The key components of India's income tax law are the Income Tax Act of 1961, annual Finance Acts, Income Tax Rules, circulars and notifications, and legal decisions from courts. The Income Tax Act governs the levy of income tax and is amended each year by the Finance Act passed by Parliament. The Central Board of Direct Taxes frames Income Tax Rules to facilitate proper administration of the Act. Income tax is levied on the total income of the previous financial year for individuals, HUFs, AOPs, BOIs, firms and companies resident in India.

1. Income Tax Law
CA Satyananda Routray
ACS, DISA (ICAI),M Com, MBA,

2. OVERVIEW OF INCOME-TAX LAW IN INDIA
Income-tax is the most significant direct tax. The
income-tax law in India consists of the following
components.
Income Tax Act
Annual Finance Acts
Income Tax Rules
Circulars/Notifications
Legal decisions of Courts

3. Income-tax Act
 The levy of income-tax in India is governed by the Income-tax
Act, 1961. We shall briefly refer to this as the Act.
 This Act came into force on 1st April, 1962.
 The Act contains 298 sections and XIV schedules.
 These undergo change every year with additions and deletions
brought about by the Finance Act passed by Parliament.
 In pursuance of the power given by the Income-tax Act, rules
have been framed to facilitate proper administration of the
Income-tax Act.

4. The Finance Act
Every year, the Finance Minister of the Government of India
presents the Budget to the Parliament.
Part A of the budget speech contains the proposed policies of the
Government in fiscal areas.
Part B of the budget speech contains the detailed tax proposals.
In order to implement the above proposals, the Finance Bill is
introduced in the Parliament.
Once the Finance Bill is approved by the Parliament and gets the
assent of the President, it becomes the Finance Act.

5. Income-tax Rules
The administration of direct taxes is looked after by the Central
Board of Direct Taxes (CBDT).
The CBDT is empowered to make rules for carrying out the
purposes of the Act.
For the proper administration of the Income-tax Act, the CBDT
frames rules from time to time. These rules are collectively called
Income-tax Rules, 1962. It is important to keep in mind that along
with the Income-tax Act, these rules should also be studied.

6. LEVY OF INCOME-TAX
 Income-tax is a tax levied on the total income of the previous
year of every person. A person includes
 An individual,
 Hindu Undivided Family (HUF),
 Association of Persons (AOP),
 Body of Individuals (BOI),
 A firm,
 A company etc.

7. CONCEPT OF INCOME
The definition of income as per the Income-tax Act begins with
the words “Income includes”.
Income, in general, means a periodic monetary return which
accrues or is expected to accrue regularly from definite sources.
Income normally refers to revenue receipts. Capital receipts are
generally not included within the scope of income.
Income means net receipts and not gross receipts.
Income is taxable either on due basis or receipt basis.

8. INCOME INCLUDES
Any illegal income arising to the assessee
Any income that is received at irregular intervals
Any Taxable income that have been received from a source outside
India
Any benefit that can be measured in money
Any subsidy or relief or reimbursement
Gift the value of which exceed INR 50,000 without any
consideration by an individual or HUF.
Any prize
Causal incomes like winning from lotteries or horse race gambling
etc.

9. Resident
(a) If he is in India during the relevant previous year for a period
amounting in all or in aggregate to 182 days or more.
OR
(b) If he was in India for a period or periods amounting in all to 365
days or moreduring the four years preceding the relevant previous
year
AND
he was in India for a period or periods amounting in all to 60* days
or more in that relevant previous year.

10. ASSESSMENT YEAR and PREVIOUS YEAR
 An assessment year is a period of 12 months commencing on
1st April and ending 31st March. It is a year in which the income of
the previous year is to be assessed. The current assessment year is
2019-2020
 Previous Year means the financial year immediately proceeding
the assessment year. Previous year is also known as the
accounting year or income year. The current assessment year is
2019-2020 which commenced on 1-4-2018 and will be end on
31-3-2019 the previous year for this assessment year wound be
2019-2020

11. Tax slabs
Income Tax SlabIndividuals Below The Age Of 60 Years
Up to `2,50,000 Nil
2,50,001 to 5,00,000 5%
5,00,001 to 10,00,000 12,500 + 20% of total
income exceeding 5,00,000
Above 10,00,000 1,12,500 + 30% of total
income
exceeding 10,00,000
4% Health & Education Cess is applicable on the income tax and
applicable surcharge.

12. Tax slabs
Above rates does not include Surcharge and Cess.
10% surcharge is applicable on income tax if income exceeds 50
lacs but upto 1 crore
15% surcharge is applicable on income tax if income exceeds 1
crore
Tax rates and slabs are same for Male and Female as per above
table Individuals having total income below 5 lakhs, are eligible for
full tax rebate under section 87A
AY 19-20 Individuals having total income below 3.5 lakhs, are eligible
for ` 2500.00 rebate under section 87A.