Sudhansu Sir Unit-I Disha College

INTRODUCTION:
The word ‘Income-tax’ is a combination of two words- ‘Income’ and ‘Tax’. Generally,
income means money that is earned by doing work or received from investment whereas
tax is fee charged by a government on a product, income or activity. Tax also means a rate
or sum of money levied on persons or property for the benefit of the state.
Therefore, Income-tax is a direct tax which is imposed upon the income of a person.
Section 2(43) of the Income Tax Act, 1961, defines ‘tax’. Therefore, tax means
income tax chargeable under the provisions of this Act.
Tax is fee charged by a government on a product, income or activity. Tax also
means a rate or sum of money levied on persons or property for the benefit of the state.
Section 2(43) of the Income Tax Act, 1961, defines ‘tax’. Therefore, tax means income tax
chargeable under the provisions of this Act.
Types of Taxes:
i. Direct Taxes: Tax is levied directly on the income or wealth of a person. The tax is
born by the person paying e.g. Income Tax and Wealth Tax
ii. Indirect Taxes: Tax is levied on the price of a goods or service. The person paying the
tax passes on the incidence to another person, e.g. GST (CGST & SGST) and
customs duty.

Why are taxes levied?

i. Basic source of revenue to the government.
ii. Revenue so raised is utilized for meeting the expenses of government like defence,
provision of education, health-care, infrastructure facilities like roads, dams etc.

Income Tax
Income tax is a very important direct tax. It is an important and most significant
source of revenue of the government. The government needs money to maintain law and
order in the country; safeguard the security of the country from foreign powers and
promote the welfare of the people.
Since our government is wedded to socialistic pattern of society it is the foremost duty
of the government to bring out such welfare and development programmers’ which will
bridge the gap between the rich and the poor. All this requires mobilization of funds from
various sources. These sources may be direct or indirect. Income tax, being a direct tax,
is an important tool to achieve balanced socio-economic, growth by providing
concessions and incentives in income tax for various developmental purposes.

Who is liable to pay Income Tax?

Every person, whose taxable income for the previous financial year exceeds the
minimum taxable limit, is liable to pay tax to the Central Government, Income Tax during
the current financial year on the income of the previous financial year at the rates in force
during the current financial year.

Brief History of Income Tax in India

In India, this tax was introduced for the first time in 1860, by Sir James Wilson in
order to meet the losses sustained by the Government on account of the Military Mutiny of
1857. Thereafter, several amendments were made in it from time to time. At last, in 1886,
a separate Income Tax Act was passed. This Act remained in force up to 1917, with various
amendments from time to time. In 1918, a new Income Tax Act was passed and again it
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was replace by another new Act which was passed in 1922. This Act remained in force up to
the assessment year 1961-62 with numerous amendments.
Overview of Income-Tax Law in India
Following are the components of Income Tax Law in India
 Income tax Act
 Annual finance Act
 Income Tax Rules
 Circulars/Notifications
 Legal Decisions of Courts

Income tax Act

i. The levy of income tax in India is governed by income tax Act, 1961
ii. The Act came into force on 1st April, 1962.
iii. These undergo change every year with additions and deletions brought about by the
Finance Act passed by Parliament.

Income Tax Rules

i. The administration of direct taxes is looked after by the Central Board of Direct
Taxes (CBDT).
ii. For proper administration of the income Tax Act, the CBDT frames rules from time to
time.
iii. These rules are collectively called Income Tax Rule, 1962.

SALIENT FEATURES OF INCOME-TAX

1. Income-tax is a direct tax: Income-tax is borne by the person upon whom it is
levied. It cannot to be shifted to any other person.
2. Income-tax is a central tax: Income-tax is levied and collected by Central
Government.
3. Income-tax is computed upon Net Taxable Income of Previous Year: Net
taxable income during the previous year is computed as per the provisions of
Income-tax.
4. Exempted Limit of Income: Certain amount of income is exempted from income-
tax according to Income-tax Act. This amount is called exempted limit of income. Any
income which exceeds this limit shall be taxable. This limit may vary for each
assessment year. This exempted limit also be different in case of male assessees,
female assessees and other persons.
5. Income-tax is payable by every assessee: Assessee includes an individual, Hindu
undivided family, a firm, a company, every artificial person.
6. Income-tax is Computed on the basis of Rates of Income-tax Applicable in
Current Assessment year.
7. Income-tax is paid in current Assessment Year: Computation, payment and
recovery of income-tax is done in assessment year relating to each previous year,
e.g. the payment of income-tax on income up to 31 st march, 2023 shall be made in
related Assessment year 2023-24.
8. Income is grouped in various slabs.
9. Progressive Rates of Income-tax: Income-tax is charged on progressive rates on
increasing slabs of income. The slab of income and rated of income-tax applicable to
an individual assessee are given in the following table:
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Computation of Tax for the A. Y. 2023-24
Rates of tax for an Individual, Hindu Undivided Family, Association of Persons or Body of
Individuals:
1. General Rate (Excluding short-term capital gains, specified in Se. IIIA, long term
capital gains, winnings from Lottery, Crossword puzzle, Races, etc.):
i. Individual, HUF, BOI, AOP – [other than those covered in sub parts (ii) and
(iii)]: Normal person below 60years
Total Income Rate of
Tax
Up to Rs. 2,50,000 Nil
Next on Rs. 2, 50,000 5%
Next on Rs. 5, 00,000 20%
Next balance 30%
On Rs. 2, 50,000 (Min. exemption limit) Nil
ii. Individual – Senior citizen (resident in India, who is of the age of 60 year or
more but less than the age of 80 years at any time during the previous year):
Total Income Rate of
Tax
On Rs.3, 00,000 Nil
Next on Rs. 2,00,000 5%
Next on Rs. 5, 00,000 20%
Next balance 30%
iii. Individual – Super Senior citizen (resident in India, who is of the age of 80
year or more during the previous year):
Total Income Rate of
Tax
On Rs. 5, 00,000 Nil
Next on Rs. 5,00,000 20%
Next balance 30%

OR
Income tax slabs under the New Optional Tax Regime for individual
(Being male, female, senior citizen or super senior citizen)
Or HUF for Financial Year 2023-24
(Assessment Year 2023-24)
Total Income Applicable tax rate
Up to `2.5 lakh Nil
`2.5 lakh to `5 lakh 5%
`5 lakh to `7.5 lakh 10%
`7.5 lakh to `10 lakh 15%
`10 lakh to `12.5 lakh 20%
` 12.5 lakh to `15 lakh 25%
`15 lakh and above 30%

Note: (i) If incomes does exceeds ` 50 lakhs but does not exceeds `1 crore 10%
(ii) If income exceeds `1 crore but does not exceeds `2 crore 15%
(iii) If income exceeds ` 2 crore but does not exceeds `5 crore 25%
(iv) If income exceeds `5 crore 37%
Individuals and HUFs exercising option under section 115BAC are not liable to pay
alternate minimum tax (AMT).
Notes: 1. If the individual opts for the new tax regime, then he will have to forego the
major deductions. Availing a new slab rate is one time non-recoverable income.
 Sudhansu Sir Unit-I Disha College
2. Under the older tax regime, the individual can still avail all the
deductions.
2. Special Rates: On specified incomes the tax is charged at a specified flat rate:
i. On Short-term Capital Gains on shares which are subject to Security Transaction Tax
(STT) -- @ 15%
ii. On Long-term Capital Gains -- @ 20%
iii. On gains from Listed Shares without indexing the cost of acquisition -- @ 10%
iv. On casual incomes(winnings from lottery, Crossword puzzle, Horse race, etc) --@ 30%

3. Surcharge:
For individual, HUF, AOP, BOI and Artificial Juridical persons the rate of surcharge shall be
 If total income exceeds Rs. 50 lakh but does not exceeds Rs. 1 crore 10%
 If total income exceeds Rs. 1 crore 15%
4. Education Cess: On the amount of Income Tax and surcharge, if any, @4%.
5. REBATE U/S 87A: in case of total income of an individual does not exceed Rs.
500000, a rebate shall be allowed out of tax as under: Rs 12,500 or tax calculated on
total income as per prescribed rates whichever is less.

Firms and Companies:

Particulars Firms Domestic Foreign Companies
Companies
Basic Tax Rate 30% 30% 30%
Co-operative Societies
Income Rate of Tax
Up to Rs.10000 10%
Next on Rs.10000 20%
Next balance 30%

10. Incidence of Tax on financially strong and rich persons: It is an

important feature of income-tax that the financially strong and rich persons will have
to pay more income-tax as compared to middle class persons due to progressive
rates of income-tax.
11. Administration of Income-tax: Various activities relating to income-tax viz.
proceedings of tax, assessment, and recovery of tax etc., administrative activities are
performed by Income-tax Department.
12. Distribution of Income from Income-tax: Although income-tax is levied
and collected by Central Government yet its distribution is done among Central and
different States based on the recommendations of Finance Commission. But State
Government is not allowed to take part in following amounts:
(i) Income-tax received from companies
(ii) Surcharge, if any, and
(iii) Education cess.

Basis of Charge of Income Tax

The following basic principles emerge from the charging section:
i. Income tax is an annual tax on income.
ii. Income of previous year is taxable in the next following assessment year at the
rate of rates applicable to that assessment year. However, there are certain exceptions to
this rule.
iii. Tax rates are fixed by the annual Finance Act.
iv. Tax is charged on every person as defined in Section 2(3)
v. The tax is charged on the total income of every person computed in accordance
with the provisions of this Act.
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vi. Income tax is to be deducted at the sources or paid in advance as provided under
provisions of the Act.
The total income is computed on the basis of the residential status of the assessee in the
manner provided hereunder and is called into the following five heads:
i. Income from Salaries,
ii. Income from House Property,
iii. Income from Profits of Business or Profession,
iv. Income from Capital Gains and
v. Income from other Sources.
For computing the total income of an assessee and the tax payable by him the following
step by step procedure is followed:
i. Classify the income under each of the above five heads and then deduct from the
income under each head the deductions permissible under the Act in respect of that
head of income. The balance of amount left under each head of income is its assessable
income.
ii. Total up the assessable income of each head and the aggregate of all these assessable
incomes is called the Gross Total Income.
iii. From the Gross total Income thus arrived at, deduct the deductions permissible under
sections 80C to 80U of the Act for computing the total income. The balance left after
subtracting the allowable deductions is called the total income.
iv. The amount of income tax payable is then calculated on this total income according to
the rates prescribed by the Finance Act for the relevant assessment year and the rates
prescribed under different sections of the Act.
Definitions
Assessee [Section 2(7)]:
Assessee means a person by whom any tax or any other sum of money is payable under
this Act and includes:
1. Ordinary Assessee: It includes-
i. Any person against whom some proceedings under this Act are going on, It is
immaterial whether any tax or other amount is payable by him or not;
ii. Any person who has sustained loss and has filed return of loss u/s 139(3)
iii. Any person by whom some amount of interest, tax or penalty is payable under this
Act; or
iv. Any person who is entitled to refund of tax under this Act.
2. Representative Assessee or Deemed Assessee: A person may not be liable only
for his own income or loss but also on the income or loss of other persons e.g. guardian
of minor or lunatic, agent of a non-resident etc. in such case the persons responsible for
the assessment of income of such persons are called representative assesses. Such
person is deemed to be an assessee.
i. In case of a deceased person who dies after writing his will the executors of the
property of deceased are deemed as assessee.
ii. In case a person dies intestate (without writing his will) his eldest son or other legal
heirs are deemed as assessee.
iii. In case of minor, lunatic, or idiot having income taxable under income tax Act, their
guardian is deemed as assessee.
iv. In case of a non-resident having income in India, any person acting on his behalf is
deemed as assessee.
3. Assessee in Default: A person is deemed to be an assessee in default if he fails to fulfill his
statutory obligations. In case of an employer paying salary or a person who is paying interest it is
their duty to deduct tax a source and deposit the amount of tax so collected in government
treasury. If he fails to deduct tax at source or deducts tax but does not deposit it is the treasury,
he is known as assessee in default.
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Person [Section 2(31)]: Person includes:
i. Individual: It refers to a natural human being whether male or female, minor or
major.
ii. Hindu Undivided Family: It is a relationship created due to operation of Hindu Law.
The manager of HUF is called “Karta” and its members are called ‘Coparceners’
iii. Company: It is an artificial person registered under Indian Companies Act 2013 or
any other law.
iv. Firm: It is an entity which comes into existence as a result of partnership
agreement. The Income tax Act accepts only these entities as firms which are assessed as
firms under section 184 of the Act. The only condition for a partnership entity to be
assessed as firm is that it must submit its instrument of partnership (partnership deed)
duly authenticated by all partners except a minor partner and it must specify the shares of
the partners. In case firm has not submitted its partnership deed it is assessed as firm u/s
185.
v. Association of Persons: When persons combine together to carry on a joint
enterprise and they do not constitute partnership under the ambit of law, they are
assessable as an association of persons. Receiving income jointly is not the only feature of
an association of persons. There must be common purpose, and common action to achieve
common purpose i.e., to earn income. An AOP, can have firms, companies, and individuals
as its members.
vi. Body of Individuals: Only natural human beings can be members of a body of
individuals
vii. Local Authority: Municipality, Panchayat, Cantonment Board, Port trust etc, are
called local authorities.
viii. Artificial Juridical Person: A Public corporation established under special Act of
legislature and bodies having juristic personality of its own are known to be artificial
juridical person. Universities are an important example of this category.
Assessment Year [Sec. 2(9)]:
Assessment year means the period starting from April 1 st and ending on March 31st of
the next year. For instance, the Assessment Year 2023-24 which will commence on April 1 st,
2023, will end on March 31st, 2024. Income of previous year of an assessee is taxed during
the next following Assessment Year at the rates prescribed by the relevant Finance Act.
The assessment year is the financial year of the Government of India during which
income of a person relating to the relevant previous year is assessed to tax. Every person
who is liable to pay tax under this Act files return of income by prescribed dates. These
returns are processed by the income tax department officials and officers. This processing is
called assessment. Under this income returned by the assessee is checked and verified. Tax
is calculated and compared with the amount paid and assessment order is issued. The year
in which whole of this process is undertaken is called assessment year.
Previous Year [Sec. 3]:
Income earned in a year is taxable in the next year. The year in which income is earned
is known as previous year and the next year in which income is taxable is known as
assessment year.
From the assessment year 2022-23 onwards, all assessee are required to follow
financial year (i.e., April 1st to March 31st) as the previous year. This uniform previous year
has to be followed for all sources of income.
1. Previous year in case of a continuing business: It is the financial year preceding
the assessment year. As such for the assessment year 2023 – 24, the previous year for
a continuing business is 202 – 23 (i.e., 1 – 4 -2022 to 31 – 3 – 2023)
2. Newly set up business or profession: The assessee is free to set up a new business
or start a new profession on any day and the first previous year in case of a newly set
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up business or profession or newly created source of income shall be on the day it is set
up and end on 31st March next following. So the first previous year may be of 12
months or less than 12 months but all subsequent previous year shall be of 12 months
duration and always be starting on 1st April each year.
3. In case of a newly created source of income: In such case the previous year shall
be the period between the day on which such source comes into existence and 31 st
March next following:
Exceptions:
The general rule is that the income earned during a previous year is taxed in its
relevant assessment year. But there are certain exceptions to this general rule. In these
cases income is taxed in the same year in which it is earned. These exceptions are:
1. Shipping business income of non-resident ship-owners (section 172): In case a
non resident shipping company, which has no representative in India, earns income by
carrying passengers, livestock, mail or goods loaded from any Indian port, such ship
will not be allowed to leave the port till the tax on such income has been paid or
alternative arrangements to pay tax are made. As such income is assessed to tax at
current year’s rates. 7.5% of the amount received or amount receivable by the ship-
owners or charters as fare/freight shall be deemed to be the income accruing in India
on account of such carriage.
2. In cases of persons leaving India (section 174): In case I.T.O has the reasons to
believe that an individual will leave India with no intention to return during the current
assessment year, the total income of such individual for the period between the expiry
of last previous year and till the date of his departure, will be taxable in the current
assessment year.
3. In case of persons who are likely to transfer their assets to avoid tax (section
175): If it appears to the I.T.O that any person is likely to sell, transfer, dispose off or
to part with any of his assets with the intention to avoid payment of any tax liability, he
may commence proceeding to assess the income for the period between the expiry of
last previous year and the date of commencement of such proceedings.
4. In case of discontinued business (section 176): In case any business or profession
is discontinued during an assessment year, the income of the period from the expiry of
last previous year till the date of discontinuation will be assessed to tax in the current
assessment year.
5. Assessment of any association of persons, body of individuals or Artificial
Juridical person formed or established only for a limited period(Section 174A):
In case an Assessing Officer finds that any association of persons, body of individuals or
artificial juridical persons has been formed or established only for a limited period or for
a particular event and it is likely to be dissolved or discontinued in the same year after
the accomplishment of such event or purpose, the assessment of such person can be
made in same year.
Income:
According to English dictionary, the term income means “periodical receipts from one’s
business, land, work, investments etc.” the term income simply means something which
comes in. it is a periodical return with regularity or expected regularity. It’s nowhere
mentioned that income refers to only monetary return. It includes value of benefits and
perquisites. Anything which can reasonably and properly be described as income is taxable
under this Act unless specifically exempted under the various provisions of this Act
The term income includes not only what is received by using the property but also the
amount saved by using it himself. Anything which is convertible into income can be
regarded as source of accrual of income
1. Profits and gains;
2. Dividend;
3. Voluntary contributions received by (a) a trust created for charitable or religious
purposes, or (b) by a scientific research association, or (c) by a games or sports
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association or institution, or (d) any university or other educational institution, or (e)
any hospital or other institution;
4. The value of any perquisite or profits in lieu of salary taxable under the head ‘salaries;
5. Any special allowance or benefit specifically granted to the assessee to meet his
expenses wholly, necessarily and exclusively for the performance of his duties;
6. Any allowance granted to the assessee either to meet his personal expenses at the
place where he performs his duties or compensate him for the increased cost of living,
for example, City Compensatory Allowances;
7. The value of any benefit or perquisite which is obtained by any representative
assessment,;
8. Any sum chargeable to income tax under the head ‘business’ or ‘profession’;
9. Any capital gains;
10. The profits and gains of any business of insurance carried on by mutual insurance
company or by co-operative society;
11. Any winnings from lotteries, crossword puzzles, races including horse races, card games
and other games of any sort or from gambling or betting of any form of nature
whatsoever; Explanation: ‘Lottery includes winnings from prizes awarded to any person
gym draw of lots or by chance or in any other manner whatsoever; (b) card game and
other game of any sort’ includes any game show, an entertainment programme on
television or electronic mode, in which people compete to win prizes or any other
similar game.
12. Any sum received by the assessee from his employees as contributions to any provident
fund or superannuation fund or any fund set-up under the employees’ State Insurance
Act or any other fund for the welfare of such employees;
13. Any sum received under a key man insurance policy including the sum received by
way of bonus on such policy. (Keyman insurance policy means a life insurance policy
taken by a person on the life of another person who is or was (a) an employee of the
first person, or (b) connected in any manner with the business.
The sum of keyman insurance policy is assessable as following:
 When the sum is received by the organization, who has taken the policy, it is assessable
under the head profits and gains of business or profession.
 When the amount is received by the employee, it is assessable as profits in lieu of
salary.
 When the amount is received by a person, where employer-employee relationship does
not subsist (Chairman or Director etc, of a company), it is assessable under the head
income from other sources.
14. Any sum of money in aggregate value of which exceeds ` 50,000 received without
consideration by an individual or a Hindu undivided family in any previous year from
any person (other than a relative etc.) the whole of such sum.
15. The profits and gains of any business of banking (including providing credit facilities
carried on by a co-operative society with its members.
Concept of Income:
Income means a monetary income which is derived from definite sources with some sort
of regularity or expected regularity. These definite sources of income are:
 Head Salaries,
 Income from House Property,
 Profits and gains of Business or Profession;
 Capital Gains ; and
 Income from Other Sources
Besides this, there are some other important rules regarding income, which are as
under:
1. There should be a definite source of income.
2. An income earned, whether legally or illegally, is taxable under the Income Tax Act.
The Income Tax Act does not make any distinction between legal and illegal income.
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However, any expenditure incurred to earn an illegal income is allowed to be deducted
out of such income only.
3. It is not necessary that the incomes should be received regularly and periodically,
say, weekly, monthly or quarterly. Lump-sum received can also be income, provided it
is income in view of other factors and considerations.
4. Income should be received from outside. In an institution, if the income from
subscription from its members exceeds it expenditure on its members the excess
cannot be treated as taxable income, because the subscription was received from
amongst the members themselves and the excess represents the excess of income over
expenditure incurred for their own benefit or well being, hence this excess is not
received from outside and will not be income. Similarly, excess over expenditure,
received by a club from facilities provided to members as part of advantages attached
to such membership, is not taxable income.
5. It is not essential that the income must be received in the form of money. Receipts in
kind or service having money equivalent can also be income.
6. Whether a particular receipt is income or not, is decided at the time of its first receipt.
If an amount is not income at the time of its receipt and if it becomes income
afterwards on account of changed circumstances, it cannot be treated as income under
the income tax act. For example, while finalizing the bargain of sale of his property, a
person receives an amount as advance, and afterwards the buyer does not fulfill the
agreement, consequently the seller forfeits the advance received from the buyer.
Actually speaking, forfeited amount becomes the income of the seller; but since it was
not income at the time of its receipt, it cannot after wards, be treated as income under
the Income Tax Act.
7. Temporary or Permanent income: Whether the income is temporary or permanent,
it is immaterial from the tax point of view.
8. If an assessee has earned an income but has not actually received it, it will be treated
as the income of the assessee, because he is entitled to receive it
9. Reimbursement of expenses is not income. Reimbursement of actual travelling
expenses to an employee is not his income.
10. Where under a legal obligation a charge is created on the income of a person, then to
the extent of such charge it will be deducted from his income.

GROSS TOTAL INCOME Gross Total

Income

Income from
Income from Salaries Income from Income from other
Income from House Business or Capital Gain sources
Property Profession

It means total income computed in accordance with the provisions of the Income
Tax Act, before making any deduction under sections 80C to 80U. gross total income is
computed in the following manner:
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First assessable income under each head of income is computed. While finding
out the final figure of assessable income under each head, if there are losses from some
sources and incomes from other sources under the same head, such losses are set-off
against incomes of the same head from other sources. Then, unabsorbed amount of losses
are set-off against incomes under other heads, whenever permissible under the law.
Therefore, carried forward losses, unabsorbed depreciation, etc. are set-off according to
the Income Tax Act. The final figure of assessable income under each head is then
aggregated. The resultant sum is known as ‘Gross Total Income’.
In other words, aggregate of assessable incomes under the heads salaries,
house property, business or profession, capital gains and other sources is called gross total
income.

TOTAL INCOME
The total amount of income referred to in section 5, computed in the manner laid
down in the Income Tax Act is called total income. Under section 5, different incomes of an
assessee are included in his total income on the basis of his residence. The computation of
this income is done according to the provisions of different sections of the Act under the
heads of Salaries, Incomes from House property, Profits and Gains of Business or
Profession, Capital Gains and Income from other Sources.
In other words, the amount left after making the deductions under sections 80C to 80U
from the gross total income is called total income.
Difference between Gross Total Income and Total Income

Basis Gross Total Income Total Income

1. Meaning It is the total or aggregate of all It is the balance amount
the five heads of income remaining after making
deductions of Section 80C to
80U from the Gross Total
Income.
2. Deductions u/s 80 It is the income before making It is the income after making
deductions u/s 80 deductions u/s 80
3. round-off It is not rounded off It is rounded off in multiple if `10
4. Income Tax Income tax is not computed on Income tax is computed on this
this income income.
5. Knowledge of Deductions Knowledge of deductions is not Knowledge of deductions is
required for computation of this required for computation of this
income. income.

Practical Questions:
Q1. An assessee commences this business on:
(iv) 1st July 2022 (ii) 1st October 2022 and (iii) 1st January 2023.
In each case what will be the assessment year and what period will be treated as his
previous year for the concerned assessment year?
Q2. (1) Sri Ram Gopal was appointed on 1.7.2022 as lecturer in Disha College on
probation.
He was confirmed on 30.06.2023.
(2) Sri Amandeep was appointed on 01.09.2022 as a lecturer against leave vacancy of Sri
Ram Gopal. Sri Ram Gopal joined the college on 01.02.2023.
(3) M/s Shyam Lal maintain the books of account of their business on calendar year basis.
They prepared their final accounts on 31.12.2022.
Under the above mentioned cases what would be the du
ration of previous year for the assessment year 2023-24?
Q3. The total income of Mr. A for the Assessment Year 2023-24 is Rs. 1060000. Mr. A got
the appointment letter from a foreign country. He will leave India on 20 th Sept. 2022. His
estimated income from 1st April 2022 to 20th Sept., 2022 is Rs. 6,60,000. How much tax he
has to pay leaving India?
Sudhansu Sir Unit-I Disha College
Q4. Compute the gross total income and total income of Mr. Uday Kumar from the following
particulars for the assessment year 2023-24:
Income from Salary (Net) `60000
Capital Gain `20000
Profits from Business `30000
Income from Other Sources `40000
Income from House Property `50000
He paid Life Insurance Premium of ` 20000 in the previous year.
NUMERICAL QUESTIONS
1. An assessee commences his business on:
(i) 1st September 2022,
(ii) 1st December, 2022,
(iii) 1st February, 2023.
In each case, what will be his Assessment Year and What period will be treated as his previous year for the
concerned assessment year?

Ans. The Assessment Year in each case will be 2023-24. The previous year will begin from the date of
commencement of business and will end on 31-03-2023.

2. Which period will be treated as the previous year for Income Tax purposes for the Assessment
Year 2023-24 in the following cases:
(i) Amit starts a new business on 1st November, 2022 and prepares Final Accounts on 30th
June, 2023.
(ii) Amita joined service in a company on 1st Jan., 2022. Her increment in salary will be on 1st
Jan., 2023. Prior to this, she was employed.
(iii) Ashish maintains his accounts on the basis of the Financial Year.
(iv) Abhay is a registered doctor and keeps his ‘Income and expenditure Account’ on the
calendar year.
(v) Aruna bought a house on 1st August, 2022 and let out at ` 50000 per month.

Long Answer Question:

1. Discuss the evaluation of Income Tax Law in India.
2. What is Income Tax? Describe the history of Income tax in India. What are the basis and
procedure of changing Income Tax?
3. Explain the following terms
(i) Previous Year
(ii) Assessment Year
(iii) Assessee
(iv) Income
(v) Casual Income
(vi) Total Income
(vii) Gross total income
4. “Income tax is a tax on income and not on receipt.” Discuss this statement and give the
essential characteristics of the term ‘Income’.
5. Define the term Income. Distinguish between the Gross Total Income and Total Income.