In India, the direct taxes of today are said to be practiced in ancient times, as well in some or other. Most of the taxes of Ancient India were highly productive. Kings had the power to collect taxes. The combination of Direct taxes with Indirect taxes created a scope for taxation, though more of direct taxes were collected. The tax rates varied from one kingdom to another. For the first time in 1922, a proper tax system of administration was introduced to income-tax authorities. After many efforts, the Income Tax Act came in to existence on in 1961. The Direct Tax Advisory Committee was set up in the same year. Income Tax returns are the most imaginative fiction written today.
Many people are confused about taxes these days. They can’t figure out on what income they should pay taxes. To make it easy, the Income Tax Department(ITD) has explanations to such questions and confusions. This guide will help in understanding the Scope of Income under section 5 of the Income Tax Act, 1961.
Income of an individual shall be determined depending up on two factors. They are:
Section 5 explains what income is to be included for calculation of tax, along with a the conditions mentioned below. According to the provisions of the act, income from previous years, of an individual who is a resident of India includes all the income;
Provided that, in case a person is non-ordinarily resident of India according to section 6(6), the income which is received or deemed to be received outside India shall not be included, unless income of that business is managed or set up in India. In case of a Non-Resident of India, income from the previous year includes;
Today, it takes a lot effort to make out the income-tax form than it does to make the income. To file your tax return easily with maximum tax savings enlist the aid of your personal tax expert at H&R Block India.