NOTES ON INCOME TAX (UNIT I)

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INTRODUCTION OF INCOME TAX

ASSESSMENT YEAR 2025-26

RULES OF BASIC INCOME TAX


Income Tax :- Income Tax is a very important direct tax. It is a most significant source of revenue of the government. It is a yearly tax, which is paid by the assessee during the current financial year (assessment year) on the income of the previous financial year.

Previous Year: - Previous year means the financial year immediately preceding the assessment year. (For this year period of 01.04.2024 to 31.03.2025 is previous year).

Assessment Year :- Assessment year means the period of 12 months commencing on the first day of April every year and ending 31st March of the next year. An assessee is liable to pay tax on the income of the previous year during the following financial year. (For this year period of 01.04.2018 to 31.03.2019 is assessment year).

Assessee :- An Assessee means a person who is liable to pay any tax or liable to pay any sum of money (e.g. , interest, penalty etc.).

Deemed Assessee :- A person who is deemed to be an assessee for some other person, is called deemed assessee.

AGRICULTURE INCOME

According to Income Tax act agriculture income is totally exempt from liability to income tax. However, agriculture income is a factor in determining the tax on the non agriculture income of person when the agriculture income exceeds Rs. 5000.

If the following conditions satisfied all the income arising from agriculture land is treated as agriculture income except capital gain arising from the transfer of agriculture land.

1.The land must be situated in India.

2.Land must be used for agriculture purposes.

3.The receiver of income from land must have interest in the land.

4.The agriculture income must be direct income from agriculture.

5.The product must be easy fit for market.

6.Income from a farm house is treated as agriculture income if building is used for agriculture purpose and the land is situated municipality has a population of less than 10000; or the land is beyond a distance more than 8 kms.

Partly Agriculture Income

When it is difficult to differentiate agriculture and non agriculture income called partly agriculture income. For this purpose, calculation of income determined as follows:-

S.No. Product Agriculture Income Non Agriculture Income

1. Tea 60% 40%

2. Coffee 75% 25%

3. Coffee roasted 60% 40%

4. Centrifuged latex (Rubber) 65% 35%

Note: For determining the non agriculture income chargeable to tax, the market value of any agriculture produce which has been raised by the assessee and which has been utilised as a raw material in such business, shall be deducted.

RESIDENCE AND TAX LIABILITY

The scope of total income of an assessee is determined with reference to his residence in India in the previous year. The residential status of an assessee is determined with reference to his residence in India during the previous year. The incidence of tax has nothing to do with citizenship. That means a foreigner may be resident for income tax purposes.

Basic Conditions:-

1. He stays in India in the previous year at least 182 days.

OR

2. He has been in India for at least 365 days during the four preceding the previous year and at least 60 days during the previous year.

Additional Conditions:-

1. He has been resident in India in at least 02 out of 10 previous years preceding the relevant previous year, and

2. He has been in India for at least 730 days in all during the 07 previous years preceding the relevant previous year.

Exceptions:-

1. An individual who is a citizen of India and leaves India in any previous year for the purpose of service (job).

2. An individual who is a citizen of India and leaves India in any previous year as a member of the crew of an Indian ship.

3. If any citizen of India or a foreign national of Indian origin, who is living outside India, comes on a visit to India in the previous year. (Indian origin means that either he or either of his parents or any of his grand parents was born in India.

Note: - In the case of above exceptions only first basic condition (at least 182 days) will be applicable.

Determination of Residential Status

A. Individual:-

1. Resident (Ordinarily Resident): If he satisfies at lease one basic condition and both the additional conditions.

2. Not Ordinarily Resident: If he satisfies at lease one basic conditions but does not satisfy the aforesaid two additional conditions.

3. Non Resident: If he does not satisfy at least one basic condition.

B. Hindu Undivided Family, Firm, or Association of Persons:-

1. Resident (Ordinarily Resident): If the control and management of its affairs is situated wholly or partly in India during the relevant previous year.

2. Not Ordinarily Resident : Firm and Association of person cannot be not ordinarily resident. A H.U.F. is not ordinarily resident in India, if, its karta does not satisfy both the additional conditions.

3. Non Resident: If the control and management of its affairs is situated wholly outside India.

C. Companies:-

1. Resident (Ordinarily Resident): If (i) It is an Indian company; or

(ii) During that year, the control and management of its affairs is situated wholly in India.

2. Not Ordinarily Resident: A company is never not ordinarily resident.

3. Non Resident: If the company does not satisfy both the aforesaid conditions of residence.

D. Every Other Person:-

Every other person (local authority, artificial juridical person, etc.) is determined in the same manner as of a firm or associations of persons.

Dr. Sumeet Agrawal

E-NOTES FOR NEP

PLEASE CONTACT ME 9893318991

Wednesday, August 08, 2018

डियर रीडर्स , आप सबके विचार जान कर अच्छा लग रहा है। आयकर के नोट्स के लिए आप सभी के फोन्स आ रहे है , अभी "वेतन से आय " के नोट्स हिन्दी तथा इंग्लिश दोनों में उपलब्ध है, नोट्स बड़ा होने के कारण इसे पब्लिश करना सम्भव नही है, आप नोट्स मुझसे सीधे संपर्क करके ले सकते है। इसी तरह बी काम प्रथम वर्ष के लिए अर्थशास्त्र के नोट्स हिन्दी तथा इंग्लिश में आप ले सकते है। मेरे छात्रो द्वारा भेजे गए मेसेज में से कुछ आप लोगो के लिए -
1A bird sitting on a tree is not afraid of the branch shaking of breaking,
Because Bird trusts Not on the Branches but its OWN WINGS!!
2. Best inspiring message of the year?
If you are born poor, it’s not your mistake, But if you die poor, it's your mistake. 
 bye bye.
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