Skip to main content

What is Income Tax Act

 

The Income-Tax Act

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. 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. However the bill was later scrapped.

Income tax of India is governed by Entry 82 of the Union List of the Seventh Schedule to the Constitution of India, empowering the central government to tax non-agricultural income; agricultural income is defined in Section 10(1) of the Income-tax Act, 1961. Income-tax law consists of the 1961 act, Income Tax Rules 1962, Notifications and Circulars issued by the Central Board of Direct Taxes (CBDT), annual Finance Acts, and judicial pronouncements by the Supreme and high courts.

Tax Benefits

Exemption: One need not pay any tax on such income. Interest income on PPF and REC tax-free bonds is fully exempt from tax.

Deduction: Investments u/s 80C upto Rs 1,50,000, mediclaim for self/parents u/s 80D, interest on loan for higher education of self/relative u/s 80E, donations made u/s 80G are deductible from the taxable income.

Rebate: After income tax is computed, the actual tax payable is reduced, if a rebate is allowed on account of specific investment that was made.

Allowances: Paid in addition to salary, to meet specific expenses. Common allowances include DA, house rent, LTA, education, medical, transport etc.

Indexation: Used to adjust the purchase price of an investment to reflect the effect of inflation on it, indexation helps to lower long-term capital gains, which brings down the taxable income.

What is the Rules of Income Tax

Any Indian citizen aged below 60 years is liable to pay income tax, if their income exceeds Rs 2.5 lakhs. If the individual is above 60 years of age and earns more than Rs 2.5 lakhs, he/she will have to pay taxes to the Government of India.

Individuals having an annual income of up to Rs 5 lakh have effectively been made tax free by offering a rebate under Section 87A of the Income Tax Act, 1961. People who have an annual income of over Rs 50 lakh have to pay an additional surcharge on the amount of the income tax.


Labels

Labels:

Comments

Post a Comment

Popular posts from this blog

The Top 5 Consumer Court Cases in India

People buy goods and services an inevitable process of their daily lives. We all need food clothing and shelter, which forms the basic necessities of our lives. And with the growing dependency on technology, it has also formed in some shape or form, a basic necessity. The world revolves around technology and the internet. While purchasing goods or services, you can come upon various problems from the one who delivers your goods or the service provider or an online vendor or anyone else. Here Are The Top 5 Consumer Cases In India  Karnataka Power Transmission Corporation v Ashok Iron Works Private Limited The Supreme court, in this case, held that a corporate body is included in the meaning of ‘person’ in section 2(1)(m) of the CPA. It reiterated the position of Lord Watson in Dilworth v. Commissioner of Stamps that the word “includes” is generally used to enlarge the meaning of the word but can alternatively be used to say “mean and include”, in which case what follows is an exhaus...
Post a Comment
Read more

Know about Supreme Court of India, History, Functions, Types of Cases

As the highest court in India, the Supreme Court’s judgments are binding on all other courts in the country. It serves both as the final court of appeals and final interpreter of the Constitution. Owing to these vast powers, many including Attorney General K.K. Venugopal have labelled it among the most powerful courts in the world. Its authority stems from the Constitution of India. Supreme Court History The Federal Court of India was created as per the Government of India Act 1935. This court settled disputes between provinces and federal states and heard appeals against judgements of the high courts. After independence, the Federal Court and the Judicial Committee of the Privy Council were replaced by the Supreme Court of India, which came into being in January 1950. The Constitution of 1950 envisaged a Supreme Court with one Chief Justice and 7 puisne Judges. The number of SC judges was increased by the Parliament and currently, there are 34 judges including the Chief Justice of I...
Post a Comment
Read more

POCSO Act 2012 - Know about This POCSO Act and Its Salient Features

In order to effectively address the heinous crimes of sexual abuse and sexual exploitation of children through less ambiguous and more stringent legal provisions, the Ministry of Women and Child Development championed the introduction of the Protection of Children from Sexual Offences (POCSO) Act, 2012 . The Act has been enacted to protect children from offences of sexual assault, sexual harassment and pornography and provide for establishment of Special Courts for trial of such offences and related matters and incidents. The Act was amended in 2019, to make provisions for enhancement of punishments for various offences so as to deter the perpetrators and ensure safety, security and dignified childhood for a child. Salient Features of Pocso act and Its Amendment The Act is gender-neutral and regards the best interests and welfare of the child as a matter of paramount importance at every stage to ensure the healthy physical, emotional, intellectual and social development of the child. T...
Post a Comment
Read more