{"id":7721,"date":"2025-07-14T09:29:35","date_gmt":"2025-07-14T09:29:35","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&#038;p=7721"},"modified":"2025-07-14T09:29:38","modified_gmt":"2025-07-14T09:29:38","slug":"income-tax-act","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/income-tax-act\/","title":{"rendered":"Income Tax Act"},"content":{"rendered":"<ul class=\"wp-block-list\">\n<li>The <strong><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/income-tax-act\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Income Tax Act<\/a>, 1961<\/strong> is the main law governing <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/income-tax\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">income tax<\/a> in India.<\/li>\n\n\n\n<li>It tells you <strong>who pays <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tax\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>tax<\/a><\/strong>, <strong>how much tax<\/strong>, and <strong>when to pay<\/strong>.<\/li>\n\n\n\n<li>It also lists <strong>exemptions<\/strong>, <strong>deductions<\/strong>, and <strong>penalties<\/strong> for breaking rules.<\/li>\n<\/ul>\n\n\n\n<p>Think of it as a big rulebook that explains everything about income tax in India.<\/p>\n\n\n\n<h2 id=\"key-chapters-sections\" class=\"wp-block-heading\">Key Chapters &amp; Sections<\/h2>\n\n\n\n<p>The Act is divided into many chapters. Here&#x2019;s a simple breakdown:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Chapter I (Sections 1&#x2013;4)<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Title &amp; scope<\/strong>&#x2014;who must file, where it applies.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Chapter II (Sections 5&#x2013;9)<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Income sources<\/strong>&#x2014;salary, business, property, etc.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Chapter III (Sections 10&#x2013;13)<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Exemptions<\/strong>&#x2014;what income isn&#x2019;t taxed (e.g., certain allowances, <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/agricultural-income\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">agricultural income<\/a>).<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Chapter IV (Sections 14&#x2013;15)<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Chargeability<\/strong>&#x2014;who is resident or non-resident, global income.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Chapter VI (Sections 24&#x2013;59)<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Deductions<\/strong>&#x2014;like Section&#x202F;80C (&#x20B9;1.5 lakh limit for PPF, insurance), 80D, 80E, 80TTA.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Chapter XI (Sections 197A&#x2013;234A)<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/advance-tax\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Advance tax<\/a> &amp; <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/tds\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>TDS<\/a><\/strong>&#x2014;when tax is deducted by employer or banks.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Chapter XII-A (Sections 234B&#x2013;234C)<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Penalties<\/strong> for late tax or wrong returns.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Chapter XVII (Sections 271&#x2013;280)<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Penalties &amp; prosecutions<\/strong>&#x2014;for serious violations.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Chapter XXII (Sections 292B&#x2013;293B)<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Appeals &amp; dispute resolution<\/strong>&#x2014;how to challenge tax orders.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n<h2 id=\"scope-who-it-applies-to\" class=\"wp-block-heading\">Scope &amp; Who It Applies To<\/h2>\n\n\n\n<p>It applies to all individuals and entities earning income from:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Salary<\/strong> or business\/profession<\/li>\n\n\n\n<li><strong>House property<\/strong> (rent or deemed rent)<\/li>\n\n\n\n<li><strong><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/capital-gain\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Capital gain<\/a>s<\/strong> (selling property, <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/stocks\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>stocks<\/a>)<\/li>\n\n\n\n<li><strong>Other sources<\/strong> (interest, <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/dividend\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">dividend<\/a>s, lottery)<\/li>\n\n\n\n<li><strong>Foreign income and <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/assets\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>assets<\/a><\/strong>, depending on residency<\/li>\n<\/ul>\n\n\n\n<p>Everyone must file if income is above the basic exemption limit (&#x20B9;2.5 lakh for most individuals). It covers residents, NRIs, partnerships, companies, trusts, etc.<\/p>\n\n\n\n<h2 id=\"why-it-matters\" class=\"wp-block-heading\">Why It Matters<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Helps calculate <strong>total taxable income<\/strong> after applying <strong>exemptions and deductions<\/strong>.<\/li>\n\n\n\n<li>Establishes rules for <strong>filing tax returns<\/strong>, paying tax, and <strong>TDS\/deduction at source<\/strong>.<\/li>\n\n\n\n<li>Defines procedures for <strong>handling disputes<\/strong>, <strong>penalties<\/strong>, and <strong>appeals<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"quick-flowchart\" class=\"wp-block-heading\">Quick Flowchart<\/h2>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Determine your <strong>total income<\/strong> from Chapters II &amp; IV.<\/li>\n\n\n\n<li>Subtract <strong>exemptions<\/strong> (Chapter III) and <strong>deductions<\/strong> (Chapter VI).<\/li>\n\n\n\n<li>Compute <strong>taxable income<\/strong> and apply rates.<\/li>\n\n\n\n<li>Pay tax via TDS or advance payments (Chapters XI &amp; XII-A).<\/li>\n\n\n\n<li>File <strong>annual ITR<\/strong>.<\/li>\n\n\n\n<li>If dispute arises, use appeal routes in Chapter XXII.<\/li>\n<\/ol>\n\n\n\n<h2 id=\"summary\" class=\"wp-block-heading\">Summary<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The <strong>Income Tax Act, 1961<\/strong> is India&#x2019;s complete guidebook to income tax.<\/li>\n\n\n\n<li>It outlines <strong>what to tax<\/strong>, <strong>what not to tax<\/strong>, <strong>how to deduct<\/strong>, and <strong>when to pay<\/strong>.<\/li>\n\n\n\n<li>Chapters are organized by topic&#x2014;income sources, exemptions, deductions, penalties, appeals.<\/li>\n\n\n\n<li>Applies to all taxpayers&#x2014;individuals, businesses, NRIs&#x2014;with clear rules for filing and compliance.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Think of it as a big rulebook that explains everything about income tax in India. Key Chapters &amp; Sections The Act is divided into many chapters. Here&rsquo;s a simple breakdown: Scope &amp; Who It Applies To It applies to all individuals and entities earning income from: Everyone must file if income is above the basic [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7721","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7721","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":2,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7721\/revisions"}],"predecessor-version":[{"id":7723,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7721\/revisions\/7723"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7721"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}