Who is an Assessee in Income Tax: A Comprehensive Guide
An income tax assessee is a taxpayer who pays any amount of money or taxes under the Income Tax Act of 1961. Moreover, everyone who must pay taxes on any earned income or incurred loss in a single assessment year is considered an income tax assessee under Section 2(7) of the act. Assessees may also include persons for whom:
An assessment of income is being conducted under the Act
The money made by someone else and is subject to taxes
Any damages suffered by him or any other individual or individuals who are qualified for a tax refund
In this comprehensive guide, we will discuss the concept of income tax assessee in detail.
Table of Contents
Definition of a Person and Types of Persons Under Income Tax
The Income Tax Act of 1961's Section 2(31) provides a definition of "Person." The Income Tax Act lists seven categories of "persons":
Person
Joint Venture Company
Business
Body of Individuals (BOI) or Association of Persons (AOP)
Municipal Government
Artificial Judicial Body (not included in any of the categories listed above)
Types of Assessees Under the Income Tax Act
Normal Assessee
A normal assessee is a person who has to pay taxes on the money they make in a given fiscal year. In the current fiscal year, all individuals who have earned money or incurred losses in prior fiscal years are required to make tax payments to the government. All those who are required to receive a refund from the government or who pay interest or penalties are classified as regular assessees. For instance, let's say that for the previous five years, Mr. A, a salaried person, has been paying his taxes on schedule. Accordingly, Mr. A is regarded by the Income Tax Act of 1961 as a normal assessee.
Deemed Assessee
The legal authorities may designate an individual as liable for paying taxes. These people are known as deemed assessees. This category may include:
The surviving spouse or a legitimate heir of a person who passed away without leaving a will.
The executor or a legitimate heir to a deceased person's estate who has given the executor written authority over the estate.
The caretaker of a child, an imbecile, or a madman.
The representative of an Indian non-resident who is getting money from India.
For instance, Mr P receives rent money from the business building he owns. He has written and signed a will which specifies that his niece will receive the property upon his passing. His niece will be regarded as the property's executor—that is, as deemed assessee—after his death. She will be in charge of paying taxes on the resulting rental revenue.
Representative Assessee
A situation could arise where someone is required to pay taxes on profits received or losses sustained by a third party. One such individual is referred to as a representative assessee. When someone is insane, a minor, or a non-resident who owes taxes, representatives become involved. These folks are incapable of filing taxes on their own. Their representatives may take the form of guardians or agents. Take Mr. X's case as an example. He has lived overseas for the last seven years. However, he gets paid for the two Indian homes he owns. He files his taxes in India with the assistance of his relative, Mr. Y. Mr. Y serves as a representative assessee in this instance. Mr. Y is the property's guardian and represents Mr. X. Therefore, he will be required to produce the required paperwork if the assessing officer decides to look into the tax submittal.
Assessee in Default
An assessee-in-default is a person who has not filed his income tax return or paid taxes to the government in accordance with the terms of the income tax legislation. For instance, before paying an employee's wage, a company is required to withhold taxes from it. After that, he must pay the government the taxes that were withheld before the deadline. The employer will be regarded as an assessee-in-default if he does not deposit the tax that has been withheld.
Difference between a Person and an Assessee
A person includes:
A single individual
HUF
An organisation
Firm
Organisation of People or Group of People
A Local Government
The aforementioned clauses do not apply to any artificial judicial person.
No provision in the aforementioned list applies to any artificial judicial person.
Mr. Ram is a person who made a total of Rs. 1,60,000 in revenue the year prior. Since his entire income is less than the Rs. 2,50,000 exemption level and he owe no money in taxes or other obligations, he is a person and not an assessee.
Roles and Responsibilities of an Assessee
Taxpayers are obligated to pay their taxes on due dates and submit their returns on time. On the other hand, assessees may often overlook filing their returns on time. They might get a notice in this case from the relevant Assessing Officer or the IT department asking for an explanation of why the return was not submitted for that specific fiscal year. In this case, the assessee is required to reply to the Assessing Officer with an explanation of why the returns were not filed on time. The assessee is also required to file the returns as soon as he gets the notification. Several duties and responsibilities that an assessee may have after getting a notice are stated as follows:
The assessee is required to file their tax returns for the anticipated income for the particular assessment year as soon as they obtain the notice from the department.
They can get a copy of the notice from the assessing officer. This explains the precise reasons behind the officer's notice, once they file the taxes.
The assessee may register an objection and contest the legitimacy of the notice if they feel that the reasons provided in the copy are invalid and they are not pleased with the explanations.
In addition, the assessee needs to confirm that they have good cause to object to the government's notification and that they made the right choice in doing so.
The assessee may send a request to the relevant Assessing Officer requesting further details if the officer dismisses the assessee's claims.
The assessee may elect to file a writ petition with the appropriate High Court in order to challenge the validity of the notification well in advance of the scheduled assessment or reassessment.
The assessee may also decide to file a writ petition with the appropriate High Court in order to contest the validity of the notice even after the scheduled assessment has been completed.
The assessee is required to furnish information pertinent to their income returns. This must be completed within thirty days of the notice's issuance, not the day the assessee received it. Furthermore, it is necessary to provide the required information about the income for which tax payment has been avoided, together with other related income facts. It should be in a clear and concise manner and file it with the appropriate authorities in order to prevent future issues.
Conclusion
Anybody who is required to pay taxes or undertake tax processes is considered an income tax assessee. These individuals may speak on behalf of local government agencies, businesses, partnerships, associations, or private citizens. It is the assessee's responsibility to file tax returns, pay taxes, and reply to Income Tax Department letters. Being aware of your responsibilities as an assessee is essential to adhering to Income Tax laws and regulations.
FAQ
Q1. Is assessee always a person?
A person is not regarded as an assessee if he is not required to pay taxes since his income does not qualify for taxes. Thus, an individual is always an assessee. Conversely, an individual may not always be an assessee.
Q2. What is a corporate and non-corporate assessee?
Corporate assessees are businesses which are registered under the Companies Act of 1956 and 2013. All assesses are referred to as non-corporate assessees, with the exception of the aforementioned corporate assessee. Non-corporate evaluates partnership firms and people.
Q3. Who is not an assessee?
He has to pay taxes on his income in accordance with the Income Tax Act. Due to his tax liability, the person in this instance is an assessee. But not every person is a candidate for assessment. For instance, someone who receives no income is not considered an assessee.
Q4. What is the assessee total income?
After clubbing and writing off losses, the total income is computed under each of the five income source headings. The amount of tax due by an assessee is determined by their income. Gross total income is the amount of income before deductions under Chapter VIA of the Income Tax Act of 1961.
Q5. What do you mean by a representative assessee?
Section 160(2) defines a representative assessee as an individual who is subject to assessment. These assessees are required to pay taxes on income received from both themselves and other people. For instance, guardians of minors or NRI agents.
Q6. Can parents be representative assessee?
Parental guardianship or parental assessment is permissible. They are required to apply on behalf of the minor child. The 49A form needs to be completed. This form can also be utilised for an adult representative assessee. The parent's identity documents must be presented with the form.
Q7. Who can be an authorized representative per the Income Tax act?
If you give permission to someone capable, they can act on your behalf. If you are unable to handle your income tax matters yourself, this authorised person can handle them on your behalf. Clause (i) of sub-section (2) of U.S. Tax Act, 1961 states that an assessee's employee or relative may serve as their authorised representative.
Q8. What steps should I follow to add a representative assessee to my income tax?
Enter your login information to access your income tax account. To add a representative, select the "Add/Register as Representative" option under the "My Account" menu.
Q9. What is deemed assessee in income tax?
People fall into the category of presumed assessees when they are required by law to pay taxes on behalf of another person.
Q10. What is the difference between AOP and BOI?
A firm or a single individual may be considered a person in AOP. Any group, body of people, or business may be referred to as a "person"; yet, only individuals are permitted to join a BOI. Thus, we can state that an AOP may include legal organisations. On the other hand, a BOI only consists of humans.
Q11. Who is eligible to pay tax?
Anyone who is an Indian citizen and has income is able to file taxes.
Q12. What distinguishes an assessee from a taxpayer in income tax law?
An assessee is any individual or entity subject to income tax laws, which includes taxpayers, but also includes those who are liable for penalties or have undergone assessments, even if no tax is payable.
Q13. Can a minor be considered an assessee in income tax?
Yes, a minor can be considered an assessee if they have income, such as from investments, which exceeds the basic exemption limit. The income is typically clubbed with the parent's income, but the minor is still recognized as an assessee.
Q14. Are non-resident Indians (NRIs) classified as assessees?
Yes, NRIs are considered assessees if they have income arising in India, such as rental income, dividends, or capital gains, which is taxable under Indian income tax laws.
Q15. How does the income tax department identify an assessee?
The income tax department identifies an assessee through their Permanent Account Number (PAN), which is mandatory for all individuals and entities who are liable to file income tax returns or perform taxable transactions.
Q16. What are the consequences if an assessee fails to file their income tax return?
If an assessee fails to file their income tax return, they may face penalties, interest on unpaid taxes, and potential prosecution. Additionally, the tax department may issue a notice demanding the return or initiate an assessment based on available information.
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