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Income Tax- An Introduction

The taxation is the primary source of revenue

to the Government for incurring public welfare
expenditure.

Tax means the money that you have to pay to the

government so that it can provide public services.

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 History of Income Tax

Tax arises from Latin word ‘TAXO’ which means Rates.

Income Tax was introduced for the first time in India 1860, by Sir
James Wilson.

First Income Tax Act was made in 1922.

In consultation with the Ministry of Law finally the Income Tax Act
1961 was passed.
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 History of Income Tax

The Income Tax Act 1961 has been bought in force from 1st April 1962.
Note: It applies to whole India (including Jammu and Kashmir).

Amendments in Income Tax Act is made every year by Finance Act.

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 Types of
Taxes

Direct Indirect
Tax Tax
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 Direct and Indirect Tax
Direct Tax Indirect Tax
1. It is paid by the person on 2. It is charged on goods and
whom it is charged. services and is paid by the
ultimate user.
2. The tax burden cannot be 2. Tax burden can be shifted.
shifted.
3. Example: Income Tax 3. Example: GST

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 Income Tax

Schedule VII
Direct Tax
in Union List.
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 Administration of Tax

Union List Income Tax

Parliament State List Tax on Agriculture

Concurrent List Goods and

Services Tax (GST)

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 Administration of Tax

Central Board of
Direct Taxes
(CBDT)
Central
Government
Central Board of
Indirect Taxes and
Customs (CBIC)
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 Tax

What does TAX includes?? Surcharge TAX

Cess
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 SURCHARGE
Additional charges imposed on the amount of income tax.
It is mandatory if conditions are satisfied.
Surcharge

Individual, Domestic
Firms
HUF, AOP, BOI Companies

@10% - more @ 7% - more

than 50 lakhs @ 12% - more than 1 crore
but less than 1 than 1 crore but less than
crore. 10 crore

@ 15% - more @ 12% - more

than 1 crore. than 10 crore
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 Health and Education Cess (HEC)

It is additional amount to be paid by all assesse.

It is mandatory.
It is applied on tax including surcharge.

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Allocation of Amount of Tax

1. Income Tax The amount of tax is allocated among

amount
recovered from central government and state
companies. government.
Some revenues is exclusively taken up by
Central Government.
2. Amount of
Surcharge.

3. Amount of
Health &
Education Cess.
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Characteristics of Income Tax
Direct and Central Tax
Tax on Total Income
Tax Exempted Limit
Progressive Tax Rates
Surcharge
Health and Education Cess
Allocation of Tax.
Administration

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 Progressive Tax
Tax rate increases with increase in income.

Income Slab Tax for individual

Up to Rs. 2,50,000 NIL

Rs. 2,50,001 to 5,00,000 5%

Rs. 5.00,001 to 10,00,0000 20%

Above Rs. 10,00,000 30%

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