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  Different types of Provident Funds (a) Statutory Provident Fund: Statutory provident fund is the oldest type of fund. It was started in the year 1925 through a Provident Fund Act of 1925. This fund was started with a view of promoting savings amongst government employees. Generally this fund is maintained by Government or Semi- Government departments like Railways, RBI, Colleges, Universities, local bodies, Insurance companies etc. The employer’s contribution towards the employee’s statutory provident fund and the amount of interest earned on the accumulated balance to the employee’s credit balance is not to be included in the income of the employee and so it is ignored. When the employee retires or leaves the service and receives any amount from the accumulated balance to his credit in the statutory provident fund, the amount so received will not be included in employee’s total income [Section 10(11)] being exempted income. Employee’s own contribution will qualify for deducti

  According to section 17(1) salary includes the following amount received by an employee from his employer, during the previous year: (i)               Wages (ii)             Any annuity or pension ( family pension received by heirs of an employee is taxable under income from other sources) (iii)           Any gratuity (iv)           Any fees, commission, perquisites or profits in lieu of or in addition to any salary or wages (v)             Any advance of salary (vi)           Any payment received by an employee in respect of any period of leave not availed of by him (vii)        The annual accretion to the balance at the credit of an employee participating in a recognized provident fund to the extent to which it is chargeable to tax under Rule 6 of part A of the Fourth Schedule (viii)      The contribution made by the central government or any other employer in the previous year, to the account of an employee under a pension scheme referred to in Section 80CCD

  Some of the basic concepts Under Income Tax Act 1961 are mentioned below: 1. Assessee:  As per section 2(7), an assessee is a person who is liable to pay the taxes under any provision of Income Tax Act 1961. Assessee can also be a person with respect of whom any proceedings have been initiated or whose income has been assessed under the Income Tax Act 1961, Assessee is any person who is deemed assessee under any of the provisions of this act or an assessee in default under any provisions of this Act. 2. Assessment: Assessment is primarily a process of determining the correctness of income declared by the assessee and calculating the amount of tax payable by him and further procedure of imposing that tax liability on that person. 3. Previous year: As per Section 2(34) of the defines Previous Year as (a). Previous year means the previous year as defined in section 3;  (b). As per section 3 of the Income Tax Act 1961, previous year is defined as the financial year which immediately prec

 The tax is levied on total income of a person. The total income is based upon the residential status of an assessee. Section 5 provides the scope of total income which varies on the basis of the status.  1. Scope of total income of  'a Resident' [Section (1)]     (a) Income received or deemed to be received in India during the relevant accounting year. The place and date of accrual is immaterial.     (b) Income which accrues or arises or is deemed to accrue or arise in India during the relevant accounting year irrespective of the date and place of its receipts.     (c) Income accruing during the relevant accounting year outside India whether it is brought or not in India during the year. 2. Scope of total income of  'Not Ordinarily Resident' [Section 5(1)]     (a) Income received or deemed to be received in India during the relevant accounting year. The date and place of accrual is immaterial.     (b) Income which arises or is deemed to accrue or arise in India during