THE FINANCE ACT

The Finance Act
Every year, the Finance Minister of the Government of India introduces the Finance Bill in the Parliament’s Budget Session. When the Finance Bill is passed by both the houses of the Parliament and gets the assent of the President, it becomes the Finance Act. Amendments are made every year to the Income-tax Act, 1961 and other tax laws by the Finance Act.

The First Schedule to the Finance Act contains four parts which specify the rates of tax -
• Part I of the First Schedule to the Finance Act specifies the rates of tax applicable for the current Assessment Year.

• Part II specifies the rates at which tax is deductible at source for the current Financial Year.

• Part III gives the rates for calculating income-tax for deducting tax from income chargeable under the head “Salaries” and computation of advance tax.

• Part IV gives the rules for computing net agricultural income.