Taxpayers are required to maintain books of accounts and get them audited if their gross turnover or receipts during the previous year exceed the prescribed threshold limit. The requirement to keep the books of accounts is specified under Section 44AA, and to get them audited is mentioned in Section 44AB of the Income-tax Act. The purpose of a tax audit is to ensure that the taxpayer maintains proper books of account and complies with the provisions of the Income-tax Act.
If there is any mistake in the order passed by the Income-tax authorities, the said authority can rectify such mistake under section 154. The power to rectify the mistake may be exercised by the authority concerned on his own initiative or when the mistake is brought to his notice by the assessee concerned. Every taxpayer has to furnish the details of his income to the Income-tax Department 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 process of examining the return of income by the Income Tax department is called as “Assessment”. An appeal is a process by which a person (assessee or revenue) aggrieved by an order passed by the tax authority or judicial authority, as the case may be, can challenge it before the higher judicial authorities.
Different time limits have been prescribed under the Income-tax Act for Summary Assessment, Scrutiny Assessment, Best Judgment Assessment and Income Escaping Assessment. If an assessment is not completed within the prescribed time limit, it becomes time barred.
When an assessee carries on any business or profession, the income arising from such business or profession shall be calculated and taxed under the head ‘Profit and gains from Business or Profession’. The business income shall be computed in accordance with the method of accounting regularly followed by the assessee. For the computation of business income, a taxpayer can follow either mercantile system of accounting or cash basis of accounting.
This document entails the different type of exemption available to an assessee with respect to sale of a capital asset. The document contains the detials about the type of capital asset, capital gains and type of new asset in which the amount needs to be reinvested.
ICDS stands for Income Computation and Disclosure Standards. It is issued by the Central Government in the exercise of the powers conferred by Section 145(2) of the Income-tax Act, 1961 to bring uniformity in the accounting policies and provisions of the Income-tax Act and to reduce litigations.
This document contains a list of definitions and words that are widely used in the Income Tax Act, 1961. It intends to provide definitions or explanations of the terminology used throughout the Act. Glossaries are very helpful for the taxpayers who are not familiar with the language and terminology used in the Act, as they can use the glossary to quickly look up and understand the unfamiliar terms.
An assessee can be categorized as a resident in India or a non-resident in India during the previous year. Further, if the assessee is an individual or a HUF and he is resident in India, his residential status is further sub-classified as a resident and ordinarily resident or resident but not ordinarily resident.
Compounding of an offence is a mechanism whereby the defaulter is reprieved of major legal consequences by affording him with an opportunity to pay a sum of money to escape prosecution. The competent authority has the power to compound any offense either prior to or following the commencement of legal proceedings.
Since all the incomes are not taxable at a same rate. The document provides a list of Capital Gains/Incomes arising out of certain securities eligible for special tax rates. It contains details with respect to the eligible assessee, security, or tax rates etc.