---
title: "Income Tax Act, 1961: India's Direct Tax Law"
description: "The Income Tax Act, 1961 is India's governing statute for direct tax on income, effective 1 April 1962. Covers heads of income, assessment, and the CBDT."
url: "https://modeldiplomat.com/learn/glossary/income-tax-act-1961"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- The Income Tax Act, 1961 is the principal Indian statute governing the levy, administration, collection, and recovery of direct tax on the income of persons.
- What is the constitutional basis of the Income Tax Act, 1961?
- How does the assessment year differ from the previous year under the Act?
- What are the five heads of income under Section 14?
- Is the Income Tax Act, 1961 being replaced?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

The Income Tax Act, 1961 is the principal Indian statute governing the levy, administration, collection, and recovery of direct tax on the income of persons.

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## Timeline

1. 13 September 1961

   It received presidential assent on and came into force on 1 April 1962.

2. 1 April 1962

   It received presidential assent on 13 September 1961 and came into force on .

3. 1 April 2017

   The General Anti-Avoidance Rules (Chapter X-A, Sections 95–102) became effective , and the equalisation levy and significant-economic-presence concepts addre…

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Example

India's Finance Ministry, through the Finance Act 2020, inserted Section 115BAC into the Income Tax Act, 1961, creating an optional concessional personal tax regime that the Finance Act 2023 later made the default.

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