Income Tax India
The Indian Income Tax department is governed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue under the Ministry of Finance.
The government of India imposes an income tax on taxable income of individuals, Hindu Undivided Families (HUFs), companies, firms, co-operative societies and trusts(Identified as body of Individuals and Association of Persons) and any other artificial person. Levy of tax is separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961.
Charge to Income tax
Income tax is a tax payable, at the rate enacted by the Union Budget (Finance Act) for every Assessment Year, on the Total Income earned in the Previous Year by every Person.
The chargeability is based on the nature of income, i.e., whether it is revenue or capital. The principle of taxation of income is: -
1. All revenue incomes are chargeable to tax unless it is specifically exempt (declared as not taxable).
2. All capital profits are not chargeable to tax unless specifically made chargeable.
Residential Status
The inclusion of a particular income in the Total Income of a person for income-tax in India is based on his residential status. There are three residential status, viz., (i) Residents (or) Resident & Ordinarily Residents (ii) Resident but not Ordinarily Residents and Non Residents. There are several steps involved in determining the residential status of a person
All residents are taxable for all their income, including income outside India. Non residents are taxable only for income received in India or Income accrued in India. Not Ordinarily residents are taxable in relation to income received in India or income accrued in India and income from business or profession controlled from India.
Heads of Income
The total income of a person is divided into five heads, viz., taxable:
1. Income from Salary
2. Income from House Property
3. Income from Business and Profession
4. Income from Capital Gains
5. Income from Other sources
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