Taxation Law Notes for LLB Students

Taxation Law is typically an elective in Indian LL.B. courses, covering both direct and indirect tax. These notes cover the structural basics most commonly examined.

Direct Tax: The New Income-tax Act, 2025

The Income-tax Act, 1961 was replaced by the Income-tax Act, 2025, effective from 1 April 2026 (Assessment Year 2026-27), simplifying language and renumbering sections while largely preserving the substantive scheme — residential status determining taxability (resident/non-resident, Section 6 under the old Act), the five heads of income (salary, house property, business/profession, capital gains, other sources), and the slab-based taxation structure.

Residential Status and Scope of Total Income

A resident’s global income is taxable in India; a non-resident is taxed only on income received, accruing or arising in India. This distinction (and the related “resident but not ordinarily resident” category) remains central to any taxation law exam.

Indirect Tax: GST

The Goods and Services Tax, introduced by the 101st Constitutional Amendment (2016) and the Central GST Act, 2017 (with corresponding State GST Acts), replaced most pre-existing indirect taxes with a unified destination-based tax on supply of goods and services, administered jointly by the Centre and States through the GST Council (Article 279A).

Input Tax Credit and Compliance

GST’s core mechanism is input tax credit — tax paid on inputs can be set off against tax payable on output, avoiding cascading taxation. Compliance involves registration (mandatory above prescribed turnover thresholds), periodic returns, and e-invoicing for larger businesses.

Tax Appeals and Dispute Resolution

Income tax disputes proceed through the Commissioner (Appeals), the Income Tax Appellate Tribunal (ITAT), and onward to the High Court and Supreme Court on substantial questions of law; GST disputes follow a parallel structure through the GST Appellate Tribunal (GSTAT), now being operationalised.

Key exam questions to prepare

• Explain residential status and its effect on scope of total income.
• How does the input tax credit mechanism work under GST?
• Structure of tax appeals from assessment to the Supreme Court.

More: all LL.B. subject notes