Definition of Liable to Tax - to be included in the Income Tax Act, 1961.
Source: The Finance Bill 2021 and the memorandum to the finance bill
The Income Tax Act, 1961, at numerous places mentions the term Liable to Tax. Some of the sections are as below;
- Section 6
- Section 10(23FE)
- Section 90 and Section 90A
- Various Tax Treaties
The Finance bill 2021 proposes to include the definition of "Liable to Tax" by inserting a new clause (29A) under section 2 as below;
Section 2(29A) - "Liable to tax", in relation to a person, means that there is a liability of tax on such person under any law for the time being in force in any country, and shall include a case where subsequent to imposition of tax liability, an exemption has been provided;
In simple words, A person is said to be liable to tax in respect of a particular income if there is a liability of tax on such person with respect to such income in any country.
This was so needed definition for interpretation of tax treaties, various sections mentioned above.
Do let me know what are your views on the same.
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