Name: Sarthak Gade

Roll No:228484
Stream: S.Y.BBI - B
Subject: Direct tax

K.V.Pendharkar College
WHAT IS TAX ? & WHY IT IS REQUIRED?
i. TAX IS A PART OF AN INDIVIDUAL’S EARNING WHICH IS REQUIRED TO
BEPAID TO THE GOVERNMENT IN ORDER TO GENERATE REVENUE.
ii. IT IS AMANDATORY LIABILITY FOR EVERY CITIZEN OF THE COUNTRY.
iii. THERE ARE TWO TYPES OF TAX IN INDIA I.E. DIRECT AND INDIRECT TAX.
INCOME TAX IS DIRECT TAX.

WHY TAX IS REQUIRED?

INCOME TAX IS THE MAIN SOURCE OF INCOME
FOR THE GOVT.
TAX MONEY IS USED IN INITIATING VARIOUS
WELFARE AND OTHE ACTIVITIES SUCH AS :

 PROVIDING HEALTHCARE FACILITIES.

 PROVIDING EDUCATION THROUGH GOVT SCHOOLS
WHER FEE IS NEGLIGIBLE.
 SUBSIDY ON COOKING GAS, FERTILIZERS AND OTHER
ESSENTIAL
COMMODITIES.
 SALARY AND PENSION TO LAKHS OF GOVT EMPLOYEES.
 NATIONAL SECURITY AND INFRASTRUCTURE
DEVELOPMENT.
BRIEF HISTORY OF INCOME TAX
ORIGIN OF TAXATION IN INDIA DATES BACK TO ANCIENT INDIA AS
FOUND MENTIONED IN ANCIENT BOOKS SUCH AS ARTHA SHASTRA AND
MANUSMRITI.

Chapter 7 of Manusmriti also lays down the other key principles: The tax collection should
be annual. Collection should be by reliable functionaries. Taxation should be fair (here,
Manu says the King should treat taxpayers equally, and not differentiate, just as a father
does not favour one son over the other)
IN MODERN INDIA,
TAX WAS INTRODUCED FOR THE FIRST TIME IN
1860 BY SIR JAMES WILSON IN ORDER TO MEET THE LOSSES
SUSTAINED ON ACCOUNT OF MILITARY MUTINY OF 1857.
THIS WAS
THE FIRST INCOME TAX ACT OF MODERN INDIA.

INCOME TAX ACT 1922 WAS THE LAST INCOME TAX OF BRITISH
INDIA AND REMAINED IN FORCE TILL 1962
 IN INDEPENDENT INDIA THE INCOME TAX ACT 1922 WAS
REPLACED WITH INCOME TAX ACT 1961 WHICH WAS
IMPLEMENTED WEF. 01 APR 1962 AND IT IS STILL IN FORCE.

HEADS OF INCOME

Income Income
Income from
From from
House
Salary Business or
Property
Profession
Income from
Capital Gains Income
From Other
Sources
Income must come from a definite
source in order to get it taxable.
• Legal & illegal incomes are taxable.
• Both cash & in kind.
• Temporary or permanent.
• Lump sum or received in instalment
• Same income cannot be taxed twice.
• Reliefs or reimbursement of expenses (not an Income).
• In case of dispute regarding the title of income, then the
beneficiary will be taxed.
• Diversion of income is not taxable.
• Application of income is taxable.
• PIN money received by wife is not taxable.
• Award received by a professional sports person in the nature of
benit is taxable
• Income includes loss also.
 The tax rate may increase as taxable income increases (referred to as
graduated or progressive tax rates).

 The tax imposed on companies is usually known as corporate tax and is

commonly levied at a flat rate. Individual income is often taxed at
progressive rates where the tax rate applied to each additional unit of
income increases

 (e.g. the first Rs.10,000 of income taxed at 0%, the next Rs.10,000 taxed at
1%, etc.).

 Most jurisdictions exempt local charitable organizations from tax. Income

from investments may be taxed at different (generally lower) rates than
other types of income.

 Credits of various sorts may be allowed that reduce tax.

 Some jurisdictions impose the higher of an income tax or a tax on an

alternative base or measure of income.
THANK YOU !!!