Income tax refers to the tax levied by the government for the purpose of financing its various operations. Taxes are of two types, direct and indirect. Whereas Income Tax is a direct tax, VAT, service tax, excise and the latest one to subsume all these taxes Goods and Services Tax (GST) are all indirect taxes.

Apart from funding the activities of the government, taxes also act as a fiscal stabiliser that aid in distributing wealth evenly among the population. Furthermore, taxes are instrumental in cushioning the effects of economic cycles. The payment of Income Tax in India is made according to the provisions made under the Income Tax Act.

According to the Indian Income Tax laws, income from the following sources is deemed taxable:

  1. Salaries

  2. Income from house property

  3. Profits and gains of business or profession

  4. Capital gains

  5. Income from other sources

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