BASIC KNOWLWDGE ABOUT INCOME TAX IN INDIA.

 INCOME TAX IN INDIA

INCOME TAX :- Tax on the income (Gross Total Income – Deductions ) of the person after allowing deductions under ChapterVI of Income Tax Act,1961.

   Who is a ‘person’ under Income Tax Act,1961?

As per section-2(31) of Act , Person may be any of the following.

1. Individual 
2. Hindu Undivided Family (HUF)
3. Partnership firm
4. Company
5. Association of Persons (AOP)
6. Body of Individuals (BOI) 
7. Artificial Judicial Persons.

Who is an 'assessee' under Income Tax Act,1961 ?

Under Section 2(7) of the Income Tax Act, an 'assessee' means a person by whom any tax or any other sum of money is payable under this Act, and includes:

• Every person in respect of whom any proceeding under this Act has been taken for the assessment of his income 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 the provision of this Act;
• Every person, who is deemed to be an assessee in default under any provision of this Act.

What are the 'Heads of Income' under the Act?

Under the Act, all income shall, for the purposes of charge of income tax and computation of total income, be classified under the following heads of income.

• Salaries
• Income from house property
• Profits and gains from business or profession
• Capital gains
• Income from other sources.

                                                                                                               

• Income from each head is calculated after allowing for exemptions under each head.
• After summing up all above heads we get GTI(Gross Total Income).
• NET TOTAL INCOME = GTI – DEDUCTIONS (Sec 80C to Sec 80U)

Income Tax is calculated on Net Total Income.