Tax rates for Assessment Year 2025-26 Total income of an assessee is taxable either as per applicable normal tax rates or as per special tax rates. The special tax rates have been prescribed in the relevant provisions of the Income-tax Act, while as normal tax rates are prescribed every year under First Schedule of the Finance Act.… Read More »

Computation of Income and Tax Liability This chapter outlines the statutory procedure for determining the total income and tax liability of a taxpayer under the Income-tax Act, 1961. The process broadly involves three stages: ascertaining the residential status and category of the assessee, computation of total income, and computation of tax liability. Residential Status and… Read More »

Assessment on Dissolution or Discontinuance of AOP or Firm Introduction If an Association of Persons (AOP) or firm is dissolved or discontinued, its assessment is made as if dissolution had not occurred. Every member, partner, or legal representative is jointly and severally liable for tax dues, penalties, or other sums payable. Applicability Applies to: Dissolution… Read More »

Recovery of Firm’s Dues Introduction If a firm has outstanding tax dues, these can be recovered from every person who was a partner during the relevant financial year, whether the firm is under liquidation or not. Liability of Partners Limited Liability Partnership (LLP) [Section 167C] If tax dues cannot be recovered from an LLP, all… Read More »

Oral Trust Introduction An oral trust is a trust not declared through a written instrument, including any valid Wakf deed under the Mussalman Wakf Validating Act, 1913. Recognition of Oral Trusts If a written declaration containing trust purpose, trustee details, beneficiaries, and trust property is submitted to the Assessing Officer within three months from the… Read More »

Discretionary and Specific Trusts Introduction A discretionary trust gives trustees absolute discretion over distributing income or capital among beneficiaries. A specific trust has pre-determined beneficiaries with fixed shares in income and corpus. While both are taxed in a representative capacity, discretionary trusts are taxed under Section 164, and specific trusts under Section 161. Types of Trusts Oral… Read More »

Company in Liquidation Introduction When a company undergoes liquidation, a liquidator is appointed to oversee the sale of assets and settlement of liabilities. This provision ensures that the government’s tax dues are not evaded during the liquidation process. Duties of the Liquidator Notification to Assessing Officer: o The liquidator must inform the Assessing Officer within… Read More »

Assessment of Discontinued Business or Profession Introduction If a business or profession is discontinued during the year, the tax officer can tax the income earned from the start of that year up to the date of discontinuance in the same year itself. Income Taxable in the Previous Year Itself Normally, the income of a previous… Read More »

Assessment of Persons Likely to Transfer Property to Avoid Tax Introduction If the Assessing Officer believes that a person may sell, transfer, or dispose of assets to evade tax liabilities, the total income of that person can be taxed before the transfer occurs. This ensures tax recovery before assets are beyond reach. Income Taxable in… Read More »

Assessment of AOP, BOI, or AJP Formed for a Short Duration Introduction If the Assessing Officer believes that an Association of Persons (AOP), Body of Individuals (BOI), or Artificial Juridical Person (AJP) is likely to dissolve within the current assessment year or shortly thereafter, tax on its total income can be levied before dissolution. This… Read More »