Income Tax Act,1961

(a) Income tax in India is governed by the Income Tax Act,1961

(b) It came into force w.e.f.1.4.1962

(c) The Act contains 298 sections and XIV Schedules

(d) The Finance Act shall bring amendment to this Act.

(e) The Law provides for determination of taxable income, tax liability and procedure for assessment, appeal,

penalties and prosecutions.

1. Finance Act

(a) Finance Minister presents this as Finance Bill in both the Houses of Parliament.

(b) Part A of the Budget contains proposed policies of the Government in fiscal areas.

(c) Part B contains the detailed tax proposals.

(d) Once the Finance Bill is approved by the Parliament and gets the assent of the President, it becomes the

Finance Act.

(e) The rate of tax at which income shall be charged is prescribed in the Schedule I of Finance Act.

(f) The Finance Act brings amendments to both the Direct Tax Laws (i.e. Income Tax, Wealth Tax etc.) and

Indirect Tax Laws (i.e. law relating to Central Excise, Customs Duty, Service Tax etc.)

2. The Income Tax Rules, 1962

(a) The administration of Direct Taxes is vested with Central Board of Direct Taxes (CBDT).

(b) Under Section 295 of IT Act, CBDT is empowered to frame rules from time to time to carry out the purpose

and proper administration of the Act.

(c) All forms, procedures and principles of valuation of perquisites prescribed under the Act are provided in

the Rules framed by CBDT.

We will be discussing the below under the Income Tax Act,1961:

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