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Income-tax Act, 1961

Indian law

Summary

Indian law

Field	Value
imagesize	150
long_title	An Act to consolidate and amend the law relating to income-tax and super-tax.
citation	Act 43 of 1961
enacted_by	Parliament of India
date_commenced	1 April 1962
status	in force amended

The Income-tax Act, 1961 was the charging statute of income tax in India. It provides for the levy, administration, collection, and recovery of income tax.

The Income-tax Act, 2025 replaced Income-tax Act, 1961.

Amendments

The Government of India presents the finance bill (budget) every year in the month of February. The finance budget brings various amendments in the Income Tax Act, 1961 including tax slabs rates. The amendments are generally applicable to the following financial year beginning from 1 April unless otherwise specified. Such amendments become part of the Income Tax Act after receiving approval of the President of India.

The partial budget presented for a non-full financial year, typically during a General Election year in India, is called a "Vote on Account." It is introduced to ensure the continuation of essential government expenditures required for the smooth functioning of the country. A full-fledged budget is presented once a new government is formed.

Scope of total income

The scope of total income is contingent on the category of the taxpayer and their residential status in India. For example, a person resident in India is liable to pay income tax in India on his total world income. On the other hand, a person non-resident in India is liable to pay tax in India only on his Indian income. Under the Income Tax Act, there are five heads of income: salary, house property, business or profession, capital gains, and other sources. Total income consists of income computed under these heads. The tax on total income is computed as per the tax rates specified for the year during which the income is earned.

Simplification

The Union Government established a panel, led by Arbind Modi, to overhaul and simplify the income tax laws. On 22 November 2017, the government formed a task force to draft a new direct tax law, replacing the existing Income Tax Act, which has been in effect since 1961. Arbind Modi, a member of the Central Board of Direct Taxes (CBDT), will lead the six-member panel, with Chief Economic Advisor Arvind Subramanian serving as a permanent special invitee.

Notable cases

Cairn Energy and Government of India dispute
Vodafone International Holdings B.V. vs. Union of India & Anr.

Notes

References

(13 February 2025). "Direct Tax Code 2025".
"Income Tax Bill 2025: Top 5 highlights of newly-introduced Income Tax Bill 2025 impacting taxpayers - Income Tax Bill 2025".
"Tax Rates-Individual".
(23 November 2017). "Govt sets up Arbind Modi-led panel to overhaul, simplify income tax laws". [[Business Standard]].

Wikipedia Source

This article was imported from Wikipedia and is available under the Creative Commons Attribution-ShareAlike 4.0 License. Content has been adapted to SurfDoc format. Original contributors can be found on the article history page.

acts-of-the-parliament-of-india-1961 1961-in-indian-law income-tax-in-india indian-tax-legislation indian-legislation history-of-taxation-in-india

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