The Indian Income tax Act prescribes different tax slabs for Senior citizens, Women & Individuals including AOP (Association of Person), BOI (Body of Individuals) & HUF (Hindu Undivided Family).

To calculate the total income tax liability, one needs to follow the below mentioned process:

* Calculate your gross total income. This includes gross income from the five sources of income – Income from Salary, Business/ Profession, Capital Gains, House Property & Income from other sources.
* Calculate the net deductions for example donations, investments and savings such as provident fund subscriptions, Life Insurance Premiums etc.
* The net taxable income is gross total income less net deductions.
* Then the appropriate income tax rate is applied to calculate the total tax liability.
* Education Cess of 3% is applied on the tax payable to arrive at the total tax payable. Relief under various sections would be applied on this total tax.

Some very basic terms & their definitions used in context with the Indian Income Tax are given below:

ASSESSEE – is any person who is required to pay Income tax or any other sum payable under the Income Tax Act being interest, penalty etc.

ASSESSMENT YEAR – is the period comprising of twelve months starting on 1st of April & ending on 31st March of the next year. Assessment year succeeds the financial year. For eg. For the FY 2011-2012, the AY will be 2012-2013.