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Introduction To Income Tax

Published in: Accountancy | Direct Tax
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    Harleen

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Introduction to basic concepts of Income Tax

  • 1
    INTRODUCTION TO INCOME TAX ACT 1961 Introduction Basic concepts Important Terms
  • 2
    When Income Tax Act was Established? In year 1961 ' Income tax Rules were established in 1962. So, the levy of income tax in India is governed by the Income Tax Act, 1961 and Income Tax Rules, 1962.
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    What is the purpose of levy of Taxes? The taxes are the basic source of revenue for the Government. Revenue raised from the taxes are utilized for meeting the expense of Government like, provision of education, infrastructure facilities such as roads, dams etc. The taxes are collected for serving the primary purpose of providing sufficient revenues to the State, taxes have come to be recognized as an instrument through which the social and economic objectives of a welfare State could be achieved.
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    Who is responsible for collection of Income Tax? 0 The responsibility for collection of income-tax vests with the Central Government,
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    Types of taxes Government Impose. Government imposes two types of taxes namely Direct taxes and Indirect taxes. Direct tax is one where burden of tax is directly on the payer e.g income tax, wealth tax etc. Suppose Mr. Joseph is a owner of a manufacturing concern . He comes under the ambit of payment of income tax . Then Tax will be levied on Mr. Joseph only as direct taxes are levied on Individual. For calculation of his Tax Liability Income Tax Slabs are used. ' Indirect tax is paid by the person other than the person who utilizes the product or service e.g Excise duty, Custom duty, Service tax, Sales Tax, Value Added Tax. For example : When we buy/ purchase a recharge coupon we pay VAT also. For a recharge of Rs. 20 we get talk time of Rs .14 something . Rs 6 is deducted as indirect tax.

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