Section 3, 4 & 5 of Income Tax Act-1961

Section 3:- Previous year defined.

For the purposes of this Act, "previous year" means the financial year immediately preceding the Assessment year.

It means if a business is started in F.Y.13-14 & as per the Act the assessee filed a Income Tax Return for the F.Y.13-14 in the A.Y.14-15.It means a period which is the source of income comes into existence and ending with the said financial year ie.here13-14 is a previous year of the A.Y.14-15.

Section 4:- Charge of income-tax.

Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, for the total income of the previous year of every person.

Section 5:-Scope of total income

 The total income of any previous year of a person who is a resident includes all income from whatever source derived which is received or is deemed to be received in India

The total income of a person who is a resident of India the 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.

Section 1 & Section 2 of Income Tax Act-1961

Income Tax Act-    This Act may be called the Income-tax Act, 1961.It extends to the whole of India. In Income Tax Act Two Ninety Eight (298) Sections &  Fourteenth  (14) Schedules are explained briefly  and as per all these Acts we the People of India bound to follow the Rules and regulations of Income Tax Act 1961.

Sections:-

Section 1:-The Title & commencement of The Income Tax Act 1961.

Section 2:- The following definitions are explained in Section 2

Advance Tax ;Agricultural Income; Amalgamation; Additional Commissioner; Additional Director; annual value; Appellate Tribunal; approved gratuity fund; approved superannuation fund; assessee Assessing Officer Assessment ;assessment year Assistant Commissioner; Assistant Director; average rate of income-tax; block

of assets; Board; books or books of account; business; capital asset; agricultural

land; charitable purpose; Chief Commissioner; child; Commissioner; Commissioner

Appeals; company; company in which the public are substantially interested; co-

operative society; Deputy Commissioner; demerge; demerged company; Deputy

Commissioner Appeals; Deputy Director; Director General or Director; dividend;

domestic company; document; electoral trust; fair market value; firm; foreign

company; fringe benefits; income; Income-tax Officer; Indian company;

infrastructure capital company; infrastructure capital fund; Inspector of Income-

tax; interest; interest on securities; insurer; Joint Commissioner; Joint Director;

legal representative; long-term capital asset; long-term capital gain; manufacture;

maximum marginal rate; National Tax Tribunal; non-resident; person; person who

has a substantial interest in the company; prescribed; previous year; principal

officer; profession; public sector company; public servant; rate or rates in force;

Recognized provident fund; regular assessment; relative; resulting company;

Resident; short-term capital assets; tax; tax credit certificate; Tax Recovery Officer; total income; transfer; zero coupon bond.

Tax in India

Taxes in India-

Article 265 :-“No tax shall be levied or collected except by the authority of law."

Tax levied or collected Laws are passed in Parliament or the State Legislature.

Taxes are levied by the Central Government , State Governments &

Local Authorities  ( Municipality)

Income taxes are a source of funds that the government uses in its activities and

serve the people of India.

The levy is governed by the Income Tax Act, 1961. The Income Tax Department is

governed by CBDT and is a part of the Department of Revenue under the 

Ministry of Finance, Govt. of India.

The government of India imposes an income tax on taxable income of

all persons including individuals, Hindu Undivided Families (HUFs), companies,

firms, association of persons, and body of individuals, local authority and any other

artificial judicial person

Five heads of Income:-

1)     Income from salaries:-

2)     Income from house property:-

3)     Profits and gains of business or profession:-

4)     Income from Capital gain :-

5)     Income from other sources

Introduction:-

1)     Income from salaries:-Salary is an amount of money or compensation

received   to employee from its employer for his services or it is a returns for

work performed during the employment period.

2)     Income from house property :-The assessee should be owner of the

property.  The property should consists of any building or lands appurtenant

thereto is taxable as property income under this head, rental income from

vacant land or plot is taxable under the head “Income from other sources”

3)     Profits and gains of business or profession:- Business :-An activity of

purchase and sales with intention of making profit.

Business includes any trade, commerce or manufacture or any adventure or c

oncern in the nature of trade, commerce or manufacture. 

Income earned from any profession or vocation which involves the

occupation requiring intellectual skill or manual skil  E.g. Doctor, Lawyer etc, is 
taxable under this head.

Vocation is an activity, which requires a special skill, which is used to earn i

ncome. e.g. Painter, Singer etc.

4)Income from Capital gain :-Any profit or gains arising from the sale or

           transfer of  capital assets is chargeable to tax under the head of “Capital      

           gains”

5) Income from other sources :-A source of income which does not specifically

fall under any one the above four heads of income (ie. Income from salary;

Income from house property; income from Profits and gains of Business or

Profession & Income from Capital gains)

Water play