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.  ...

 History of Income Tax In India 1.      In India, this tax was introduced for the first time in 1860, by Sir James Wilson in order to meet the losses sustained by the Government on account of the military Mutiny of 1857. 2.     In 1886, a separate Income Tax Act was passed. This act remained in force up to 1917, with various amendments from time to time. 3.     In 1918, a new Income Tax Act was passed again it was replaced by another new Act which was passed in 1922. This Act remained in force up to the assessment year 1961-62 with numerous amendments. 4.     The income Tax Act was 1922 had become very complicated on account of innumerable amendments. The Government of India, Therefore, referred it to the Law Commission in 1956 with a view to simplify and for the prevention of tax evasion. The Law Commission submitted its report in September 1958, but in the meantime the Government of India ...

Let us understand what is Income from Salaries ?   ll kinds of taxable income of an assessee fall under any of the following five heads of income. Those incomes which does not find place under any of the first four heads and are taxable , fall under the fifth head of income. In order to calculate the taxable income under each head, certain deductions have made from gross income of that head. These deductions are different for each head. There are separate sections in the Income tax Act for computing the taxable income under each head, which are as under :        1.     Salaries- Sections 15 to 17, 2.     Income from House Property- Sections 22 to 27, 3.     Profits and Gains of business or Profession- Sections 28 to 44, 4.     Capital Gains- Sections 45 to 55, and 5.     Income from other Sources- Sections 56 to 59.      No deduction of expe...

     Assesse means a person by whom any tax as any other sum of money (penalty or interest) is payable under the Act. The term includes the following persons:  1.     A person by whom any tax as any other sum of money (including interest and penalty) is payable under the act (irrespective of the fact whether any proceeding under the act has been taken against him or not) 2.     A person in respect of whom any proceeding under the Act has been taken (whether as not he is liable for any tax, interest as penalty) proceeding may be taken. (a) Either fees the assessment of the amount of his income or the loss sustained by him (b) Of the income (or loss) of any other person in respect of whom he is assessable. (c)   Of the amount refund due to him as to such other person. 3.     Every person who is deemed to be an assessee. Fees instance, a representative assessee is deemed to be an assesse by vi...

     Government levies tax not only to collect required revenue to meet its expenditure but also with a view to attain certain economic objectives as well. Most important among them is reallocation of economics resources. Income tax is most important tax from this view. It is a direct tax and a very powerful tool to promote economic cause of the nation. What is Income tax?      Income tax is an annual tax charged from every individual, HUF, firm association of persons, body of individual, Company, Corporation, authority and Juristic person on the total income of the previous year completed with reference to the provisions of the Income Tax Act, 1861 at rates specified by the finance Act for the relevant assessment year. The income chargeable to tax should have some definite sources of income – salaries, house property, business and profession, Capital gains and other sources. Meaning of Income Tax:      ...