Basic Concepts of Income Tax

Income tax in India is governed by the Income Tax Act, 1961, and a specific vocabulary of terms is used throughout the Act.

• Assessee [Section 2(7)] — a person by whom income tax (or any other sum of money) is payable under the Act; it includes a person in respect of whom any proceeding has been taken for the assessment of their income, or of the income of any other person for which they are assessable, or of the loss/refund due to them.
• Previous Year [Section 3] — the financial year (1st April to 31st March) immediately preceding the assessment year, in which the income is actually earned.
• Assessment Year [Section 2(9)] — the financial year (1st April to 31st March) immediately following the previous year, in which the income earned in the previous year is assessed and taxed.
• Person [Section 2(31)] — defined broadly to include an individual, a Hindu Undivided Family (HUF), a company, a firm, an association of persons (AOP) or body of individuals (BOI), a local authority, and every other artificial juridical person not falling within the earlier categories. …