The 'Charge of income-tax' is defined under ________ of the Income Tax Act, 1961

The correct answer is 'Section 4 of the Income Tax Act, 1961'

Key Points

• Definition of 'Charge of Income-Tax' under Section 4:
  • Section 4 of the Income Tax Act, 1961, provides the foundation for the chargeability of income tax in India.
  • It states that income tax shall be charged at the rates specified for the relevant assessment year on the total income of the previous year of every person, as defined under the Act.
  • The section defines the scope of income tax and establishes the obligation of individuals, companies, and other entities to pay tax on their income.
  • It also specifies that tax is levied on the total income of a person, which is calculated as per the provisions of the Act after considering various exemptions, deductions, and allowances.

Additional Information

• Brief Overview of Incorrect Options:
  • Section 5:
    • Section 5 deals with the scope of total income, detailing what constitutes total income for a resident, non-resident, or a person not ordinarily resident in India.
    • It specifies that residents are taxed on their global income, whereas non-residents are taxed only on income received or accrued in India.
    • While essential, Section 5 does not define the 'charge of income tax' but rather elaborates on the components of taxable income.
  • Section 6:
    • Section 6 defines the residential status of an individual, Hindu Undivided Family (HUF), or company, which is critical in determining the scope of total income under Section 5.
    • It outlines the conditions under which a person qualifies as a resident, non-resident, or not ordinarily resident in India.
    • However, Section 6 does not deal with the chargeability of income tax.
  • Section 3:
    • Section 3 defines the 'previous year' for income tax purposes, which is the financial year immediately preceding the assessment year.
    • The 'previous year' is critical for determining the income earned in that year, which is assessed and taxed in the subsequent assessment year.
    • While significant, Section 3 does not define the 'charge of income tax.'