INCOME TAX BASICS

 Undisclosed income typically includes cash, investments, expenses, or loans that are not recorded in books of accounts or are not properly explained .   Section 68 – Cash Credits ·          If any sum is found credited in the books of an assessee, and the assessee fails to explain the nature and source satisfactorily, the amount shall be taxed as income . ·          💡 Even if the assessee provides a name, the identity , creditworthiness , and genuineness of the transaction must be proven.  Example: ₹5 lakh deposited in bank account without proper explanation.   Section 69 – Unexplained Investments ·          Applies when an assessee has made investments not recorded in the books, and no satisfactory explanation is given. ·          Such investments are deemed as income of the financial ...

  General Rule: Income of a previous year is assessed in the assessment year following the previous year. Previous Year (PY): The financial year in which the income is earned (e.g., 1st April 2024 to 31st March 2025). Assessment Year (AY): The year immediately following the previous year when income is assessed and taxed (e.g., AY 2025-26).   Example: Income earned during FY 2024-25 (PY) will be assessed in AY 2025-26. Exceptions to the General Rule: There are certain situations where the income of a previous year is assessed in the same previous year itself , and not deferred to the following assessment year . These exceptions are provided to protect revenue interests , especially when there's a risk of the income escaping assessment.  1. Shipping Business of Non-Resident [Section 172] Applies to non-resident owners/charterers operating ships in India. Since these individuals may not be traceable in the next year,...

    Stamp Duty Value is the value of a property as determined by the Stamp Valuation Authority (SVA) of the respective state government for the purpose of levying stamp duty on the transfer of immovable property (like land, building, flat, etc.). It is also referred to as: ·          Circle rate ·          Ready reckoner rate ·          Guideline value  Purpose of Stamp Duty Value 1.       To standardize property valuations for stamp duty purposes. 2.       To prevent undervaluation and tax evasion in property transactions. 3.       Used under Income-tax Act to determine taxability when: o     Property is sold below market value . o     Property is received as a gift or for inadequate consideration .  How It Is Det...