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Whether tax can be levied on hypothetical income or income that has yet to be received?


Section 4 of the Income Tax Act, 1961 provides for the charge of income tax on the total income of a taxpayer. The section lays down the scope of taxable income, which includes all income from whatever source derived, subject to certain exemptions and deductions.

Section 145 of the Income Tax Act, 1961 provides the method of accounting by the individual taxpayer. To maintain a similar process of recording income, expenses, assets, and liabilities of every business, certain standards are designed which are known as the methods of accounting.

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