Income Tax

Definitions

2. In this Act, unless the context otherwise requires,—

1. “advance tax” means the advance tax payable in accordance with the provisions of Chapter XVII-C;
2. “annual value”, in relation to any property, means its annual value as determined under section 23 ;
3. “Appellate Tribunal” means the Appellate Tribunal constituted under section 252 ;
4. “approved gratuity fund” means a gratuity fund which has been and continues to be approved by the [Principal Chief Commissioner or] Chief   Commissioner or [Principal Commissioner or] Commissioner in accordance with the rules contained in Part C of the Fourth Schedule ;
5. “approved superannuation fund” means a superannuation fund or any part of a superannuation fund which has been and continues to be approved by the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner in accordance with the rules contained in Part B of the Fourth Schedule ;
6. “assessee” means a person by whom any tax or any other sum of money is payable under this Act

Read More

“Previous year” defined

3. For the purposes of this Act, “previous year” means the financial year immediately preceding the assessment year :
Provided that, in the case of a business or profession newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending with the said financial year.
Provided that, in the case of a business or profession newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be
Read More

Charge of income-tax

4. Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be

1. Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of, this Act in respect of the total income of the previous year of every person :
2. In respect of income chargeable under sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act.

Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly.
Read More

Scope of total income

1. Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which—
   1. is received or is deemed to be received in India in such year by or on behalf of such person ; or
   2. accrues or arises or is deemed to accrue or arise to him in India during such year ; or
   3. accrues or arises to him outside India during such year :
      Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6)* of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India.
2. Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which—
   1. is received or is deemed to be received in India in such year by or on behalf of such person ; or
   2. accrues or arises or is deemed to accrue or arise to him in India during such year.

Explanation 1.—Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India.
Explanation 2.—For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India.
Read More

Residence in India

6. For the purposes of this Act,—

1. An individual is said to be resident in India in any previous year
2. A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.
3. A company is said to be resident in India in any previous year
4. Every other person is said to be resident in India in any previous year in every case, except where during that year the control and management of his affairs is situated wholly outside India.
5. If a person is resident in India in a previous year relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in India in the previous year relevant to the assessment year in respect of each of his other sources of income.
6. A person is said to be “not ordinarily resident” in India in any previous year

Read More

Income deemed to be received

7.  The following incomes shall be deemed to be received in the previous year :—

1. the annual accretion in the previous year to the balance at the credit of an employee participating in a recognised provident fund, to the extent provided in rule 6 of Part A of the Fourth Schedule ;
2. the transferred balance in a recognised provident fund, to the extent provided in sub-rule (4) of rule 11 of Part A of the Fourth Schedule ;
3. the contribution made, by the Central Government or any other employer in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD.

Read More

Dividend income

8. For the purposes of inclusion in the total income of an assessee,—

1. any dividend declared by a company or distributed or paid by it within the meaning of sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) or sub-clause (e) of clause (22) of section 2 shall be deemed to be the income of the previous year in which it is so declared, distributed or paid, as the case may be ;
2. any interim dividend shall be deemed to be the income of the previous year in which the amount of such dividend is unconditionally made available by the company to the member who is entitled to it.

Read More

Income deemed to accrue or arise in India

1. The following incomes shall be deemed to accrue or arise in India :—
   1. all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India.
   2. income which falls under the head “Salaries”, if it is earned in India.
   3. income chargeable under the head “Salaries” payable by the Government to a citizen of India for service outside India.
2. Notwithstanding anything contained in sub-section (1), any pension payable outside India to a person residing permanently outside India shall not be deemed to accrue or arise in India, if the pension is payable to a person referred to in article 314 of the Constitution or to a person who, having been appointed before the 15th day of August, 1947, to be a Judge of the Federal Court or of a High Court within the meaning of the Government of India Act, 1935, continues to serve on or after the commencement of the Constitution as a Judge in India.

Read More