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“Understood. What is meant by assessment here in previous here. Let us now move to to some of the characteristics of income tax. Now income tax basically as we also in lecture.
Number one is a direct tax that is the person on whom. It is levied has to be r the burden or make the payment you cannot have someone else pay your income tax. Okay second is it is an annual tax which means that income tax is to be computed on your annual income. So we saw earlier the concept of previous here.
Which is first a april 2 march. 31. So whatever you earn during that particular year financial year or the previous here as we call it on that income you have to compute your income tax annually. You might be required to pay it in by way of advance tax in you know quarterly or maybe whatever depending on what your status is but the tax is an annual tax.
It is levied on the income of the entire year. The third point is that it is governed by the indian income tax act 1961. So this is the statute. Which basically prescribes how these incomes are to be taxed.
You know what are the compliance is to be followed of course there are income tax rules. Which also play an important role in the implementation of the provision of income tax act. But basically the statute or the law is governed by the indian income tax act 1961 tax of previous year is charged in the immediately following here called the assessment year. So basically what happens is that tax of previous here.
So we saw what do you mean by previous here. And what do you mean by an assessment here so basically what happens is what whatever income you have earned in the previous year. Whatever tax is due on that is charged in the immediately following year called the assessment here so you earn in previous here. But you are chargeable to in the assessment here the meaning of these two we ve done in the previous lecture.
You can refer it taxes levied at rates of income tax fixed by the relevant finance act. So what happens is that every year. There s a finance bill. Which is coming in the budget.
You must have been hearing a lot about this okay so once the budget presents this finance bill and which is passed every year. It becomes a finance act. So the rates of taxes which are to be levied on incomes earned by a particular set of person a different set of person is fixed by the relevant finance act in case. The finance act has not been passed as an april one of the relevant assessment here provision of the finance bill stroke previous act.
Whichever are beneficial to the taxpayer applies. This is important let me explain it to you now what happens is you have normally a finance bill. Which comes generally in the month of february stroke. March.
This contains various provisions okay. So let s consider the current scenario. So there was a finance bill. 2011.
And let s say. There is a finance bill. 2012. This bill.
Which is presented in february and march of relevant here is normally passed by april. The 30th and same for this also okay now until and unless. This is passed what happens let s say for example. We know that our previous year of the financial year starts from april 1 right so on april 1.
If this is not passed not passed then what will happen in such a case. The assessee has an option to take either the provision of the earlier finance bill or so this bill would have been passed you can consider either the provision of this or this whichever are more beneficial to you okay whatever provisions are more beneficial you can consider that and this is that you can determine your tax liability. And payments of taxes and other provisions right applicability of the law as an april one of the relevant assessment here so let s say for example. What happens is there is some change in the law on april 15th okay let s say april 15.
2012. Now the assessment here which is running here. Is assessment year 2012. 13.
Which is relating to previous year 2011. 2012. Right. So.
The question. Which comes up is which provision. Am. I supposed to see i mean.
There s a law change on this date. Okay. But is this applicable to my case. The answer is no why for assessment year 1213 whatever is the law on april 1.
2012. Is the one which has to be seen any changes after this date are not applicable for this year. But they will apply for assessment year 2013 14 onwards okay pure procedural changes applicable from amendment so what can happen is that instead of changing the law there could be some procedural amendments. Let s say for example form in which the it returns to the file so if the government changes.
The form in this the return is to be filed or interest payment on detail late filing etc. Which are more of procedural in nature or something you know not relating to the law per se. These changes can be made effective from the date. When they are notified instead of april 1 of the relevant assessment here so these characteristics are important as you move ahead with your income tax journey.
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