Section 2 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Clauses (77) to (100) of section 2 define who a "person" is, what "prescribed" means, who can be a "principal officer", what "rates in force" refers to, who is a "relative" and a "senior citizen", and what a "regular assessment" is. This article explains them as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026. Section 2 was amended by section 35 of the Finance Act, 2026.
A "person" has seven limbs, from an individual to an artificial juridical person, whether or not formed to earn income. "Prescribed" means prescribed by rules made under the Act. "Rates in force" always points to the Finance Act of the relevant year (or to a rate in a named section or treaty), so this article states no rate. A senior citizen is a resident individual aged sixty or more at any time during the relevant tax year.
Where this article sits
This is the fifth of the articles on section 2. It follows clauses 49 to 76 and is followed by clauses 101 to 112. Because "person" decides who can be charged and who must file, it is the term our income tax return filing team checks first for a new client.
Clause (77): person
"Person" includes:
| Limb | Included |
|---|---|
| (a) | An individual |
| (b) | A Hindu undivided family |
| (c) | A company |
| (d) | A firm |
| (e) | An association of persons or a body of individuals, whether incorporated or not |
| (f) | A local authority |
| (g) | Every artificial juridical person not falling within the preceding limbs |
The closing words say that the association of persons, body of individuals, local authority or artificial juridical person counts whether or not it was formed or established or incorporated with the object of deriving income, profits or gains. The clause says "includes", so the list is open.
Clauses (78) to (89): origin, interest, officers, banks
- Person of Indian origin (78): an individual who, or either of whose parents or any of whose grand-parents, was born in undivided India.
- Person who has a substantial interest in the company (79): the beneficial owner of shares (not being shares entitled to a fixed rate of dividend, with or without a right to participate in profits) carrying not less than 20 per cent of the voting power.
- Prescribed (80): prescribed by rules made under the Act. Wherever the Act says "as may be prescribed", the detail is left to the Income-tax Rules, 2026.
- Principal Chief Commissioner (81), Principal Commissioner (82), Principal Director (83), Principal Director General (84): each a person appointed to that office of Income-tax under section 237(1).
- Principal officer (85): for a local authority, company, other public body, association of persons or body of individuals, (a) the secretary, treasurer, manager or agent, or (b) any person connected with the management or administration upon whom the Assessing Officer has served a notice of his intention of treating him as the principal officer.
- Profession (86): includes vocation.
- Public sector bank (87): the State Bank of India constituted under the State Bank of India Act, 1955; a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 or the Act of 1980; and a bank in the category "other public sector banks" by the Reserve Bank of India.
- Public sector company (88): a corporation established by or under a Central, State or Provincial Act, or a Government company as defined in section 2(45) of the Companies Act, 2013.
- Public servant (89): the meaning in section 2(28) of the Bharatiya Nyaya Sanhita, 2023.
The Acts named here are separate laws; check each for its own terms.
Clause (90): "rates in force"
This clause does not fix a rate. It says where the rate is to be found, tax purpose by tax purpose.
| Limb | Purpose | Where the rate comes from |
|---|---|---|
| (a) | Computing income-tax under section 316(5), 317(2), 319 or 320(2); deducting tax under section 392(1) to (6) on salaries; advance tax under Chapter XIX-C in cases not falling under section 207, section 194(1) (Table: serial number 1 or serial number 6), or sections 214, 307, 308 or 311; and tax deducted under the listed rows of section 393(1) and 393(3) (serial numbers 1(i), 5(i), 5(ii), 5(iii) and 7 of section 393(1), and serial numbers 1, 2 and 3 of section 393(3)) | The rate or rates specified in this behalf in the Finance Act of the relevant year |
| (b) | Advance tax in cases falling under section 207, section 194(1) (Table: serial number 1 or serial number 6), or sections 214, 307, 308 or 311 | The rate or rates specified in that respective section, or in the Finance Act of the relevant tax year, whichever is applicable |
| (c) | Tax deducted under section 393(2) (Table: serial numbers 6, 7, 8, 9 and 17) | The rate in the Finance Act of the relevant tax year, or the rate in an agreement entered into by the Central Government under section 159(1), or an agreement notified under section 159(2), whichever is applicable |
So the answer to "what is the rate in force?" is always found outside section 2. For the deduction itself, see our post on Section 393 and tax deducted at source; for treaty relief, the post on Section 159 and double taxation relief.
Clauses (91) to (100): funds, assessment, relatives, residents
- Recognised provident fund (91): a provident fund recognised, and continuing to be recognised, by the approving authority as per Part A of Schedule XI, including a fund under a scheme framed under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
- Recognised stock exchange (92): one referred to in section 2(f) of the Securities Contracts (Regulation) Act, 1956 that fulfils conditions as may be prescribed and notified by the Central Government. What has been notified is not in the text consulted.
- Regular assessment (93): the assessment made under section 270(10) or section 271. The Act uses a different heading for the assessment under section 271, based on the Assessing Officer's judgment.
- Relative (94): for an individual, the husband, wife, brother, sister, or any lineal ascendant (maternal as well as paternal) or descendant.
- Reserve Bank of India (95): the Bank constituted under section 3(1) of the Reserve Bank of India Act, 1934.
- Resident (96): a person who is resident in India as per section 6.
- Resulting company (97): one or more companies (including a wholly owned subsidiary) to which the demerged company's undertaking is transferred in a demerger and which, in consideration, issue shares to the demerged company's shareholders, including any authority, body, local authority, public sector company or company set up as a result of the demerger.
- Scheduled bank (98): the meaning in section 2(e) of the Reserve Bank of India Act, 1934.
- Securities and Exchange Board of India (99): the meaning in section 2(1)(a) of the Securities and Exchange Board of India Act, 1992.
- Senior citizen (100): an individual resident in India who is of the age of sixty years or more at any time during the relevant tax year.
Example: senior citizen test
Dhruv, a resident individual, was born on 15 January 1967. The tax year is the twelve months of the financial year commencing on 1 April 2026, ending 31 March 2027. He completes sixty years on 15 January 2027, which falls within that tax year. Because clause (100) asks for sixty years or more at any time during the relevant tax year, he meets the age test for that tax year, even though he was fifty-nine on 1 April 2026. If he were not resident in India, he would not meet clause (100) at all. What a senior citizen is entitled to is set by other sections.
Example: principal officer
Meena is the secretary of a body of individuals running a village hall (an invented body), so clause (85)(a) already makes her a principal officer. If instead the Assessing Officer served a notice on a committee member, Amit, who is connected with its administration, stating an intention to treat him as principal officer, Amit would be the principal officer under clause (85)(b).
Need help with who must file and how?
Identifying the right "person" and the right status, whether individual, Hindu undivided family, firm or company, is the first step in compliance. If you are unsure, see our income tax return filing service.
Key takeaways
- "Person" has seven limbs and covers bodies not formed to earn income.
- "Prescribed" means prescribed by rules under the Act; the detail sits in the Income-tax Rules, 2026.
- "Rates in force" points to the Finance Act of the relevant year (or, in two limbs, to a section or treaty), and no rate is printed in clause (90).
- A principal officer can be named by notice from the Assessing Officer.
- A senior citizen is a resident individual aged sixty or more at any time in the tax year.
- Regular assessment means an assessment under section 270(10) or section 271.
Read next
- Section 2: income, India, interest and long-term capital asset (clauses 49 to 76)
- Section 2: short-term capital asset, slump sale, transfer and virtual digital asset (clauses 101 to 112)
- Section 6: residential status
- Section 159: double taxation relief
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.