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| Income Tax Act 1961: Navigating Its Structure & Schedules |
🧭 A Beginner’s Guide to Understanding the Framework of Indian Taxation Law
📌 Table of Contents
- What is the Income Tax Act, 1961?
- Structure of the Income Tax Act: Parts, Chapters & Sections
- What are Schedules in the Income Tax Act?
- Real-Life Example: A Freelancer's Income in Light of Sections
- Infographic: Income Tax Act Structure
- Download: Cheat Sheet PDF
- Quick Quiz
- Summary & What’s Next
📖 1. What is the Income Tax Act, 1961?
The Income Tax Act, 1961 is the central law that governs the levy, computation, and collection of income tax in India. It came into force on 1st April 1962, replacing the earlier Indian Income Tax Act, 1922.
It applies to:
- Individuals
- Hindu Undivided Families (HUFs)
- Firms
- Companies
- Trusts and other entities
🏛️ 2. Structure of the Income Tax Act
The Act is very vast and consists of:
- 1 Preliminary Chapter
- 298 Sections (as of FY 2024–25)
- 14 Schedules
- 23 Chapters grouped under 4 Parts
⚙️ Breakdown:
| Part | Content | Description |
|---|---|---|
| Part I | Preliminary | Definitions, scope, and applicability |
| Part II | Main Provisions | Income, computation, tax rates, etc. |
| Part III | Procedure | Assessment, appeals, penalties |
| Part IV | Miscellaneous | Exemptions, powers, amendments |
🧾 Commonly Used Sections:
| Section | Purpose |
|---|---|
| 10 | Incomes exempt from tax |
| 14 | 5 Heads of Income |
| 80C - 80U | Deductions under Chapter VI-A |
| 139 | Filing of return |
| 143(1) | Intimation after return processing |
📂 3. What are Schedules in the Income Tax Act?
Schedules are annexures that supplement specific provisions. Example:
| Schedule | Usage |
|---|---|
| Schedule I | Income tax rates |
| Schedule VI | Depreciation rates for businesses |
| Schedule VII | Approved institutions for donations (Sec 80G) |
📌 4. Real-Life Case Study: Freelancer Taxation
Scenario: Ravi, a freelance graphic designer, earns ₹7,20,000/year.
| Step | Reference |
|---|---|
| Declares income under PGBP | Sec 28 |
| Deducts expenses (software, laptop) | Sec 30-37 |
| Claims 80C deduction for ELSS ₹1.5 lakh | Sec 80C |
| Net Taxable Income: ₹5,50,000 | Slab Rate (Sec 115BAC or Normal) |
| Files return | Sec 139 |
This shows how different sections apply to one person depending on income type and savings.
🧠 5. Infographic: Structure of Income Tax Act
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| Infographic: Structure of Income Tax Act |
📥 6. Downloadable PDF: Income Tax Act Cheat Sheet
❓ 7. Quick Quiz – Test Your Basics
1. How many schedules are in the Income Tax Act?
a) 7
b) 14
c) 10
d) 28
2. Under which section are tax-free incomes listed?
a) Section 80C
b) Section 14
c) Section 10
d) Section 139
3. What does PGBP stand for?
a) Presumptive Gains from Business
b) Profits & Gains from Business or Profession
c) Professional Gross Base Payment
d) Progressive Government Benefit Plan
📌 Answers:
- b) 14
- c) Section 10
- b) Profits & Gains from Business or Profession
🧾 8. Summary
| Key Takeaway | Description |
|---|---|
| Income Tax Act is structured | Into Parts, Chapters, Sections, Schedules |
| Key Sections | 10, 14, 80C–80U, 139 |
| Schedules | Provide rate charts, depreciation, and more |
This structure allows systematic learning, even for non-tax professionals.
📚 Next Article in the Series:
🔗 Residential Status Deep-Dive: Special Cases & HUF → Learn how location affects taxability!