12-04-2013, 03:58 PM
INTRODUCTION TO INCOME TAX & RESIDENTIAL STATUS
INCOME TAX.pptx (Size: 129.33 KB / Downloads: 26)
INTRODUCTION
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 at rate or rates prescribed in the finance act for relevant assessment year. However , his total income shall be determined on the basis of his residential status.
Objectives
To raise money needed to finance government expenditures.
As a factor of affecting the prices of goods, they determine what to produce and in what measure.
To change the distribution of income and many more.
Important Concepts
An Individual;
A Hindu Undivided Family;
A Company;
A Firm;
An Association of Person (AOP) or a Body of Individuals (BOI), whether incorporated or not;
A local Authority;
Every artificial juridical person not falling within any of the preceding sub clauses
A local authority
The expression of local authority means:
Panchayat; or
Municipality; or
Municipal Committee and District Board, legally entitled to, or entrusted by the Government with, the control or management of a Municipal or local funds; or
Cantonment Board.
Artificial Juridical Persons
They are entities which are not natural persons but are separate in the eyes of law.
Though they may not be sued directly in a court of law but they can be sued through persons managing them.
E.g. Gujarat University
Basic rules for determining residential status of an assessee
Residential status is determined for each category of persons separately.
Residential status is always determined for the previous year because we have to determine the total income of the previous year only.
Residential status of a person is to be determined for every previous year because it may change from year to year.
If a person is resident in India in a P.Y. relevant to an assessment year in respect of any source of income, he shall deemed to be resident in India in the P.Y.relevant to the A.Y.in respect of each of his other source of income.
A person may be a resident of more than one country for any P.Y.
Citizenship of a country and residential status of that country are two different concepts.