What Is Income Tax and How Does It Work?

Category: Education

Taking an income tax course can help you advance in your career. It has numerous advantages. Let me start by explaining what income tax is. Income tax is a sort of tax imposed by governments on income made by enterprises and persons within their jurisdiction. Taxpayers are required by law to file an income tax return each year in order to establish their tax obligations. Governments rely on income taxes to fund their operations. They’re used to pay for government obligations, support public services, and give commodities to citizens. Basics of Income Taxation in India Individuals and corporations pay income tax, which is a sort of tax levied by the federal government on income received within a fiscal year. Taxes are one of the government’s main sources of revenue. This money is used by the government to build infrastructure, provide healthcare, education, and subsidies to farmers and the agricultural sector, as well as other government welfare programmes. Direct taxes and indirect taxes are the two basic forms of taxes. Direct tax, for example, is a tax levied directly on earned income. Income tax is a form of direct taxation. The tax calculation is based on the income slab rates that were in effect at the time. Types of Taxes in India As per the Income Tax Act, there are 2 types of taxes in India: Direct Taxes It is borne and paid directly by the individual on whom it is imposed such as, wealth tax, income tax, gift tax, etc. The taxpayer pays this tax directly to the government without any involvement of intermediary source. Indirect Taxes If a tax is passed on by the taxpayer to the other person, it is an indirect tax e.g. sales tax, Value Added Tax (VAT) etc. This type of tax is paid indirectly to the Income tax department. To learn Income Tax Compliance Course, Advanced Excel Course and for digital books visit Taxguru Edu.