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Income Tax Assessee - Overview and Types

Under the Income Tax Act, 1961 an assessee is a person who pays tax to the government and files income tax returns. Every individual or company or any other person who has earned income during a financial year and on which he has paid income tax is treated as an assessee. Section 2 subsection 7 of the Income Tax Act 1961 defines the assessee. It states that everyone liable to pay taxes for any earned income or accrued loss in a single assessment year is known as an income tax assessee. 

Further, Income Tax Act also defines a “Person” under section 2 subsection 31. This section states that a person means any natural as well as an artificial person. 

Categories of Persons under Income Tax Act

There are certain categories of persons that are defined under the Income Tax Act. Those categories are as follows: 

  • Individual person 
  • Partnership firms 
  • A Hindu Undivided Family (HUF) 
  • Company 
  • An Association of Persons (AOP) or a Body of Individuals (BOI) 
  • Local Authority 
  • An Artificial Judicial Person (not covered under the categories of persons mentioned above).

Types of Income Tax Assessee

An Income Tax Assessee can be of various types like: 

  • Normal Assessee
  • Deemed Assessee
  • Representative Assessee and 
  • Assessee in default 

Let us learn about all these types of assessees in detail. 

Normal Assessee: 

A normal assessee is any individual or company or another person who is liable to pay tax on income earned by him or her during a financial year. A normal income tax assessee is a person who pays taxes against any income earned or losses accrued during the previous year. 

Further, a person who makes payment in the form of interest or penalty in reference to the income tax act is also called a normal assessee. 

Deemed Assessee:

A deemed assessee refers to a person who is held responsible by the income tax authorities to pay tax for any other person. Usually, a deemed assessee is assigned when the real assessee is not in the position to pay taxes or is deceased. In this case, the authorities employ some other responsible person to pay tax on behalf of the real assessee. 

Deemed assessee can be the following: 

  • The trustee or legal heir of the deceased person who, in writing, has transferred his whole property to an agent or executor. 
  • The eldest child or any legal heir or a deceased person who has expired before writing his will 
  • The guardian of a minor or a person who is of unsound mind 
  • The agent of a non resident individual who is earning income from India. 

Representative Assessee:

A representative assessee is appointed when the person liable to pay tax is not in the position to do so. This can happen when the real assessee is a minor or a person of unsound mind or a non resident. Here, the income tax authorities assign some other person, possibly an agent or a guardian, to represent the real assessee. The person appointed by the authorities is then represented as a representative assessee. It is the responsibility of the representative assessee to pay the tax and file the income tax return on behalf of the real assessee. 

Assessee in default: 

A person is treated as an assessee in default when he fails to comply with the provisions of the income tax act. A person who fails to pay income tax to the government or fails to file the return on behalf of the due date or fails to deduct TDS or deposit TDS deducted is known as an assessee in default. A person who is deemed to be an assessee in default shall be liable to pay interest as per section 220 and a penalty as per section 221. 

Author : Simran

Date     : 12-Jul-2022