Can be used for unlimited no. of Companies.
The economy has its up and downs, but as some say, the only things certain in life are “death and taxes”. Every legal, taxable entity pays taxes – individuals, companies, partnership firms, banks, Government, societies, schools, hospitals, hotels and trusts etc.
BASIC CONCEPTS
What is a Tax?
Tax is a fee charged by a government on a product, income or activity. There are two types of taxes – Direct Taxes and Indirect Taxes.
• Direct Taxes covered Income Tax and Wealth Tax.
• Indirect Taxes covered Service Tax, Excise Duty, and Customs Duty, Sales Tax / Value Added tax.
Why are Taxes Levied
The reason for levy of taxes is that they constitute the basic source of revenue to the government.
Levy of Income Tax
Income –Tax is a tax levied on the total income of the previous year of every person. A person includes an Individual, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI), a firm, a Company etc.
Important Definition
Assessee [section 2(7)]: Assessee means a person by whom any tax or any other sum of money is payable under this etc. It includes every person in respect of whom any proceeding has been taken for the assessment of his income of assessment of fringe benefits. Sometimes a person becomes assessable in respect of the income of some other persons. In such a case also, he may be considered as an assessee. This term also includes every person who is deemed to be an assessee or an assessee in default under any provision of this Act.
Assessment [Section 2 (9)]: This is the procedure by which the income of an assessee is determined by the assessing officer. It may be by way of a normal assessment or by way of reassessment of an income previously assessed.
Assessment Year : The term has been defined under section 2(9). This means a period of 12 moths commencing on 1 st April every year. The year in which tax is paid is called the Assessment Year while the year in respect of the income of which the tax is levied is called the Previous Year.
For example: For the assessment year 2010-11, the relevant previous year is 2009-10 (01.04.2009 to 31.03.2010).
Gross Total Income: The aggregate income under the 5 heads of income (viz. Salary, House Property, Business of profession, Capital Gain & Other Sources) is termed as “gross total income”. In other words, gross total income means total income computed in accordance with the provisions of the Act before making any deduction under sections 80C to 80U.
Residential Status: The different types of residential status are:-
- Resident (R)
- Not Ordinarily Resident (NOR)
- Non-Resident (NR)
Deduction under Chapter VI-A:
Deductions are allowed from gross total income under Chapter VI-A. Thus, if a deduction under chapter VI-A is allowable in respect of a particular income, then, the said income will be computed after allowing all expenses and will be include under the appropriate head of income. The gross total income will include that income and deduction under the relevant section will be allowed from the amount of gross total income.
Forms of Income Tax Return:
ITR–1(Saral II ): For Individual having income from salary and interest.
ITR-2: For Individual and HUF's not having business / profession income.
ITR-3: For Individual/HUF being partners in firm and not carrying out business or profession under any proprietorship.
ITR-4: For Individuals and HUF having income from a proprietary business or profession.
ITR-5: For Firms, AOP and BOI.
ITR-6: for Companies other than companies claming exemption under section 11.
ITR-7 : For persons including companies required to furnish return under section 139(4A)/ (4B)/ (4C)/ (4D).
ITR-V: Where the data of the return of income in forms ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, & ITR-7 transmitted electronically without digital signature.
