This comprehensive analysis aims to delve into each of these concepts—tax planning, tax avoidance, tax evasion, and tax management—by providing a detailed explanation of their legal standing, practical examples, and judicial precedents that have shaped the current framework of tax law in India.
In many instances, employers provide additional benefits, privileges, and amenities to their employees, which may or may not be in the form of direct monetary compensation. These non-monetary benefits are known as perquisites under Section 17(2) of the Income Tax Act, 1961.
Section 22 of the Income Tax Act provides the framework for calculating this income, laying out specific criteria and rules on how property income should be treated for taxation purposes.
Provident funds (PF) are an essential financial instrument for ensuring long-term savings and security, especially for salaried individuals. In India, they are an integral part of employee benefit schemes, contributing significantly to the retirement plans of workers. However, understanding the tax treatment associated with provident fund contributions, the interest earned, and the withdrawals can be complex, particularly as it varies based on the type of provident fund involved
In India, the concept of residential status plays a decisive role in ascertaining whether an individual is required to pay tax only on income earned within India or on their global income. Many people mistakenly believe that taxation depends on citizenship, but under the Income Tax Act, 1961, it is a person’s physical presence in India that determines their residential status and, consequently, their tax obligations.
Under the Act, income derived from business or profession is subject to taxation under the head “Profits and Gains of Business or Profession,” specifically outlined under Section 28. This section encompasses a wide range of incomes arising from different sources within a business or professional activity. These include regular profits, compensation, export incentives, and more.
Salary income forms the backbone of financial sustenance for a vast majority of the working population in the country. Consequently, understanding the provisions relating to the taxation of salary under the Income Tax Act is of paramount importance for both employees and employers.
The section outlines the disallowance of specific expenditures, ensuring that businesses comply with the provisions related to tax deductions and payments, thereby contributing to the efficient functioning of the tax system.
Taxation plays a central role in any country’s economic structure, acting as a primary mechanism through which the government generates revenue to fund essential public services. This revenue is used to construct infrastructure, defend the nation, provide healthcare, promote education, and fund welfare programs, among many other critical functions.
Under Section 2(1A) of the Income Tax Act, 1961, the term “agricultural income” is defined as:Income derived from land which is situated in India and is used for agricultural purposes.
Income derived from agricultural operations on the land, such as tilling, sowing, and harvesting.
Income derived from the sale of agricultural produce.
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