Income Tax Act 1961

SectionChapterDescription
1IShort title, extent and commencement
2IImportant Definitions
3I“Previous Year” Defined
4IICharge of Income Tax
5IIScope of Total Income
6IIResidence in India

The Constitution of India, in Article 265 lays down that “No tax shall be levied or collected except by authority of law.” Accordingly both the levy of tax as well as its collection shall be made under a law framed by the government.

Income Tax Act 1961

Constitution of India gives the power to levy and collect taxes, whether direct or indirect, to the Central and State Government. The Parliament and State Legislatures are empowered to make laws on the matters enumerated in the Seventh Schedule by virtue of Article 246 of the Constitution of India.

The Seventh Schedule to Article 246 contains three lists which enumerate the matters under which the Parliament and the State Legislatures have the authority to make laws for the purpose of levy of taxes.

The following are the lists:

(i)Union List or List I: Parliament has the exclusive power to make laws on the matters contained in Union List.
(ii) State List or List II: The Legislatures of any State has the exclusive power to make laws on the matters contained in the State List.
(iii) Concurrent List or List III: Both Parliament and State Legislatures have the power to make laws on the matters contained in the Concurrent List.

Income-tax is the most significant direct tax. Entry 82 of the Union List i.e., List I in the Seventh Schedule to Article 246 of the Constitution of India has given the power to the Parliament to make laws on taxes on income other than agricultural income.

Income-tax is a tax levied on the total income of the previous year of every person. A person includes an individual, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI), a firm, a company etc.

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