All about Income Tax Act, 1961

Mitali , Last updated: 23 March 2024
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Income Tax Act, 1961

The Income Tax Act, 1961 is an Indian legislation that governs the taxation of income in the country. It provides the framework for levying, collecting, and regulating income tax for individuals and businesses. The act outlines various provisions, exemptions, deductions, and tax rates applicable to different types of income, such as salary, business profits, capital gains, and other sources. Taxpayers are required to comply with the provisions of this act and file their income tax returns annually to fulfill their tax obligations to the government.

Chapters of the Income Tax Act 1961

The Income Tax Act, 1961, is divided into 23 chapters that cover different aspects of income taxation in India.

Chapter	Explanation
Chapter I	Provides an introduction and overview of the Income Tax Act, 1961.
Chapter II	Deals with the commencement and scope of the IT Act, specifying its applicability and territorial jurisdiction.
Chapter III	Lists income sources that are exempt and do not form part of the taxpayer's total income.
Chapter IV	Outlines the methods for computing the total income by considering income under various heads like salary, house property, business/profession, and capital gains.
Chapter V	Covers other income sources of individuals, including capital gains, business income, income from house property, and more, which are included in the taxpayer's total income.
Chapter VI	Deals with combining income from different sources, carrying forward losses, and setting off losses against income.
Chapter VIA	Covers deductions applicable while calculating their total income.
Chapter VIB	Imposes restrictions on specific deductions for companies while calculating their taxable income.
Chapter VII	Specifies parts of total income that are exempt from income tax.
Chapter VIII	Describes applicable rebates and reliefs that can reduce the income tax liability.
Chapter IX	Provides information on double taxation relief to avoid taxation of the same income in multiple jurisdictions.
Chapter X	Lists special cases where certain assesses are exempt from paying income tax.
Chapter XA	Introduces general anti-avoidance rules to prevent tax avoidance schemes.
Chapter XI	Explains additional tax implications on undistributed profits of companies.
Chapter XII	Contains rules for tax calculation in special cases or for specific income types.
Chapter XIIA	Contains special tax rules for certain types of income earned by Non-Resident Indians (NRIs).
Chapter XIIB	Provides special tax provisions applicable to certain companies.
Chapter XIIBA	Contains special tax provisions for certain limited liability partnerships.
Chapter XIIBB	Covers special tax rules when the Indian branch of a foreign bank is converted into a subsidiary company.
Chapter XIIBC	Encompasses special tax rules for companies that are resident in India.
Chapter XIIC	Includes special tax rules for the retail trade.
Chapter XIID	Deals with special tax rules for the distributed profits of domestic companies.
Chapter XII DA	Contains special tax rules for the distributed income of domestic companies related to buying back shares.
Chapter XIIE	Covers special tax rules for distributed income.
Chapter XIIEA	Encompasses special tax rules for distributed income by securitization trusts.
Chapter XIIEB	Contains special tax rules for accredited income earned by specific institutions and trusts.
Chapter XIIF	Encompasses special tax rules for income from venture capital funds and venture capital companies.
Chapter XIIFA	Covers special tax rules for business trusts.
Chapter XIIFB	Deals with special tax rules for the income of investment fund schemes and the income received from them.
Chapter XIIG	Contains special tax rules for the income of shipping organizations.
Chapter XIIH	Covers tax implications on fringe benefits provided by employers to employees.
Chapter XIII	Contains information about Income Tax Authorities, their roles, and powers.
Chapter XIV	Outlines the procedure for income tax assessment, including filing returns and conducting tax audits.
Chapter XIVA	Provides special rules to avoid repeated appeals on the same tax matters.
Chapter XIVB	Encompasses special rules for assessing cases related to search and seizure by tax authorities.
Chapter XV	Addresses tax liabilities in special cases, such as deemed income, income of non-residents, etc.
Chapter XVI	Contains special tax rules applicable to firms.
Chapter XVII	Covers the rules and procedures for tax collection and recovery from taxpayers.
Chapter XVIII	Explains tax relief available on dividend income in specific cases.
Chapter XIX	Deals with the process of claiming tax refunds for excess tax paid by taxpayers.
Chapter XIXA	Deals with case settlements, providing a mechanism for resolving tax disputes between taxpayers and tax authorities through mutual agreement.
Chapter XIX-AA	Specifies the role of the Dispute Resolution Committee in certain cases to facilitate the resolution of tax disputes.
Chapter XIXB	Covers advance rulings, a facility that allows taxpayers to seek clarification from tax authorities on the tax implications of their proposed transactions.
Chapter XX	Describes the provisions related to appeals and revision of tax assessments, allowing taxpayers to challenge decisions of tax authorities.
Chapter XXA	Addresses immovable property acquisition in specific cases to prevent tax evasion, ensuring fair taxation during property transfers.
Chapter XXB	Specifies the mode of accepting payments or repayments in special cases to prevent tax evasion.
Chapter XXC	Covers the purchase of immovable property by the central government in certain transfer cases.
Chapter XXI	Describes the penalties that can be imposed for non-compliance or tax offenses.
Chapter XXI	Covers the punishable offenses and the prosecution procedures for tax-related violations.
Chapter XXIB	Pertains to certificates of tax credit, providing evidence of taxes paid.
Chapter XXIII	Encompasses various miscellaneous provisions related to income tax assessments, appeal procedures, and other administrative matters.

How does the Income Tax Act of 1961 define the term 'person'?

The Income Tax Act of 1961 defines "person" under section 2(31) to include seven categories:

Individuals (such as salaried workers or sole proprietors),
Hindu Undivided Families (HUF),
Companies (like Infosys Ltd.),
Firms,
Associations of persons (AOP) or bodies of individuals (BOI), even without registration,
Local authorities,
Any artificial judicial person not covered above.