Basic Tax Detail

TAX is a compulasory contribution to state revenue, levied by the government on workers income and business profits, or added to the cost of some goods, services, and transaction. 

What is Tan ?

Those who are liable to deduct TDS as per provisions of Income Tax have to obtain TAN. TAN full form is Tax deduction and collection account Number. What amount you deduct as TDS that you have to deposit with Government by mentioning your TAN. Then you have to file TDS return and whenever you issue Form 16A you have to mention your TAN.

Income Tax Refund 

When your TDS is more that your income tax liability you will get back excess amount and that is called Refund. Sometimes it may happen that you have paid more tax then what you are liable to pay then also you will get Refund.

What is PAN?

Full form of PAN is Permanent Account Number. It is issued by Indian Income Tax Department. People have misconception about this that once they obtain PAN they have to file income tax return. No it’s not like that if you have income more than basic exemption limit (for PY 2012-13 it’s 2,00,000) or you have foreign assets then only filing of income tax is compulsory.

What is Previous Year?

Suppose you have started your business on 20th May, 2012, then your 1st previous year will be 20th may 2012 to 1st March, 2013 i.e. P.Y. 2012-13. In any other cases your previous year will start on 1st April and end on next 31st march. In simple meaning, Previous Year means actual year (financial year) starting on 1st April and ending on following 31st March i.e. previous year means the year in which you earn the income.

What is Assesment Year?

To know the exact tax liability of particular year you have to wait until that year ends. When your Previous Year ends Assessment year relevant to that Previous Year will start. i.e. in above example Assessment year will be 2013-14. The year in which we self assess our income tax liability and we file our income tax  return.

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