CA Inter Paper 3: Taxation key terms

The financial year in which income is actually earned and taxed, immediately preceding the assessment year; it is the year of accrual or receipt of income for the assessee.

The twelve-month period beginning 1 April that immediately follows the previous year, in which that year's income is assessed to tax and the return is filed.

The classification of a person as resident or non-resident, and if resident, ordinarily or not ordinarily resident, based on days of stay and other tests; it fixes the scope of taxable income.

The two tests for individual residency: stay in India for 182 days or more in the previous year, or 60 days in that year plus 365 days in the preceding four years.

A resident individual who satisfies at least one basic condition and is not deemed non-resident, and who also meets the additional conditions on prior residence in India.

The set of incomes taxable in India for a person, ranging from all worldwide income for an ordinarily resident person to only India-sourced or India-received income for a non-resident.

The point at which a right to receive income becomes enforceable, as distinct from actual receipt; it determines the year in which income is taxed.

Fixed periodic payments forming part of salary that may be fully taxable, partly exempt up to specified limits, or fully exempt, such as house rent allowance and gratuity.

A non-cash benefit or facility provided by an employer to an employee in addition to salary, valued under prescribed rules and generally taxed as part of salary.

The notional taxable base for house property, being the higher of expected rent and actual rent received, subject to municipal taxes and vacancy adjustments.

A deduction from net annual value for interest on borrowed capital used to acquire, construct, repair or renew the property, capped at a prescribed amount for self-occupied houses.

Interest on a housing loan for the period before construction is completed, allowed in five equal annual instalments beginning with the year of completion of construction.

A deduction for wear and tear on blocks of assets used in business, computed on the written-down value of the block at prescribed rates.

A group of assets of the same class and rate of depreciation, such as plant and machinery; gains and losses on its assets are computed collectively.

The opening value of an asset block after allowing depreciation, adjusted for additions and for money received on assets sold during the year.

Profit on transfer of a capital asset, computed as full value of consideration less cost of acquisition, cost of improvement and transfer expenses, taxed by holding period.

The amount paid or the value adopted to obtain a capital asset, which may be substituted with a higher notional figure for assets acquired before a notified date.

A capital asset held for not more than the prescribed holding period before transfer, commonly 12 months for listed shares and 24 months for most other assets.

A capital asset held for more than the prescribed holding period before transfer; gains on it may qualify for concessional rates or exemptions.

Cost of acquisition inflated by the ratio of the cost inflation index of the year of transfer to that of the year of acquisition, reducing taxable long-term gains.

The residual head covering income not falling under salary, house property, business or profession, or capital gains, such as interest, dividends and winnings.

Unexpected or non-recurring receipts such as lotteries, crossword puzzles, betting or gambling winnings, taxed at a flat rate without basic exemption or deductions.

The inclusion of another person's income in the assessee's total income to prevent tax avoidance, for example income transferred to a spouse or minor child.

Adjusting a loss from one source or head against income from another source or head in the same assessment year, subject to statutory restrictions.

Carrying an unadjusted loss to a later assessment year for set-off against future income, allowed only where the return is filed within the due date and conditions are met.

Amounts allowed under specified provisions, such as life insurance premiums, pension contributions and medical insurance, to arrive at total income from gross total income.

The aggregate of income computed under all five heads after applying intra-head and inter-head set-off, before any eligible deductions.

Gross total income reduced by eligible deductions; it is the figure on which tax is computed at the applicable rates.

A reduction in the tax payable, granted under specified provisions such as a rebate for resident individuals whose total income does not exceed a prescribed threshold.

A reduction in tax liability granted to prevent hardship, for example relief for arrears of salary taxed in a later year, computed by comparing tax with and without the arrears.

Tax paid in instalments during the previous year on income other than that subject to tax deducted at source, with prescribed percentages and due dates.

Tax withheld by a payer at the time of making a specified payment or credit, deposited with the government and treated as tax paid by the recipient.

Tax collected by a seller from a buyer on specified goods or transactions, deposited with the government and credited to the buyer's tax account.

The prescribed form in which an assessee discloses income, taxes paid and other particulars for an assessment year, filed within the due date.

The process by which an assessee computes tax payable on the income declared in the return, pays any balance and treats it as assessed on filing.

Any form of supply of goods or services such as sale, transfer, exchange, licence, rental or disposal, made for consideration in the course or furtherance of business.

A supply of two or more goods or services naturally bundled and supplied together, where one is principal and the others are ancillary; it is taxed as the principal supply.

A supply of two or more individual goods or services supplied together for one price, not naturally bundled, taxed at the highest rate among the items.

The statutory location that determines whether a transaction is intra-State or inter-State and which State may levy the tax, based on rules for goods and services.

The point at which a liability to pay tax arises, generally the earlier of invoice date and payment date for goods or services, with special rules for specific situations.

The transaction value of a supply where the parties are unrelated and price is the sole consideration, otherwise determined by prescribed valuation rules.

The price actually paid or payable for a supply, inclusive of specified additions and after permissible inclusions and exclusions, used as the primary measure of value.

A system where the recipient of goods or services, rather than the supplier, is liable to pay GST on a notified supply.

A credit for GST paid on inward supplies used for business, set off against output tax, subject to conditions such as possession of a valid tax invoice.

The document issued by a registered supplier showing the description, quantity and value of goods or services, the tax charged and the registration particulars of the parties.

The process by which a person obtains a GST identification number, becoming liable to charge and collect tax, claim credit and file returns.

A periodic statement filed electronically disclosing outward supplies, inward supplies, tax liability and input tax credit for a tax period.

An account maintained on the GST portal in which deposits made by a taxpayer are credited and from which tax, interest, penalty and other dues are paid.

The return of tax, interest or other amounts paid in excess or collected but not payable, claimed through an application supported by prescribed documents.

A written decision by the authority on the tax position of a proposed transaction, binding on the applicant and the department for that transaction.

A challenge to an order passed by an adjudicating or appellate authority, filed before the prescribed appellate forum within the limitation period and with pre-deposit.

A monetary consequence for contravention of GST provisions, such as failure to register, issue invoices or file returns, or for issuing invoices without supply.

Setting off a loss under one head of income against income under another head in the same year, permitted only in specified cases such as business loss against other heads.