## Charging Section [Section 4]
Income Tax is levied on the Total Income of every person at the rates specified in:
- Finance Act [Schedule I] → General Tax Rates
- Income Tax Act, 1961 → Special and Concessional Tax Rates
### Steps for Computing Total Income & Tax Liability
Step 1: Determine Residential Status
- Resident → Global Income (Indian + Foreign) taxable.
- Non-Resident → Only Indian Income taxable.
Step 2: Compute Income under the 5 Heads
| Head | Amount (₹) |
|---|---|
| Income from Salary | XX |
| Income from House Property | XX |
| Income from Business & Profession | XX |
| Income from Capital Gains | XX |
| Income from Other Sources | XX |
Step 3: Apply Clubbing of Income provisions
Step 4: Set-off and Carry Forward of Losses
Step 5: Arrive at Gross Total Income (GTI)
Step 6: Allow Deductions under Chapter VI-A → resulting in Total Income (TI)
Step 7: Compute Tax on Total Income
| Item | Amount |
|---|---|
| General Rate Income × General/Concessional Tax Rates | XX |
| Special Rate Income × Special Tax Rates [Compulsory] | XX |
| Tax | XX |
| (+) Surcharge (if Total Income exceeds threshold) | XX |
| (+) Health & Education Cess @ 4% of (Tax + SC) | XX |
| Total Tax Liability | XX |
| (-) TDS / TCS / Advance Tax | (XX) |
| Net Tax Payable / (Refundable) | XX |
### Key Points
- Special Rate Tax application is compulsory — no option to use slab rates.
- Health & Education Cess @ 4% is mandatory in all cases.
- Surcharge is a 'tax on tax' and is applicable only when Total Income crosses specified thresholds.