Tax, types of tax, assessment year and previous year

1. INCOME TAX LAW AND PRACTICE
1
BASIC CONCEPTS OF INCOME TAX
Dr. R. Prema
Assistant Professor in Commerce CA
Department of Commerce with Computer Applications
Dr. N.G.P. Arts and Science College
Dr. N.G.P.-Kalapatti Road
Coimbatore-641 048
Tamilnadu, India

2.  Introduction
 Basic Concepts
 Residential Status
 Heads of Income
 Conclusion
Points of Presentation
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

3. INTRODUCTION
“In this world nothing can be said to be certain,
except death and taxes.” - Benjamin Franklin.
Mandatory liability
Compulsory financial charge
Latin word ‘Taxo’
Not a Voluntary payment – an enforced contribution
Basic source of revenue – Welfare of People
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

4. 'WHY SHOULD I PAY TAX?
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

5. What Government Do from our TAX?
 Health care and Education
 Cooking gas
 National Defense, Infrastructure Developments etc.
 Various welfare schemes
 Administrative cost
 Judicial Salaries, perks of Judges, Magistrates and judicial
staff

6. DIRECT
TAXES
INDIRECT
TAXES
Income tax
GST
Customs Duty
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

7. Normal
Assessee
Representative
Assessee
Deemed
Assessee
Pay taxes for the income
earned by him for a
particular financial year
Assessee
IMPORTANT TERMS
Assessee-
in-Default
Pay taxes for income or
losses incurred not only by
him, but also by a third party
Pay taxes for some other
person by the legal
authorities
Failed to fulfill his legal
duty of paying tax
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

8. WHO ARE LIABLE FOR TAX?
1. Individuals
2. Hindu Undivided families
3. Companies
4. Firms (partnerships)
5. Association of persons or bodies of individuals
6. Local authority (municipal bodies)
7. Artificial juridical person
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

9. ASSESSMENT YEAR (Section 2(9))
The period of twelve months
commencing on the 1st day of
April every year and ending on
31st March every year.
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

10. PREVIOUS YEAR (Section 2(34))
The financial year immediately
preceding the assessment year
Previous Year
2019-20
Assessment Year
2020-21
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

11. • World income is taxable in
IndiaRESIDENT
• Only income arising or
accruing in India is taxable in
India
NON
RESIDENT
(NRI)
• Income accruing or arising
outside India may also be
taxable in India
RESIDENT
BUT NOT
ORDINARLY
RESIDENT
RESIDENTIAL STATUS
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

12. RESIDENT
u/s 6(1)
In India for a
period of 182 days
or more in the FY
In India for 60 days or
more during FY &
in India for 365 days or
more during 4 previous
years immediately
preceding the RFY.
RESIDENTIAL STATUS OF AN INDIVIDUAL
(a) (b)
(or)
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

13. RESIDENTIAL STATUS OF AN INDIVIDUAL
ORDINARY
RESIDENT
u/s 6(6)
Resident in India in
atleast 2 years out of 10
previous year
immediately preceding
the previous year.
In India for a period of
730 days or more
during 7 years
immediately
preceding the relevant
previous year.
(a) (b)
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

14. NON
RESIDENT
u/s 2(30)
Individual who does
not satisfy at least
one of the basic
conditions
u/s 6 (1).
RESIDENTIAL STATUS OF AN INDIVIDUAL
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

15. Example:
Rickey Pointing, an Australian cricketer has been
coming to India for 100 days every year since 2005-06:
(a) Determine his residential status for the assessment
year 2018-19.
(b) Will your answer be different if he has been coming to
India for 110 days instead of 100 days every year.
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

16. • RPY - 182 daysSec 6(1) a
• RPY - 60 Days
• Preceding 4 years – 365 daysSec 6(1) b
• Resident in India 2 PY out of
10 preceding PYSec 6(6) a
• Stay in India 730 days out of
7 preceding PY
Sec 6(6) b
RESULT = R But Not OR
R
O
R
and
or
(a)
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

17. • RPY - 182 daysSec 6(1) a
• RPY – 60 Days
• Preceding 4 years – 365 daysSec 6(1) b
• Resident in India 2 PY out of
10 preceding PYSec 6(6) a
• Stay in India 730 days out of
7 preceding PY
Sec 6(6) b
RESULT = OR
R
O
R
and
or
(b)
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

18. Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

19. Gross Total Income = Aggregate of Five Heads of
Income.
Total Income = GTI – Deductions u/s 80C to 80U.
Total Income is also called as Taxable Income.
Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

20. Dr. N.G.P. Arts and Science College
Coimbatore, Tamil Nadu, India

21. THANK YOU