income Tax

Income tax is a tax levied on an assessee’s entire income for the fiscal year in question. This means that

  • Income tax is a yearly tax on earnings.
  • Income from the previous year is taxable in the next assessment year at the tax rates in effect at the time.
  • The yearly Finance Act, not the Income-tax Act, determines tax rates. For example, the Finance Act of 2012 establishes tax rates for the fiscal year 2013-14.

Conclusion

So we have come to know about the basic concepts of income tax and the central government’s control of income tax, especially after adopting the Income Tax Act of 1961. We also understood who is an assessee under the income tax act and what is an assessment year. The form which we submit to the Income Tax Department usually contains information about an individual’s income and taxes which one has to pay.

You May Also Like

More From Author

The Visual Kei movement in Japan

What is Double Jeopardy Law

239 thoughts on “Income Tax Basic Concepts”

  238. My programmer is trying to persuade me to move to .net from PHP. I have always disliked the idea because of the expenses. But he’s tryiong none the less. I’ve been using Movable-type on a number of websites for about a year and am concerned about switching to another platform. I have heard fantastic things about blogengine.net. Is there a way I can import all my wordpress posts into it? Any help would be greatly appreciated!

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

You may also like