Income Tax Act 1961: Chapters, Objectives, Features, Provisions

The Income Tax Act of 1961

The Income Tax Department levies, manages, collects, and recovers taxes in accordance with the Income Tax Act of 1961. It includes 23 chapters, 298 parts, and a number of significant rules covering each component of Indian taxation.

The Income Tax Act of 1961 is direct in nature, which means that the taxpayer is required to pay direct taxes at a specific proportion determined by his or her income.

Income Tax Act 1961Chapters

The Income Tax Act contains 23 chapters, some of which have subparts which are mentioned below in the list:

Chapter I - An introduction to the Income Tax Act and its overview.

Chapter II - The beginning and scope of the IT Act.

Chapter III - Income that does not form a part of the total income.

Chapter IV - How is total income calculated?

Chapter V - Other income sources of individuals that form a part of the assessee’s income, like capital gains, businesses, properties, etc.

Chapter VI - Aggregation of income, carry forward of loss, and set off.

Chapter VIA - Deductions applicable while calculating total income.

Chapter VIB - Restriction on specific deductions for companies.

Chapter VII - Parts of total income on which income tax is not applicable.

Chapter VIII - Applicable rebates and reliefs while calculating income tax.

Chapter IX - Contains information on double taxation relief.

Chapter X - Special cases in which assessees do not have to pay income tax.

Chapter XA - General anti-avoidance rules for income tax.

Chapter XI - Additional tax implications on undistributed profits.

Chapter XII - Rules of tax calculation in special cases.

Chapter XIIA - Special rules on certain Non-Resident Indian (NRI) income.

Chapter XIIB - Special tax provisions for certain companies.

Chapter XIIBA - Special tax provisions for certain limited liability partnerships.

Chapter XIIBB - Special tax rules when the Indian branch of a foreign bank gets converted to a subsidiary company.

Chapter XIIBC - Special tax rules for companies that are resident in India.

Chapter XIIC - Special tax rules for retail trade.

Chapter XIID - Special tax rules for the distributed profits of domestic companies.

Chapter XII DA - Special tax rules for the distributed income of domestic companies for buying back shares.

Chapter XIIE - Special tax rules for distributed income

Chapter XIIEA - Special tax rules for distributed income by securitization trusts.

Chapter XIIEB - Special tax rules for accredited income of specific institutions and trusts.

Chapter XIIF - Special tax rules for income from venture capital funds and venture capital companies.

Chapter XIIFA - Special tax rules for business trusts.

Chapter XIIFB - Special tax rules for the income of investment fund schemes and the income received from them.

Chapter XIIG - Special tax rules for the income of shipping organizations.

Chapter XIIH - Tax implications on fringe benefits.

Chapter XIII - Information of Income Tax Authorities.

Chapter XIV - Procedure of income tax assessment.

Chapter XIVA - Special rules for avoiding repeated appeals.

Chapter XIVB - Special rules for assessing search cases.

Chapter XV - Tax liabilities in special cases.

Chapter XVI - Special tax rules applicable to firms.

Chapter XVII - Rules of tax collection and recovery.

Chapter XVIII - Tax relief on dividend income in specific cases.

Chapter XIX - Tax Refunds.

Chapter XIXA - Case settlements.

Chapter XIX-AA - Role of Dispute Resolution Committee in specific cases.

Chapter XIXB - Advance rulings.

Chapter XX - Appeals and revision.

Chapter XXA - Immovable property acquisition in special cases of transfer to prevent tax evasion.

Chapter XXB - Mode of accepting payments or repayments in special cases in order to counteract tax evasion.

Chapter XXC - Buying of immovable property by the central government in certain transfer cases.

Chapter XXI - Imposable penalties.

Chapter XXII - Punishable offenses and prosecutions.

Chapter XXIB - Certificates of tax credit.

Chapter XXIII - Miscellaneous.

Primary Objectives of Income Tax Act 1961

• Maintaining Price Stability: The Act regulates direct taxes to control private spending and prevent inflation of commodity prices.
• Encouraging Full Employment: The Act reduces income tax rates to stimulate demand for goods and services, leading to increased employment opportunities.
• Addressing Non-Revenue Objective: The Act encourages a progressive taxation system to address wealth inequality.
• Controlling Cyclical Fluctuations: The Act adjusts income tax rates during economic booms and recessions to manage money value fluctuations.
• Minimizing Balance of Payment Issues: The Act imposes customs duties on imports to encourage domestic production, reducing the balance of payment difficulties.

The Income Tax Act of 1961's key characteristics

• The following are some of the Income Tax Act of 1961's key characteristics:
• It is a type of direct tax that the taxpayer is responsible for paying as income tax. It is not transferable to another person.
• This type of tax is under the jurisdiction of the Central Government of India.
• It applies to the income received by the taxpayer during the preceding year.
• The assessee's income tax slab determines the applicable tax calculation.
• In order to force wealthy and influential people to pay more taxes, the government imposes an income tax rate called as progressive income tax rate.
• In some circumstances, deductions are subject to a maximum limit for each fiscal year.

The Income Tax Act of 1961's provisions

• The Income Tax Act of 1961 contains a number of sections. Some of them are:
• Appeal to the Supreme Court under Section 261 and to the High Court under Section 260A
• Financial transaction statement and annual information
• Appearance of a designated representative
• Taxability of income
• Undertaking transactions mode
• Evaluating tax authorities
• Instructions to lower-level authorities
• Appeal application for the Income Tax Officer's review