Introduction

Taxation

Particulars Direct Tax Indirect Tax

Individuals, HUFs, firms

Taxpayer End-consumer of the goods and services
and companies

The burden falls directly on The burden is shifted to the consumer

Tax burden
the individual by the manufacturer or service provider

Cannot be transferred to Can be transferred from one taxpayer to

Transferability
anyone else the other

Confined to an entity or Wide coverage because all the members

Coverage
individual taxpayer of the society are taxed

Tax evasion Possible Not possible

Most common Income, Wealth, Corporate GST or Goods and Services Tax,
types (in India) Tax Customs tax
 Taxation

● Ministry of
Finance

● Department of
Revenue

● CBDT ● CBIC

Finance Act, 2026

Tax Year 2026-27
 Income Tax Laws

● Income Tax Act,2025

● Income Tax Rules, 2026
● Notifications
● Circulars
● Explanations
● Court Cases
 History of IT Act,2025

● Short title, extent and commencement.

○ This Act may be called the Income-tax Act, 2025.
! It extends to the whole of India.
! Save as otherwise provided in this Act, it shall come into force on the 1st
day of April, 2026.
● "India" means the territory of India as referred to in article 1
of the Constitution, its territorial waters, seabed and subsoil
underlying such waters, continental shelf, exclusive
economic zone or any other maritime zone as referred to in
the Territorial Waters, Continental Shelf, Exclusive
Economic Zone and other Maritime Zones Act, 1976 (80 of
1976), and the air space above its territory and territorial
waters;
 Basic Concept

● Tax Year (Section 3)

● Person – Section 2(77)
● Assessee – Section 2(11)
● Income – Section 2(49)
● Indian Company – Section 2(28)
● Domestic Company
● Foreign Company
● Deduction vs. Exemption
● Tax Rates
● Computation of Total Income(TI) u/s 13 and Total Tax Liability(TTL)
● Calculation of surcharge and concept of marginal relief
 Tax Year

● Tax year means 12 months period of financial year commencing on 1st

April
● In case in case of business or profession newly set up, or a source of
income newly coming into existence in any financial year, the tax year is
the period beginning with the date of setting up of that business or
profession or the date on which source of income comes into existence
and ending with that financial year
● So a tax year is normally starting 1st April to 31st March but in new
setup, it can be shorter than 12 months but it can never be longer than
12 months
 Person

● an individual,
● a Hindu undivided family (HUF),
● a company,
● a firm,
● a cooperative society
● an association of persons (AOP) or a body of
individuals (BOI), whether incorporated or not,
● a local authority, and
● every artificial juridical person(AJP)
 Meaning of Assessee

● "assessee" means a person by whom any tax or any other sum of

money is payable under this Act, and includes—
● (a) every person in respect of whom any proceeding under this
Act has been taken for the assessment of his income or
assessment of fringe benefits or of the income of any other person
in respect of which he is assessable, or of the loss sustained by
him or by such other person, or of the amount of refund due to
him or to such other person ;
● (b) every person who is deemed to be an assessee under any
provision of this Act ;
● (c) every person who is deemed to be an assessee in default under
any provision of this Act ;
● In other words,
○ Normal Assessee
○ Representative assessee
○ Deemed assessee
○ Assessee in default
 Assessing Officer

● "Assessing Officer" means the Assistant

Commissioner or Deputy Commissioner or Assistant
Director or Deputy Director or the Income-tax Officer
who is vested with the relevant jurisdiction by virtue
of directions or orders and the Additional
Commissioner or Additional Director or Joint
Commissioner or Joint Director
 Meaning of Income as per Sec 2(49)

● "income" includes—
● (i) profits and gains ; -PGBP
● (ii) dividend ; - OS
● (iia) voluntary contributions received by a trust created wholly or partly
for charitable or religious purposes –PGBP/OS
● (iii) the value of any perquisite or profit in lieu of salary taxable under
clauses (2) and (3) of section 17 ; -SALARY
● (iiia) any special allowance or benefit, other than perquisite -SALARY
● (iii), specifically granted to the assessee to meet expenses wholly,
necessarily and exclusively for the performance of the duties of an office
or employment of profit ; -SALARY
● (iiib) any allowance granted to the assessee either to meet his personal
expenses at the place where the duties of his office or employment of
profit are ordinarily performed by him or at a place where he ordinarily
resides or to compensate him for the increased cost of living ; -SALARY
 Continued…

● iv) the value of any benefit or perquisite, whether

convertible into money or not, obtained from a company
either by a director or by a person who has a substantial
interest in the company, or by a relative of the director or
such person, and any sum paid by any such company in
respect of any obligation which, but for such payment,
would have been payable by the director or other person
aforesaid ; SALARY
● (iva) the value of any benefit or perquisite, whether
convertible into money or not, obtained by any
representative assessee SALARY/OS
● (v) Any sum chargeable to income tax under section 28-
PGBP
 Continued…

● (vi) any capital gains chargeable ; -CG

● (vii) the profits and gains of any business of insurance carried on by a
mutual insurance company or by a co-operative society
● (viia) the profits and gains of any business of banking (including
providing credit facilities) carried on by a co-operative society with its
members; PGBP
● (ix) any winnings from lotteries, crossword puzzles, races including
horse races, card games and other games of any sort or from gambling
or betting of any form or nature whatsoever. -OS
● (x) any sum received by the assessee from his employees as
contributions to any provident fund or superannuation fund or any fund
set up under the provisions of the Employees' State Insurance Act, 1948
(34 of 1948), or any other fund for the welfare of such
employees ;=SALARY
 Continued…

● (xi) any sum received under a Keyman insurance

policy including the sum allocated by way of bonus on
such policy. –PGBP/SALARY/OS
● (xiii), (xiv), (xv), (xvi) & (xvii a,b) Gifts - OS
● (xviii) assistance in the form of a subsidy or grant or
cash incentive or duty drawback or waiver or
concession or reimbursement (by whatever name
called) by the Central Government or a State
Government or any authority or body or agency in
cash or kind to the assessee other than,— PGBP/OS
 Keyman Insurance P0licy

● Keyman
Insurance
Policy

● Employer ● Principal ● Contractor

● PGBP ● PGBP ● PGBP

● Employee ● Agent ● Contractee

● SALARY ● PGBP/OS ● OS
 Meaning of Company
● "Indian company“ u/s 26 means a company formed and registered under the
Companies Act, 1956 (1 of 1956), and includes—
● (i) a company formed and registered under any law relating to companies
formerly in force in any part of India (other than the State of Jammu and
Kashmir and the Union territories specified in sub-clause (iii) of this clause) ;
● (ia) a corporation established by or under a Central, State or Provincial Act
● (ib) any institution, association or body which is declared by the Board to be
a company under clause (17) ;
● (ii) in the case of the State of Jammu and Kashmir, a company formed and
registered under any law for the time being in force in that State ;
● (iii) in the case of any of the Union territories of Dadra and Nagar Haveli,
Goa, Daman and Diu, and Pondicherry, a company formed and registered
under any law for the time being in force in that Union territory.
● “domestic company” means an Indian company, or any other company which, in
respect of its income liable to tax under this Act, has made the prescribed
arrangements for the declaration and payment, within India, of the dividends
(including dividends on preference shares) payable out of such income ;
 Tax Rates

● Category I: Resident Individual(below the age of 60

years)/NRI/HUF/AOP/BOI/AJP

Total Income Diff Tax Rates

0-250000 250000 NIL
250001 - 500000 250000 5%
500001-1000000 500000 20%
Above 1000000 - 30%
 Tax Rates

● Category II: Resident Individual(60 years or more

but less than 80 years) – Senior Citizen

Total Income Diff Tax Rates

0-300000 300000 NIL
300001 - 500000 200000 5%
500001-1000000 500000 20%
Above 1000000 - 30%
 Tax Rates

● Category III: Resident Individual(80 years or more)

– Super Senior Citizen

Total Income Tax Rates

0-500000 NIL
500001-1000000 20%
Above 1000000 30%
 Tax Rates

U/s 115BAC as per IT Act, 1961 and Finance Act, 2020, had provided
an option to Individuals and HUF for payment of taxes at reduced rates
which has become the default regime since 2024-25 onwards. The
reduced rates for Tax year 2026-27 u/s 202 are as follow:
Total Income Tax Rate
0-400000 NIL
400000-800000 5%
800000-1200000 10%
1200000-1600000 15%
1600000-2000000 20%
2000000-2400000 25%
Above 2400000 30%
 Other Tax Rates

● Firm(including LLP) – 30%

● Local Authority – 30%
● Domestic Company – 25% or 30%
○ Where its total turnover or gross receipt during the previous
year 2024-25 does not exceed Rs. 400 crore – 25%
○ Any other case – 30%

● Foreign Company – 35%

● Cooperative Society
○ Upto 10000- 10%
○ 10001-20000- 20%
○ Above 20000- 30%
 Surcharge Rates

● In case of an Individual/HUF/AOP/BOI/AJP
Range of 50lakhs to 1crore to 2crore to Above
Income 1crore 2crore 5crore 5crores
OTR 10% 15% 25% 37%
NTR 10% 15% 25% 25%
● In case of partnership Firm(including LLP), and local authority –
12% if total income exceeds 1crore
● In case of cooperative society, 7% from 1cr to 10 cr and 12% above
10cr
● In case of company
Range of Income 1crore to 10crore Above 10crores
Domestic Company 7% 12%
Foreign Company 2% 5%
 Rebate u/s 156

● In case of default tax regime u/s 202, a resident

individual having taxable income upto Rs 12,00,000
will get a tax rebate as
○ Lower of:
! Maximum 60000
Or
! Amount of tax

● In case of Old tax regime, a resident individual having

taxable income upto Rs 5,00,000 will get a tax rebate as
○ Lower of:
! Maximum 12500
Or
! Amount of tax
 Maximum Marginal rate u/s 2(70)

● It means the rate of income tax (including surcharge on tax)

applicable to the highest slab of income for individuals/AOP/
BOT as specified in finance act of relevant year. Under default
regime of section 202, the surcharge is capped at 25% which
give top rate of 37.5% before cess and 30% with cess
Step Particulars Rate

1 Highest rate of IT 30%

2 +Surcharge at highest rate(37% of 30) 11.10%
3 Maximum marginal rate as defined u/s 41.10%
2(70)
4 +HEC@4% of 41.10% 1.644%
5 Effective maximum marginal rate 42.744%
 Rounding off u/s 516

● The amount amount of total income computed, or

any amount payable or refundable under the act, is
rounded off to the nearest multiple of ₹10 ignoring
paise
 Collection of taxes by Government

● Tax Deducted at Source

● Tax Collected at source
● Advance tax
● Self assessment Tax