Know About How Income Tax Department Assess Income

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Income Assessment

Income Tax Department (ITD) assesses income in several ways. The first step is the declaration of income by the taxpayer. This involves providing details of income from various sources such as salary, business or profession, house property, etc. 


Methods Of Assessment: Self-Assessment

This must be paid before filing the return. In this, taxpayers determine income tax liability by consolidating income, adjusting for losses, deductions, exemptions, and calculating tax liability. 


Summary Assessment

Summary assessment operates without human involvement. It involves cross-checking the information provided by the taxpayer in their income return with the data accessible to the ITD. 

Summary assessment

Regular Assessment

The goal here is to ensure that the taxpayer has not understated their income, overstated expenses or losses, or underpaid taxes. The CBDT has established specific criteria based on which a taxpayer's case is selected for a scrutiny assessment.

Regular Assessment

Income Escaping Assessment

The assessing officers are empowered to assess or reassess the taxpayer's income, when they believe that any taxable income has not been properly assessed. The time frame for issuing a notice to reopen an assessment is within four years from the end of the relevant assessment year.

Escaping Assessment

Scrutiny Assessment

Following the submission of an income tax return, the ITD may assign an income tax officer to assess the filing, then taxpayer is notified through an income tax notice under Section 143(2). The officer may then request information required and calculates the taxpayer’s income tax liability

Compiled by Syed Muskan