An assessee is a key part of tax law, as it determines who is liable for filing and paying taxes. This article will provide an in-depth look at the meaning of assessee and its different types, along with the rules and regulations governing them.
What is an Assessee?
An assessee is a person or an entity that is responsible for filing and paying taxes as per the laws set by a governing body. Assessees are normally classified into two main categories: Natural Person, which can include individuals, companies, associations of persons, and artificial judicial bodies; and Juridical Person, which consists of trusts, co-operatives, corporations, etc. All rules regarding taxation regarding the assessee fall under the jurisdiction of the Income Tax Department (ITD).
Definition of an Assessee
An assessee is an individual or entity who is liable to pay tax, calculate their taxable income, and self-assess taxes under the country's taxation laws. The return or payment of the tax is reflected on the Income Tax Return (ITR) that is filed with the relevant authority. Additionally, an assessee may also be required to comply with other obligations such as filing periodic declarations online or furnishing details in case of audits or investigations.
Types of Assessees
There are five main types of assessees in India – Individuals, Hindu undivided families (HUFs), Associations of Persons (AOPs or BOIs), Companies, and Local Authority. An Individual is a natural person such as a man, woman, or child who is liable to pay tax on their income. This includes salaried people, business owners, freelancers, etc. HUFs are composed of members from certain Hindu communities that have been treated as a single unit for taxation purposes. AOPs are two or more persons joined together to carry on a venture which can be a business or a mutual undertaking. Companies refer to only those entities registered under the Companies Act while Local Authorities include Municipal bodies, Municipal corporations, and Panchayats.
Laws and Duties of an Assessee
Assessees are expected to discharge their duties as per the Income Tax Laws. They need to timely disclose accurate information depending on their type – Individuals, Companies, and Other Assessees. It is also the duty of the assessee to file a tax return before the due date with all the relevant details including receipts and deductions from gross income. In addition, they must adhere to local laws and pay taxes regularly or risk being slapped with a fine or penalty.
Advantages of Being an Assessee
Being an assessee offers several entitlements and privileges which make filing taxes efficient. For example, those who are registered can make use of the e-filing facility, claim tax deductions and have access to various income tax forums and guidance. Assessees can also benefit from the provisions for lower taxes or exemptions for specified categories such as investors or employees with a specific age bracket. Furthermore, assessees can avail of some credits and discounts in certain areas if they link their PAN/Aadhaar to their bank account as well as availing of other digital payment methods.