THE INCOME TAX ACT 1961

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An income can be generated through various sources. The Government of a country has the responsibility to create job opportunities or employment for the welfare of the people. The Government of India provides several opportunities for a citizen to create income. Government assures professions or job opportunities in private and public sector. As a reciprocal obligation citizen of India is bound to contribute a share of his income to strengthen the revenue of the country through proper tax payments. One cannot concentrate on amassing wealth only for his benefits. The taxable amount is used for the entire progress and development of the nation. In India income tax was introduced by Sir James Wilson for meeting the loss incurred by the government. The Income Tax Act 1961 was enacted with the object of assessing and obtaining a chargeable tax amount from the income of any one who is employed having an income to a prescribed limit that can be charged for income tax. The Income tax Act 1961 is applicable to the employees of government or public sector , companies registered under companies act, certain nationalized banks etc. the specified income of a person from any of these institutions are liable for income tax payment. The principle act of 1961 has undergone several amendments. The taxation law amendment act 2005 and 2006 repealed certain provisions in the parent act.

In the parent act in section 15 A the words “the 1st day of October” is substituted by the words, 1st day of April shall be substituted. Section 39 is newly substituted for the purpose of levying tax on the specified income generated from international sporting events. The specified income shall be notified by the central government on international sporting event by any subsidiary company involved in the business of power generation to and Indian company. The subsidiary company or the holding company shall give the specified income in way of grant and the receipt of such income is meant for settling the due for the revival in the business of power generation.

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Another major amendment is made in section 40 and 40 A of the parent act by the amendment in the year 2006. In section 40 the word commission or brokerage is substituted with the words rent or royalty and in section 40 A the sentence” crossed cheque drawn on a bank or by a crossed bank draft’’ is substituted as “an account payee cheque drawn on a bank or account payee bank draft”. Any dispute regarding the matter of tax payment is appealable before the commissioner and appeal from the order of the commissioner shall be brought before the High Court under section 260 A and to the Supreme court under section 261.

Even though the Income Tax act 1961 had undergone several amendments the basic purpose and structure is not altered as it is evident that the income tax is assessed and accrued on the basis of income from salaries, income from house property, profits of business or profession, capital gains and income from other sources. The income tax is always an annual tax on income and rates are fixed by the annual finance act.

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Government has obligation and responsibility towards the welfare and development of people and mobilization of funds from direct or indirect sources shall be utilized for this purpose. Through various provisions in the income tax and other taxation laws the government can meet monetary requirements in the form of revenue of the country for the promotion of welfare of people by bridging the gap between the wealthy and the poor. The taxation laws maintain balanced socio- economic growth.