Income tax
Income Tax is a direct tax levied by the Central Government on the income of a person and it extends to Jammu and Kashmir. Unlike indirect tax, income tax is not regressive. As it is not regressive, only those individuals who are in the higher income limits are taxed and thus promote economic equality in a sense.
For an entrepreneur, one of his important decisions will be the type of business which he wants to invest. The obvious dilemma is sometimes answered in the Income Tax Act by way of tax incentives for certain businesses. There are tax holydays for many persons for setting up business of a specialized nature which is already identified in the Act by the government. Making use of these packages will be an intelligent option for a businessman who is looking for tax planning. Furthermore there are composition schemes which make the setting up of small and medium businesses, an attractive package.
It is widely opined that the income tax rates in India is high. This fact needs to be agreed. It can be one of the major reasons of unaccounted money in the country and was evident during the demonetization period. In future there will be substantial reduction in the rates of income tax and increase in the basic exemption limit which will motivate the disclosure of true and correct income earned by the tax payer.
The interest and penalties in the Income Tax Act are very high and sometimes penalties can go up to 100% of the tax evaded at the discretion of the assessing officer. For most persons, payment of tax is something they cannot digest. But there are many ways through which a tax payer can reduce the tax burden. Therefore it necessitates the consultation of a professional who can help him through it. The various provisions of the law are something which a layman is not familiar with. Further it needs to be understood that there is always room for tax planning rather than tax avoidance which can be very harmful to the individual if found guilty.
Electronic mode of filing returns was the latest addition which enabled the easy processing of returns by the department. The tax payers need not produce TDS certificates or challan as his account will show the exact tax credit. Hence it requires timely filing of TDS returns by the deductor of income tax. At first electronic filing was made as an option. Later it was made compulsory for most tax payers and as a result of that, now tax payers cannot file the returns by themselves as electronic filing needs the use of computer and use of information technology.
Frequently Asked Questions
Income Tax is a direct tax levied by the Central Government on the income of a person and it extends to Jammu and Kashmir. Unlike indirect tax, income tax is not regressive. As it is not regressive, only those individuals who are in the higher income limits are taxed and thus promote economic equality in a sense.