NTA UGC NET 2019 Commerce full free notes for income tax and corporate planning

Unit 10- Income-tax and corporate tax planning

Basic concepts:

• "Tax on income other than agricultural income" is imposed and charged by the central government according to entry 82 of union list (list I) of seventh schedule to the article 246 of the Constitution of India.
• The state government is empowered to charge tax on agricultural income as per entry 46 of state list (list II).
• Provisions in income tax are governed by Income tax act, 1961 and supported by Income tax rules, 1962 which are prepared by 'Central board of direct taxes' (CBDT).
• Income tax is one of the major source of income to the central government.
• Agricultural income [Section 2(1A)] - It is fully exempted from tax as per section 10(1).
• Assessment is a process or procedure where the assessing officier determines the income of an assessee.
• Assessee [Section 2(7)] means a person by whom any tax or any other sum of money is payable under the Income tax act, 1961.
• Person [Section 2(31)] includes:

1. an individual  
2. a Hindu undivided family(HUF) 
3. a company 
4. a firm 
5. an association of persons 
6. a body of individuals 
7. a local authority
8. every other artificial juridical person.

• Income [Section 2(24)] includes all such incomes laid down under this act.
• Heads of Income [Section 14] contains:

1. Income from salaries (sec 15-17)
2. Income from house property (sec 22-27)
3. Income from profits and gains of business or profession (sec 28-44)
4. Income from capital gains (sec 45-55)
5. Income from other sources (sec 56-59)

• Gross total income [Section 80B (5)] means the total income of an assessee before any deductions.
• Total income [Section 2(45)] means income remaining after all deductions and income tax is charged on this total income at the prescribed rate.
• Assessment year [Section 2(9)] denotes the period of 12 months starting from 1st April every year and ending on 31st March of the following or next year. The previous year income of an assessee is assessed in the assessment year and tax is calculated at the prescribed rates.
• Previous year [Section 3]  denotes the year in which income is earned. Such income is taxable in the assessment year.