Laws for Business Presentation

INCOME TAX ACT

1961
Presenting,
Gopika K R.
S3 MBA

CONTENTS
1. Introduction
2. Income tax Act 1961
3. Finance Act
4. Important concepts
5. Deduction of tax at sources
6. Advance payment of tax
7. Conclusion

INTRODUCTION
INCOME
Sum of all the wages, salaries, profits, interest payments, rents and
other forms of earnings received in a given period of time.

INCOME TAX
Tax payable enacted by the union budget for every assessment
year on the total income earned in the previous year by every person.

INCOME TAX ACT

An Act to consolidate and amend the Law relating to
income tax and super tax.

INCOME TAX ACT 1961

Charging Statute of income tax in India.
Become effective from 1st April 1962.
Contains provisions for

Determination of taxable income.

Determination of tax liability.
Procedure for assessment.
Appeals
Penalties
Prosecutions

FINANCE ACT
The finance bill when passed by the Parliament and
assented by the President becomes The Finance Act.
Financial bill is presented before parliament by the
finance minister on the end of the February.
Financial bill mentioned the rates of Income tax and
other taxes.

FINANCE ACT
First Schedule gives the rates of income in 4 parts.
Part 1 : Rate of income tax for various assesses for the
current assessment
year.
Part 2 : Rate for the deduction of the tax at sources from the
income earned
in the current financial year from sources of other
than salaries.
Part 3 : Rates for calculating income tax for deducting tax
from income
chargeable under the head salaries earned during

IMPORTANT CONCEPTS
Person
Assessee
Assessment year
Previous year
Financial year
Gross Total Income (GTI)
Total income

1. PERSON
Section 2(31)
Person includes:

An individual
A Hindu Undivided Family
A Company
A Firm
Association of Persons/Body of individuals
Every artificial juridical person not falling within any of the
preceding sub-clauses.

2. ASSESSEE
Section 2(7)
A person by whom any tax or any other sum of money
payable under this Act.

3. ASSESSMENT YEAR
Section 2(9)
The period of 12 months commencing on the 1st day of
April in every year.
Tax is levied with respect to the total income earned by
the assesse in the previous year.

4. PREVIOUS YEAR
Section 3
Financial year immediately preceding the assessment
year.
Income tax is payable on the income earned during the
previous year.

5. FINANCIAL YEAR
Period of 12 months.
Beginning from 1st April and ending on 31st March.
Has double role to perform previous year &
assessment year.

6. GROSS TOTAL INCOME (GTI)

Section 80B(5)
Income is chargeable to tax under five heads:

Salaries
Income from house property
Profits and gains from business / profession
Capital gain
Income from other sources

7. TOTAL INCOME
The Gross Total Income as reduced by amount
permissible as deduction under sections 80C 80U.
These include deductions in respect of :

Life Insurance Premium

Contribution to Provident Fund
Subscription for certain equity shares
Pension Fund
Medical Insurance Premium
Donation for charitable institution etc.

DEDUCTION OF TAX AT SOURCE

Section 192 206CA
Also known as TDS (Tax Deducted at Source).
Indirect method for collecting tax.
Aims at collection of revenue at the every sources of income
Simple and convenient mode of payment.

DEDUCTION OF TAX AT SOURCE

(cont.)
Assesse is liable to pay tax on his income, the person
making the payment is required to deduct tax in respect
of income of the assesse from each of the following
sources:

Salary
Interest on securities
Interest other than interest on securities
Winnings from lottery, crossword puzzle, card game, horse
race etc.
Rent

ADVANCE PAYMENT OF TAX

Section 207 219.
Also Known as pay as you earn scheme.
Method of collection of tax by the central government in the
form of prepaid taxes.
An assesse is required to pay tax in a particular finance year
on the basis of his estimated income.

ADVANCE PAYMENT OF TAX

Advance tax is in addition to deduction of tax at source
or collection of tax at source.
Specific features :
Liability to pay advance tax.
Instalments of advance tax.

CONCLUSION
Income tax Act is a charging Statute of Income tax in
India, become effective from 1st April 1962.
It provides for levy, administration, collection and
recovery of the income tax.
The Act contains provisions for determination of taxable
income, determination of tax liability, procedure for
assessment, appeals, penalties and prosecutions.

THANK YOU