Income tax act 1961

Income Tax Act 1961 , Casual Income, Income, Residential Status, Assessment Year, Previous Year

1. Income Tax Act 1961 Girish M.C Asst. Prof. of Commerce 1 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

2. Income Tax Taxes are the primary sources of revenue for the Govt . It is levied by the Govt on the Taxpayers. It is a contribution by individuals as well as organisations to the Govt to undertake various public activities such as education , infrastructure , health , poverty and national security etc.. Taxes are broadly divided into two : 1. Direct taxes 2. Indirect Taxes 2 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

3. Direct Tax Direct tax is levied directly on the income of the person , which is normally levied on persons , are assessed on the basis of their income or property. This tax is directly paid by persons to the Govt. 3 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

4. Indirect Tax In indirect taxes , the person who pays the tax , shifts the burden to the person who consumes the goods or services. Before 2017 the indirect tax comprises of various taxes and duties like Service tax ,sales tax, Value added tax ( VAT), Customs duty .Excise Duty and etc.. On 1/7/2017 onwards all such indirect taxes are submerged in one law which was named as “ The Goods and Services Tax Act 2017” (GST) . 4 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

5. Brief History of Income Tax in India Nearly 2000 years ago In Greece , Germany and Roman empires taxes levied on the basis of turnover and occupations. 1. Tax are first introduced by the Sir James Wilson in the year 1860 in order to meet the loss caused on account of military activities in 1857. 2. In Tax Act passed in the year 1886 , this Act was in force for a long time.(1886 to 1917) 3.Income Tax Act passed in the year 1918 (1918 to 1922). 4. 3.Income Tax Act passed in the year 1922 (1922 to 1961). 5. 3.Income Tax Act passed in the year 1961. 6. Amend 1984, 1987,1988,1989, 1991 ,1992, 1993 – This Act is applicable to whole of India including Jammu and Kashmir ) 5 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

6. CBDT The Central Board of Direct Taxes : It is the apex body of the income tax department . It is the supreme authority and administrative head of the Income Tax Department. It functions as a part of the Finance Ministry of the Govt of India. 6 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

7. Components of the Income Tax Law 1. The Income Tax Act 1961 (Amendments up to date) 2.The Finance Act Passed every Year. 3.The Income Tax Rules 1962. 4.Judjment of the Court of Law 5. Circulars, Orders, notifications and instructions issued by the Income Tax department from time to time. 7 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

8. Basic terms in Income Tax Act (U/S 2 of the Income Tax Act 1961) Income:(Section 2 (24)) Income means money or money’s worth received from any definite source with certain amount of regularity. It is a periodical receipt from one’s business , land , work , investment etc,. The Act does not define income . It simply lists some of the items that can be included in the income. They are :- Profit or gain Dividend , interest Voluntary contribution received by a charitable institutions. 8 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

9. Income:(Section 2 (24)) Value of perquisites or profit in lieu of salary. Interest , salary , bonus commission or remuneration earned by a partner of a firm from such firm. Capital Gains. Profit and Gains from the business of banking carried on by a co-operative society with its members. Winnings from lotteries , cross world puzzles , races including horse races and card games , gambling or betting. 9 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

10. Deemed income Any sum contribution to PF or superannuation fund by the employers. Any sum received from under Key man Insurance Policy. (Policy taken by a person on the life of another person ) The profit and gains of business of Banking . Any consideration received excess for issuing shares exceeds the fair market value of the shares. Any advance received for negotiation for capital assets and fails negotiations. 10 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

11. Subsidy received for reimbursement . (LPG and other subsidy not included ) Any some received or value of property received without consideration or inadequate consideration on or after 1-4-2017. Compensation due or received in termination of employment Fair market value inventory converted into or treated as , capital asset ( w.e.f AY 2019-2020) Gift exceeds Rs 50000, received by an individual or HUF from any person during the previous year without consideration. 11 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

12. Agricultural Income Agricultural income (u/s 2 (1A) Agricultural income earned by a taxpayer in India is exempt under section 10(1) of the income tax act 1961. as per the section 2(1A) agricultural income means :- a) Any rent received or revenue derived from land which is situated in India and is used for agricultural purpose. 12 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

13. Agricultural Income b) Any income derived from such land by agricultural operations including processing of agricultural produce so as to render it fit for the market or sale of such produce. c) Any income from a farm house subject to satisfaction of certain conditions. Any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income. 13 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

14. Persons (U/S 2(31) Person includes : 1. Individuals 2. HUF –Karta and coparceners. 3.Company 4.Firm. 5.AOP or Body of Individuals 6.Local Authority Artificial Judicial persons. Public corporations by Act of legislature. 14 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

15. Assessee - 2(7) The term assessee means a person by whom any tax or any other sum of money is payable under this Act and includes : A) Proceedings taken against a person under this act Amount of refund due to him as per this Act Persons who is deemed to be an assessee Persons who is deemed to be an assessee in default as this Act. 15 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

16. Assessment Year -2 (9) A.Y is a period of twelve months commencing from First April of the every year to an end of 31 st March of the next year. ie , The year in which the income of the previous year is assessed is called A.Y 16 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

17. Assessment year- 2 (9) Assessment year is the year in which you will file your return for the previous year. For instance, if you start your job on 1 January 2019, your tax year closes on 31 March 2019. 2018-19 is your previous year and your AY is 2019-20. The last day to file your return is 31 August 2019. 17 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

18. Previous year -3 Previous year means the financial year immediately preceding the assessment year. Thus previous year is the financial year or a period of 12 months immediately preceding the A.Y The P.Y is very important because income tax is charged on the total income earned during the previous year. 18 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

19. Exceptions to General rule for Assessment. 1. Income from non-residents from shipping business (172) 2. Income of person leaving India (174) 3.Income persons likely to transfer assets to avoid tax (175) 4. Income of a discontinued business , professions or vocation . (176)persons 19 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

20. Heads of Income 1. Income from Salaries 2.Income from House property 3. Income from Profits or Gains of Business or profession. 4. Capital Gains 5.Income from Other sources. 20 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

21. Gross Total Income -80B (5) G.T income means the total income computed in accordance with the provisions of this Act . Before making any deductions under sections 80C to 80U. It is the aggregate of taxable income under the different heads of income such as income from salary, house property , income from profits or gains of business , capital gains and other sources… 21 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

22. Total Income Total income means the amount left after making the deductions under Section 80C to 80U from the gross total income. Income tax will be calculated on this total income . So this income is also called taxable income. 22 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

23. Maximum marginal rate of tax -2(29) It means the rate of income tax (including surcharge ) applicable in relation to the highest slab of income in case of individual , AOP, or BOI , as the case may be as specified in the Finance Act of the relevant P.Y. 23 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

24. Average rate of Income tax -2(10) The total tax divided by the Total income multiplied by the 100. Average rate =Total Tax/Total Income *100. 24 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

25. Casual Income A non recurring income or income received casually is called casual income. It is an unexpected income . Winning from lottery , income from card games, crossword puzzles and other games or gambling or betting in any form are casual income. 25 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy

26. Thanks 26 Girish M C , Asst Prof of Commerce, Panampilly Memorial Govt . College, Chalakudy