Income Tax Act Sections
Income Tax Act, 1961 – Section-Wise Overview
The Income Tax Act, 1961 governs the taxation of income in India. It includes sections defining taxable income, exemptions, deductions, and penalties. Below is a detailed section-wise breakdown of the key provisions of the Act.
📌 Key Sections of the Income Tax Act, 1961
1️⃣ Basic Provisions
| Section | Provision |
|---|---|
| Section 1 | Short title, extent, and commencement of the Act. |
| Section 2 | Definitions (e.g., Assessee, Income, Previous Year). |
| Section 3 | Definition of “Previous Year” (financial year). |
| Section 4 | Charge of income tax on total income of a person. |
2️⃣ Residential Status & Scope of Income (Sections 5-9)
| Section | Provision |
|---|---|
| Section 5 | Scope of total income based on residential status. |
| Section 6 | Resident & Non-Resident status classification. |
| Section 7 | Income deemed to be received in India. |
| Section 8 | Dividend income taxability. |
| Section 9 | Income deemed to accrue or arise in India. |
🔹 Example: NRIs are taxed only on income earned or received in India under Section 5.
3️⃣ Heads of Income (Sections 10-59)
A. Exemptions Under Section 10
| Section | Exemption Type |
|---|---|
| Section 10(1) | Agricultural income (fully exempt). |
| Section 10(10D) | Life Insurance Maturity proceeds. |
| Section 10(14) | Allowances for salaried individuals (HRA, LTA). |
| Section 10(34) | Dividend income up to ₹10 lakh (now taxable). |
🔹 Example: Salary components like HRA & LTA can be tax-free under Section 10(14).
B. Salaries (Sections 15-17)
| Section | Provision |
|---|---|
| Section 15 | Taxability of salary income. |
| Section 16 | Standard deduction & entertainment allowance. |
| Section 17 | Perquisites valuation for taxation. |
🔹 Example: Standard deduction of ₹50,000 under Section 16 reduces taxable salary.
C. Income from House Property (Sections 22-27)
| Section | Provision |
|---|---|
| Section 22 | Tax on rental income. |
| Section 23 | Calculation of Gross Annual Value (GAV). |
| Section 24 | Deduction on home loan interest (₹2,00,000 max). |
| Section 25 | No deduction for unpaid municipal taxes. |
🔹 Example: Homeowners can claim ₹2 lakh deduction on loan interest under Section 24.
D. Profits & Gains from Business/Profession (Sections 28-44)
| Section | Provision |
|---|---|
| Section 28 | Taxability of business income. |
| Section 30-37 | Allowable business deductions. |
| Section 44AD | Presumptive Taxation Scheme (for small businesses). |
| Section 44AE | Taxation for transport businesses. |
🔹 Example: Small businesses earning up to ₹2 crore can pay tax under Section 44AD at 8% of turnover.
E. Capital Gains (Sections 45-55A)
| Section | Provision |
|---|---|
| Section 45 | Taxability of capital gains (Short Term & Long Term). |
| Section 48 | Cost of acquisition & indexation. |
| Section 54 | Exemption for sale of residential property. |
| Section 54F | Exemption on sale of assets other than property. |
🔹 Example: If you sell a house and reinvest in another house within 2 years, capital gains are tax-free under Section 54.
F. Income from Other Sources (Sections 56-59)
| Section | Provision |
|---|---|
| Section 56 | Income from interest, lottery, gifts. |
| Section 57 | Deductions allowed under “Other Income”. |
| Section 58 | Disallowed expenses. |
🔹 Example: Gifts received above ₹50,000 are taxable under Section 56(2)(x).
4️⃣ Deductions Under Chapter VI-A (Sections 80C to 80U)
| Section | Deduction Type | Maximum Limit |
|---|---|---|
| Section 80C | Investments in LIC, PPF, EPF, NSC | ₹1,50,000 |
| Section 80D | Health Insurance Premium | ₹25,000-₹50,000 |
| Section 80E | Interest on Education Loan | No limit |
| Section 80G | Donations to charities | 50-100% of donation |
| Section 80TTA | Savings account interest exemption | ₹10,000 |
| Section 80U | Disability deduction | ₹75,000-₹1,25,000 |
🔹 Example: Investing in PPF + ELSS can save up to ₹1.5 lakh in tax under Section 80C.
5️⃣ Filing & Tax Compliance (Sections 139-151)
| Section | Provision |
|---|---|
| Section 139 | Compulsory filing of Income Tax Return (ITR). |
| Section 140 | Signing authority for tax returns. |
| Section 143 | Scrutiny Assessment by the IT Department. |
| Section 147 | Reassessment in case of escaped income. |
🔹 Example: If income is above ₹2.5 lakh, filing ITR under Section 139 is mandatory.
6️⃣ Tax Deduction at Source (TDS) (Sections 192-206AA)
| Section | TDS Type |
|---|---|
| Section 192 | TDS on salary. |
| Section 194A | TDS on interest (Fixed Deposits, Loans). |
| Section 194C | TDS on contractor payments. |
| Section 194H | TDS on commission & brokerage. |
| Section 206AA | Higher TDS (20%) if PAN is not provided. |
🔹 Example: Banks deduct 10% TDS on FD interest exceeding ₹40,000 under Section 194A.
7️⃣ Advance Tax & Penalties (Sections 207-234F)
| Section | Provision |
|---|---|
| Section 207 | Advance tax applicability. |
| Section 234A | Penalty for late filing of ITR. |
| Section 234B | Interest for non-payment of advance tax. |
| Section 234F | Late filing fee (₹5,000-₹10,000). |
🔹 Example: If tax due exceeds ₹10,000, advance tax payment under Section 207 is mandatory.
🔥 Conclusion
The Income Tax Act, 1961 covers various income sources, deductions, exemptions, TDS rules, and compliance requirements.
💡 Need help with tax planning, exemptions, or ITR filing? Let me know! 😊
