An assessment, under the income tax act, holds significant importance as it ensures your tax compliance. This is required as per the tax laws and regulations, and it helps determine your tax liability based on your income bracket and other factors. 

 

An assessment also provides you with an opportunity to review your finances. Along with that, you can check if you can minimise the tax outgo. This can be done by clearly understanding the deductions and tax exemptions under the Income Tax Act. 

 

Read on to know the various types of assessments in income tax.

Various Types of Income Tax Assessments

1. Self-Assessment - Section 140A

A self-assessment is when the calculation of your annual tax payable is done by yourself. Under Section 140A, the first step of income tax self-assessment involves consolidating the tax payable by calculating your total income from all the sources. Then, you make the necessary additions and subtractions to your income based on the applicable exemptions and deductions.

 

After taking these deductions into account, you get your taxable income. After checking your income tax slab, you can easily calculate the income tax. Self-assessment in income tax can be easily done with the help of the illustrations and resources provided by the IT department.

2. Scrutiny Assessment - Section 143(2)

Scrutiny assessment is a type of tax assessment wherein an income tax officer is assigned to check the income tax filing done by you. The income tax department performs this action to check the data provided by you along with your tax liability. It helps in finding any discrepancies in your tax filings. 

 

Under Section 143, you will be notified regarding the same. If you agree with the errors, you can pay the balance sum or get the extra payment back. Conversely, if you disagree with the income tax officer's findings or calculations, you can convey it to the IT department under Section 154.

3. Summary Assessment - Section 143(1)

A summary assessment is carried out before you get the notification regarding any discrepancies or refunds on your tax filings. This assessment is performed to cross-check the information and calculations in your filing. 

 

Finding calculation errors in such filings is not uncommon, and a summary assessment can assist in catching such discrepancies. If any discrepancies are found during the summary assessment, the IT department notifies you regarding the same.

4. Regular Assessment - Section 143(3)

Regular assessment is yet another kind of income tax assessment that an income tax officer carries out. Regular assessments are not performed on every filing. There are some parameters, which determine profiles that require a regular assessment. 

 

The main objective of this assessment is to check if any taxpayer has paid inadequate or a higher amount as tax. If your filing is selected for a regular assessment, you will be notified regarding the same. You might be asked to present your income documents and account information for adequate verification.

5. Best Judgement Assessment -Section 144

Best judgement assessment is another type of income tax assessment that is performed in extreme cases. This happens when a taxpayer does not comply with the IT department. When such cases happen, the income tax department has the authority to calculate the tax of that taxpayer. 

 

This has to be performed with honest judgement. This assessment is seen in cases in the following cases:

  • Individuals not presenting the required documents and information

  • Individuals failing to file their returns

  • Noncompliance with the department

  • Individuals failing to maintain tax and income records

6. Income Escaping Assessment - Section 148

Income escaping assessment is an assessment reserved for critical tax cases. Under this kind of assessment, an officer calls for a reassessment if they find any discrepancies or dissatisfaction with older cases. 

 

Income escaping assessment is done in such cases:

  • Tax evasion

  • ITR not filed on taxable income

  • Understating income

  • Overstating of losses

  • International transactions not presented

7. Assessment in Case of Search - Section 153A

Under Section 153A, the income tax officer possesses the right to search any assessment of any individual for verification purposes. Also, note that under assessment, in case of search, the IT department has the right to look up the assessments for up to 6 years. 

 

Now that you have the information regarding various types of assessments under the Income Tax Act, you are better prepared to file your taxes. Arming yourself with such knowledge helps you get a better grasp of the tax system. This is important because you may get notifications or orders pertaining to your tax liabilities, and you should know what these mean

FAQs on Types of Income Tax Assessments

What is the maximum time limit for the assessment of income tax returns?

The minimum time limit under the assessment under the income tax act is set at 9 months from the end of that particular financial year.

What are the different types of assessment in income tax?

There are various types of assessments in income tax, which are self-assessment, scrutiny assessment, regular assessment, self-judgement assessment, income escaping assessment and other types of assessments.

How do I assess my income tax through summary assessment?

If any errors or discrepancies regarding your income tax are found during the summary assessment, the income tax department has the responsibility of notifying you regarding the same.

What is the procedure for income tax self-assessment?

Income tax self-assessment involves the calculation of your tax payable yourself. You can do this by calculating your total income and then making adjustments according to the applicable deductions and exemptions. Once done, you can check the applicable tax slab, and apply the corresponding rate to get the tax payable. 

 

Check the latest income slabs to know your tax group. The Indian income tax department provides numerous resources and illustrations for your easy tax calculation.

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