WHAT IS A TAX?

• Tax is a fee charged by a government on a product, income or

activity.
• There are two types of taxes: DIRECT TAXES AND INDIRECT
TAXES.
• If tax is levied directly on the income or wealth of a person, then
it is a direct tax e.g. income-tax, wealth tax.
• If tax is levied on the price of a good or service, then it is called
an indirect tax e.g. Excise duty, Custom duty, Goods & Service
tax and Sales tax or Value added tax.
Income tax is applied to both earned income
(wages, salaries and commission) and unearned
income (dividends, interest and rents).
 INCOME-TAX ACT
• The Income-Tax Act came into force on 1st April, 1962.

• The Act contains 298 sections and XIV schedules.

• These undergo change every year with additions and deletions

brought about by the Finance Act passed by the Parliament.

 An Income-Tax Return is the declaration of income by

the assesse in the prescribed format.
 The particulars of income earned under different
heads like: gross total income, deductions from gross
total income and tax payable income are to be
furnished by the assesse.
 The filing income-tax return is mandatory and is to be
filed before the due date.
• While the government expects you to pay income tax,
it also allows you to legally save on income tax.
• You don’t have to pay income tax if you earn less than
Rs. 2.5 lakh in a year.
• Income more than that is taxed as per different slabs,
with the tax rates going up with increase in income.
• No matter how much taxable income you earn, there
are certain exemptions and deductions available to all
taxpayers that can be used to pay less income tax.
 WHY ARE TAXES LEVIED & THE
IMPORTANCE OF PAYING INCOME TAX
• If given a choice, most of us wouldn’t want to pay tax
on the income we earn.
• But we should, because the income tax we pay is an
important source of revenue for the government.
• Revenue, so raised is utilised for meeting the
expenses of government like defence, provision of
education, health-care, infrastructure facilities like
roads, dams etc.
• As citizens of India, we are also consumers of the
country’s public infrastructure and facilities. When
we want these facilities and infrastructure to
improve, it is also our duty and responsibility to
contribute towards building and maintaining it.
• Paying income tax and filing income tax returns is
one way of doing that.
• We should fulfill this duty with pride and thus help
to build a stronger nation for its citizens and the
future ...