The person1, whose Total income3 exceeds Maximum Taxable limit of income in previous year3, is called as an assessee & is chargeable to Tax at the rates prescribed in finance act for that relevant previous year. We are discussing here the Basic Concepts of Income Tax Act.
Person (Sec. 2(31):
It includes..
- Individual
- Companies (Public or Private)
- Partnersip Firms including LLP (Limited Liability Partnership)
- APO / BOI (Association of Persons or Body of Association)
- HUF (Hindu Undivided Family)
- Local Authority
- Any other official persons.
Total Income :
It is an income arrived at after deduction of all deductions & is a final income to be taxed.
Gross Total income* xxxxx
Less : Deductions (xxx)
Net Total Taxable income xxxxx
*Gross Total Income :
Income is taxable under below mentioned heads.
- Salary
- House Property
- Profits & Gains from Business or Profession
- Capital Gains
- Other Sources.
Previous year :
The income of a particular Financial Year is taxable & is taxed in following year (or succeeding year).
Assessment year :
It is a succeeding year in which the income of previous year is assessed.
Refer below table..
Previous year ————————————————-Assessment Year
2015-16 (From 1st April to 31st March) 2016-17
The Basic Concepts of Income Tax is, the income of 2015-16 (Financial Year) is taxable in 2016-17.
Thus, for 2016-17 in above chart , 2016-17 is an Assessment year for the financial year 2015-16.
Advanced Concepts ..
For newly set up business, the previous year starts from the date of setup of business & ends on 31st of March.
Exception :
- Shipping Business of Non Resident (Sec. 172)
>> the income is taxable in the same year in which it incurred..
First of all, the Assessee must be a non-resident & owns or chartered a ship, which carries passenger, live stock, mail / goods, shipped at a port in India. Also it is not necessary that non resident have an agent or representative in India.
- Person leaving India (Sec. 174)
- The Body corporates (AOP / BOI) are formed for short duration (Sec.174) for a particular event / purpose & the same purpose or event is over.
- Person likely to transfer property to avoid tax (Sec. 175)
- Discontinued Business (Sec.176). It is at the discretionary of AO (Assessing Officer) to tax in same year.
AOP (Association of Persons) :
Group of persons (whether individuals, HUF, Companies, Firms etc.), who join together for common purpose/s, for income producing activity.
BOI (Body of Individuals) :
Group of individuals (Individuals only), who join together for common purpose/s, whether or not to earn income.