Law & Life

The relationship between taxation and Fundamental Rights is one of the most important and complex areas of Indian constitutional law. On one hand, the State has an inherent sovereign power to levy taxes to finance its activities and promote public welfare. On the other hand, citizens have constitutionally guaranteed Fundamental Rights under Part III of the Constitution of India that protect them from arbitrary, discriminatory, or confiscatory state action — including in the field of taxation. The tension between the State's power to tax and the citizen's Fundamental Rights has been the subject of numerous landmark judgments of the Supreme Court of India. Over the decades, the Supreme Court has carved out a nuanced jurisprudence that recognizes both the State's need to raise revenue and the citizen's right to be protected from unjust taxation. The primary Fundamental Rights that are relevant to taxation are: Article 14 — Right to Equality Article 19 — Right to...

Taxation is the primary means by which a government raises revenue to finance its activities and fulfil its obligations to its citizens. In India, the power to levy and collect taxes is derived from the Constitution of India , which is the supreme law of the land. The most fundamental provision governing taxation in India is Article 265 of the Constitution, which acts as the cornerstone of the entire taxation system. Article 265 of the Constitution of India states: "No tax shall be levied or collected except by authority of law." This short but enormously significant provision establishes the fundamental principle that taxation is a sovereign power that can only be exercised through law — i.e., through legislation passed by Parliament or the State Legislature. No executive action, administrative order, or arbitrary government decision can impose a tax. The levy and collection of every tax must be backed by a valid law enacted by a competent legislature. Article 265 —...

PAN stands for Permanent Account Number . It is a ten-digit alphanumeric identifier issued by the Income Tax Department of India to every taxpayer and certain other persons. PAN is governed by Section 139A of the Income Tax Act, 1961 and the Income Tax Rules, 1962 (Rules 114 to 114D). PAN is one of the most important documents in the Indian taxation system and has become an essential identification tool not just for tax purposes but for a wide range of financial transactions. Structure of PAN A PAN is a 10-character alphanumeric code in the format: AAAAA0000A The structure is: First 3 characters — Alphabetic series (AAA to ZZZ) — assigned by the Income Tax Department 4th character — Indicates the type of taxpayer : P — Individual Person C — Company H — Hindu Undivided Family F — Firm A — Association of Persons T — Trust B — Body of Individuals L — Local Authority J — Artificial Juridical Person G — Government 5th character — First letter of the su...

Perquisites are an important concept under the Income Tax Act, 1961 in the context of taxation of salary income. Perquisites are essentially benefits or amenities provided by an employer to an employee in addition to his regular salary or wages. They represent a non-cash component of the employee's remuneration and are taxable in the hands of the employee as part of his salary income under Section 17(2) of the Income Tax Act, 1961. The concept of perquisites is important because employees today receive a significant portion of their remuneration in the form of non-cash benefits — company-provided accommodation, car, medical facilities, club memberships, etc. — and the tax treatment of these benefits has important implications for both employees and employers. Definition of Perquisites — Section 17(2) Under Section 17(2) of the Income Tax Act, 1961, "perquisite" includes: 1. Value of rent-free accommodation provided by the employer to the employee. 2. Value of...

A Hindu Undivided Family (HUF) is a unique concept in Indian law that has no parallel in any other legal system in the world. Under the Income Tax Act, 1961 , an HUF is recognized as a separate taxable entity — distinct from its individual members. This means that the HUF is assessed to income tax as a separate unit, with its own Permanent Account Number (PAN), its own tax slabs, and its own deductions. The recognition of HUF as a separate taxpayer under the Income Tax Act offers significant tax planning benefits to Hindu families. Meaning of HUF An HUF consists of all persons lineally descended from a common ancestor — including their wives and unmarried daughters. The HUF is governed by Hindu personal law and is a creation of law, not of contract. It comes into existence automatically upon a Hindu marriage. The members of an HUF are of two types: Coparceners — Male members (and daughters after the 2005 Amendment) who have a right by birth in the HUF property. They can dem...

  Total Turnover is an important concept in Indian taxation law, particularly under the Income Tax Act, 1961 and the Goods and Services Tax (GST) framework . The concept of total turnover is used to determine the tax liability of a business, eligibility for certain deductions, applicability of tax audit requirements, and eligibility for the composition scheme under GST. Understanding the correct meaning and computation of total turnover is essential for proper tax compliance by businesses in India. Meaning of Total Turnover Under Income Tax Act Under the Income Tax Act, 1961 , the term "total turnover" is not separately defined but is used in several provisions. It generally refers to the total amount of sales or gross receipts of a business during a previous year, before deducting any expenses. The concept of total turnover is particularly important in the following contexts: 1. Tax Audit under Section 44AB Under Section 44AB of the Income Tax Act, a person carryi...

 Tax was a direct tax levied on the net wealth of certain categories of persons in India. It was governed by the Wealth Tax Act, 1957 , which was enacted with the primary objective of reducing economic inequality by taxing the accumulated wealth of rich individuals, Hindu Undivided Families (HUFs), and companies. The Wealth Tax Act operated alongside the Income Tax Act, 1961 to form a comprehensive system of direct taxation in India. It is important to note at the outset that the Wealth Tax Act, 1957 was abolished with effect from 1st April, 2016 by the Finance Act, 2015 . Despite its abolition, the concept of net wealth and the general principles relating to the charge of wealth tax remain important academic topics and continue to be examined in law courses. The Wealth Tax Act was based on the principle enunciated in the Directive Principles of State Policy under Article 39(c) of the Constitution of India, which directs the State to ensure that the operation of the economic...