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Total Income and Taxation Rules Explained

Section 2(45) defines total income for tax purposes, which includes all incomes chargeable to tax, even those on which no tax is payable, termed as aggregation of income. Section 66 mandates that all incomes, regardless of tax liability, must be included in total income, while Section 86 outlines rules for including shares of income from associations of persons (AOP) or bodies of individuals (BOI) based on their tax liability. Additionally, deemed income and various sections (68, 69, 69A, 69B, 69C) address circumstances under which certain credits and investments may be added to an assessee's income if not properly explained.

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8 views2 pages

Total Income and Taxation Rules Explained

Section 2(45) defines total income for tax purposes, which includes all incomes chargeable to tax, even those on which no tax is payable, termed as aggregation of income. Section 66 mandates that all incomes, regardless of tax liability, must be included in total income, while Section 86 outlines rules for including shares of income from associations of persons (AOP) or bodies of individuals (BOI) based on their tax liability. Additionally, deemed income and various sections (68, 69, 69A, 69B, 69C) address circumstances under which certain credits and investments may be added to an assessee's income if not properly explained.

Uploaded by

Navya Singh
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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section 2(45) describes total income for which an assessee is

chargable to tax and which is computed as per the provisions and the
manner prescribed in the act. It means that the total income of an
assessee includes all such incomes which are chargable to tax
however, there are circumstances in which such incomes are also
included in assessee’s total income on which income tax is not
payable. The process of including income in total income on which
income tax is not payable is termed aggregation of income.

According to section 66, in computing the total income of an


assessee, there shall be included all incomes on which no income tax
is payable.

According to section 86, share of an assessee in the income of


association of persons, or BOI, is such income rules for inclusion of its
share are as under

1. if an assessee is a member of AOP or BOI, the share of assessee


in AOP or BOI shall be included in his total income however, if
the AOP or BOI is liable to pay tax on its total income, the
assessee shall be entitled to rebate of such income tax on such
share of income including any remuneration at the average rate
of income tax
2. Where the assessee is a member of AOP or BOI, but such AOP
or BoI is not liable to pay tax on its total income, the assessee
shall not be entitled to rebate of income tax on his share of
income on his AOP or BOI, means the assessee will pay tax on
his income.
3. If the total income of AOP or BOI is chargable to tax at the
maximum marginal rate or any higher rate under any provisions
of income tax, the share of the member assessee of such AOP
or BOI shall not be included in his tota income. In such case, the
assessee’s share of income.
4. Deemed income- normally every assessee is liable to pay
income tax on his own income but there are certain such
incomes or amounts which apparently are not the income of
the assessee even then they are deemed to be the income of
the assessee on the various provisions of IT act. Such incomes
are added to income of assessee are called deemed income

cash credit – sec 68


any amount credited in books of accounts of assessee in the previous
year for which assessee does not offer such explanation regarding
nature and source of such credit to the assessing officer then such
credited amount may be added to income of assessee and tax may
be charged on

share application money, share capital, security premium reserve etc


if found credited in the accounts of closing head company

unexplained investment- sec 69


unexplained money etc- sec 69A
investment amount etc not fully disclosed in the books of accounts-
sec 69B
unexplained expenditure etc- sec 69C

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