Good Morning, Good Evening, Good Afternoon.
How are you all?
Friends, I am your companion, your friend, your companion
in this tax class.
Your Hamdam,
C.S. Shreyagupta.
How are you all?
Friends, we have started this journey of Income Tax.
We had covered 2-3 lectures.
Basic, we were taking some basic knowledge that what is
Income Tax?
How does it work? What do we do? What don't we do?
So, basically,
I will take 2-3 minutes and revise what we have studied so
far.
Friends, first of all, we have studied the system of
taxation.
What is tax? Why is it needed?
The need of tax, which you and I both understand, the need
of tax, the need of tax, the need of this tax, to develop
the country, to develop the country, to develop the
country, we need money.
The government needs money.
So, from where will we get money? By collecting tax.
Now, this tax, we had divided it into two types.
One is direct tax and the other is indirect tax.
About direct tax, the discussion that we had, we had
discussed that, what is direct tax?
You yourself deposit it from your pocket in the government
treasury.
You yourself deposit it from your pocket, from your income,
you cannot recover that tax from anyone else.
You will have to open your own pocket.
You will have to withdraw money from that pocket and
deposit it to the government.
You are giving your own money.
Direct tax.
The government is directly taking money from you.
Direct tax. You cannot recover it from anyone else.
Direct tax.
Direct tax means income tax.
The biggest example is income tax.
We had taken the example of Akshay Kumar that whoever earns
money from films, on his own money, he deposits his income
tax on his own money.
From his own pocket.
Then we had studied the second classification of this.
That was indirect tax.
Indirect tax.
We had taken the example of a shopkeeper.
He sells you a shirt.
It is a shirt worth Rs. 1000.
And on Rs.
1000, he charges you Rs.
200 GST.
The payment that you will do, you will pay him Rs.
What will he get?
Rs. 1000 for the shirt and Rs.
200 for the GST.
Now that GST, he collected it from you and deposited it to
the government.
Indirect tax.
He took money from you, took tax from you and deposited it
to the government.
Indirectly.
Basically, what did he do?
He recovered the tax from you.
He deposited it to the government but he recovered it from
you.
This is called indirect tax.
We had discussed what is direct tax and what is indirect
tax.
The lectures that were going on were discussing income tax.
The classes of income tax were going on.
Let us discuss income tax, the direct tax.
We had discussed income tax.
Basically, it is a tax that is imposed on your income.
It is a tax that is imposed on your income.
To get rid of income tax, first of all,
I should have an account book of how much money
I have earned throughout the year.
How much money I have earned throughout the year.
We calculate this.
How much money I am earning from where.
I will involve my accountant and CA.
How much money
I have earned throughout the year.
In Hindi, it means how much income I have earned throughout
the year.
I have to pay tax on that income.
You will have to pay a percentage on that income.
You have to pay your tax.
It is a simple thing.
It is a simple point.
You have to calculate the income.
How will you calculate the income in the next few days?
How will you calculate the income?
I had told you that all the income you have in this world,
all the income you have, you will divide that income in
five categories.
You say you earn rent.
That will be a category of house property.
You will put it there.
Business income goes to business head.
You buy and sell a share.
You buy and sell a property.
You buy and sell FD.
You have an interest.
You have some other source of income.
These are five heads.
Don't remember them.
I will remember them gradually.
Just understand that you are calculating your income.
So whatever income you calculate, you will put that in five
categories.
You will put your income in five categories.
You can total your income.
There will be deductions
You will get your total income, whatever tax you get on
that total income, you have to pay that tax.
Don't take tension, brother has come, he will explain
further, don't take tension.
I am basically making a background for you now, that what
is income tax, how to get it.
It is a simple thing, income tax is a tax that is imposed
on your income.
For that, we need your entire bureau of income, that how
much money you have earned from different sources
throughout the year, you have to total that, and on that
total, a percentage will become your tax.
We have read this till now, friends.
Am I right or am I right?
Did you understand the revision till now, friends?
Friends, before I start further discussion with you, I just
want to tell you a small thing.
Friends, now we will go on such a journey, where we will
move forward step by step in our studies.
Each and every level will move forward.
Do keep on doing revision.
When you move forward step by step in life, sometimes mind
gets disturbed.
There is a doubt in mind, a self-doubt arises, that how
will we do this further?
Will we be able to do this?
Many children must be asking this question at this time,
that sir is teaching, but will we be able to understand?
Will we be able to understand things?
Friends, let me tell you, whatever work you do, these are
the words of Swami Vivekananda ji, not mine.
His words are, that whatever work you do, you don't do that
work.
It is your sub-conscious mind, which we call your
sub-conscious mind, your sub-conscious mind, that makes you
do that work.
This whole game is a game of mind, friends.
This whole game is a game of your thinking.
If you believe, that I will become a king, then believe me,
you will become a king, today or in 15-20 years you will
become a king.
But if you believe now, that I will not be able to do
anything in life, sir, life will pass away, you will not be
able to do anything.
The message you give to your body, the message you give to
your sub-conscious mind, the same thing your sub-conscious
mind makes you do, believe this.
If you wake up in the morning and tell yourself, that I am
me,
I have woken up, oh nature, I am coming,
I have woken up, I am coming and I am coming to become a
king, believe me, that day you will live like a superstar.
Do it from tomorrow, you wake up in the morning,
I know how you wake up, you wake up in the morning, then
you will have to go to class, then you will have to work,
then this guy will come to meet you, not like this, think
like this, that the whole day will pass by.
You wake up in the morning,
I have woken up, good morning, go to the sun, say, salam
sun god,
I have come, today is going to be my day,
I will become a king,
I will work like a superstar, then you see your energy,
sir, everything is a game here, you will say that income
tax is nothing,
I will learn easily, you will start getting energy anyway,
this is all a game of the mind, this mind is such a
powerful thing, the way you will indicate it, you will work
in life anyway, big people control this thing and work, it
is a game of the mind, always keep indicating to the mind,
that I am,
I am and there is no one else, keep this confidence, keep
indicating to the mind, that sir, whether it is income tax,
GST, whatever it is,
I will do it,
I am, I will do it,
I will do it, it is not happening now, no problem, but I
will do it, if you keep this confidence, you will do
something in life, come on guys, come on, let's look back
once, next topic, charge of income tax, till now we have
studied, how income tax is charged, total income, total
income of the whole year, and you put a percentage on it,
of tax, and by doing the percentage of tax, you took out
the amount of tax, that this tax, this came out, this is
being deposited to me, okay, now come on,
of income tax, let's do it, what does it say,
Section 4 of the Income Tax Act.
This is a charging section.
What does it mean?
What does charging section mean? Will someone tell me?
Charging section.
Friends, charging section means a section, a section, a
section which gives power to impose tax.
Charging section.
I was talking about 5 heads.
Those 5 heads also have different charging sections.
Those charging sections give that authority to that head.
They give authority, they give power.
That yes, under this section, you can impose tax on this
person.
Charging section means a section which gives you power
about the charge of your tax.
What does it mean?
Section 4 is a charging section.
Section 4 has given the authority to impose income tax.
What does it say?
It provides that tax shall be charged at the rate
prescribed for the year by the Finance Act or Income Tax
Act or both.
The tax which you get, basically, like I had discussed with
you a few lectures ago, that the rate of income tax that
you get, that Finance Act, the Finance Act that comes every
year, what does Finance Act mean to me?
The budget that comes every year, which Nirmala Tai brings
every year with a briefcase to the Parliament and presents
the budget, that budget also has income tax rates.
That this year, income tax will be imposed at this rate.
So, this is the first point that he is talking about, that
the tax, at what rate is it charged?
At the rate given in the Finance Act.
Now, this charge, the charge is on every person.
See, what is there in the law?
In the law, every word has a different meaning.
Now, you are thinking that the charge is on every person.
The definition of a person is given separately in the
Income Tax Act.
What is a person?
What do we understand from a person?
We think that he is a human being.
He is a person.
No, sir.
It is not like that.
In the Income Tax Act, every word has a definition.
Every word has a definition.
In Section 2, that definition has to be read once, that
what comes in a person and what does not come in a person.
So, we will read the definition of a person.
First, let us cover this point.
What is there in the definition of a person?
In that, a company also comes.
In the definition of a person, a firm also comes.
An individual also comes.
Companies also come.
You may not know this.
You may be thinking that a person means a person.
No, sir.
In the Income Tax Act, every word has a different meaning.
For that, you will have to read the definition once.
I will read it in between.
Do not worry.
My brother has come.
He will do everything.
Do not worry.
I will do everything.
Please support me here.
Now, we are reading that the tax will be imposed on the
rate in the budget.
And the tax is imposed on every person.
I am trying to understand that an individual is also a
person.
A company is also a person.
A firm is also a person.
This is a person.
That means, tax is imposed on the company also.
Tax is also imposed on an individual person.
An individual person means, even if Amitabh Bachchan goes,
he will also pay tax.
And if a company goes to Reliance Industries, then income
tax will also be imposed on Reliance Industries.
If there is a firm, a partnership firm, a firm of lawyers,
a firm of CA, tax will also be imposed on that firm.
So, tax is imposed on every person.
We will see what all comes under the definition of a person.
Then, we will come to know on which people tax is imposed.
Come to the third point.
And the most important point.
Tax is chargeable on the total income.
What is tax saying?
Tax is chargeable on the total income.
See, income tax is imposed on the total income.
So, tax on the income.
Income means total income.
The total income that you have earned in the whole year.
The total income that you have earned in the whole year,
you divided it into different categories from different
heads.
If you take out the total, you will pay the over income tax.
He is saying the same thing.
What? Tax is charged on the total income earned during the
previous year and not the assessment year.
Read this line again.
Then, I will discuss it.
Read this line.
What does this line say?
Tax that is chargeable on the total income earned during
the previous year and not the assessment year.
There are 3-4 things in this line.
Very fine things, friends.
And as soon as I tell you to catch this word.
So, what does it mean to catch this word?
Let's go to the definition of this word.
What does it want to say?
What is the definition of this thing?
What does it want to say?
Look at it.
Tax is chargeable on the total income.
First, we have to see what total income is.
Now, what we are understanding, according to common sense,
that total income means how much money I have earned in the
previous year from different sources.
This is what it means.
In Hindi language, it means total income means how much
money I have earned in the previous year from different
sources.
So, what is it trying to say?
Tax is charged on the total income earned earned means the
money you have earned during the previous year and not the
assessment year.
Sir, I want to discuss these two words with you.
Word number 1 and word number 2.
What is it trying to say?
Read this line again.
It wants to say that
Tax is charged on the total income earned in the previous
year and not in the assessment year.
It is earned in the previous year.
One is previous year, PY.
Now, whatever discussion we will have on income tax, it
will be based on PY and AY.
PY and AY.
What is previous year?
What is assessment year?
Will anyone try to tell?
Will anyone be able to tell what it is?
Think about it and tell me.
What is the meaning of previous year?
Previous.
Previous year.
Previous means past.
Usually, what we do in common language, for example, if I
am telling you that current year is 2023.
In common language,
I am not telling you the language of income tax.
In common language,
I am asking you what was previous year?
What was last year?
What will you say? 2022.
Absolutely right.
Last year, how did you tell me?
I just told you that I am living in 2023.
2023 is going on.
According to this, you are telling me your previous year.
What was the year before 2023?
You told me that it was 2022.
I gave you the information of current year.
That's why you told me last year.
Sir, this happens in income tax also.
One is previous year.
Second is assessment year.
What is the meaning of previous year?
The meaning of previous year is
Vahe Varsh.
It is a great concept.
In income tax, you will run your career for 30-40-50 years.
This will be useful everywhere.
This is so important.
What is the meaning of previous year and assessment year?
The meaning of previous year is
Vahe Varsh.
The year you earned money.
The year you filled your pocket.
The year you increased your bank balance.
The year you earned income.
You have earned money.
That is previous year.
Sir, why is it called previous?
Why is it not called current?
I will tell you.
First listen to me.
After that I will tell you.
I will tell you in a way that you will enjoy.
You will enjoy.
First listen to me for 5 minutes.
After that you have 6 minutes.
I have 5 minutes.
After that everything is yours.
Only 5 minutes.
Previous year.
Forget all this.
Forget what I told you earlier.
Now come to this.
What is the meaning of previous year?
The year you earned money.
That is previous year.
Logically, the law of income tax says that if you earn
money this year, then this year
only earn money.
Don't pay tax this year.
When to pay tax? When you finish the whole year.
We will get the whole account book that brother, you have
earned so much money in the
first year.
Once you get the total, then you have to pay tax the next
year, which is also right by the law.
Say yes.
I have to pay income tax.
Now understand
the thing. See, there is no cheating in income tax. Let me
tell you first, there is no cheating.
It's all a game of understanding.
What did I tell you first that income tax, when does it
apply? What is it? Brother, such a tax that applies to your
total income.
Okay brother, I will earn income all year round.
I will earn income in April, I will earn it in March, I
will earn it in May, I will earn income all year round.
Now when I have to pay tax, then I should have total income.
So I need an account book of income for a whole year.
What will I do by calculating month by month? I need an
account of the
whole year that how much money I have earned in the whole
year.
I will take an account of the whole year.
From 1st April to 31st March, I will take an account that
brother,
from 1st April to 31st March, I have earned money from
different sources.
Add this, add this, add this, add this, add this, add this.
Add income of 5 heads.
Total how much money
I have earned? From 1st April to 31st March.
Okay. Very good.
This is the account of the whole year? The account of the
whole year is there? Now, next year go and deposit tax on
Now, next year, go and deposit the tax on it.
Next year.
Because you know that you have taken the entire year's
account.
From 1st April to 31st March, you have added the account,
made an account, made accounts, made a balance sheet, made
a profit and loss account for the whole year.
That brother, I have earned so much money in the whole year.
Now, you go to that account, show it to your income tax
officer, show it to your income tax department, file a
return.
You know, I file a return.
So, you will file a return.
That return is basically nothing.
That return is a summary.
It is a summary.
In short, you have to tell, how much money you have earned
in the whole year, from where.
You will file that return.
But is there any right to file it here?
How can I file it here?
Here, I am earning money.
Right now, I don't even know, till the end of the year, how
much money I will have earned. For example, I am a
businessman.
And in the month of April, I have made a profit.
In the month of April, I will not file any return for the
income tax.
Right now, I don't even know, till the end of the year, how
much money I will have earned. I don't even know,
I have made a profit in a month,
I will make a loss in 11 months.
So, that is why, the income tax officer gives you a whole
year.
That brother, take a whole year.
The whole amount of money you have earned in a year, total
it.
The whole year's income.
Don't do it separately.
Total the whole year's income.
When the year ends, you have all the accounts.
That how much money I have earned in the whole year.
Reach the next year.
File a return.
Return means, give a summary.
To the income tax officer, that I have earned this much
money from here and there.
This is my total income for the whole year.
And on this, this much tax is due to me.
You will reach the next year.
For example,
I will do this one more time in the month of April.
So that, there is no problem.
You, for example, assume that it is 2022 now.
That from 1st April 2022, you have started a business.
From 1st April 2022, till 31st March 2023, in the whole
year, you have earned money.
You have earned money from different places.
You have earned money from business.
1 crore rupees.
And you, for example, you used to work part time.
So you have earned a salary.
Salary.
You have earned 0.10 crore.
Meaning, you have earned a salary of 10 lakh rupees.
You get a rental from somewhere.
You also get a rent.
90 lakh rupees from somewhere.
This is happening to you every month.
In business, after 3 months, you might suddenly get a
profit. You get a rent every month.
You get a salary every month.
So you don't have to calculate every month.
You calculate the whole year.
You calculate the total once.
Now your year is over.
You are sitting here on 31st March.
On 31st March, one day, you will call your accountant.
You will ask him,
Brother, tell me one thing.
You make all my accounts.
Tell me, how much have I earned in the whole year?
He will say, you have earned 2 crore rupees in the whole
year.
Very good.
Now my year comes to an end here, on 31st March.
I, brother, in the month of April, or in the month of July,
will go to the Income Tax Department.
This is the office of the Income Tax Department.
I will go out of this office.
This is the office.
Sir, have you made a drawing?
Son, do you know,
I have got Padmanabhushan in my drawing.
If you don't understand my drawing, then this is your
problem, friend.
This is not my problem.
Come here.
On 31st March, you have calculated how much money I have
earned in the whole year.
Next year, you go to the Income Tax Department. You say,
this is my return.
In return, there is a summary.
You have given a paper.
See, this is a paper.
In this paper, it is written, how much money I have earned.
Is it correct?
You have deposited a return of 2 crores.
This is a summary of 2 crores, that how much money I have
earned. And on this, this is my tax.
On 2 crores, for example,
I have a tax of 60 lakhs.
So, you deposit this tax of 60 lakhs. What will you say?
I have earned so much money.
In which year?
In the previous year.
So, what will you have?
This will be in the previous year.
I have earned so much money in the previous year.
And what is the assessment year?
Assessment year means, the year when your income will be
assessed. Assessed means, when you file a return, when you
come here next year, when you file a return next year, so,
it is not like, when you file a return, you believe it to
be true.
You are not explaining to me, that whatever I file,
I will file only the truth.
I will not file anything other than the truth.
This is not happening.
When it comes to income tax, there are frauds of crores,
lakhs, billions of rupees. So, when you file a return, the
officer also checks it.
This is a checking procedure.
They check your return.
They mix your balance sheets with your profit and loss
account.
Everything is mixed with your balance sheet and profit and
loss account.
An officer must be sitting there.
What is he doing?
He is checking.
What is this checking called?
This checking is called assessment.
You are assessing. You are being assessed.
That whatever you have said, whatever return you have
filed, is it true? Can you really see 1 crore rupees in
your profit and loss account?
Can you really see 2 crore rupees in your bank statement?
This is called assessment.
This is called checking.
So, this checking, in which year will it be done? In this
year, when you file a return.
So, what is this called?
This is called assessment year.
The year when your accounts, your return will be checked,
there will be an assessment.
This will be called assessment year.
What is the assessment of? It is of income.
Which year's income? Sir, the income earned in the previous
year.
The money I earned in the previous year, this entire
amount, I earned it in the previous year.
Next year, in the assessment year,
I will file its return.
I will also deposit the tax that is incurred on it.
And I will do the assessment.
So, what will it be called?
The year in which all the paperwork will be done, next
year, that is called assessment year.
And the year in which you earn money, that is called
previous year.
Is the point clear?
In the next year of the previous year, you have to deposit
the tax.
In Hindi language, if it is understood roughly, like if
2022 is going on, if you are earning money in 2022, then
what will be considered next year? Previous year.
Assume that the previous year is 1st April 2019 to 31st
March 2020.
What is it called?
In short, previous year 2019-2020.
All this goes on from April to March.
It goes on according to the financial year.
So, the financial year is not seen from January to
December. The financial year is seen from April to 1st
April.
31 March.
So previous year for example you have 19-20.
So previous year if you have 19-20 then what will be its
assessment year? If you are earning money in 19-20 then
when will you pay tax? Next year.
Next year means what will be its assessment year? 20-21.
Is it clear? Previous year if you have for example 21-22
then what will be its assessment year? 22-23.
Is it clear? Previous year, assessment year.
Previous year if you are earning money then previous year.
Assessment year is the year when you do all the
computation, checking, return file, tax.
This is the point.
Now tell me, does any child have any doubt? No? Then what
will be its assessment year? Next year.
Next year means what will be its assessment year? Previous
year.
Now tell me, does any child have any doubt? By the way I
don't think any doubt will be left.
Now come back to this point.
Now I will understand the point that tax is chargeable on
the total income earned during the previous year and not
the assessment year.
Whatever your tax is charged, it is charged on that income
which you have earned.
Now what did you think in the previous year? You thought
that whatever I am earning in the previous year, now you
will think that the year I am standing today, according to
the income tax people, that is the previous year.
According to the income tax people, that is the previous
year.
Previous year means the year you are earning money.
Previous year doesn't mean last year.
Previous year means the year you are earning money.
run according to assessment year.
Like you take an income tax, there it is run according to
assessment year that you bring the file of that assessment
year, you bring the account book for that assessment year.
So, assessment year means, that if you have to bring the
file of the assessment year, it means you have to bring the
file of the previous year, the year you are earning money.
This is why it is called previous.
It is previous than you will definitely be taxed.
Definitely.
Is the point clear?
Previous year.
Those who are not clear, look at it again from here.
Previous year means, income earned during the previous year
is taxable in the assessment year.
And what does it say?
If the business profession is newly set up, in such case,
the previous year, what will it be?
That shall be the period beginning on the date of setting
up of the business and ending on 31st March.
For example, you started a business in July.
Now, what is the previous year?
First tell me, what is the previous year?
What is the previous year?
The year in which I earn money.
So, if you started in July, then start from where you
started.
Start from 1st July.
From 1st July to 31st March.
If you started on 10th September, then from 10th September
to 31st March.
That will be the previous year.
If you started on 1st January, then there is no problem.
If you start on 1st January to 31st March, that will be the
previous year.
Whichever year you start a business, pick up the previous
year from there.
If the source of income comes into existence in the said
year, then when will the previous year start?
From the date, from where the source of income comes into
existence.
And when will it end?
On 31st March.
Okay? Let's see a couple of questions.
Then the point will be clear.
Mr. A is running a business since 1993.
And he is saying that the assessment year is 23-24.
What is the assessment year? 23-24.
So, I told you about the assessment year, which is 23-24.
So, what will be the previous year?
The income of the previous year will be assessed next year.
So, if an income is being assessed in 23-24, then when will
I earn that income?
In 22-23.
What will be the previous year?
From 1-4-22 to 31-23.
And he is saying that there is a CA.
He started his practice on 1-July-22.
So, find out his previous year.
So, the previous year is the same as the year I earn money.
So, from 1-July to 31-March.
That will be my previous year.
From 1-July to 31-March.
Is the point clear?
The previous year.
If the previous year is 22-23, then the assessment year
will be 23-24.
Is it clear?
This is the same point that I have told you.
The year in which income is earned, means the previous
year, is the previous year.
And this income is taxable in the immediately following
year.
What do you call it?
You call it the assessment year.
Is this point clear?
Is it clear?
Let's move ahead.
Let's see some more.