Indian Income Tax Issues
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This site is dedicated to issues in Indian Income Tax. Mainly, the basic issues shall be discussed here and the issues mainly shall pertain to individual and partnership assessees. This also provides a facility of consultation through our panel of consultants.
However, we limit our liability in case of consultation that the opinions give shall not be taken to be our opinions and neither shall we be held liable for opinions expressed by our consultants. Also, the opinions given are for the personal use of the assessees and the final decision is left to the assessee. However, before acting on our opinions, assessees are advised to consult their tax consultants.
Every care has been taken
to
see that information provided here is up to date and accurate. If,
however, any information is not accurate, be kind enough to mail us so
that we may correct in future for the benefit of our readers.
In India, Income is taxed
through the Income Tax Act. The Act is amended yearly. The Finance Act
will amend the Income Tax Act.
Indian Income Tax is a
progressive tax. That is to say, as you earn more and more income, your
income tax burden will go up. This is because Income Tax slabs are so
structured that the rates are higher for the higher slabs.
Assessees are required to pay
Income Tax in advance if their incometax burden is estimated at
Rs.5000/- or more for the financial year.
For the purpose of Indian
Income
Tax, the financial year is taken as the assessment year. The financial
year begins on 1st April of the year and closes on the 31st March of
the next year.
The financial year in which
the
income chargeable to incometax is earned is called the Previous Year.
Assessment for the purpose of Income Tax is done during the financial
year commencing immediately after the previous year. The financial year
in which the income is assessed for income tax purposes is called the
Assessment Year. The Assessment year is always relative to the previous
year.
For example, if you take the
financial years 2006-07 and 2007-08, the income earned during the
financial year 2006-07 will be assessed to income tax in the financial
year 2007-08. Hence, 2006-07 is the previous year and 2007-08 is the
assessment year.
Budget is presented normally
on
the 28th February of each year. The direct tax provisions like Income
Tax will take effect from the 1st of April on the same year . The
indirect tax provisions will normally take effect immediately.
Hence, Indian Income Tax
provisions in the budget 2007 will be applicable for the income earned
during the financial year 2007-08. The assessment of this income
will be done during the financial year 2008-09, though income tax is
paid in advance during the financial year 2007-08.
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