A

Research Project Report

On

“Impact Of Indian Income Tax Act, 1961”

Submitted By

Mr. Dhapse Ishwar Pralhad

[PGDM] Semester I

In Partial Fulfilment for the Degree of

POST GRADUATE DIPLOMA IN MANAGEMENT STUDIES
Batch: 2020 – 22
Under the Guidance of

Prof. Sahar B. Kapdi

(Program Manager & Asst. Professor)

Plot No 12, Sector-22, Opp. Nerul Railway Station

Phase 2, Nerul West, Navi Mumbai, 400706
2021

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 DECLARATION

I, Ishwar Pralhad Dhapse, hereby solemnly declare that the report of the project
work entitled Impact Of Indian Income Tax Act, 1961, is based my own work
carried out during the course of my study at Terna Global Business School. This
project work is submitted in partial fulfilment of the requirements for the award
of the degree of Post Graduate Diploma in Management.

I assert that the statements made and conclusions drawn are an outcome of the
project work. Whenever I have used materials (data, theoretical analysis, and text)
from other sources, I have given due credit to them in the text of the report and
giving their details in the references. I further declare that to the best of my
knowledge and belief that the project report does not contain any part of any work
which has been submitted for the award of any other degree/diploma/certificate
in this Institute or any other Institute/University.

Date: 22-04-2021 Signature of the Student

Ishwar Pralhad Dhapse

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 TABLE OF CONTENT
Sr. No. Particulars Page No
1 Executive Summary 4
2 Introduction 5
3 Company Profile 8
4 Significance 9
5 Objectives 10
6 Research Methodology 11
7 Data analysis and Interpretation 12
8 Conclusion 22
9 Bibliography 23
10 Annexure 24

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 EXECUTIVE SUMMARY

The first part of report concentrates on introduction to income tax act 1961 and its features.
The second part of the report concentrated on general overview of incomes and its impact
about the act. Also company analysis also done for better understanding of the act.
The third part explains about the methodology of study such as sample size, techniques used,
variables of the study, limitations of the research etc.
The fourth part is the important and core part of the report which deals with analysis of data
collected from the survey conducted and interpretations were drafted for every issue
questioned. The analysis of data has conducted in three phases, where the first phase is about
general information and transaction analysis, the second phase is about income tax act
awareness and filing of returns awareness among the Tax payers which is great content to
fulfil the objective of study, the third phase is about various issues faced by the traders/Tax
payers while filing returns which were segregate into major categories such as Technical,
administrative, Monetary.

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 CHAPTER 1: INTRODUCTION

Tax is the mandatory financial charge demand by the government on pay, product,
administrations, exercises or exchange. Taxes are the fundamental modes of income for the
government, which are used for the welfare of the general population of the nation through
government strategies, arrangements, and practices. This act was applicable from 1st April
1962. This act contains 298 sections and 14 schedules. It contains provisions for the
determination of taxable income, determination of tax liability, appeals, penalties and
prosecution. This act is being amended time to time. The law is applicable to the whole of
India including the state of Jammu and Kashmir.

Rule's income tax act 1962:

These rules are the supplement to the Income Tax Act. Every act normally gives power to an
authority, responsible for implementation of the act, to make rules for carrying out the
purpose of the act. in case of Income Tax Act, CBDT (Central Board of Direct Taxes) has
been empowered to make rules. Example: Section 10 (13A) (1) provide that house rent
allowance exempts up to a certain limit, how to calculate such limit is given in rule 2A of the
Income Tax Rules 1962.

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Need for income tax in India:

Income tax is a tax on the income of an individual or an entity. Income tax is the main source
of income for the government to carry out its functions. The jobs of government are not just
restricted to defence, law, and order, etc., but it also has to undertake activities like welfare
and development under sectors of health, education, rural development, etc. the government
also has to pay for its own administration. All of these activities need huge public finance
which is raised by the collection of taxes.

There are two types of tax:

1. Direct tax
2. Indirect tax

DIRECT TAX:

Income tax is a tax on the income of an individual or an entity. Income tax is the main source
of income for the government to carry out its functions. The jobs of government are not just
restricted to defense, law, and order, etc., but it also has to undertake activities like welfare
and development under sectors of health, education, rural development, etc. the government
also has to pay for its own administration. All of these activities need huge public finance
which is raised by the collection of taxes.

INDIRECT TAX:

Income tax is a tax on the income of an individual or an entity. Income tax is the main source
of income for the government to carry out its functions. The jobs of government are not just
restricted to defence, law, and order, etc., but it also has to undertake activities like welfare
and development under sectors impof health, education, rural development, etc. the
government also has to pay for its own administration. All of these activities need huge
public finance which is raised by the collection of taxes.

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IMPACT OF INCOME TAX ACT 1961
Income tax act 1961 can have an impact on various aspects of the economy, including:

 Labour supply
 Labour Productivity
 Economic Growth
 Inflation
 Production & consumption of goods
 Service rate
 Income distribution
 Resource distribution

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 CHAPTER 2: COMPANY PROFILE

Introduction:
Infosys Technologies Private Limited is Established in 7th July 1981. Founders of company.
(N.R. Narayana Murthy, Nandan Nilekani, S. Gopalakrishnan, S. D. Shibulal, K.
Dinesh, N. S. Raghavan, Ashok Arora). {Infosys Technologies Private Limited
Company comes under the IT services/IT sector} Infosys is a New York Stock Exchange
(NYSE) listed global consulting and IT services company with more than 250k employees.
From a capital of US$250, we have grown to become a US$13.56 billion. Company with a
market capitalization of approximately US$79.74 billion.
In our journey of 40 years, we have catalysed some of the major changes that have led to
India's emergence as the global destination for software services talent. We pioneered the
Global Delivery Model and became the first IT Company from India to be listed on National
Association of Securities Dealers Automated Quotations (NASDAQ). Our employee stock
options program created some of India's first salaried millionaires.

Overview:
Infosys is a global leader in next-generation digital service of and consulting. We enable
clients in 46 countries to navigate their digital transformation. nearly four decades of
experience in managing the systems and workings of global enterprises, we expertly steer our
clients through their digital journey. We do it by enabling the enterprise with an AI-powered
core that helps prioritize the execution of change. We also empower the business with agile
digital at scale to deliver unprecedented levels of performance and customer delight. Our
always-on learning agenda drives their continuous improvement through building and
transferring digital skills, expertise, and ideas from our innovation ecosystem.

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 CHAPTER 3: SIGNIFICANCE

This project provides you the information about the Indian income tax act 1961. Income Tax
Act, 1961 governs the taxation of incomes generated within India and of incomes generated
by Indians overseas. This study aims at presenting a simple understanding of taxation
structure of an individual's income in India for the assessment year 2020-21.

Income tax is a tax on the income of an individual or an entity. Income tax is the main source
of income for the government to carry out its functions. The jobs of government are not just
restricted to defence, law, and order, etc., but it also has to undertake activities like welfare
and development under sectors of health, education, rural development, etc. The government
also has to pay for its own administration. All of these activities need huge public finance
which is raised by the collection of taxes.

As fellow taxpayers of the country, it is important to keep a keen eye on the yearly changes in
the taxation norms and also on the income tax slabs that each one of us fall under. It is the
with the help of these tax slabs that we are essentially able to determine how much tax we
owe to the Indian Government and how much refund we are eligible for.

However, sometimes the question arises as to whether or not one is eligible to, pay income
tax. This fact is associated with the matter that all incomes below the minimum exemption
limits are exempted from tax. The peripheral question that arises in this regard is whether or
not that individual should file an income tax return.

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 CHAPTER 4: OBJECTIVES

 To study the impact of income tax act 1961.

 To understand the importance of taxation in an organization

 To get a practical insights about tax filing process.

 To study the impact of income tax on individuals.

 To study taxation provisions of The Income Tax Act, 1961 as amended by Finance
Act, 2007.

 To explore and simplify the tax planning procedure.

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 CHAPTER 5: RESEARCH & METHODOLOGY

Sources of the data:

My entire project work is based on Primary data & Secondary data. Mentioned below are the
website links and names of the news Papers and magazines from where bulk of data has been
collected.

Scope of the study:

Scope of study is a general outline of what the project will cover. In this project we shall
Undertake to find out what are the impact of income tax act ? What are the provisions for
income tax act1961? Mainly we focus on taxation and its provision relating to Infosys Pvt
Ltd.

Period of the study:

I have taken around 1 months to conduct this study and studied various magazines, articles,
journals,. I also taken Suggestion from various professors and teachers and discussed among
seniors and my friends for conducting this Study.

Problem statement:
Title of project report: Impact of Indian Income Tax Act 1961.

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 CHAPTER 6: DATA ANALYSIS & INTERPRETATION

Q.1 Are you aware about the income tax act 1961?
Table No. 6.1

Sr. No. Response No of percentage

respondents
1 Yes 19 76
2 No 6 24
Total 25 100

Figure No.6.1

Response

24%

76%

Yes No

Interpretation:

From the above it shows that 76% of the respondents are agreed. Rest of the respondents are
disagreed. Therefore, most of the people are aware about the income tax act 1961.

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 Q.2 Does your organization audited for tax purpose?
Table No. 6.2

Sr. No. Response No of percentage

respondents
1 Yes 17 74
2 No 8 26
Total 25 100

Figure No. 6.2

Response

26%

74%

Yes No

Interpretation:

From the above it shows that 74% of the respondents are agreed. Rest of the respondents are
disagreed. Therefore, most of the organization audited because of taxation.

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Q.3 Do you file the income tax return?
Table No. 6.3

Sr. No. Response No of percentage

respondents
1 Yes 18 75
2 No 7 25
Total 25 100

Figure No. 6.3

Response

25%

75%

Yes No

Interpretation:

From the above it shows that 75% of the respondents are filed the ITR. Rest of the
respondents are not filed. Therefore, most of the people are filing the income tax return.

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Q.4 Do you believe that government spend tax money properly?
Table No. 6.4

Sr. No. Response No of percentage

respondents
1 Yes 13 65
2 No 12 35
Total 25 100

Figure No. 6.4

Response

35%

65%

Yes No

Interpretation:
From the above it shows that 65% of the respondents are believed. Rest of the respondents
are not believed. Therefore, most of the people are believed that government spend tax
money properly.

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Q.5 Are you aware about the deduction in tax filing?
Table No 6.5

Sr. No. Response No of percentage

respondents
1 Yes 15 68
2 No 10 32
Total 25 100

Figure No. 6.5

Response

32%

68%

Yes No

Interpretation:

From the above it shows that 68% of the respondents are agreed. Rest of the respondents are
disagreed. Therefore, most of the people are aware about the deduction in filing.

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Q.6 Classification on the basis of “The current tax laws and regulations are
complex.”
Table No. 6.6

Sr. No. Response No of percentage

respondents
1 Agree 15 24
2 Disagree 6 16
3 Neutral 4 60
Total 25 100

Figure No. 6.6

Response

24%

60% 16%

Agree Disagree Neutral

Interpretation:

From the above it shows that 60% of the respondents are say neutral to the statement. 24%
and 16% are agree and disagree with the statement respectively. Therefore, most of the
people are neither agree or disagree with the statement.

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Q. 7 Do you think current tax system is fair?
Table No. 6.7

Sr. No. Response No of percentage

respondents
1 Yes 17 71
2 No 8 29
Total 25 100

Figure No. 6.7

Response

29%

71%

Yes No

Interpretation:
From the above it shows that 71% of the respondents are agreed. Rest of the respondents are
disagreed. Therefore, most of the people think that the current tax system is fair.

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 Q. 8 Classification on the basis of “Fair tax system encourage voluntary
compliance.”
Table No 6.8

Sr. No. Response No of percentage

respondents
1 Agree 11 44
2 Disagree 1 4
3 Neutal 13 52
Total 25 100

Figure No. 6.8

Response

44%
52%

4%

Agree Disagree Neutral

Interpretation:
From the above it shows that 52% of the respondents are say neutral to the statement. 44%
and 4% are agree and disagree with the statement respectively. Therefore, most of the people
are neither agreed with the statement.

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Q. 9 Do you think current income tax rate is high?
Table No. 6.9

Sr. No. Response No of percentage

respondents
1 Yes 15 68
2 No 10 32
Total 25 100

Figure No. 6.9

Response

32%

68%

Yes No

Interpretation:

From the above it shows that 68% of the respondents are agreed. Rest of the respondents are
disagreed. Therefore, most of the people think that current tax rate is high.

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Q. 10 If the penalty is high everyone will comply voluntarily with the tax law?
Table No. 6.10

Sr. No. Response No of percentage

respondents
1 Yes 19 73
2 No 6 27
Total 25 100

Figure No. 6.3

Response

27%

73%

Yes No

Interpretation:
From the above it shows that 73% of the respondents are agreed. Rest of the respondents are
disagreed. Therefore, most of the people comply with voluntarily tax law.

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 CHAPTER 7: CONCLUSION

This report considered in identifying factors & awareness about income tax act 1961. The
present study has a important implications towards tax payment planning about individuals.
At end of the study, we can say that given standard of living of every individual and growing
economy showing that tax planning before-hand is must for all the citizens to make the most
of their incomes.

Taxation is the process by which the government imposes charges on citizens and corporate
businesses. The charges collected by the government are used to fund different government
projects that would in the end benefit the citizens of the country as a whole. The taxation
process can benefit both the society and business as a whole. Tax should be paid by all those
who have pay. Employees should be educated on how to plan their tax filing and reduce their
tax liability. Government take some step for increasing tax collection. Employees must be
helped on keeping the necessary documents ready for tax filing. Therefore, govt. should try
best possible methods of tax collection & payment for individuals.

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 CHAPTER 8: BIBLIOGRAPHY

 http://in.taxes.yahoo.com
 http://in.biz.yahoo.com/taxcentre
 htttps://incometaxindia.gov.in
 https://www.businesstoday.in/current/economy-politics/why-many-registered-
taxpayers-are-not-
 //economictimes.indiatimes.com/articleshow/63232433.cms?utm_source=contentofint
erest
 https://economictimes.indiatimes.com/news/economy/policy/over-68000-companies-
registered-

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 ANNEXURE
Q.1 Are you aware about the income tax act 1961?

a) Yes b) No

Q.2 Does your organization audited for tax purpose?

a) Yes b) No

Q.3 Do you file the income tax return?

a) Yes b) No

Q.4 Do you believe that government spend tax money properly?

a) Yes b) No

Q.5 Are you aware about the deduction in tax filing?

a) Yes b) No

Q.6 Classification on the basis of “The current tax laws and regulations are
complex.”
a) Agree b) Disagree c) Neutral

Q. 7 Do you think current tax system is fair?

a) Yes b) No

Q. 8 Classification on the basis of “Fair tax system encourage voluntary

compliance.”
a) Agree b) Disagree c) Neutral

Q. 9 Do you think current income tax rate is high?

a) Yes b) No

Q. 10 If the penalty is high everyone will comply voluntarily with the tax law?
a) Yes b) No

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