INCOME TAX LAWS AND PRACTICE

 

Scheme of Taxation

Every person, whose total income of the previous year exceeds the maximum amount which is not chargeable to income tax, is an assessee and chargeable to income-tax in the assessment year at the rates or rates prescribed in the Finance Act/Income-Tax Act  for that relevant year. However, his/her total income shall be determined on the basis of his/her residential status in India. All the notifications, circulars and clarifications issued from time to time by the Central Board of Direct Taxation (CBDT).

In other words, Income-Tax levied in India in the following manner:

Income earned by every person is chargeable to income-tax provided it exceeds the maximum amount which is not chargeable to tax i.e. it exceeds the amount maximum exemption limit.

It is charged on the total income of the previous year but it is taxable in the next following assessment year at the rates applicable to such assessment year. However, there are certain exceptions to this rule.

Income tax charged at two rates, viz., normal rates and special rates. Normal tax rates can be in the form of slab rates or flat rates are fixed by the annual Finance Act but special rates are given in Income-tax Act.

Tax is charged on the total income computed in accordance with the provisions of the Act.

Total income of the person is determined on the basis of his/her residential status in India.

The income of the previous year is chargeable to tax in the assessment year, but the assessee has to pay income-tax in the same previous year in which income is earned. It is paid in the form of advance tax and deduction of tax at source (TDS). Such tax paid in the previous year (also known as prepaid taxes) shall be deducted from the income tax due on total income in the assessment year.

For Book of Income Tax

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