Definition: Casual income refers to irregular, non-recurring income. Examples include winnings from lotteries, horse races, and crossword puzzles.
Key Conditions:
- No Expenditure or Allowance:
- No deductions for expenses or allowances are permitted against casual income.
- No Deductions under Chapter VI-A:
- Deductions under Chapter VI-A (like Section 80C for investments) are not allowed against casual income.
- No Adjustment with Basic Exemption Limit:
- Casual income cannot be adjusted against the unutilized portion of the basic exemption limit.
Examples:
- Lotteries: Winnings from lottery tickets.
- Horse Races: Earnings from betting on horse races.
- Crossword Puzzles: Prizes from crossword puzzle contests.
- Game Shows: Winnings from participating in game shows or reality contests.
Basic Concepts of Income Tax
Income Tax Law in India: The Income Tax law in India is composed of the following elements:
- Income Tax Act, 1961:
- Contains major provisions related to Income Tax in India.
- Income Tax Rules, 1962:
- Rules framed by the Central Board of Direct Taxes (CBDT) for the administration of Direct Tax.
- Finance Act:
- Enacted annually to update the tax laws and rates.
- Circulars and Notifications:
- Issued by the CBDT to clarify provisions and resolve ambiguities.
Types of Taxes:
- Direct Tax:
- Levied directly on income (e.g., Income Tax, Wealth Tax).
- Indirect Tax:
- Levied on goods and services, with the burden shifted to consumers (e.g., GST).
Concept of Income: Income is broadly classified in tax law and includes various forms like cash, kind, legal, and illegal income, as well as temporary or permanent income.
Key Terms:
- Person:
- Includes individuals, HUF, companies, firms, AOP/BOI, local authorities, and artificial juridical persons.
- Assessee:
- Any person liable to pay taxes.
- Assessment Year:
- The year in which income of the previous year is assessed (e.g., 1st April to 31st March).
- Previous Year:
- The financial year in which income is earned.
Heads of Income:
- Income from salaries.
- Income from house property.
- Profits and gains of business or profession.
- Capital gains.
- Income from other sources.
Tax Rates:
- Vary based on income slabs and categories of taxpayers (e.g., individuals, senior citizens).
Surcharge:
- An additional tax on higher income groups.
Education Cess:
- An additional 3% (2% for education and 1% for secondary and higher education) on income tax liability.
Summary
Agricultural Income: Income from agricultural operations, rent or revenue from agricultural land, processing agricultural produce, and associated buildings.
Casual Income: Irregular, non-recurring income like lottery winnings, with no deductions allowed.
Income Tax Concepts: Governed by the Income Tax Act, 1961, includes various types of taxes, definitions, assessment years, heads of income, and tax rates, with specific provisions for deductions and surcharges.