Direct Indirect Tax
Basics of Direct Taxes(Income Tax Act) and Indirect Taxes(VAT, CST, Excise duty, Service Tax etc.,)
The Persons who are taxed are called “Assessees”.
Assessees or “Person” under the Income Tax Act, 1961(as amended Yearly under the respective Finance Acts) are as follows:-
1) Individual
2) Hindu Undivided Family(HUF)
3) Firm or Association of Persons(AOP)
4) Joint Stock Company
5) Every other person
Whether an Assessee is liable to be taxed and if so, on what income etc., depends on the residential status of the
Assessee.
An Assessee is taxed in the Assessment Year on Income in the Previous Year.
The term “Assessment Year”(A.Y) means the period of 12 months commencing on the first day of April every year.
Thus, the A.Y always begins on Ist April and ends on 31 March every year. This period is also known as the Financial Year.
Previous Year(P.Y) is the year in which income is earned. Income tax is charged on the total income of the previous year and the income earned during the previous year is assessed to tax at the rates and as per the provisions applicable for the A.Y relevant to the P.Y. In other words, the income chargeable to tax in the A.Y is the one actually earned in the Previous year. Residential status of an Assessee as an “Individual”:-
An Individual can be either (1) a resident in India or (2) non-resident in India
However, an “Individual” or a “H.U.F can be of two further Sub-categories under the main category “Resident in
India”, namely:- a) Resident and Ordinarily Resident and
b) Resident but not Ordinarily Resident
Basic conditions to make an Individual, a “Resident in India” are as follows:-
A) Stay in India for a period of 182 days or more during the Previous Year
OR
B) (i) He is in India(stay in India)in the Previous Year for a period of 60days or more AND (ii) He is in India for a period or periods of 365 days or more during 4 years immediately preceding the
The Persons who are taxed are called “Assessees”.
Assessees or “Person” under the Income Tax Act, 1961(as amended Yearly under the respective Finance Acts) are as follows:-
1) Individual
2) Hindu Undivided Family(HUF)
3) Firm or Association of Persons(AOP)
4) Joint Stock Company
5) Every other person
Whether an Assessee is liable to be taxed and if so, on what income etc., depends on the residential status of the
Assessee.
An Assessee is taxed in the Assessment Year on Income in the Previous Year.
The term “Assessment Year”(A.Y) means the period of 12 months commencing on the first day of April every year.
Thus, the A.Y always begins on Ist April and ends on 31 March every year. This period is also known as the Financial Year.
Previous Year(P.Y) is the year in which income is earned. Income tax is charged on the total income of the previous year and the income earned during the previous year is assessed to tax at the rates and as per the provisions applicable for the A.Y relevant to the P.Y. In other words, the income chargeable to tax in the A.Y is the one actually earned in the Previous year. Residential status of an Assessee as an “Individual”:-
An Individual can be either (1) a resident in India or (2) non-resident in India
However, an “Individual” or a “H.U.F can be of two further Sub-categories under the main category “Resident in
India”, namely:- a) Resident and Ordinarily Resident and
b) Resident but not Ordinarily Resident
Basic conditions to make an Individual, a “Resident in India” are as follows:-
A) Stay in India for a period of 182 days or more during the Previous Year
OR
B) (i) He is in India(stay in India)in the Previous Year for a period of 60days or more AND (ii) He is in India for a period or periods of 365 days or more during 4 years immediately preceding the