Overview of income-tax law in India :
Income-tax is a tax levied on the total income of the previous year of every person. A person includes an individual, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI), a firm, a company etc. Income-tax is the most significant direct tax. The income-tax law in India consists of the following components– The various instruments of law containing the law relating to income-tax are explained below:
Income-tax Act, 1961: The levy of income-tax in India is governed by the Income-tax Act, 1961. This Act came into force on 1st April, 1962. The Act contains 298 sections and XIV schedules. These undergo change every year with additions and deletions brought about by the annual Finance Act passed by Parliament. In pursuance of the power given by the Income-tax Act, 1961 rules have been framed to facilitate proper administration of the Income-tax Act, 1961.
The Finance Act: Every year, the Finance Minister of the Government of India introduces the Finance Bill in the Parliament‘s Budget Session. When the Finance Bill is passed by both the houses of the Parliament and gets the assent of the President, it becomes the Finance Act. Amendments are made every year to the Income-tax Act, 1961 and other tax laws by the Finance Act.
The First Schedule to the Finance Act contains four parts which specify the rates of tax –
- Part I of the First Schedule to the Finance Act specifies the rates of tax applicable for the current Assessment Year.
- Part II specifies the rates at which tax is deductible at source for the current Financial Year.
- Part III gives the rates for calculating income-tax for deducting tax from income chargeable under the head ―Salaries‖ and computation of advance tax.
- Part IV gives the rules for computing net agricultural income.
- William F. Buckley, Jr.
Latest posts by Lavish Dey (see all)
- Method of accounting [Section 145] – Income Tax - March 11, 2016
- Deemed income chargeable to tax [Section 59] – Income Tax - March 11, 2016
- Deductions not allowable [Section 58] – Income Tax - March 11, 2016