Knowing the Sources of the Income Tax

We all know the five heads of Income which are:

SalariesIncome from house propertyProfits and Gains of Business and ProfessionCapital gains &Income from other sources

But very few of us know the five sources of the Income Tax Act. So, let us have a look on the sources of our Income Tax –

The Income – Tax Act, 1961 –

The Income – tax Act, 1961 constitutes the substantive legislation which contains the law of Income Tax. It extends to the whole of India and came into force on the 1st of April, 1962. The Act comprises of 298 sections along with their respective sub – sections arranged in a comprehensive way & classified into 23 chapters and 12 schedules. This Act is amended from time to time periodically, generally after every budget, to implement the fiscal policies & are based on the revenue plans of the Government.

The Income – Tax Rules, 1962 –

The Act cannot provide for all the circumstances and various issues that may arise in the course of implementation of the Income – Tax Act. Hence, the legislature has left many issues to be decided by the department. Our department is the Central Board of Direct Taxes (CBDT ) which looks after the administration of all the direct taxes. This Board has framed various rules for the administration of the Act. These rules are known as the Income – Tax Rules, 1962. These are also amended from time to time as required by the amendments made in the Income – Tax Act, 1961 and also the changing fiscal policies.

Various Circulars, Notifications, etc. issued by the CBDT –

In addition to the above, the Central Board of Direct Taxes issues from time to time certain circulars and notifications for the help of or to give directions to the departmental officials. These circulars are binding on the assessing authorities. However, all these circulars have to be in conformity with the provisions of the Income – Tax Act. In case of a conflict between the circular & the Act, the Act will override the circular.

The Finance Act –

To give effect to the various fiscal proposals of the Govt., a Finance Act is enacted annually. The Finance Act contains the amendments in Direct and Indirect Tax Laws. It also contains the rates of Income Tax applicable to various types of assessees & the basic exemption limits applicable to them.

Case Laws –

Apart from the above, innumerable disputes arise between the assessee and the department while implementing the provisions of the Income – tax Act & the Income Tax Laws. The Supreme Court and the various High Courts give various judgments interpreting the provisions of the Income – Tax Act. Such judgement also forms part of the law of Income Tax.