Tax law, sources of

Sources of Tax Law – A country’s tax system is built on several layers of legal authority. The core layer consists of Acts enacted by Parliament or the legislature, such as the Income Tax Act or the GST law. Supporting layers include rules, administrative directives, circulars, and court rulings that clarify how the main statutes should be interpreted and applied. International influences come from tax treaties—like DTAAs—and model conventions developed by bodies such as the OECD and UN, which help guide cross-border taxation principles. Together, these elements determine how taxes are levied, computed, enforced, and administered.

Example: To figure out how a foreign dividend will be taxed, a taxpayer may consult the Income Tax Act for the basic rule, rely on CBDT circulars for clarification, and refer to the India–USA DTAA to understand treaty implications.