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Showing posts with the label Income Tax

Introduction to Income Tax Act 1961

In India, Income tax is a tax you pay to the government based on your income. The government uses this tax money for various purposes including public services, infrastructure development, defence spending and subsidies among other options. It is compulsory that one has to pay income tax if the income he or she earns crosses beyond a certain limit.   The Income Tax Act,enacted in 1961, is a statute that focuses on the different rules and regulations that govern taxation in the country. It provides for collecting, levying, administering and recovering income tax for the Indian government. The Income Tax Act,1961 contains a total of 23 chapters and 298 sections. These deal with various aspects of taxation in India.   During the month of February, every year, the Indian government presents a finance budget. There are various amendments to the Income Tax Act in the finance budget. This includes changes in tax slabs wherever applicable. For example, the Finance Minister announced tha

Concept of Hindu Undivided Family (HUF)

Concept of HUF The term 'Hindu Undivided Family' has not been defined under the Income Tax Act. It is defined under the Hindu Law as a family that consists of all persons lineally descended from a common ancestor, including wives and unmarried daughters. This means membership of a HUF does not come from a contract but from status of the person in such families. A HUF cannot be formed by a group of people who do not constitute a family. Lineal descendents with a common ancestor is a must Type of HUF There are two types of HUF Mritakshra sampraday Dayabhag sampraday Dayabhag Sampraday (दयाभाग संप्रदाय) The dayabhag law applies in West bengal and Assam . According to this law, the son doesn't acquired any right by birth in the ancestral property. The son's right arise for the first time on father death. All properties thus, devolve by inheritance and not by survivorship. Under this school of law, the coparcenary is formed only on death of the father. Fem

Diffrence between Previous year & Assessment years

Assessment Year [Sec. - 2 (9)] Meaning and Definition  Assessment year refers to a year in which financial year is assessed. Assessment year  is the evaluation year of the financial year. Or  Assessment year is the tax calculation year. Explanation If a person "A" earned income in financial year 2016-17, then he will pay income tax in assessment year 2017-18. Definition:- Assessment year may be defined as a year in which the income of the previous year is to be assessed. Previous year [Sec. -3] Meaning and Definition Previous year refers to the year in which income is generated. The income of the previous year is taxed in the immediately following assessment year. Definition:- Previous Year means financial year, which is immediately preceding  the assessment years.   Introduction to Income tax Act 1964 Sr. No.  Subjects Name  Links 1 Previous years & assessment years Click Here>>> 2 Assessee Click Here>>&

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

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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