Under Section 4 of the Income Tax Act 1961, income tax is CHARGED for any 'PREVIOUS YEAR' on:
ATOTAL INCOME of the previous year of every person — at the rates prescribed by the Finance Act for the assessment year
Bonly salary income (cf. Income Tax Act 1961, Section 4) (cf. Income Tax Act 1961, Section 4) (cf. Income Tax Act 1961, Section 4)
Conly profit income (cf. Income Tax Act 1961, Section 4) (cf. Income Tax Act 1961, Section 4) (cf. Income Tax Act 1961, Section 4)
Donly capital gains (cf. Income Tax Act 1961, Section 4) (cf. Income Tax Act 1961, Section 4) (cf. Income Tax Act 1961, Section 4)
Answer & Solution
Correct answer: A. TOTAL INCOME of the previous year of every person — at the rates prescribed by the Finance Act for the assessment year
1. Section 4(1) Income Tax Act 1961: 'Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of, this Act in respect of the total income of the previous year of every person.'
2. KEY TERMS: 'assessment year' (12 months starting from 1 April), 'previous year' (12 months preceding the assessment year).
3. Charging section is foundational — establishes the basis of tax liability.
4. Hence option B is correct.
_Source: CS Executive Paper 4 Tax Laws (ICSI BoS) + Income Tax Act 1961 + CGST Act 2017 — Income Tax Act 1961, Section 4_
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