Which of the following qualify as assessed under the Income Tax Act, 1961?
A) Individual
B) Company
C) Firm
D) A local authority

The correct answer is 'A, B, C, and D'

Key Points

• Taxation and Assessees under the Income Tax Act, 1961:
  • The Income Tax Act, 1961 is the primary legislation governing taxation in India. It defines the term "assessee" to include any person who is liable to pay taxes or who has any obligation under the Act.
  • Under Section 2(31) of the Act, the term "person" includes several entities that can qualify as assessees:
  • Individual: Any single human being is considered an individual assessee. They are taxed based on their income from various sources such as salary, business, profession, or investments.
  • Company: A company, whether private or public, is a separate legal entity and is subject to corporate taxation under the Act.
  • Firm: Partnerships, including LLPs (Limited Liability Partnerships), are assessed as firms under the Income Tax Act.
  • Local Authority: Municipalities, Panchayats, or other local governing bodies are also considered assessees under the Act when they generate taxable income.
  • These entities are assessed based on specific provisions of the Act that apply to their respective categories.

Additional Information

• A and B:
  • This option is incorrect as it only includes 'Individual' and 'Company' while excluding other categories such as 'Firm' and 'Local Authority' that are also assessed under the Income Tax Act, 1961.
• A:
  • This option is incorrect because it only mentions 'Individual' and ignores other categories like 'Company,' 'Firm,' and 'Local Authority,' which are equally considered assessees under the Act.
• A, B, and C:
  • This option is partially correct but incomplete as it excludes 'Local Authority,' which is also covered under the definition of assessee in the Act.