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CS Executive · Tax Laws and Practice · Basic Concept of Income Tax

Under the Income-tax Act, 2025, on 1 April of a tax year, the Central Act fixing tax rates for that year has not yet been enacted. Which statement correctly describes the position under section 530?

Section 530 keeps the Act operative until the charging provision is made. It applies the preceding tax year's provision or the one proposed in the Bill before Parliament, whichever is more favourable to the assessee. Tax charging does not halt, and the less favourable rate is not applied.

  1. AThe Act has effect as if the preceding year's provision or the proposed Bill's provision, whichever is more favourable to the assessee, were in forceCorrect
  2. BThe Act has effect only with the preceding year's rates, whichever are higher
  3. CNo tax can be charged until the rates are enacted
  4. DThe Act has effect only with the rates proposed in the Bill, whichever are higher

Explanation

Section 530 lets the Act operate pending legislation as if the previous year's provision or the one proposed in the Bill then before Parliament, whichever is more favourable to the assessee, were in force. Charge does not stop, and the rule is not based on higher rates.

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