A 1. Basics of Income Tax Act Flashcards
Real income
Income which is earned by person
Taxable income?
Income which is taxed
Income from business activity - 10,000
Income from Agriculture activity-5,000
What is taxable income and why?
Taxable income -10,000
Income from Agriculture activities cannot be taxed.
True/false
Real income= Taxable income
True
True/false
Real income > taxable income
True in some cases
True/false
Real income < Taxable income
True in times of fraud etc.
Tax is _______ source of revenue for Government
Primary
What is the purpose of collecting tax?
To incur public welfare expenditure, like health care, education, social security.
Tax is _________ contribution to the Govt. Revenue
Compulsory/ enforced
Tax is levied in two ways, what are they?
1)Tax on income, wealth, business and profits.
2) Add to the GST of Goods/ Service.
What is a Direct Tax?
A tax that is levied directly on an individual’s income or wealth
Examples include income tax and property tax.
What is the definition of Income Tax?
A tax imposed on the income of individuals or entities
It is usually calculated as a percentage of the income earned.
What does ‘Incidence and impact on tax payer’ refer to?
The analysis of who ultimately bears the burden of a tax and how it affects their financial situation
This can vary based on the type of tax and the taxpayer’s circumstances.
Fill in the blank: A _______ tax imposes a higher rate on higher income levels.
[progressive tax]
What is an Indirect Tax?
A tax that is levied on goods and services rather than on income or profits
Examples include sales tax and value-added tax (VAT).
How does a Regressive Tax function?
It takes a larger percentage of income from low-income earners than from high-income earners
This can lead to a higher burden on poorer individuals.
What is meant by ‘levied on goods’?
Taxes imposed on the sale or production of goods
This typically includes sales taxes and excise taxes.
What is a Custodial Tax?
A tax collected on behalf of another entity, often related to indirect taxes
It can include taxes collected by businesses on behalf of the government.
True or False: A progressive tax system benefits low-income earners more than high-income earners.
True
Fill in the blank: The _______ tax is based on the value of goods and services consumed.
[sales tax]
Who has the authority to collect taxes?
Article 265 of the Constitution states that taxes can only be levied or collected by the authority of law.
Three lists of the Government
Article 246
1.Union list (central government)
2. State list ( state government)
3. Concurrent list ( both)
In case of any dispute, union list to prevail.
What are the sources of Income tax law?
1) Income tax act, 1961(including amendments)
2) Income tax rules, 1962
3) Circular and clarifications by CBDT.
4) Judicial precedents
CBDT stand for
Central Board of Direct Tax.
