1. The Implementation Milestone: Scope and Commencement

The enactment of the Income-tax Act, 1961, stands as a premier example of sovereign legislative consolidation in the early decades of the Indian Republic. Promulgated in the Twelfth Year of the Republic of India, this statute was designed to replace the antiquated Indian Income-tax Act, 1922, and to harmonize the fractured fiscal regulations inherited from the colonial administration. The strategic necessity of this consolidation was rooted in the need for a unified fiscal framework that could sustain a burgeoning independent economy through a centralized and robust revenue mechanism.

In accordance with Chapter I, Section 1, the Act is titled the Income-tax Act, 1961, and its authority extends to the whole of India. While the legislative process concluded in 1961, the Act reached its operational statutory threshold on the 1st day of April, 1962, the date it officially came into force.

The significance of April 1, 1962, transcends a mere administrative start date; it represents the commencement of a standardized fiscal policy for a unified nation. By extending the Act's reach to the "whole of India," the legislature effectively integrated disparate regional economic interests into a singular, non-negotiable tax base. This geographic and legal expansion ensured that the sovereign state possessed the definitive instrument required for domestic revenue mobilization. This transition from colonial law to republican statute provided the necessary legal scaffolding to define the specific entities and "persons" caught within the state’s regulatory net.

2. Defining the "Assessee": Evaluating the Scope of the Tax Base

In the discipline of tax policy, the precision of nomenclature is the bedrock of fiscal oversight. The 1961 Act meticulously defines "person" and "assessee" to ensure that no economic entity—regardless of its stated purpose—can operate outside the state’s gaze. A critical strategic detail, found in the Explanation to Section 2(31), mandates that an entity is deemed a "person" whether or not it was "formed or established or incorporated with the object of deriving income, profits or gains." This clause is essential for policy stability, as it prevents entities from using a "not-for-profit" status as a shield to evade the legal definition of a person.