Assessee is a term commonly used in taxation, and it refers to an individual, firm, or company that is subject to income tax. Under the Indian Income Tax Act, 1961, Section 2(7) defines the term assessee as a person by whom income tax or any other sum of money is payable under the Act.
There are different types of assesses under the Indian Income Tax Act, and in this article, we will discuss some of the common types.
- Normal Assessee: This refers to an individual or entity whose income is subject to income tax. In the case of an individual, the income is calculated based on the total income earned during a financial year, which includes income from salary, business or profession, capital gains, and other sources. For a company, the income is calculated based on the profits earned during a financial year.
- Representative Assessee: A representative assessee is an individual or entity appointed by the Income Tax Department to represent a person who is not capable of making an assessment or paying tax. This includes minors, lunatics, and individuals who are not physically present in the country.
- Deemed Assessee: A deemed assessee refers to an individual or entity that is not a normal assessee but is treated as one for the purpose of tax assessment. For example, in the case of a partnership firm, the firm is not a separate legal entity, and the partners are assessed individually for tax purposes. However, in certain cases, the partnership firm may be treated as a deemed assessee and assessed separately.
- Assesssee in Default: An assesssee in default is an individual or entity that fails to comply with the provisions of the Income Tax Act. This includes individuals or entities that do not file their income tax returns, fail to pay tax on time, or provide false information to the tax authorities.
In conclusion, the term assessee under Section 2(7) of the Indian Income Tax Act refers to a person who is liable to pay income tax. It is important to understand the different types of assesses to ensure compliance with the tax laws and avoid penalties.