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Showing posts from February, 2020

Creditor (Meaning, Definition,Types of Creditor)

What is Creditor? Any person or organization who sales goods or services in credit or grant money on credit to the other person or organization is known as a creditor. A business that provides suppliers or services to companies or an individual and does not demand payment immediately is also considered as a creditor. Who is Creditor? The creditor may be a person, supplier, or Bank that has provided credit to the company. The amount owed to the creditor is reported on the company balance sheets as liabilities. Creditors can be classified as personal or real. People who loan money to friends or families are known as personal creditors. Real creditors have a legal contract with borrowers, sometimes granting the lender the right to claim any of the debtor real assets (For example, bank or finance company). Types of Creditor There are two types of Creditor 1) Secured Creditor      2) Unsecured Creditor 1) Secured Creditor The Creditor or Lender who gives credit to any Company,

What is Tax Deduction at Source (TDS)? Meaning, Definition, and various tax deduction sources

What is TDS? TDS is the abbreviation of Tax deduction at sources. The concept of TDS was introduced with the aim to collect the tax from the very source of the income. As per this concept, a person (payer) who make a payment any specified nature to any other person (Payee), shall deduct tax at source and remit the same into the account of the central government.  For example, Mr. X make payment of ₹50000, to Y Ltd as a professional fee. So Mr. X will deduct TDS @10% (as per TDS Rate chart) i.e. ₹ 5000 and remit the ₹5000 into account of central government. Deduction of Tax at Source and Advance payment (Sec. 190) The total income of assessee which he or she earned in the previous year is taxable in relevant assessment years. For example,  Income earned in PY 17-18 are taxable in AY 18-19, but the income tax is recovered from the assessee in Previous years itself through:- Tax deduction at source (TDS) Tax collection at source (TCS) Payments of advance tax.

Residential Status of Hindu Undivided Family (HUF)

HUF is a short form of Hindu Undivided Family. HUF is under in categories of persons under income tax act. The main motive to create HUF is taxed separately from its members. A Hindu family comes together and forms a HUF. HUF is not only for Hindu, even the Jain, Buddhist, Sikh can also form a HUF. A HUF is taxed separately, therefore deductions under section 80 and exemption allowed under the tax law can claim separately. So before calculating tax of HUF, the most important step is to know the residential status of HUF. Residential Status of HUF       The residential status of persons other than the individual is based on the place. The HUF is said to be resident if the control and management of its affairs are wholly or partly in India. A HUF is said to be resident  If the control and management of its affairs are situated wholly or partly in India. A HUF is said to be Non-Resident If the control and management of its affairs are situated wholly outside of India. Res

Residential Status Under Income Tax Act, 1961

Hindi Income tax Accounting Before calculating taxable income first thing is the need that we should know about the residential status of persons. Residential Status plays important role in income tax act. Residential status determines the taxable income which generated from activity performing in India or another country. Types of Residential status Residents 1) Ordinary residents  2) Non-ordinary residents Non-residents Note:-Only individual and HUF can be ordinary or Non-ordinary residents.All other classes of assessees can be either a resident or non-resident. Primary Conditions:- The residential status of Individual/HuF An Individual is said to be Resident in India if he satisfies at least one basic conditions: He is in India at least 182 days in previous years (Financial Year) Or He is in India for 60 days or more during that financial year and has been in India for 365 days or more during 4 previous years immediately preceding the relevant financ

Definition and type of Persons

Person includes Individual, Hindu Undivided Family (HUF), a Company, a Firm Associations of Person Body of Individual Local authorities Artificial jurdiction person Individual Individual refers to a living person i.e. Man,woman, transgender,minor or major. Hindu Undivided Family (HUF) A Hindu Undivide Family  (HUF) is relationship created due to operation of hindu law. The head of HUF is karta and member are called coparceners.  Company A Company refers to artificial persons incorporate under Company Act 2013 or any other act. Firm Persons who have entered into partnership with one another are called individually "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm name". Association of Person It means two or more persons join for a common purpose with a view to earned income. Body of Individual It means a conglomeration of individual who carry on

What is Assessee ? (Meaning,Definition and type of Assessee)

Meaning of Assessee Sec.2(7) Assessee is person who liable to pay Tax, Intrest, or penalty under the Income Tax Act and includes every  person  in respect of whom any proceeding under this Act has been taken for the assessment of his income or assessment of fringe benefits or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person; every  person  who is deemed to be an assessee under any provision of this Act; every  person  who is deemed to be an assessee in default under any provision of this Act. Ordinary Assessee or Normal Assessee:- It includes Any person against whom some proceeding under this act are going on. It is immaterial whether any tax or other amount is payable by him or not.  Any person who has sustain loss and has filed return loss u/s 139(3) Any person by whom some amount of interest tax paid or penalty is

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