The year in which tax is paid is called the assessment year.

Assessee means a person by whom any tax or any other sum of money is payable under this act.

The term 'person' includes the following:
(i) An individual
(ii) A Hindu Undivided Family (HUF)
(iii) A Company
(iv) A Firm
(v) An Association of Persons or a Body of Individual, whether incorporated or not
(vi) A local authority, and
(vii) Every artificial, juridical person E,g. an idol or deity

The year in which income is earned is called "previous year".

Income tax is a direct tax under which tax is calculated on the income, gains or profits earned by a person such as individuals and other artificial entities (a partnership firm, company, etc.)

There are two types of taxes direct taxes and indirect taxes,
(i) Direct Tax:
(1) If a tax levied on the income or wealth of a person and is paid by that person or his office directly to the Government, it is called direct tax.
(2) E.g: Income tax, wealth tax, capital gain tax, etc.
(ii) Indirect Tax:
(1) If tax is levied on the goods or services of a person (seller), it is collected from the buyers and is paid by seller to the Government, it is called indirect tax.
(2) E.g. GST

Out of Gross Total Income, Income tax Act, 1961 allows certain deductions under section 80. After allowing these deductions the figure which we arrive at is called 'Total Income' and on this figure tax liability is computed at the prescribed rates.

(i) Any rent or revenue derived from land which is situated in India and is used for agricultural purpose.
(ii) Agricultural income is fully exempted from tax u/s 10(1) and as such does not form part of total income.

These five heads are :
(i) Income from salaries (sections 15-17) 
(ii) Income from House Property (sections 22-27)
(iii) Income from 'Profits and gains of Business or Profession' (sections 28-44)
(iv) Income from capital gains (section 45-55) and
(v) Income from other sources (section 56-59)

Income aggregated after adjusting past and present losses and the total so arrived at is known as 'Gross Total Income'.

According to the Assessment year 2018-2019 the following rates will be charged:

Section 14 of Income Tax Act 1961 provides for the computation of total income of an assesse which is divided under five heads of income. Each head of income has its own method of computation. These five heads are;
Income from 'Salaries' [Sections 15- 17]
Income from 'House Property' [Sections 22-27]
Income from 'Profits and Gains of Business or Profession' [Sections 28- 44]
Income from 'Capital Gains' [Sections 45-55] and
Income from 'Other Sources' [Sections 56-59]

Indian taxation system is one of the largest systems in the world. The authority to levy tax is derived from the Indian constitution and is well-structured. The tax administration has clear demarcation between Central Government and State Governments and then between State. Governments and Local Bodies. Article 246 (Seventh Schedule) of the Indian constitution contains the legislative powers (including taxation) of the Union government and the State Governments.

(1) Mr. Abdul Kalam - An Individual
(2) Mr. Rama is a karta in a family which consists of his brother, sister, father and mother are co-parceners - HUF
(3) Life Insurance Corporation of India - A Company
(4) A partnership firm with A, B, and C are partners -Firm
(5) Kancheepuram Silk Co-operative Society- AOP
(6) A village panchayat - A local authority.
(7) Reserve Bank of India - Artificial Juridical person.