The government of India imposes an income tax on taxable income of individuals, Hindu Undivided Families (HUFs), companies, firms, co-operative societies and trusts (identified as body of individuals and association of persons) and any other artificial person. Levy of tax is separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961. The Indian Income Tax Department is governed by the Central Board for Direct Taxes(CBDT) and is part of the Department of Revenue under the Ministry of Finance Govt. of India. Income tax is a key source of funds that the government uses to fund its activities and serve the public. There are close to 35 million income tax payers in India.
Everyone whose income exceeds the ;maximum amount, which is not chargeable to the income tax, is an assesse, and shall be chargeable to the income tax at the rate or rates prescribed under the finance act for the relevant assessment year, shall be determined on basis of his residential status.
Income tax is a tax payable, at the rate enacted by the Union Budget (Finance Act) for every Assessment Year, on the Total Income earned in the Previous Year by every Person.
The changeability is based on nature of income, i.e., whether it is revenue or capital. The rates of taxation of income are-:
Income Tax Rates/Slabs Rate (%) (as per budget 2012)
Up to 2,00,000 = 0%,
2,00,001 – 5,00,000 = 10%,
5,00,001 – 10,00,000 = 20%,
10,00,001 upwards = 30%,
Up to 2,50,000 (for resident individual of 60 years or above)= 0
Up to 5,00,000 (for very senior citizen of 80 years or above)= 0
Education cess is applicable @ 3 per cent on income tax, surcharge = NA