The general meaning of income under the Income Tax Act, 1961 is any money, profits or gains (from whatever source derived) which is not specifically exempted under the Act. This includes income from salary, house property, business or profession, capital gains, and other sources.

The Act defines income under five heads under Income Tax Act:

• Salary: This includes all wages, salaries, allowances, and other benefits received by an employee from their employer.
• House property: This includes income from rent, royalties, and other payments received from letting out property.
• Business or profession: This includes income from carrying on any business or profession, such as income from trading, manufacturing, or providing professional services.
• Capital gains: This includes income from the sale or transfer of capital assets, such as land, buildings, shares, and securities.
• Other sources: This includes income from all other sources, such as interest, lottery winnings, and agricultural income.

The Income Tax Act also provides for a number of deductions and exemptions from income. This means that not all income is taxable. For example, certain medical expenses, educational expenses, and charitable donations are deductible from income.

The general meaning of income under the Income Tax Act is quite broad, but there are a number of exemptions and deductions that can be used to reduce taxable income. It is important to consult with a tax professional to understand the specific rules and regulations that apply to your individual situation.

EXAMPLES

The general meaning of “income” under the Income Tax Act, 1961 is any profit or gain accruing or arising to any person from any source, including but not limited to:

• Salaries, wages, and other remuneration
• House property income
• Profits and gains from business or profession
• Capital gains
• Income from other sources, such as interest on deposits, dividends, and lottery winnings

The term “income” is very broad and includes all types of receipts, whether they are in cash or in kind. It is important to note that not all receipts are taxable income. For example, gifts and inheritances are not taxable income.

Here are some examples of general income under the Income Tax Act:

• Salary earned by an employee
• Profits earned by a businessman
• Interest income earned on bank deposits
• Dividend income earned on shares
• Rental income earned from property
• Capital gains earned from the sale of assets
• Winnings from lotteries and gambling

CASE LAWS

The Income Tax Act of 1961 does not define the term “income” in general. However, the courts have interpreted the term “income” in a number of cases. Some of the important case laws on the general meaning of income under the Income Tax Act are as follows:

• CIT v. Ramkrishna Dalmia [1958] 33 ITR 861 (SC)

In this case, the Supreme Court held that “income” is any accretion to the wealth of a taxpayer, which is not capital in nature. The court further held that income is not necessarily money, and can be in any form, such as goods, services, or other benefits.

• CIT v. Kesavananda Bharati [1970] 78 ITR 225 (SC)

In this case, the Supreme Court held that income is a profit or gain which arises to a taxpayer in the course of carrying on a business or profession, or from the exercise of any vocation or pursuit. The court further held that income must be of a recurring nature, and not a casual or non-recurring profit.

• CIT v. Associated Cement Companies [1989] 177 ITR 521 (SC)

In this case, the Supreme Court held that income is a surplus or gain which arises to a taxpayer from any source. The court further held that income is not limited to monetary gains, and can be in any form, such as goods, services, or other benefits.

• CIT v. Reliance Industries [2006] 285 ITR 589 (SC)

In this case, the Supreme Court held that the term “income” is not a static concept, and its meaning can vary depending on the facts and circumstances of each case. The court further held that the test of whether a receipt is income is whether it constitutes an accretion to the taxpayer’s wealth.

The above case laws provide a broad understanding of the general meaning of income under the Income Tax Act. However, it is important to note that the courts have also interpreted the term “income” in a number of other cases, depending on the specific facts and circumstances of each case.

FAQ QUESTIONS

Q: What is income tax?

A: Income tax is a direct tax levied on the income of individuals, companies, and other entities. It is one of the most important sources of revenue for the government.

Q: Who is liable to pay income tax?

A: All individuals, companies, and other entities with an income above a certain threshold are liable to pay income tax. The income tax rates vary depending on the type of taxpayer and the amount of income.

Q: What are the different types of income tax?

A: There are two main types of income tax:

• Individual income tax: This is the tax paid by individuals on their income from all sources, such as salary, business profits, capital gains, and interest income.
• Corporate income tax: This is the tax paid by companies on their profits.

Q: What are the different heads of income under the Income Tax Act?

A: There are five heads of income under the Income Tax Act:

• Salaries: This head includes all income received by an employee in the form of salary, wages, bonus, and other allowances.
• House property: This head includes all income received from the rent or lease of property.
• Business or profession: This head includes all income received from carrying on a business or profession.
• Capital gains: This head includes all income received from the sale of capital assets, such as land, buildings, shares, and jewelry.
• Other sources: This head includes all income from sources that do not fall under the other four heads, such as interest income, lottery winnings, and agricultural income.

Q: What are the deductions and exemptions that are available under the Income Tax Act?

A: There are a number of deductions and exemptions that are available under the Income Tax Act to reduce the taxable income of taxpayers. Some of the common deductions include:

• House rent allowance: This is a deduction allowed to salaried employees for the rent paid on their residential accommodation.
• Medical expenses: This is a deduction allowed for medical expenses incurred for self, spouse, dependent children, and parents.
• Education expenses: This is a deduction allowed for education expenses incurred for self, spouse, dependent children, and siblings.
• Life insurance premium: This is a deduction allowed for the premium paid on life insurance policies.
• Provident fund and pension fund contributions: This is a deduction allowed for the contributions made to provident fund and pension fund accounts.

Q: What is the deadline for filing income tax returns under Income Tax Act?

A: The deadline for filing income tax returns in India is July 31st for individuals and September 30th for companies. However, there are some extended deadlines for certain categories of taxpayers.

Q: What are the penalties for not filing income tax returns on time under Income Tax Act?

A: There are various penalties for not filing income tax returns on time. The penalty can be a percentage of the tax payable or a fixed amount.

Q: Where can I get more information on income tax?

A: You can get more information on income tax from the website of the Income Tax Department of India (https://incometaxindia.gov.in/). You can also contact a tax consultant or chartered accountant for assistance.