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CLAT PG Exam  >  CLAT PG Notes  >  Tax Law  >  Mnemonics: Direct Taxes (Income Tax Act, 1961)

Mnemonics: Direct Taxes (Income Tax Act, 1961)

Five Heads of Income

What needs to be memorized: The five categories under which all income is classified under the Income Tax Act, 1961: Salaries, House Property, Profits and Gains of Business or Profession, Capital Gains, Income from Other Sources

Mnemonic: "Sachin Hits Perfect Centuries Only"

🔗 The Breakdown:

  • Sachin → Salaries
  • Hits → House Property
  • Perfect → Profits and Gains of Business or Profession
  • Centuries → Capital Gains
  • Only → Other Sources (Income from)

Major Exemptions under Section 10

What needs to be memorized: Key exemptions that are fully exempt from tax: Agricultural Income [10(1)], HRA [10(13A)], LTA [10(5)], Gratuity [10(10)], Leave Encashment [10(10AA)], Scholarship [10(16)]

Mnemonic: "Aaj Hari LTC Leke Gaya, Last mein Scholarship mili"

🔗 The Breakdown:

  • Aaj → Agricultural Income
  • Hari → HRA (House Rent Allowance)
  • LTC → LTA/LTC (Leave Travel Allowance/Concession)
  • Gaya → Gratuity
  • Last → Leave Encashment
  • Scholarship → Scholarship

Important Deductions under Chapter VI-A

What needs to be memorized: Most commonly claimed deductions: 80C (Savings like LIC, PPF, ELSS), 80D (Medical Insurance), 80E (Education Loan Interest), 80G (Donations to Charity), 80TTA (Interest on Savings Account)

Mnemonic: "College Mein Doctor bana, Education loan liya, Gifts diye, Tax To Avoid kiya"

🔗 The Breakdown:

  • College → 80C (Savings - LIC, PPF, EPF, ELSS, Tuition fees)
  • Doctor → 80D (Medical Insurance premiums)
  • Education → 80E (Education Loan interest)
  • Gifts → 80G (Donations to charitable institutions)
  • Tax To Avoid → 80TTA (Interest on Savings Account)

Assets NOT Considered as Capital Assets

What needs to be memorized: Four main categories excluded from definition of capital assets: Stock-in-trade, Personal effects (except jewelry, art), Agricultural land in rural areas, Special government bonds/Gold bonds

Mnemonic: "SPAG nahi hain Capital Assets"

🔗 The Breakdown:

  • S → Stock-in-trade
  • P → Personal effects (excluding jewelry, precious stones, drawings, paintings, sculptures, archaeological collections)
  • A → Agricultural land in rural area
  • G → Gold Deposit Bonds, Special Bearer Bonds, and other specified government bonds

Types of Assessment

What needs to be memorized: Four main types of assessment under the Income Tax Act: Self Assessment (140A), Regular Assessment (143), Best Judgment Assessment (144), Income Escaping Assessment (147)

Mnemonic: "Students Regularly Buy Important notes"

🔗 The Breakdown:

  • Students → Self Assessment (Section 140A)
  • Regularly → Regular Assessment (Section 143)
  • Buy → Best Judgment Assessment (Section 144)
  • Important → Income Escaping Assessment (Section 147)

Definition of "Person" under Income Tax Act

What needs to be memorized: Eight categories included in definition of "Person": Individual, HUF, Company, Firm, Association of Persons, Body of Individuals, Local Authority, Artificial Juridical Person

Mnemonic: "I Have Coffee From America, Bhai - LA Airport"

🔗 The Breakdown:

  • I → Individual
  • Have → HUF (Hindu Undivided Family)
  • Coffee → Company
  • From → Firm (Partnership firm)
  • America → AOP (Association of Persons)
  • Bhai → BOI (Body of Individuals)
  • LA → Local Authority
  • Airport → Artificial Juridical Person

Advance Tax Installment Dates and Percentages

What needs to be memorized: Four installments due on 15th of: June (15%), September (45% cumulative), December (75% cumulative), March (100%)

Mnemonic: "Board Exam Preparation Schedule"
"June mein start (15% syllabus), September first test (45% coverage), December pre-boards (75% done), March finals (100% complete)"

🔗 The Breakdown:

  • 15th June → 15% of advance tax (जैसे syllabus start)
  • 15th September → 45% cumulative (पहला test - almost half)
  • 15th December → 75% cumulative (Pre-boards - mostly done)
  • 15th March → 100% (Finals - complete)

Remember: Har quarter ki 15 tarikh, और percentages exam preparation ki tarah!

Residential Status - Conditions for "Resident Individual"

What needs to be memorized: An individual is Resident if EITHER: (a) stays 182 days or more in Previous Year, OR (b) stays 60 days or more in PY AND 365 days or more in preceding 4 years

Mnemonic: "Ek Saal 182 ya Do Check: 60 + 365"
(One year 182 days OR Two checks: 60 this year + 365 in last 4 years)

🔗 The Breakdown:

  • 182 days → Simple rule: Stay 182+ days in Previous Year = Resident
  • OR
  • 60 days → In current Previous Year, PLUS
  • 365 days → In preceding 4 years combined = Resident

Trick: 182 is half a year (simple), or 60+365 combo (do calculations)

The document Mnemonics: Direct Taxes (Income Tax Act, 1961) is a part of the CLAT PG Course Tax Law.
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Apr 20, 2026 Last updated
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