What is Direct tax? Meaning, History and Important terms under direct tax - newsify
Direct tax meaning:
Direct tax meaning:
Direct tax refers to a financial charge which is imposed on every citizen of the nation by the government. In other words, it is compulsory extraction of money by the government from the people of the nation. The concept of the direct tax is based on federal system of governance in India which means there is clear demarcation of power between Central government, State government and Local authorities which is broad explain under article 246 of our constitution.
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| Meaning, History and Important terms under direct tax |
History of Direct Taxes:
Trade its roots in the pro independence. In other words, the history of direct taxes into existence following the revolt of 1875 which is also entitled a first independence war of India. The period 1860 to 1886 there were certain experiment which were perform by British government on his conceptual framework of direct taxes. Finally, the first Indian direct tax law came in existence in 1886 but it was just a start and later on varies modification or alteration were made in respective law in year 1918, 1922 and 1961. At present, direct tax law or income tax law, 1961 is applicable.
Important term under direct tax:
1. Agriculture Income Under Sec.2(1A):
Direct tax state that agriculture income is exempt under sec 10(1) of income tax. in brief, Agriculture income is defined as any revenue or rent which is generated from local used for agriculture purpose.
2. Assessee Under Sec. 2(7):
Assessee refers to a persons who is obligated to pay tax on their income under the provisions of income tax. The term Assessee can be further divided into a following categories : Ordinary, Representative and Assessee in default.
3. Person Under Sec. 2(31):
2(31) defines person as: Individual, Partnership, Company, Artificial of person/ Body of institution, local authority and Artificial Institute.
4. Previous Year Under sec. 2(34) rewrite under sec 3:
It refers to the financial year in which income is earn by the assessee.
5. Assessment Year under sec. 2(9):
It refers to the financial year in which tax is charged on the income which is earned in previous year defined under sec. 2(34) rewrite under sec. 3.
6. Heads of Income U/S 14:
Sec. 14 of income tax act, broadly define 5 major head of income:
1. Income U/S Salary (U/S 15 - 17)
2. Income Under the Head (U/H) House property (U/S 22 - 27)
3. Income U/H PGBP ( Profit and Gains from business and profession) (U/S 28 - 44)
4. Income U/H Capital Gain ( U/S 45 - 55)
5. Income U/H other source ( U/S 56 - 59)
7. Gross Total Income U/S 80B(5):
Gross total income = 5 Heads of income ( U/S 14)
+ Clubbing of income ( U/S 60 - 69)
- Set off a carry forward of losses (U/S 70 -79)
8. Total Income U/S 2(45):
Total Income = Gross total income U/S 80B (5)
- Deduction U/S (80 C to 80 U)
9. Maximum Marginal Rate (MMR):
It refers to the maximum rate which is charged by tax department from the Assessee in India. The maximum marginal rate is 30%.
10. Income U/S 2(24):
Sec. 2(24) provides inclusive definition of the word income which means there is no clear cut meaning of income under the provisions of income tax act. In other words, this section does not give the clear cut meaning but it tells various sources which come under the category of the word Income.
Conclusion:
These all are the important terms which are use in the field of direct tax. Direct tax are very important for nation development so we have to pay direct tax without any foul play. These all from my side (What is Direct tax? Meaning, History and Important terms under direct tax).
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