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Tax
Introductio
n
Tax
●
Laws
Government can raise funds needed for the development and defence of the country by
collecting taxes such as Income-tax, excise duties, service tax, etc from the citizens.
● As the revenue collected from income-tax helps the development of the country, it is said
that “income-tax is the price, one pays for the civilisation”.
● Constitution is the parent law in India, and all other laws should be enacted without exceeding
the framework of the constitution and subject to the norms laid down therein.
● Under the Constitution of India, the Central Government has the right to collect income tax.
● We will be studying basically only Sections 1 to 80 of the Act which deal with -
○ The basic concept of the income-tax law such as what is income, whose income is
taxable, income of what period is taxable, how the income is to be computed and so on.
○ The provisions relating to the computation of total income under various heads such as
Salaries, House Properties, Business or Profession, Capital Gains, Other Sources,
○ The deductions available from total income on savings for blind individuals, on
mediclaim insurance, on contribution to pension fund etc.
● With this background, let us now begin our detailed study of the Income-tax Act.
Scheme of
●
Act
Just as a book is divided into chapters and paragraphs, the Income-tax Act is divided into
chapters (from I to XXIII ie 1 to 23).
● Each section deals with a specific matter (provision) and is further divided into subsections,
clauses and subclauses.
● Any person, who is having the Income in excess of non-taxable limit, is required to pay tax.
● The term Income is well defined under the Income Tax Act.
● Law has taken proper care to cover all sorts of income and receipts of gains in the hands of
person chargeable to tax.
● It defines the term person in such a fashion that each and every sort of entity is covered.
● There are certain income which are exempt upto certain limit and thereafter chargeable to tax.
● Thus the technique of Computation of Income depends upon the classification of Income
under different heads of Income.
What is Income
●
Tax?
Deduction have also been specified under each head of Income to ascertain the Income chargeable
to tax under respective head.
● Over and above there are certain admissible deduction which have been stated to be deducted
from the Gross Total Income, so as to arrive at the Net Taxable Income.
● Having derived the Net Taxable Income, a person calculates his Gross Tax Liability.
● After reducing the TDS from Gross Tax Liability he arrives at the final Net Tax Liability.
● Apart from this, the act also describes various tax Authorities, procedure of assessment, collection
and recoveries, interest and penalties, appeal and revisions, offences and prosecutions etc.
● These all are well dealt with in the 298 sections of the Income Tax Act, 1961 as a mended date.
upto
What is Income
●
298 sections. Tax?
There are hundreds of sub section, clauses, sub clauses, explanations and proviso to these
● Along with it, quite good number of circulars are issued by the department to clarify various
provisions of the Act.
● These amendments is effected through the Finance bill introduced in the parliament by the
Finance Minister.
● Once the Finance bill is approved by the parliament and gets the assent of the parliament it
becomes the Finance Act.
● Thus the Finance Act makes the amendment in the form of omission, insertions and substitutions in
the Income Tax Act.
What is Income
●
Tax?
One finds it very difficult to trace the correct provision of law at it is applicable as on a particular
day, though it is not impossible.
● The rate of tax on the total income is decided every year by passing the Finance Act.
Extends to whole of India
1. states that;
(S.1)
1. This Act may be called the Income-tax Act, 1961 &
Thus the Act is applicable to persons residing in India as well as to the income arising in
India.
Modules at a Glance
Modules in Brief
Ans: True
● The Income Tax Act came into force from financial year 1962-63.
Ans: False
● The rate of tax on the total income is decided every year by passing the Finance
Act. Ans: True
● The Finance Bill makes the amendment in the form of omission, insertions and ubstitutions the
s Income Tax Act. in
Ans: False
True or
● False
The Finance Minister introduces the Finance Bill in the parliament
Ans: True
The makes the The Income Tax Act, 1961 has 298
amendment in the form of omission,
.
insertions and substitutions in the
Income Tax Act
1. 1961 1. 1961
2. 1962 2. 1962
3. 1963 3. 1963
4. 1964 4. 1964
Thank
You!