Section 295 of ITA, 1961 : Section 295: Power To Make Rules

Explanation using Example

Imagine a small business owner, Mr. Sharma, who operates a farm and a textile shop. His income comes partly from agriculture, which is exempt from tax, and partly from his textile business, which is taxable. Mr. Sharma is confused about how to calculate his taxable income for the year. The Central Board of Direct Taxes (CBDT), using the powers granted under Section 295 of the Income-tax Act, 1961, has created rules that help Mr. Sharma determine the portion of his income from the textile business that is subject to tax, ensuring he complies with tax laws without overpaying.