The Income-Tax Act, 1995

 
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THE INCOME-TAX ACT, 1995 ACT NO. 43 OF 1961

[date 13-9-1961]

(Received the assent of the President on 13-9-1961)

An Act to consolidate and amend the law relating to income-tax 1[andsuper-tax]

BE it enacted by Parliament in the Twelfth Year of the Republic of India as follows:-

CHAP

PRELIMINARY.

CHAPTER I

PRELIMINARY

1.

Short title, extent and commencement.

1. Short title, extent and commencement (1) This Act may be called the Income-tax Act, 1961.

(2) It extends to the whole of India.2 (3) Save as otherwise provided in this Act, it shall come into force on the 1st day of April, 1962.

2.

Definitions.

2. Definitions In this Act, unless the context otherwise requires,-

3[(1) "advance tax" means the advance tax payable in accordance with the provisions of Chapter XVII-C;]

4[(1A)] "agricultural income" means-

(a) any rent or revenue derived from land which is situated in India and is used for agricultural purposes;

(b) any income derived from such land by-

(i) agriculture; or (ii)the performance by a cultivator or receiver of rent-

in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market; or

[See footnote 1 for this section]

5 Ibid.

6 Inserted by the Taxation Laws (Amendment & Miscellaneous Provisions)

Act, 1986, w.e.f. 1-4-1988. Earlier, the original clause was omitted by the Finance Act, 1965, w.e.f. 1-4-1965.

[See footnote 2 for this section]

2 Inserted by the Finance (No. 2) Act, 1965, w.e.f. 1-4-1965.

3 Inserted by the Taxation Laws (Amendment & Miscellaneous Provisions)

Act, 1965, w.e.f. 4-12-1965.

4 Inserted by the Special Bearer Bonds (Immunities and Exemptions) Act, 1981, w.e.f. 12-1-1981.

5 The words 'not involving the carrying on of any activity for profit' omitted by the Finance Act, 1983, w.e.f. 1-4-1984.

[See footnote 3 for this section]

2 Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-

1976.

3 Renumbered for "(15A)" by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

4 Substituted by the Finance Act, 1970, w.e.f. 1-4-1970.

5 The words " and includes a person appointed to be an Additional Commissioner of Income-tax under that sub-section" omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988.

6 Inserted by the Finance (No. 2) Act, 1977, w.e.f. 10-7-1978.

7 Substituted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.

[See footnote 4 for this section]

5 Inserted by the Finance Act, 1987, w.e.f. 1-4-1988.

[See footnote 5 for this section]

"Previous year" defined 4.

3[3. "Previous year" defined 4 (1) Save as otherwise provided in this section, "previous year"

for the purposes of this Act, means the financial year immediately preceding the assessment year:

[See footnote 6 for this section]

Charge of income-tax 1.

4. Charge of income-tax 1 (1)Where any Central Act enacts 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 2[subject to the provisions (including provisions for the levy of additional income-tax) of, this Act] in respect of the total income of the previous year * *] of every person:

Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly.

(2)In respect of income chargeable under sub-section (1), income-

tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act.

[See footnote 7 for this section]

Scope of total income 1.

5. Scope of total income 1.

(1)Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which-

(a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year; or (c) accrues or arises to him outside India during such year:

Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6) of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derivedfrom a business controlled in or a profession set up in India.

(2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which -

(a) is received or is deemed to be received in India in such year by or on behalf of such person; or

[See footnote 8 for this section]

Residence in India 1.

6. Residence in India 1.

For the purposes of this Act,-

(1) An individual is said to be resident in India in any previous year, if he-

(a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more;

or 2[(b) * * *]

(c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

3[Explanation.-In the case of an individual,-

(a) being a citizen of India, who leaves India in any previous year 4 [as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or] for the purposes of employment outside India, the provisions of subclause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words "one hundred and eighty two days" had been substituted;

(b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words "sixty days", occurring therein, the words 5["one hundred and eighty-two days"] had been substituted.]

(2) A Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case except where during that year the control and management of its affairs is situated wholly outside India.

[See footnote 9 for this section]

4 Inserted by the Finance Act, 1990, w.e.f. 1-4-1990.

5 Substituted for "one hundred and fifty days" by the Finance Act, 1994, w.e.f. 1-4-1995.

[See footnote 10 for this section]

Income deemed to be received.

7. Income deemed to be received The following incomes shall be deemed to be received in the previous year:-

(i) the annual accretion in the previous year to the balance at the credit of an employee participating in a recognised provident fund, to the extent provided in rule 6 of Part A of the Fourth Schedule;

(ii) the transferred balance in a recognised provident fund, to the extent provided in sub-rule (4) of rule 11 of Part A

of the Fourth Schedule.

8.

Dividend income.

8. Dividend income 1[For the purposes of inclusion in the total income of an assessee,-

(a) any dividend] declared by a company or distributed or paid by it within the meaning of sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) or sub-clause (e)

of clause (22) of section 2

[See footnote 11 for this section]

Income deemed to accrue or arise in India 2.

9. Income deemed to accrue or arise in India 2.

(1) The following incomes shall be deemed to accrue or arise in India-

3(i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India 4[* or through the transfer of a capital asset situate in India.

Explanation.-For the purposes of this clause-

(a) in the case of a business of which all the operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India;

(b) in the case of a non-resident, no income shall be deemed to accrue or arise in India to him through or from operation,., which are confined to the purchase of goods in India for the purpose of export;

5[* * *]

6[(c) in the case of a non-resident, being a person engaged in the business of running a news agency or of publishing newspapers, magazines or journals, no income shall be deemed to accrue or arise in India to him through or from activities which are confined to the collection of news and views in India for transmission out of India;]

7[ (d) in the case of a non-resident, being-

(1) an individual who is not a citizen of India; or (2) a firm which does not have any partner who is a citizen of India or who is resident in India; or (3) a company which does not have any shareholder who is a citizen of India or who is resident in India,

[See footnote 12 for this section]

Incomes not included in total income.

10. Incomes not included in total income In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included-

(1) agricultural income;

(2) 1[subject to the provisions of sub-section (2) of section 64,] any sum received by an individual as a member of a Hindu undivided family, where such sum has been paid out of the income of the family, or, in the case of any impartible estate, where such sum has been paid out of the income of the estate belonging to the family;

2[(2A) in the case of a person being a partner of a firm which is separately assessed as such, his share in the total income of the firm.

Explanation.-For the purposes of this clause, the share of a partner in the total income of a firm separately assessed as such shall, notwithstanding anything contained in any...

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