TAXATION & ITS

TERMINOLOGIES

SUBMITTED BY:
SHREE AGRAWAL
MODY UNIVERSITY OF SCIENCE &
TECHNOLOGY
 FLOWCHART OF TAXATION
RECEIPT
(-)EXEMPTED TAX
= GTI
(-)DEDUCTION
- Receipts are important for accurately calculating taxable
income, claiming deductions, and ensuring compliance with tax
laws.
- Gross Total Income is the total income earned by adding all
heads of income.
REBATE
- Rebate is a reduction in the amount of tax that a taxpayer has to pay.
80 C : It allows a maximum deduction of Rs 1.5 lakh every year from the
taxpayer's total income
80D : Section 80D allows an individual to claim tax benefit for preventive
health check-up of Rs 5,000. This tax-benefit is available within the maximum
deduction limit of Rs 25,000 or Rs 50,000, as the case maybe.
1010D : An individual can avail of tax exemption on the sum assured and
accrued bonus (if any) received through their life insurance policy claim
(maturity or death benefit
◦ TERMINOLOGIES

▪ ASSESSES (SEC 2<7>) : A person responsible for payment of income tax

SUB HEADS OF
▪ Person(Sec.2(31)): Under Section 2(31), A 'Person' is an Association Of
Persons (AOP) which was established with the object of deriving income or
INDIVIDUAL AND
profits. FIRM TAXATION
o Individual: It refers to a natural person, who is subject to tax obligations and • Tax Payer
entitled to certain rights and benefits under the tax laws.
• Standard deduction
o Firm: typically refers to a business entity or organization that is subject to tax
obligations and entitled to certain rights and benefits under the tax laws. • Itemized deduction

o Hindu Undivided family(HUF): A joint family structure recognized under Hindu

law, comprising of multiple generations of a family line, where the members • Tax credit
are connected by blood relations and share a common ancestor. (HUF is
treated as a separate entity for tax purposes). • Tax deduction

1.Karta: The male head or manager of the HUF, typically the eldest male • Business entity
member, who manages and controls the affairs of the family business. The
Karta has the authority to make financial decisions on behalf of the HUF.
◦ Coparceners: The male members of the HUF who have a right to inherit ancestral property and have a stake
in the HUF. The coparceners have the right to demand a partition of the HUF property.

◦ Partition: The process of dividing the assets and liabilities of the HUF among its coparceners. Partition can be
partial or complete, resulting in the formation of new HUFs or the conversion of coparceners into separate
individuals for tax purposes.

◦ HUF Income: The income earned by the HUF from various sources such as business, investments, and
ancestral property. The income is assessed separately from the individual income of the members.

◦ HUF Taxation: HUF is treated as a separate taxpayer under Indian tax laws. It has its own Permanent
Account Number (PAN) and files its income tax return. The HUF is subject to tax rates and provisions
applicable to an individual taxpayer.
HUF Deductions: HUF is eligible for deductions under the Income Tax Act, such as business expenses,
depreciation, and certain eligible deductions allowed to individuals .
HUF Exemptions: HUF can claim exemptions available under the Income Tax Act, such as
exemptions for agricultural income, certain specified incomes, and exemptions available for
charitable contributions made by the HUF.

HUF Succession: The HUF continues to exist even after the demise of the Karta. The eldest
coparcener usually becomes the new Karta. In case of partition, the assets and liabilities are
divided among the coparceners as per their respective shares.

Clubbing of Income: Certain provisions in the tax laws require the income of the HUF to be added
to the income of the individual members for taxation purposes. This is known as clubbing of income
and is applicable in specific cases.

Association of Person : An organization or group formed by two or more individuals or entities,

with a common objective or purpose other than a partnership or a company. AOP is recognized as a
separate entity for tax purpose.

Body of Institutions : A classification of organizations or institutions that share common

characteristics or purposes and are treated as a separate tax entity. BOI is typically used to group
together entities such as hospitals, educational institutions, research organizations, charitable
organizations, and other similar entities
• Local Authorities : Gram Panchayat and Municipalities play a crucial role in the collection and administration of
local taxes

o Gram Panchayats: They have the authority to levy and collect certain taxes, fees, and charges within their
jurisdiction. These tax include property tax on land and buildings, profession tax, tax on entertainment,
advertisement tax, and other local taxes as prescribed by the state government.
o Municipalities have the authority to impose and collect various taxes, fees, and charges to generate revenue
for providing essential services and maintaining infrastructure. Ex- Property tax, Water tax

• Company : It refers to a legal entity or business organization that is recognized as a separate entity from its
owners. It is also commonly known as a corporation.
Ex: Corporate tax, Tax Identification Number, tax reduction, etc.

• Artificial Juridical Person

• Previous Year[Sec.3]: The year in which the income is earned . The financial year ending on 31 st March is
called a Previous Year.

• Assessment Year[Sec.2{9}]: It is the period of 12 months commencing from 1st day of April immediately after
the previous year. For example for previous year ending on 31.03.19. The Assessment Year will be 2019-20[i.e
from 1.04.2019 to 31.03.2020]
 HEADS OF INCOME
(based on nature and source)

1.Salary Income: Income earned through employment or services rendered by an

individual. For example, the salary received by an employee from their employer.

2.Business or Professional Income: Income generated from a business or

professional activities. This includes income earned by self-employed individuals,
freelancers, entrepreneurs, or owners of a business. For example, income earned by
a consultant, a doctor, or a small business owner.

3.Rental Income: Income earned from renting out property or assets. This includes
income from residential or commercial property, land, or other assets. For example,
rental income received from leasing an apartment, office space, or a piece of land