Sub-section (1) is the charging provision itself, and it is conditional: where any Central Act enacts that income-tax shall be charged for a tax year at any rate or rates, income-tax for that year is charged at that rate or those rates, in accordance with and subject to the provisions of this Act. Sub-section (2) fixes what the charge bites on — the total income of the tax year of every person, as per the provisions of the Act.
Sub-section (3) declares that income-tax includes any additional income-tax, by whatever name called, levied under the Act, so a levy given a different label is still income-tax for the purposes of the charge. Sub-section (4) permits the Act to charge tax in respect of income of a period other than the tax year, in which case it is charged accordingly. Sub-section (5) provides that for income chargeable under this section, tax shall be deducted or collected at source or paid in advance as provided under the Act.
Why it is there
Nothing else in the Act imposes tax; the computation provisions only measure a liability that this section creates. It also keeps the rate outside the Act, in the annual Central Act, so that the permanent statute does not have to be amended each year. Sub-sections (3) to (5) close the obvious gaps: a differently named levy is still income-tax, a non-standard measuring period is still chargeable, and the tax is collected during the year rather than only at the end of it.
Who it applies to
Every person whose total income of a tax year is chargeable under the Act
A person on whose income tax is deducted or collected at source
A person liable to pay advance tax
A person charged in respect of income of a period other than the tax year, where the Act so provides
What this means in practice
The rate is not in this section and cannot be found in it. Sub-section (1) works only when a Central Act has fixed a rate for the tax year, and it charges tax at that rate "in accordance with and subject to the provisions of this Act", so every exemption, deduction and special rate in the rest of the Act qualifies the charge rather than sitting outside it. Sub-section (3) matters when a levy is described as a surcharge, cess or additional tax: if the Act levies it, it is income-tax, and the machinery that applies to income-tax applies to it. Sub-section (5) is why tax deducted at source and advance tax are not separate taxes but modes of collecting the charge created by sub-section (1) — the liability exists on the total income of the year, and the deduction or advance payment is credited against it.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
A company earns its income across a tax year. No liability arises from the accounting alone: the charge attaches under sub-section (2) to the total income of that tax year, at the rate the relevant Central Act has enacted for that year, and it is reduced by whatever the rest of the Act allows. During the year the company's customers deduct tax at source on payments to it and the company pays advance tax; both are collections of the same charge under sub-section (5), not additional levies.
Where you meet this section
You rarely see section 4 quoted on its own, but it is the provision an assessment order rests on when it says a receipt is chargeable, and the one a ground of appeal engages when the argument is that an amount is not income at all rather than that it is exempt or deductible.
The words themselves
Where any Central Act enacts that income-tax shall be charged for any tax year at any rate or rates, income-tax for such tax year shall be charged at that rate or those rates in accordance with and subject to the provisions of this Act.
Section 4(1), Income-tax Act, 2025.
The charge of income-tax under sub-section (1) shall be on the total income of the tax year of every person as per the provisions of this Act.
Section 4(2), Income-tax Act, 2025.
Income-tax shall also include any additional income-tax, by whatever name called, levied under this Act.
Section 4(3), Income-tax Act, 2025.
What people get wrong
Looking for a rate in section 4. Sub-section (1) charges tax only at the rate a Central Act has enacted for the tax year; the section itself states none.
Treating the charge as unqualified. Sub-section (1) charges tax "in accordance with and subject to the provisions of this Act", so exemptions and special rates operate on the charge itself.
Arguing that a levy called something else is not income-tax. Sub-section (3) includes any additional income-tax, by whatever name called, levied under the Act.
Assuming income must always be measured over the tax year. Sub-section (4) allows the Act to charge tax in respect of income of a different period, in which case it is charged accordingly.
Treating tax deducted at source or advance tax as a separate liability. Sub-section (5) makes them modes of paying the tax charged under this section on the total income of the year.
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.
Circular No. 447 — Section 4 of the Income-tax Act, 1961 - Income TAX - Charge of - Clarification as to Whether Awards Received by A Sportman, WHO Is 1986-01-22
Circular No. 442 — 1512. Appointment of estate duty valuers for different categories of assets and scale of charges for their remuneration - Notifica 1985-12-10
Circular No. 136 — 1441. Whether clause (a) of sub-section (1) should be invoked in cases where consideration for transfer of property is determined/ 1974-05-24
Circular No. 63 — 884. Assessment of existing banks and their shareholders and corresponding new banks in the context of nationalisation and payment 1971-08-16
Circular No. 53 — 1494. Unit Trust of India General Regulations, 1964 - Notification under regulation 42 - Authorisation to incumbents to exercise s 1971-01-11
A notification is made under a power the Act gives and, within that power, is law. These too were made under the 1961 Act and are placed here by the department’s concordance.
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 4. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
Ahmedabad Rana Caste Association v CITSupreme CourtHelps taxpayertagged s.4(3)(i) Indian Income-tax Act, 1922 Our trust benefits one caste. Can that be a charitable purpose at all?
CIT v Shree Rama Multi Tech LtdSupreme CourtHelps taxpayertagged s.4 We parked public issue share application money in the statutory bank account and it earned interest before allotment. Is that interest taxable as…
CIT v Sitaldas TirathdasSupreme CourtHelps departmenttagged s.4 A decree makes me pay maintenance out of my income every month. Can I deduct it before I am taxed?
Mansarovar Commercial P Ltd v CITSupreme CourtHelps departmenttagged s.4 My company is registered outside the taxable territory but run from Delhi. Where is it resident?
PCIT v Ramesh Chandra RaiSupreme CourtHelps taxpayertagged s.4 The AO has added my share of the syndicate's profit straight to my own return. Can he do that without assessing the syndicate?
Secunderabad Club v CITSupreme CourtHelps departmenttagged s.4 Our club's surplus sits in fixed deposits with a bank that is itself a corporate member. Is the interest covered by mutuality?
What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.
