THE INCOME-TAX ACT, 1961

The Income-Tax Act, 1961

Income-Tax

​​Income-tax is a tax levied by the Government of India on the annual income of every person. The Levy of tax on a person depends upon his residential status. The provisions governing the Income-tax are covered in the Income-tax Act, 1961.​ 

The Income-tax is a key source of funds that the government uses to fund its activities and serve the public. The Year under the Income-tax Law is the period starting from 1st April and ending on 31st March of the next calendar year. The Income-tax Law classifies the year as (1) Previous year, and (2) Assessment year. 

The year in which income is earned is called the previous year and the year in which the income is charged to tax is called as assessment year. e.g., Income earned during the period of 1st April, 2021 to 31st March, 2022 is treated as income of the previous year 2021-22. Income of the previous year 2021-22 will be charged to tax in the next year, i.e., in the assessment year 2022-23.​

Income Tax Laws

The Income-tax Law consists of Income Tax Act 1961, Income Tax Rules 1962, Notifications and Circulars issued by Central Board of Direct Taxes (CBDT), Annual Finance Acts and Judicial Pronouncements by the Supreme Court and High Courts. 

The Government of India imposes a tax on taxable income of all persons who are Individuals, Hindu Undivided Families (HUF's), Companies, Firms, LLP, Association of Persons, Body of Individuals, Local Authority and any other Artificial Juridical Person. The Income-tax Act, 1961 is the charging statute of Income Tax in India. It provides for levy, administration, collection and recovery of Income Tax.

Quick Reference of Income Tax Act, 1961 

 

Chapter		Section	Subject-Matter
I	PRELIMINARY	1 to 3	Basic Concepts
II	BASIS OF CHARGE	4 to 9A	Residential Status and Tax Incidence
III	INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME	10 (1) to 10 (50)	Incomes Not Included in Total Income
		10A to 13B	Exempted Incomes (Special Provision)
IV	COMPUTATION OF TOTAL INCOME	14 to 14A	Heads of Income
		15 to 17	Income from Salaries
		22 to 27	Income from House Property
		28 to 44DB	Profit & Gains of Business or Profession
		45 to 55A	Capital Gains
		56 to 59	Income from Other Sources
V	INCOME OF OTHER PERSONS, INCLUDED IN ASSESSEE’S TOTAL INCOME	60 to 65	Clubbing of Income
VI	AGGREGATION OF INCOME AND SET OFF OR CARRY FORWARD OF LOSS	66 to 69D	Aggregation of Income
		70 to 80	Set off and Carry Forward of Losses
VI-A	DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME	80A to 80GGC	Deductions in Respect of Certain Payments/Expenditures
		80IB to 80TTB	Deductions in Respect of Certain Receipts/Incomes
		80U to 80VV	Other Deductions
VII	INCOMES FORMING PART OF TOTAL INCOME ON WHICH NO INCOME-TAX IS PAYABLE	86	Association of Persons or Body of Individuals
VIII	REBATES AND RELIEFS	87 to 89A	Rebate of Income-Tax
IX	DOUBLE TAXATION RELIEF	90 to 91	Double Taxation Relief
X	SPECIAL PROVISIONS RELATING TO AVOIDANCE OF TAX	92 to 94B	Transfer Pricing
		94A	Notified Jurisdictional Area
X-A	GENERAL ANTI-AVOIDANCE RULE	95 to 102	General Anti Avoidance Rule (GAAR)
XI	ADDITIONAL INCOME-TAX ON UNDISTRIBUTED PROFITS	104 to 109	Omitted By The Finance Act, 1987
XII to XII	DETERMINATION OF TAX IN CERTAIN SPECIAL CASES	110 to 115VZC	Taxation of Special Tax Rate
XIII	INCOME-TAX AUTHORITIES	116 to 130	Income Tax Authorities
		131 to 138	Search and Seizure
XIV	PROCEDURE FOR ASSESSMENT	139 to 158	Assessment Procedures
XIV-A	SPECIAL PROVISION FOR AVOIDING REPETITIVE APPEALS	158A & 158AA	Repetitive Appeals
XV	LIABILITY IN SPECIAL CASES	159 to 180A	Assessment of Various Entity
XVI	SPECIAL PROVISIONS APPLICABLE TO FIRMS	182 to 189A	Assessment of Firms
XVII	COLLECTION AND RECOVERY OF TAX	190 to 206B	Tax Deduction at Source
		206C to 206CB	Tax Collection at Source
		207 to 219	Advance Payment of Tax
		220 to 234	Collection and Recovery
		234A to 234F	Interest
XVIII	RELIEF RESPECTING TAX ON DIVIDENDS IN CERTAIN CASES	235 to 236A	Relief
XIX	REFUNDS	237 to 245	Refund
XIX-A	SETTLEMENT OF CASES	245A to 245M	Settlement of Tax Cases
XIX-B	ADVANCE RULINGS	245N to 245V	Advance Rulings
XX	APPEALS AND REVISION	246 to 269	Appeals and Revision
XX-B	REQUIREMENT AS TO MODE OF ACCEPTANCE, PAYMENT OR REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX	269SS to 269TT	Miscellaneous Provision
XXI	PENALTIES IMPOSABLE	270A to 275	Penalties
XXII	OFFENCES AND PROSECUTIONS	275A to 280C	Offences and Prosecution
XXIII	MISCELLANEOUS	281 to 298	Miscellaneous Provision

 

 

Administrative Framework of Income-Tax

The revenue functions of the Government of India are managed by the Ministry of Finance. The Finance Ministry has entrusted the task of administration of direct taxes like Income-tax, Wealth tax, etc., to the Central Board of Direct Taxes (CBDT). 

The CBDT is a part of the Department of Revenue in the Ministry of Finance. CBDT provides essential inputs for policy framing and planning of direct taxes and also administers the direct tax laws through the Income-tax Department. Thus, Income-tax Law is administrated by the Income-tax Department under the control and supervision of the CBDT.​

Amendments of Income-Tax

The Government of India presents Finance Budget every year in the month of February. The finance budget brings various amendments in income-tax act, 1961 including tax slabs rates. The amendments are generally applicable to the next following financial year beginning from 1 April unless otherwise specified. Such amendments become part of the Income Tax Act after the approval of the president of India.

"The Taxation Laws (Second Amendment) Act, 2016" is an amendment Act, No.48 of 2016, to Income-tax Act, 1961 and The Finance Act, 2016. It was passed during the 2016 Winter Session of the Indian Parliament. The Taxation Laws (Second Amendment) Bill, 2016 was passed in Lok Sabha as a money bill on 29 November 2016 enabling people to declare their undisclosed incomes after the Indian 500 and 1000 rupee note Demonetisation.

The Government of India brought a draft statute called the "Direct Taxes Code" intended to replace the Income Tax Act, 1961 and the Wealth Tax Act, 1957.

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Sources: www.incometaxindia.gov.in