Every taxpayer has to furnish the details of his income to the Income-tax Department. These details are to be furnished by filing his return of income. Once the return of income is filed by the taxpayer, the next step is the processing of the return of income by the Income-tax Department. The Income-tax Department examines […]
What are the major assessments under the Income-tax Law?
Under the Income-tax Law, there are four major assessments as given below: section 143(1), i.e., Summary assessment without calling the assessee i.e. taxpayer. Assessment under section 143(3), i.e., Scrutiny assessment. Assessment under section 144, i.e., Best judgment assessment. Assessment under section 147, i.e., Income escaping assessment.
What is the procedure adopted for making the assessment under section 143(1)?
Assessment under section 143(1) is like preliminary checking of the return of income. At this stage, the total income or loss is computed after making the preliminary adjustments (as discussed in previous FAQ). The other procedures in this regard are as follows: After making the adjustments (if any) as discussed in previous FAQ, the tax, […]
What is the scope of assessment under section 143(3) i.e. scrutiny assessment?
The objective of scrutiny assessment is to confirm that the taxpayer has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner. To confirm the above, the Assessing Officer carries out a detailed scrutiny of the return of income and will satisfy himself regarding various […]
What are the circumstances under which assessment under section 147 i.e. income escaping assessment can be carried out?
If any income of an assessee has escaped assessment for any assessment year, the Assessing Officer may, subject to the new provisions of sections 148 to 153, assess or reassess such income and also any other income which has escaped assessment and which comes to his notice subsequently in the course of the proceedings, or […]
What is considered as salary income?
Section 17 of the Income-tax Act defines the term ‘salary’. However, not going into the technical definition, generally whatever is received by an employee from an employer in cash, kind or as a facility [perquisite] is considered as salary.
Are retirement benefits like PF and Gratuity taxable?
In the hands of a Government employee Gratuity and PF receipts on retirement are exempt from tax. In the hands of non-Government employee, gratuity is exempt subject to the limits prescribed in this regard and PF receipts are exempt from tax, if the same are received from a recognised PF after rendering continuous service of […]
When relief under section 89 of the Income Tax Act is available?
Relief under section 89 is available to an individual if he has received Salary or family pension in arrears or in advance [Rule 21A (2)] Gratuity in excess of exemption under section 10(10)(ii)/(iii) [Rule 21A(3)] Compensation on termination of employment [Rule 21A(4)] Commuted pension in excess of exemption under section 10(10A)(i) [ Rule 21A(5)] In […]
What are allowances?
Allowances are fixed periodic amounts, apart from salary, which are paid by an employer for the purpose of meeting some particular requirements of the employee. E.g., Tiffin allowance, transport allowance, uniform allowance, etc. There are generally three types of allowances for the purpose of the Income-tax Act – taxable allowances, fully exempted allowances and partially […]
Are receipts from life insurance policies on maturity along with bonus taxable?
As per section 10(10D), any amount received under a life insurance policy, including bonus is exempt from tax. However, following receipts would be subject to tax: Any sum received under sub-section (3) of section 80DD; or Any sum received under Keyman insurance policy; or Any sum received in respect of policies issued on or after […]