Types of Assessees in Income Tax

According to the Income Tax Act, an individual who must pay taxes or any amount of money to the government is an income tax assessee. Any individual who has earned money or incurred losses is considered an income tax assessee. Any individual liable for another person's income is eligible for a tax refund, is going through the process of having their income assessed, has suffered losses themselves, or another person can be considered an assessee. Here are additional details about income tax assessments, including a detailed breakdown of their types.

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Table of Contents

Who is an Assessee

Types of Income Tax Assessees

Process for Becoming an Income Tax Assessee

Conclusion

Frequently Asked Questions (FAQs)

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Who is an Assessee

Any individual required to pay taxes for income received or losses incurred during a specific Assessment Year (AY) is considered an assessee under Section 2(7) of the Income Tax Act. Additionally, you can use these guidelines to define assessee in income tax:

• Procedures under which income gets assessed

• Another person's income for which they are available

• People who must pay a tax refund

• Whatever loss a person has experienced

A person responsible for paying another person's taxes can also be considered an assessee. Nevertheless, the Income Tax Act distinguishes between various categories of assessees.

Types of Income Tax Assessees

According to the Income Tax Act, there are four categories of assessments. Details about it are listed below:

1. Traditional Assessee

An individual paying taxes on their total income for a given fiscal year and any loss incurred is a normal assessee. A person is also regarded as an assessee if they are required to pay the government any penalties or interest or are seeking a refund of their taxes. Additionally, whether or not a person owes taxes, they are considered regular assessees if they have income tax procedures pending against them.

2. The Assessee in Representation

In certain situations, one might have to pay taxes on income or losses a third party has suffered. These individuals are known as representative assessors. When a child, minor, or person with a medical disability is responsible for paying taxes, a representative assessee usually enters the picture. It will be impossible for these people to file their taxes by themselves. They might have a guardian or agent working for them. Let's take the case of Mr. A, for example. He has been living abroad for the past seven years and gets rent from two homes he owns in India. He asks a relative, Mr. B, to file taxes in India. Therefore, in this case, Mr. B acts as a representative assessee. If the Assessing Officer wants to investigate the tax filing, Mr. B, who is the property's guardian and represents Mr. A, must provide the necessary documentation.

3. The Deemed Assessee

A person may occasionally be given the duty of filing taxes by the relevant authorities. We refer to these people as deemed assessees. It might be:

• Every person who is considered an assessee under the IT Act

• Any person sued under this act for another person's gains or losses

Furthermore, according to this classification, an individual who fits into any of the following groups may pay taxes on behalf of another:

• The attorney of a deceased person

• The agent of a non-resident individual

• A trust's trustee

• The guardian of a minor

4. Defaulted Assessee

An assessee-in-default is a person who does not fulfill his statutory obligations under the Income Tax Act, such as filing an income tax return or paying taxes to the government. For example, a business must deduct tax before paying an employee's wages. After that, the employer has a deadline to deposit the amount withheld to the government. A person will become an assessee-in-default if they don't comply.

Process for Becoming an Income Tax Assessee

• The first step is getting a Permanent Account Number (PAN) from the Income Tax Department. You can accomplish this by submitting an application using forms 49A or 49AA.

• Filing an income tax return (ITR) is the next step after obtaining a PAN. You can file your ITR online at the Income Tax Department's e-filing website or offline by sending a paper return to the relevant departmental office.

• The department will issue a notice of assessment detailing the total taxable income and tax liability for the fiscal year following the filing of the ITR.

• The department will issue a certificate of assessment to the assessee upon payment of the taxes owed, which will help prove that they have assessed for that fiscal year.

Conclusion

The term "income tax assessee" is a person who must pay taxes. Filing tax returns, paying taxes, and responding to correspondence from the income tax department are all the assessee's responsibilities. However, submitting your tax returns can be challenging. Tax professionals can help you optimize your savings and guarantee accurate filing if you are one of those people who finds taxes difficult or who require assistance e-filing your income tax return.

FAQ

Q1. Who is eligible to pay tax?

Any Indian citizen with a source of income can file taxes.

Q2. Are HUFs considered separate assessees for tax filing?

Yes, Hindu Undivided Families (HUFs) are treated as separate tax entities and must file ITR-2 or ITR-3 based on income type.

Q3. How do partnership firms file their income tax returns?

Partnership firms must file ITR-5, while LLPs file ITR-5 or ITR-6, depending on tax applicability.

Q4. How can I add a representative assessee to my income tax?

Go to the income tax website and log in to your account. Select "Add/Register as Representative" under the "My Account" tab to add a representative.

Q5. What is deemed assessee in income tax?

When legal authorities instruct people to pay taxes on behalf of others, they fall under the category of deemed assessees.

Q6. Can parents be representative assessees?

Parents must apply on behalf of their minor child for parental guardianship or assessment to be permitted. They must fill out Form 49A to do this. Additionally, an adult representative assessee may use this form. The form must be submitted with the parent's identification documents.

Q7. How do trusts file their income tax returns?

Trusts file ITR-7 if they are eligible for exemptions under Section 11 and 12.

Q8. Are taxpayers with only capital gains considered individual assessees?

Yes, but they must file ITR-2 or ITR-3 based on business/professional income.

Q9. Which ITR is suitable for pensioners?

Pensioners should file ITR-1 or ITR-2 based on additional income sources.

Q10. Can a minor file an income tax return separately?

Minors’ income is clubbed with parents unless earned through special skills.

Q11. What happens if a firm is reclassified as an AOP for tax purposes?

It will be taxed as an Association of Persons (AOP) under applicable tax slabs.

Q12. Are non-resident Indians (NRIs) classified as assessees?

Yes, if an NRI has income originating in India and is subject to Indian income tax, such as capital gains, dividends, or rental income, they are regarded as assessees.

Q13. Can a minor be an assessee in income tax?

A minor who earns more than the basic exemption limit, such as from investments, may be deemed an assessee. The minor is a separate assessee even though this income combines with a parent.

Q14. What is the difference between AOP and BOI?

A BOI is exclusive to individuals, whereas an AOI is open to individuals and companies. Individuals make up the BOI, whereas legal entities like companies, bodies of individuals, or associations make up the AOI.

Q15. Is the assessee always a person?

Although not everyone is an assessee, an assessee is always a person. It is because individuals who earn more than Rs. 2.50 lakh and pay taxes get assessed, as are those who earn less than Rs. 2.50 lakh.

Q16. What is the status of the assessee?

The assessee may have a resident or non-resident status. HUF assesses resident individuals who may be ordinary residents or residents but not ordinary residents.

Q17. Who is a non-assessee?

Anyone who wishes to pay Central Excise Duty or Service Tax but is not a registered assessee must register as a "non-assessee" under ACES at http://www.aces.gov.in.

Q18. What are the consequences if an assessee does not file their income tax return?

An assessee may be subject to fines, interest on overdue taxes, and even prosecution if they neglect to file their income tax return. Depending on the information, the tax department may also start an assessment or send a notice asking for the return.

Q19. Which ITR form should an individual assessee file?

Individuals with salary income should file ITR-1, while those with business income should file ITR-3 or ITR-4.

Q20. Can an NRI file ITR-1?

No, NRIs must file ITR-2 or ITR-3, depending on income sources.

Q21. Is it mandatory for companies to file ITR even with no income?

Yes, companies must file ITR-6, even with zero income.