8/4/2019 Lecture 1 - Introduction - Income - Tax

1/17

INCOME TAXINTRODUCTION

Prof. K.M.V. NambudiriM.Com.; LL.B.; P.G.D.B.M

8/4/2019 Lecture 1 - Introduction - Income - Tax

2/17

WHAT IS INCOME-TAX?

Tax on Income = Income + Tax

Tax is charged at the rates applicable for assessment year on

the Total Income earned during the previous year by anassessee , who is a person.

8/4/2019 Lecture 1 - Introduction - Income - Tax

3/17

DIRECT TAX AND INDIRECT TAX

There are two types of tax Direct tax and

Indirect tax.

Direct tax are those where incidence and impact

on the same person. In Indirect tax incidence is

on one person where as the impact is on another.

(Incidence means the legal responsibility to pay

tax whereas impact is ultimate burden of tax.) Direct tax is used as reign of social economy.

Indirect tax is for revenue for governance.

8/4/2019 Lecture 1 - Introduction - Income - Tax

4/17

VARIOUS TYPES OF TAXES

Direct tax Income-tax, Wealth-tax, Fringe

Benefit tax, (Gift tax, Surtax, Estate Duty,

Expenditure tax, Interest tax etc.), Land

Revenue, Stamp Duty, Registration Charges,

Toll, etc.

Indirect tax Central Excise Duty, Custom

Duty, Service tax, Sales tax, State Excise Duty,Octoi, etc.

8/4/2019 Lecture 1 - Introduction - Income - Tax

5/17

Diferent types of Income-tax

Personal Income-tax

Corporate tax

8/4/2019 Lecture 1 - Introduction - Income - Tax

6/17

HISTORY OF INCOME-TAX

The infamous Capital Fee and Holy cross war.

Indian Income-tax Act of 1922 and Income-tax

Act of 1961.

8/4/2019 Lecture 1 - Introduction - Income - Tax

7/17

HEIRARCHY OF INCOME-TAX

Finance Minister Under FM, Minister of State for Revenueand Minister of State for Expenditure.

Under MOS Revenue, Central Board of Direct taxes andCentral Board of Excise and Customs.

Under CBDT, various Chief Commissioners of Income-tax. Under each CCIT, 3 Commissioners of Income-tax each.

Under each CIT, 3 Addl./Jt. Commissioner of Income-tax.

Under each Addl.CIT/JCIT, one Dy. Commissioner of Income-tax/ Asst. Commissioner of Income-tax, Four Income-tax

Officers and one Tax Recovery Officer. Under each DCIT/ACIT, ITO, TRO, one Inspector and 2-3 staff

members Tax Assistants.

8/4/2019 Lecture 1 - Introduction - Income - Tax

8/17

CHARGE OF INCOME-TAX

Income-tax is levied annually.

It is levied at the tax rates fixed by Finance

Acts of every year for the respective

Assessmet Year (Budget presented on 28th of

February) on the Total Income earned in the

previous year, on every person who is an

assessee.

8/4/2019 Lecture 1 - Introduction - Income - Tax

9/17

PREVIOUS YEAR AND ASSESSMENT

YEAR

Assessment Year is a period is a period of

twelve months starting from 1st April, every

year. u/s.2(9).

Previous Year is Financial Year immediately

preceding Assessment Year.

If a new business is started, the first previous

year means from the date of start to the next

31st March. (Sec.3)

8/4/2019 Lecture 1 - Introduction - Income - Tax

10/17

EXCEPTIONS TO ASSESSMENT YEAR

Income of Non-resident Shipping Companies

Income of person leaving India Permanently

or for a very long time.

Income of a person who is trying to lienate his

assets with a view to avoiding payment of tax.

Income of a discontinued business.

8/4/2019 Lecture 1 - Introduction - Income - Tax

11/17

PERSON

Person includes:

i) an Individual;

ii) a Hindu Undivided Family (HUF);

iii) a Company;

iv) a Firm;

v) an Association of Persons (AOP) or Body of

Individuals (BOI); vi) a Local Authority; and

vii) every Artificial Juridical Person

8/4/2019 Lecture 1 - Introduction - Income - Tax

12/17

ASSESSEE

A Person by whom Income-tax or any other

sum of money is payable under the Act;

Any Person against whom any proceedings

under the Act has been initiated; or

Any Representative Assessee.

8/4/2019 Lecture 1 - Introduction - Income - Tax

13/17

INCOME

Either received or accrued during the year, i.e.

Accrued and Received;

Accrued but not received Received but not accrued

8/4/2019 Lecture 1 - Introduction - Income - Tax

14/17

TOTAL INCOME

Gross Total Income which is the total of

incomes under different Heads of Income

Exclude the exempted Income

Reduce Deductions (Allowables)

The net result is the Total Income which

means the taxable income, on which tax is

worked out.

8/4/2019 Lecture 1 - Introduction - Income - Tax

15/17

HEADS OF INCOME

Salaries;

Income from House Property;

Profits & Gains from Business or Profession; Capital Gains; and

Income from Other Sources

8/4/2019 Lecture 1 - Introduction - Income - Tax

16/17

TAX PAYABLE

Tax is worked out at the rates applicable for

the relevant Assessment Year (AY), less

rebates + Surcharge + Education Cess + Higher

Seco

Interest levied as per law;

Penalty or fine levied for defaults;

Commutation of Prosecutions launched.

8/4/2019 Lecture 1 - Introduction - Income - Tax

17/17

MEHODS OF TAX PAYMENT

Tax Deducted at Source; (deducted at the sourceby the giver of the Income)

Advance tax - (paid by every assessee who

estimates taxable income during the year, atinstalments on 15th Sept.; 15th Dec. and 15thMarch of the Previous Year Pay as you Earn tax)

Self Assessment Tax (balance tax payable to be

paid at the time of filing of Return of Income); Regular tax (Further tax levied by the Income-tax

Officer at the time of assessment, if any)