Financial Year (FY)
Income earned in the 12 months from April 1 to March 31 is the FY.
Previous Year (PY)
Under the Income Tax Act, the FY in which the income is earned is called the PY. In India, the PY coincides with the FY.
Assessment Year (AY)
AY is the year in which the income of a PY is taken up for assessment by the income tax authorities. The AY is the year following the PY. Let's say income is earned in PY 2007-08, then the same is assessed by the tax authorities in AY 2008-09.
The process of electronically filing income tax returns through the internet is known as e-filing. To file your returns online, you need to log onto the website of the Income Tax department - www.incometaxindiaefiling.gov.in.
For employees, all that is received from an employer in cash, kind or as a facility is considered as income. For businessmen, net profits constitute income. Income may also flow from investments in the form of interest, dividend or commissions. All income is classified into 5 different heads: Income from Salary / Income from house property / Income from business or profession / Income from capital gains / Income from other sources.
Profits arising from the transfer of a capital asset is taxable as capital gains. There are 3 aspects to this: Existence of a capital asset / Transfer of a capital asset / Profit or gains that arise from such a transfer. Incidentally, any loss arising out of sale or transfer of capital assets is termed a capital loss.
Short-term capital gain (STCG)
An asset held for less than 36 months before its transfer is subject to STCG.
Long-term capital gain (LTCG)
An asset held for 36 months or more before its transfer is subject to LTCG.
In the case of certain assets, the period of 36 months is reduced to 12 months. Those assets are equity or preference shares, debentures and government securities which are listed on recognised stock exchanges, units of mutual funds and zero coupon bonds.
Assessee means person by whom tax is payable. The Income Tax Act 1961 defines 'assessee' as a person by whom any tax or any other sum of money is payable under this Act. ‘Person' further refers to an individual, a Hindu undivided family (HUF), a company, a partnership firm and an association of persons or a body of individuals whether incorporated or not.
Author: Content Team, Fundsupermart.com
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