Income Tax

Section 4:- Charging Section

 Income earned by every person
during the previous year is charged
to tax in Assessment Year at the
rates specified in the Finance Act.
 Income – 2(24)
Income includes:

 Profit & Gains from Business & Profession.

 Dividend
 Voluntary Contribution received by a trust
 Perquisite or Profit in Lieu of Salary
 Any special allowance or benefit granted to meet
expenses in performance of duty
 Export Incentives.
 Value of any Benefit or Perquisite to businessman or
professional.
 Interest, Salary, Bonus, Commission or Remuneration
received by partner or partnership firm

contd…….
……. contd

 Capital Gains
 Profits of Insurance Business.
 Winning of Lottery, Crossword puzzles, horse
races and card games.
 Sum Received from Employees as Contribution to
provident fund or employee benefit fund.
 Sum received under Keyman Insurance Policy
 Sum received under an agreement for not
carrying out an activity
 Gifts exceeding Rs. 25,000 received by Individual
 Banking Income of a Co-operative Society
 Person u/s 2(31)
Person includes:
 Individual
 HUF
 Company
 Firm
 Association of Person or Body of
Individuals
 Local Authority
 Artificial Juridical person (not falling
within any of the above category)
 Previous Year - 2(34)
 Previous Year means the previous year as
defined in Section 3

 Section 3 states:
Previous Year is the financial year
immediately preceding the assessment
year.

For E.g. For A.Y. 2007-08, previous year

starts from 1st April 2006 and ends on
31st March 2007.
 Exception:
 Previous year for a Newly set up Business:-

In the case of a newly set up business or

profession or a new source of income during the
financial year, the previous year will begin from
the date of setting up or coming into existence
of the new business, profession or new source
of income and will end on immediately following
31st March.

 For e.g. Business starts on 01/02/07

Previous Year 01/02/07 to 31/03/07
 Assessee: 2(7):-
Assessee means a person by whom any tax or
any other sum of money is payable under the
Act. The term Assessee includes:

 Every person in respect of whom any

proceeding under this act has been taken for
the assessment of his income or loss or the
amount of refund due to him
 Every person who is deemed to be an
assessee under any provisions of this Act.
 Every person who is deemed to be an
Assessee in default under the provisions of
this Act.