Importance of section 4

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wink SECTION 4 - CHARGE OF INCOME TAX cheeky

 

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Section 4 of Income tax act is the most effective and operative of the various provisions in the Act since, it is because of this section alone all other sections become enforceable. The charging section is the backbone of the act, it lays down the provisions as to what are taxable and at what rates; income of which period is taxable and in whose hands. Accordingly, the section provides that : 

a) Income tax shall be charged at the rate or rates prescribed in the finance act for the relevent previous year,

b) the charge of tax is on various persons specified u/s 2(31);

c) the income sought to be taxed is that of the previous year and not of the of assessment year

d) the levy of tax on the assessee is on his total or taxable income computed in accordance with and subject to the appropriate provisions of the income tax Act, including provisions for the levy of additional income-tax.

 

For the purpose of making an assessment, the generel rule is that the income of the previous year alone should be taxed in the immediately following assessment. 

However there are five exception to this rule :

a) Assessment of non-residents in respect of their income from shipping business (Section 172)

b) Assessment of persons leaving India (Section 174)

c) Assessment of association of persons or body of individuals or artificial judicial person formed for a particular event or purpose (Section 174A)

d) Assessment of persons trying to alienate their assets with the object of avoiding liability to tax (Section 175)

e) Assessment of the income from discontinued business (Section 176)

 

 

Regards,

Siddharth Bumb/

Email ID - sidbumbhelp @ gmail.com

WWW.SIDDHARTHBUMB.BLOGSPOT.COM

Replies (6)

Thanks for sharing valuable info............

thanks

(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 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.

very good info thanx for sharing

very good info thanx for sharing

thank you for the post. i now realise if most of the posts in cci are like these knowledge sharing we dont feel that we are wasting our time. keep going.

Nice Post Siddharth...Keep it up.....


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