Introduction Income Tax Act 1961

The Income Tax Act of 1961 is a intensive law that details the duties, exceptions, and strategies concerning income tax for people and businesses. It is moreover dependable for managing the tax system in India. This law is vital for all people earning income in India as it sets the rules for their charge duties and qualified conclusions. Certain viewpoints of the activity may advantage property holders during property purchases.

For instance, in certain zones, it offers tax benefits on both mortgage intrigued installments and principal repayments, lessening the expenses of buying a property. Understanding the details of the Income Tax Act can essentially affect your financial arranging, especially when considering utilizing a contract for purchasing a home.

Table of Contents

Introduction Income Tax Act 1961
What is the important role of Income Tax Act 1961?
What are the major objective of Income Tax Act 1961?
What does the Income Tax Act 1961 cover?
What are the features of the Income Tax Act 1961?
What are the Chapters of the Income Tax Act 1961?
What are real Provisions of Income Tax Act 1961?
What are the Deductions Available Under the Income Tax Act 1961?
Conclusion

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What is the important role of Income Tax Act 1961?

The Income Tax Act of 1961 role, as laid out, is a broad enactment that the Indian government executed to guide on the income evaluate in the nation. The Income Tax Act of 1961 replaced the Income Tax Act of 1922. The Act's rules, directions, and arrangements direct the strategies for income charge organization, require, appraisal, and collection. This applies to all people, organizations, and substances winning salary inside India's jurisdiction.

The Act applies to all types of pay for both Indian residents and non-residents. It comprises of different sources of wage, such as benefits from ventures, pay from work or business, compensation, salaries, profits, interest, eminences, and other shapes of wage.

What are the major objective of Income Tax Act 1961?

There are several objectives of income tax act 1961 which are classifieds below:

Price Stability

The IT Act lays down the regulatory regime for direct taxes, which maintains price stability in the economy. The tax acts as a measure to control private spending and thus checks the inflation of commodity prices.

Full Employment

This Act reduces the rates of income tax to aim for a higher demand for goods and services. This will, in due course, create more employment opportunities and thereby accomplish the objective of full employment.

Non-Revenue Objective

Poor people pay a lower rate of tax than rich people. Through this provision, the Income Tax Act supports progressive taxation with the view to eliminate the disparity in the wealth of its citizens, thus fulfilling its non-revenue objective.

The control of Cyclical Fluctuations

When the economy is booming, it increases the income tax rates, and when the economy is facing recession, it reduces. Thus, the Act keeps control over the cyclical fluctuations in the value of money.

Reduces Balance of Payment Problems

The Income Tax Act charges customs duties for the consequence of some products this serves as inspiration for the neighbourhood manufacturing of items and helps reduce the challenges in balancing instalments for the government.

What does the Income Tax Act 1961 cover?

The scope or level of tax application under the Income Tax Act 1961 is all depends upon the tax status table follows as:

Income Type	Residential Status
	Resident and Ordinarily Resident (ROR)	Resident but not-Ordinarily Resident (RNOR)	Non-Resident (NR)
Income earned in India or considered as earned in India	Taxable	Taxable	Taxable
Income that has been earned but not yet received in India	Taxable	Taxable	Taxable
Earnings are generated from overseas, while the occupation or trade takes place within India.	Taxable	Taxable	Non-taxable
Income is generated from sources outside of India, while the profession or business operates overseas.	Taxable	Non-taxable	Non-taxable
The foreign income from the past that was not taxed and is now being brought into the country.	Non-taxable	Non-taxable	Non-taxable

What are the features of the Income Tax Act 1961?

Their all features of Income Tax Act 1961 acts are mentioned below:

The type of direct tax, which individual has to pay by him, is an income tax. This type of incidence of tax cannot be shifted to another person.
It is administered by the Central Government in India.
It is imposed on the income earned by the assesse in the previous year.
The slab rate is applicable which the basis for computing taxes is.
The rates for such tax are such that the rich pay more in taxes; it's called a progressive tax.
On the other hand, one can claim deductions for different types of income, but only up to a certain amount during a fiscal year.

What are the Chapters of the Income Tax Act 1961?

There are totally 23 Chapters in the Income Tax Act 1961, which are mentioned as below take an look for better understanding:

Chapter	Overview
Chapter I	An introduction of the Income Tax Act and its overview.
Chapter II	The beginning and scope of the IT Act.
Chapter III	Income that does not form a part of the total income.
Chapter IV	How is total income calculated?
Chapter V	Other income sources of individuals which form a part of the assessee’s income, like capital gains, businesses, properties and more.
Chapter VI	Aggregation of income, carry forward of loss and set off.
Chapter VIA	Deductions applicable while calculating total income.
Chapter VIB	Restriction on specific deductions for companies.
Chapter VII	Parts of total income on which income tax is not applicable.
Chapter VIII	Applicable rebates and reliefs while calculating income tax.
Chapter IX	Contains information on double taxation relief.
Chapter X	Special cases in which assessees do not have to pay income tax.
Chapter XA	General anti-avoidance rules for income tax.
Chapter XI	Additional tax implications on undistributed profits.
Chapter XII	Rules of tax calculation in special cases
Chapter XIIA	Special rules on certain Non-Resident Indian (NRI) income.
Chapter XIIB	Special tax provisions for certain companies.
Chapter XIIBA	Special tax provisions for certain limited liability partnerships.
Chapter XIIBB	Special tax rules when the Indian branch of a foreign bank gets converted to a subsidiary company.
Chapter XIIBC	Special tax rules for companies which are resident in India.
Chapter XIIC	Special tax rules for retail trade.
Chapter XIID	Special tax rules for the distributed profits of domestic companies.
Chapter XII DA	Special tax rules for the distributed income of domestic companies for buying back shares.
Chapter XIIE	Special tax rules for distributed income
Chapter XIIEA	Special tax rules for distributed income by securitisation trusts.
Chapter XIIEB	Special tax rules for accredited income of specific institutions and trusts.
Chapter XIIF	Special tax rules for income from venture capital funds and venture capital companies.
Chapter XIIFA	Special tax rules for business trusts.
Chapter XIIFB	Special tax rules for the income of investment fund schemes and the income received from them.
Chapter XIIG	Special tax rules for the income of shipping organisations.
Chapter XIIH	Tax implications on fringe benefits.
Chapter XIII	Information of Income Tax Authorities.
Chapter XIV	Procedure of income tax assessment.
Chapter XIVA	Special rules for avoiding repeated appeals.
Chapter XIVB	Special rules for assessing search cases.
Chapter XV	Tax liabilities in special cases.
Chapter XVI	Special tax rules applicable to firms.
Chapter XVII	Rules of tax collection and recovery.
Chapter XVIII	Tax relief on dividend income in specific cases.
Chapter XIX	Tax Refunds.
Chapter XIXA	Case settlements.
Chapter XIX-AA	Role of Dispute Resolution Committee in specific cases.
Chapter XIXB	Advance rulings.
Chapter XX	Appeals and revision.
Chapter XXA	Immovable property acquisition in special cases of transfer to prevent tax evasion.
Chapter XXB	Mode of accepting payments or repayments in special cases in order to counteract tax evasion.
Chapter XXC	Buying of immovable property by the central government in certain transfer cases.
Chapter XXI	Imposable penalties.
Chapter XXII	Punishable offences and prosecutions.
Chapter XXIB	Certificates of tax credit.
Chapter XXIII	Miscellaneous.

What are real Provisions of Income Tax Act 1961?

There are many types of provisions are mentioned in Income tax act 1961 but the major notable provisions are mentioned below:

Appeal to High Court under Section 260A and to Supreme Court under Section 261
Annual statement of information and financial transactions
Representation by authorized representative
Taxability of income
Mode of undertaking transactions
Tax assessing authorities
Directions to subordinate authorities
Application to the Income Tax Officer for reference

What are the Deductions Available Under the Income Tax Act 1961?

The Income Tax Act 1961 allows to pay tax /assessees to avail of deductions from their total income under the are in a elaborating form mentioned below:

Section 80C: As per Sections 80C, 80CCC, and 80CCD of the IT Act 1961, the deduction available to every assesse is Rs.1.5 lakhs. These sections are of a nature that they provide for deduction in certain cases on certain types of investment.
Section 80D: A deduction under section 80D is provided for Rs.25000; in the case of senior citizens, it is Rs.50,000 against the payment of health insurance premiums for spouse, children and parents.
Section 80CCD: This section has a deduction available to individual assessees against the sum payable on account of contributions to the APY or NPS.
Section 80DD: Assessees are entitled to claim a deduction against medical expenditures incurred under this section. Any assessee being a resident in India or dependent with disabilities of HUF is entitled to it.
Section 80TTA: Under this section, the assessee can avail a deduction of Rs.10,000 on interest earned from savings bank accounts. This deduction is available only to individuals and HUF.
Sections 80DDB: If any medical expenses are incurred on the treatment of specified illnesses, then under this section of the Income Tax Act, the same can be claimed as a deduction by individuals.
Section 80U: A person who is physically or mentally disabled or impaired is entitled to this deduction under section 80U of the Act on their income.
Section 80G: The deduction available to a charitable institution dealing with donations made under Section 80G of the Income Tax Act, 1961, ranges from 50% to 100% as per the type of institution and the nature of donation.
Section 80E: Any interest paid by an individual against the loan taken for purposes of higher education is allowed as a deduction.

Conclusion

The 1961 Income Tax Act is an enacted law that governs income tax in India for both people and corporations. The new law replaced one formed back in 1922 and establishes guidelines for exemptions and deductions while covering all income brackets. Three key objectives are preserving price stability, reaching full employment, and reducing economic inequality.
The Act is composed of 23 parts, any one of which part with specific tax guidelines and directions. If this Act is welcomed and adopted by each and every individual or organization, it will immensely help in managing their tax, planning their finances to the best advantage, and enjoying tax benefits on acquiring a house or some investments. It may assist you in making better financial decisions and adhere more successfully to the tax laws of India.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.