Income –Tax Act, 1961 (Act 43 of 1961), enacted by Parliament in the Twelfth Year of the Republic of India, and is an Act to consolidate and amend the law relating to income-tax. The Act came into force on the 1st day of April 1962 and save as otherwise provided in this Act, extends to whole of India.

Income tax so levied is a Direct Tax and in exclusive Domain of the Union of India levied under Article 246 of the Constitution of India being listed at item no. 82 of the Union list enumerated under Article 246 in List I of Schedule VII . The same is a charge on the incomes earned or generated in India and further governed by DTAAs(Double Taxation Avoidance Agreements).

Because Article 265 of the Constitution of India necessitates that no tax can be levied or collected except bythe authority of Law, Income tax Act is, therefore, a tool of the Union of India by which it is made sure that there is a Law by which every subject and its income is taxed and tax is collected as per law in adherence to the said Article.