What is Income Tax?

Income tax is the government imposed tax on taxable income of all persons who are individuals, Hindu Undivided Families (HUFs), companies, firms, association of persons, body of individuals, local authority and any other artificial judicial person. Levy of tax is different on each person. Indian Income Tax Act, 1961 levies and governs income tax. The Indian Income Tax Department is administered by CBDT which 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.

In his Budget speech on February 1, 2017, finance minister Arun Jaitley said that the fiscal deficit is pegged at 3.2 per cent of GDP in 2017-18 and 3 per cent in the following year. "We are committed to making our tax rates more reasonable and the tax administration more efficient, he added. 

Tax for small companies having a turnover of less than Rs 50 crore reduced to 20 per cent. "Capital gains tax to be exempted for persons holding land from which land was pooled for creation of Telangana," Jaitley said.

"From the 3.5 crore individuals who filed tax returns, 99 lakh showed income below income tax slab, while only 24 lakh show income above Rs 10 lakhs. When too many people evade taxes, burden falls on those who are honest", Jaitley said in Parliament. 

"Demonetisation led to a 34.8% increase in personal income tax declarations. The surge in personal income declarations has never before been seen in the history of India, he added. 

Around 18 lakh persons have been identified by income tax department who will be required to divulge the source of large cash transactions they undertook in the weeks after demonetisation as part of the tax department's Operation Clean Money/Swachh Dhan Abhiyan initiative. 

An integral part of the Centre's campaign against black money, the account holders have been targeted via use of data analytics to sift through information for the period between November 9, when the old Rs 500 and Rs 1,000 notes ceased to be legal tender, and December 30, when the window for their deposit in banks ended. 

The income tax department has also started cracking down on those with "benami" assets, issuing notices in 87 cases and attaching 42 properties.