There are two types of taxes levied in India – Direct tax and Indirect tax. Direct tax is levied on income and profits but indirect taxes are levied on services and goods. Direct tax is borne and paid directly by the person on whom it is imposed, on the other hand, the burden of indirect tax is passed on by the taxpayer to other person.
Income tax is an example of direct tax. It is governed by Income tax law. Income tax law in India consist of Income Tax Act 1961, income tax rules 1962, notifications and circulars issued by the CBDT, annual finance acts and judicial pronouncements by supreme court and high courts.
Income Tax Act is the charging statue of income tax in India. It provides for levy, administration, collection and recovery of income tax. As per section 4 of Income tax Act 1961, income tax shall be charged at the rates prescribed by the annual finance act, the charge shall be on every person specified under section 2(31), it shall be chargeable on total income earned during the previous year.
Further, for the purpose of this act
1). The incidence of tax on any person depends upon his residential status under the act and assessees are classified into three broad categories, “Resident and ordinarily resident, resident but not ordinarily resident and non-resident.”
2). Person includes individual, Hindu undivided family, a company, firm, AOP/BOI a local authority and artificial judicial persons.
3). Income has been classified into five heads. i.e“salary, income from house property, capital gains, profits and gains from business and profession and income from other sources.”
Call us today for income tax return filing at just ₹499. Mob-9818148382