Income Tax Assessee under the Income Tax Act

An income tax assessee is a person who pays tax or any sum of money under the provisions of the Income Tax Act, 1961. Moreover, Section 2(7) of the act describes income tax assessee as everyone, liable to pay taxes for any earned income or incurred loss in a single assessment year. Also they can be termed as each and every person for whom:

  • Any proceedings are going on under the act for the assessment of his income
  • Income of another person for which he is assessable
  • Any loss sustained by him or by such other person or
  • Person entitled to any tax refund

Since an assessee is a person who pays a certain amount to the government it is important to understand the definition of a person.

Who is a Person under Income Tax Act?

Definition of “Person” is given u/s 2(31) of the Income Tax Act 1961. The term ‘person’ under the Income-tax Act includes natural as well as artificial persons. Also, It can be an association of persons or a body of individuals or a local authority or an artificial juridical person.

Types of Person

The 7 categories of “persons” mentioned under the Income Tax Act:

  1. Individual
  2. Hindu Undivided Family
  3. Partnership Firm
  4. Company
  5. Association of Persons (AOP) or Body of Individuals (BOI)
  6. Local Authority
  7. Artificial Judicial Body(not covered under any of the above-mentioned categories)

Types of Assessee

As per the Income Tax Act, they can be classified into different categories as follows:

  • Normal Assessee
  • Representative Assessee
  • Deemed Assessee
  • Assessee-in-default

 For better understanding, Description about the same is as below:

Normal Assessee

An individual who pays tax for the total income earned during a financial year or the loss incurred by him. Also, if any person is liable to pay any interest or penalty to the government or entitled to get any refund under the act is considered normal assessee.

Moreover, any person against whom proceedings under Income Tax Act are going on, irrespective of the fact whether any tax or other amount is payable by him or not is also a normal assessee.

Representative Assessee

A person who is responsible to pay tax for the income or loss caused by a third party. It generally happens in case person liable for tax payment is a non-resident, minor, or lunatic. They can not file tax by themselves. Therefore, It can either be an agent or guardian who need to comply with the rules on their behalf.

Deemed Assessee

An individual who is responsible to pay the tax by the legal authorities. It can be:

  • Every person who is deemed to be an assessee under the Act
  • Every person in respect of whom any proceeding under this Act has been taken for the assessment of the income/loss of any other person in respect of whom he is assessable or the amount of refund due to him or to such other person

Moreover, This category covers a person to pay taxes on behalf of any other person in specified circumstances.

Examples

  • Legal representative of a deceased person – (a) if a person dies intestate (without writing will) then his elder son or other legal heirs (b) if a person dies after writing will the executor of property
  • Agent of a non-resident
  • Trustee of a trust
  • Guardian of a minor

Assessee-in-default

When individuals fail to meet their statutory responsibilities of paying tax, then they become assessee in default. For example, an employer should deduct tax from the salary of his employees before giving the salary. Moreover, employer has to pay deducted taxes to the government as per the due date. However, If the employer fails to deposit this tax he is an assessee-in-default.

FAQs

How do I add representative assessee to my income tax?

Login to your account on the income tax website. Go to My Account Tab, and click on ‘Add/Register as Representative’ to add a representative.

What is deemed assessee in income tax?

When individuals are obligated to pay tax on behalf of someone else by the instruction of legal authorities, they come under deemed assessee category.

What is the difference between AOP and BOI?

A person in AOP could be a company or an individual person. The term person could include any association, body of individuals or company, However, in a BOI, only individuals can join. Hence we can say, BOI only comprises of individuals, whereas an AOP could include legal entities.

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