WHAT IS INCOME TAX?

Income Tax Introduction

1. Income-tax is a tax levied and collected by the Central Government on income of a person.

2. Income-tax is calculated at specified rates on total income of a person and paid directly to the Central Government.

3. It was first introduced in India for the first time in 1860.

4. The provisions relating to the income-tax are governed by the Income-tax Act, 1961.

Income Tax Act 1961

The provision of income tax are contained in the Income Tax Act, 1961 and it extends to the whole of India from 01/04/1962. Income Tax is a Law and Law means rules and regulations. All rules and regulations are arranged in:-

• Sections

• Sub- Sections • Clauses and Sub-Clauses Explanations etc

CBDT- Central Board of direct taxes

IT Act 1961, gives power to CBDT to make various rules and amendments related to Income Tax.

Important Terms

1. Previous Year – Year in which income is earned by a person. It is immediately preceded by Assessment year.

2. Assessment Year – Year in which income is assessed and tax paid to Government. It is immediately following the previous year.

E.g. 2019-2020 – Previous Year

2020-2021 – Assessment Year

DIRECT TAX AND INDIRECT TAX

Direct Taxes

DIRECT TAX

INDIRECT TAX

DIRECT TAX

It is levied on income and activities conducted.
The burden of tax cannot be shifted in case of direct tax.
It is paid directly by person concerned.
It is paid after the income reaches in the hands of the taxpayer
Tax collection is difficult.
Example Income tax, wealth tax etc.

INDIRECT TAX

It is levied on product or services.
The burden of tax shifted for indirect taxes.
It is paid by one person but he recovers the same from another person i.e. person who actually bear the tax ultimate consumer.
It is paid before goods/service reaches the taxpayer.
Tax collection is relatively easier.
Example GST, excise duty custom duty sale tax service tax

3 thoughts on “WHAT IS INCOME TAX?

  1. Deeptisingh says:

    Best vlog… thanks for sharing this knowledge… all over good way percent 👌👌👌👌👌👌👌👌👌👌…

    Reply

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