Income Tax Act of 1961
Everything pertaining to taxes is specified under the Income Tax Act, which was passed into law in 1961. This covers the assessment, gathering, handling, and reimbursement of income taxes. The primary goal of the act is to update and harmonize the nation’s tax laws.
The set of guidelines used by the Income Tax Department to levy, manage, collect, and recoup taxes is known as the Income Tax Act of 1961. It covers every facet of Indian taxation and is divided into 298 sections, 23 chapters, and other significant provisions.
The Income Tax Act of 1961 can now be divided into two categories: direct taxes and indirect taxes. Based on his or her income, the taxpayer is required to pay direct taxes at a specific proportion. On the other hand, the government imposes the latter tax indirectly through the sale of goods and services.
It is divided into numerous sections, each of which addresses a distinct facet of the nation’s tax system. The Indian government releases its annual finance budget in February. The Income Tax Act is being amended in a number of ways by the budget.
Chapter I
This is the first section and is hence for introducing the IT Act and to give a basic idea about the same.
Chapter II
This chapter talks about the commencement and the extent of the Income Tax Act.
Chapter III
The third chapter of the IT Act is basically about the charge of income tax, the scope of total income, dividend income, and income arising as a result of working abroad and so on.
Chapter IV
This chapter deals with all forms of income that do not form part of the total income. These include income from property, trusts, institutions, incomes of political parties etc.
Chapter V
The fifth chapter is about incomes of other individuals that form part of the assessee’s income. This includes income from capital gains, from businesses, from house property etc.
Chapter VI
This deals with the transfer of income when there is no actual transfer of assets. This includes transfer as well as revocable transfer.
Chapter VII
Chapter VII is basically about the deductions that are applicable on certain payments and certain incomes
Chapter VIII
Chapter VIII deals with rebates and share of member in an association or body
Chapter IX
This talks about double taxation relief that is rebate on income tax and relief in income tax
Chapter X
This is about special provisions where payment of income tax is avoided. This includes agreements with foreign countries and also information about those countries with which there exists no agreement on tax payment
Chapter XA
Lists down all general anti-avoidance rules for income tax
Chapter XII
This section pertains to calculation of tax under certain special cases
Chapter XIIA
This section deals with special provisions for incomes earned by Non-Resident Indians. This includes capital gains, short-term capital gains, provident fund etc. The chapter contains sections 110 to section 115BBE. These different sections list down different kinds of taxes applicable on incomes from various special cases like from royalty, dividends, foreign currency units etc. All the corresponding sections basically list down taxation for income made by non-resident Indians.
Chapter XIIB
This chapter lists down special taxation provisions applicable to certain companies. It has sections 115J to section 115JF.
Chapter XIIBB
This lists down taxation process for conversion of a foreign company into an Indian subsidiary.
Chapter XIIBBA
Special rules for tax payment by some individuals who are not businesses.
Chapter XIIBC
Special provisions for a foreign corporate based in India.
Chapter XIIC
Provisions concerning retail trade in India.
Chapter XIID
Deals with the taxation process for profits made by domestic companies. Interest payable on non-payment of tax by these companies and cases when the company defaults.
Chapter XIIDA
Lays down rules for tax on distributed income of a company
Chapter XIIE
Deals with tax on distributed income of unit holders
Chapter XIIEA
Special requirements for tax on income distributed by securitization trusts.
Chapter XIIEB
Special provision related to income accrued by certain institutions and trusts.
Chapter XIIF
Tax on income received from venture capital companies or venture capital funds
Chapter XIIFA
Special provisions related to business trusts
Chapter XIIFB
Special provisions related to accrued income of investment funds and income generated from it.
Chapter XIIG
Special provisions with respect to taxation of shipping companies
Chapter XIIH
Income Tax levied on fringe benefits
Chapter XIII
Lists down all information about Income Tax authorities such as their appointment and control, jurisdiction, their powers and disclosure of information
Chapter XIV
Chapter XIV contains a long list of sections starting from section 139 to section 152. This chapter deals with the whole return filing formalities. From obtaining PAN to filing returns online to methods of accounting. This also includes other amendments, rectification of mistakes, intimation of loss and other related cases.
Chapter XIVA
Lists down provision for avoiding repetitive appeals like those which are already pending in the High court or Supreme Court.
Chapter XIVB
Special provision for evaluation of ‘search cases’
Chapter XV
Lists down liabilities for each case, all general and special provisions, recovery of tax from non-resident Indians, private companies etc
Chapter XVI
This chapter is for firms and their assessment and taxation process. Also deals with changes in constitution, succession and their dissolution process
Chapter XVII
This lists down the clauses for collection and recovery of tax. Also lists down the interest charged on late payment of taxes or in cases where recovery is made
Chapter XVIII
Income tax relief to companies for the fact that they pay dividends to their shareholders. Relief in terms of tax to companies who are involved in charitable work via their foundation wings
Chapter XIX
Deals with refunds pertaining to taxes in case more tax is paid to the IT department. Cases when an individual is eligible to get refund, correctness of assessment and interest on refund when there is no claim made. Sections 237 to 245 cover all aspects of this tax chapter
Chapter XIXA
This deals specifically with settlement of cases. Sections 245A to 245L are included under this chapter. All aspects of settlement such as application, procedure, abatement f proceeding, recovery of sums are covered under this chapter
Chapter XIX-AA
In accordance with the rules established, under this Act, the Central Government shall establish one or more dispute resolution committees, as may be necessary, for the resolution of disputes involving the persons or classes of persons, as the Board may specify, who may elect to have a dispute resolved under this Chapter with respect to a dispute arising from any modification of the specified order in his case and who meet the specified requirements.
Chapter XIXB
All advance rulings come under the purview of this chapter. Sections involved are section 245N to 245V. Includes application for advance ruling, powers of authority, procedure and other related topics.
Chapter XX
Deals with appeals made to the deputy commissioner and commissioner. Also includes appeals to the high court, Supreme Court and general aspects of revision by commissioner.
Chapter XXA
Includes sections 269A to 269S. Is basically related to acquisition of immovable properties in certain cases to counteract tax evasion. All aspects of acquisition including jurisdiction of the same is covered under this chapter and its various sections.
Chapter XXB
Lists down modes of payment in cases where correction of tax evasion is required. Deals with taking and accepting of loans and deposits for the same and their corresponding modes.
Chapter XXC
Deals with purchase of immovable properties made by the central government in cases of transfer. Restrictions on the property, appropriate authority, rectification of mistakes, vesting of property are the few of the many aspects covered under this chapter.
Chapter XXI
Includes sections 271 to 275 and lists down all penalties that are applicable to various taxpayers in the event of various cases. This pertains to all kinds of penalties such as those for non-disclosure, for non-payment of taxes, for failure to comply with various provisions of the section and so on and so forth.
Chapter XXII
Section related to offences and the punishment for it
Chapter XXIIB
With effect from 1 April 1990, Sections 280Y, 280Z, 280ZA, 280ZB, 280ZC, 280ZD, and 280ZE of Chapter XXII-B were removed. For the purposes of sub-section (6) of section 280Z or, if applicable, sub-section (4) of section 280ZC, no tax credit certificate awarded under section 280Z or section 280ZC shall be shown before the Assessing Officer after 31 March 1991. Prior to 1 January 1965, the Finance Act of 1965 inserted Chapter XXII-B.
Chapter XXI
Section 275A to section 280D is included under this chapter. The section deals with prosecution and offenses with respect to compliance failure, and other details about how the prosecution process will be taken forward.
Chapter XXIII
Sections 281 to 298 come under this chapter and it covers almost all miscellaneous topics that cannot be put under any of the specific tax chapters stated above. Contains generic as well as special cases that may arise with respect to the taxation process for various taxpaying entities.