What is Income Tax

In India, there are two classifications of tax namely Direct Tax and Indirect Tax. When a person pays tax on his income directly it is called Direct Tax. Whereas, when a person collects the tax on behalf of the government i.e. he indirectly collects the tax from another person it is called indirect Tax.

Income Tax is an example of Direct Tax.

When a person earns his/her income during a particular period then, at the end of that relevant period he/she is required to pay tax on his income. This is known as Income Tax.

For the purpose of Income Tax, the term person includes:

• An individual
• A Hindu Undivided Family (HUF)
• Firms
• Companies
• Association of Person (AOP)
• Body of Individual (BOI)
• Local Authority

A person has to pay Income Tax if he earns income from various sources such as:

• Income from Salaries
• Income from House Properties
• Income from his Business or Profession
• Income from Capital Gain
• Income from Other Sources

The amount payable under Income Tax depends upon how much income a person is generated. 

There are different slab rates, according to which a person has to pay his Income Tax. The income tax slabs also depend upon the age of the individual.