A curated selection of the Income-tax Act's structural provisions — charge of tax, residential status, heads of income, and return filing. Rates, slabs and specific limits change with each Finance Act, so this excludes figures that go stale quickly — always verify current rates and limits against India Code / the Income Tax Department before citing.
Provided for study purposes. Cross-check against the official source (India Code / the relevant government gazette) before citing or relying on this text — amendments and corrections may not be reflected here.
Where any Central Act enacts (typically through the annual Finance Act) that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every person. The applicable rates and slabs change with each Finance Act — always check the rates in force for the relevant assessment year.
For a resident, total income includes all income received or deemed to be received, or accruing or arising or deemed to accrue or arise, in India or outside India during the previous year. For a non-resident, total income includes only income received, or accruing or arising, or deemed to be received or to accrue or arise, in India.
An individual is resident in India in any previous year if they are in India for a period of 182 days or more in that year, or for 60 days or more in that year and 365 days or more in the four years preceding that year, subject to certain exceptions and modified conditions for citizens or persons of Indian origin visiting India, and for citizens deemed resident under specific anti-avoidance provisions.
This section lists the classes of income which do not form part of the total income of a person, and therefore bear no tax. The list is long and frequently amended, and includes categories such as agricultural income, receipts from certain funds and trusts, specified allowances and gratuity within prescribed limits, and income of certain institutions. The precise limits and conditions attaching to each clause change from year to year.
For the purposes of charge of income-tax and computation of total income, all income shall be classified under the following heads — Salaries; Income from house property; Profits and gains of business or profession; Capital gains; and Income from other sources.
The following income shall be chargeable to income-tax under the head "Salaries" — any salary due to an employee from an employer or former employer in the previous year, whether paid or not; any salary paid or allowed to an employee in the previous year, though not due or before it became due; and any arrears of salary paid or allowed in the previous year, if not already charged in an earlier year.
The annual value of property consisting of any buildings or lands appurtenant thereto, of which the assessee is the owner, other than such portions as are occupied for the purposes of any business or profession carried on by the assessee chargeable to tax under a different head, shall be chargeable to income-tax under the head "Income from house property".
Income chargeable under the head "Income from house property" is computed after allowing a standard deduction of a prescribed percentage of the annual value, and a deduction for interest payable on capital borrowed for acquiring, constructing, repairing, renewing or reconstructing the property. Where the property is self-occupied, the deduction for interest is subject to a ceiling prescribed by the section.
The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession" — the profits and gains of any business or profession carried on by the assessee at any time during the previous year, along with certain other specified receipts such as compensation for termination of an agency and certain export incentives.
In respect of depreciation of buildings, machinery, plant or furniture being tangible assets, and of know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights being intangible assets, owned wholly or partly by the assessee and used for the purposes of the business or profession, a deduction is allowed at the prescribed percentages on the written down value of the block of assets.
Every person carrying on business whose total sales, turnover or gross receipts exceed the prescribed threshold in any previous year, and every person carrying on a profession whose gross receipts exceed the prescribed threshold, is required to get their accounts audited by an accountant before the specified date and to furnish the report of that audit in the prescribed form. The thresholds are revised from time to time.
Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, subject to certain exceptions, be chargeable to income-tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place.
Where a long-term capital gain arises from the transfer of a residential house, and the assessee has within one year before or two years after the date of transfer purchased, or within three years constructed, another residential house in India, the capital gain is exempt to the extent it is invested, subject to the conditions and monetary ceilings prescribed in the section. Amounts not utilised before the due date for filing the return must be deposited under the Capital Gains Account Scheme.
Income of every kind which is not chargeable to income-tax under any of the other heads specified in Section 14 shall be chargeable to income-tax under the head "Income from other sources", subject to the provisions of this Act, and this head also specifically brings certain items such as dividends and gifts of money or property above a prescribed threshold to tax.
An individual or a Hindu undivided family is allowed a deduction from gross total income in respect of specified sums paid or deposited in the previous year, including life insurance premia, contributions to provident and pension funds, subscriptions to specified savings instruments, tuition fees for children, and repayment of the principal of a housing loan. The aggregate deduction is subject to the ceiling prescribed by the Act, which is revised from time to time.
An individual or a Hindu undivided family is allowed a deduction in respect of premia paid for health insurance for the assessee, spouse, dependent children and parents, together with expenditure on preventive health check-ups and, in the case of senior citizens, medical expenditure where no insurance is in force. The deduction is subject to the ceilings prescribed by the section, which are higher where the person insured is a senior citizen.
Every person, if their total income during the previous year exceeded the maximum amount not chargeable to tax, or if they fall within certain other categories specified in this section, shall furnish a return of their income for the previous year in the prescribed form and manner, on or before the due date applicable to them.
Where a return has been made, the total income or loss is first computed after making prescribed adjustments, and an intimation is issued specifying the sum payable or the refund due. Where the Assessing Officer considers it necessary to ensure that the assessee has not understated income, computed excessive loss or underpaid tax, a notice may be served requiring the assessee to produce evidence, and the Assessing Officer shall thereafter make an assessment of the total income by an order in writing.
If any income chargeable to tax has escaped assessment for any assessment year, the Assessing Officer may, subject to the procedure and time limits laid down in the Act, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and comes to notice subsequently in the course of the proceedings.
Where a person required to furnish a return of income fails to do so within the time prescribed, they are liable to pay a fee, the amount of which is fixed by this section and depends on the total income of the person and on when the return is eventually furnished.
The Assessing Officer, Commissioner (Appeals) or Commissioner may, in the course of any proceedings, direct that a person who has under-reported their income shall pay a penalty, at a percentage of the tax payable on the under-reported income; where the under-reporting amounts to misreporting of income (such as by misrepresentation, suppression of facts, or false entries), a higher rate of penalty applies.