It is a tax
imposed by government of India on anybody who earns income in India. This tax
is imposed through Income Tax Act.
Income earned in
India is not limited to income earned within the geographical limits or
boundaries of the country. Certain incomes are also deemed to have been earned
in India although they may have been earned outside the country.
It is the
twelve-month period 1st April to 31st March immediately following the previous
year. In the Assessment year a person files his return for the income earned in
the previous year. For example for FY:2013-14 the AY is 2014-15.
What are all the
incomes are comes under taxable income?
The word Income has a very broad and
inclusive meaning. In case of a salaried person, all that is received from an
employer in cash, kind or as a facility is considered as income. For a
businessman, his net profits will constitute income. Income may also flow from
investments in the form of Interest, Dividend, and Commission etc. Infect the
Income Tax Act does not differentiate between legal and illegal income for
purpose of taxation. Under the Act, all incomes earned by persons are
classified into 5 different heads, such as:
- Income from Salary
- Income from House property
- Income from Business or Profession
- Income from capital gains
- Income from other sources
How Government will collect the tax
Taxes are collected by three means: a) voluntary payment by persons into
various designated Banks. For example Advance Tax and Self Assessment Tax b)
Taxes deducted at source [TDS] on your behalf from the payments receivable by
you. c) Taxes collected at source [TCS] on your behalf at the time of spending.
It is the constitutional obligation of every person earning income to compute
his income and pay taxes correctly.
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