Ragul Kannan, SASTRA Deemed to be University
ABSTRACT
In India, the government has the sole responsibility of collecting taxes from the citizens. It is not a simple task as it involves a rigorous consideration from the authority. For all the income a person gets, he is liable to pay the tax. Generally, all the incomes are classified into two namely taxable income and non-taxable income. Furthermore, the nature of receipts also determine the tax liability. The general rule is that Revenue receipts are taxable but capital receipts are not taxable. This classification is sometimes misused by the taxpayers and they mitigate the tax liability. So, in this article why not all income/receipt is not taxable will be addressed despite Tax receipts being the largest source of revenue for the government. The income tax act has not defined the term revenue receipt and capital receipt which has resulted in several confusion in the minds of tax authorities. The courts have assisted in determining certain transactions to be capital receipt and revenue receipt. In this article various judgments regarding this will be analyzed and presented.
Keywords: Revenue receipts, Capital receipts, tax liability
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