INCOME TAX KNOWLEDGE

PERMANENT ACCOUNT NUMBER      PAN means a number which the Assessing Officer may allot to any person for the purpose of identification.      PAN has ten alphanumeric characters and it is issued in the form of laminated card.      Application for PAN. If an assessee has not allotted a Permanent Account Number he must apply for it in Form No. 49A within the prescribed time. The Assessing Officer has also got power to allot to any other person a Permanent Account Number if tax is payable by such person.      Quoting PAN. Once a Permanent 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.        It helps in linking the aforesaid documents to his assessment records to facilitate quick disposal of his assessment and refund claim. ...

ASSESSMENT YEAR       Assessment year means the period of twelve months commencing on the first of April every year and ending on 31 st March of the next year. An assessee is liable to pay tax on the income of the previous year during the following financial year (assessment year). PREVIOUS YEAR      The year in which income is earned is known as previous year and the next year in which this income is taxable is known as assessment year. Income tax is charged on the total Income of the previous year at the rates prescribed by the relevant Finance Act for the assessment year: 1.    Generally, previous year means the financial year immediately preceding the Assessment Year. Financial Year begins on 1 st April and ends on 31 st March. 2.    The financial year (year ending on 31 st March) will be the uniform previous year for all the assesses and for all sources of Income. 3.  ...

Gross Total Income The aggregate of the income under the following heads is known as gross total income: 1.    Income from Salaries; 2.    Income from House Property; 3.    Profit and gains of business or profession; 4.    Capital gains; 5.    Income from other sources. The income under each head is computed after making deductions permissible under that head. Further, the brought forward losses shall be deducted (as provided in the Act) to arrive at the assessable income. Total income means the amount left after making the deductions under sections 80C to 80U from the gross total income. The amount so arrived is rounded off to the nearest multiple of ten rupess. Difference between Gross Total Income and Total Income Gross Total Income 1.    Aggregate of various heads of income is called Gross Total Income. 2.    Gross Total Income is not rounded off. 3.  ...

            There are some other important rules regarding income, which are as under: 1.    There should be a definite source of income. 2.    An income earned, whether legally income 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 should be received regularly and provided it is income in view of other factors and considerations. 3.    It is not necessary that the income should be received can also be income, provided it is income in view of other factors and considerations. 4.    Income should be received from outside. In an intuition, if the income from subscription from its members exceeds its expenditure on its members the excess cannot be treated as taxable income, because the subscription was re...

     Under sections 2 and 3 of the Income Tax Act, 1961, definitions of important terms used in the Act have given, some of which are as under:              Income      This is a very important term as income tax is charged in the income of a person. This term has not been defined in the Income Tax Act, except that it states as to what is included in income.      Under this section income includes: 1.     Profits and Gains; 2.     Dividend; 3.     Voluntary contribution received by: a.      A trust created for charitable or religious purpose, or b.     By a scientific research association, or c.      By a games or sports association institution, or d.     Any university or other educational institution, or e.      Any hospit...