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| Home » Income Tax System in India » Definition of Income Tax |
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Definition of Income Tax |
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Like many of the comprehensive subjects, the Income Tax does not have any hard and fast definition. The definition of Income tax can be given from a wide perspective which covers a lot of other aspects too. Here we are trying to give you a composite definition about Income Tax.
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Income tax is a form of tax which is imposed by governments on financial income, generated by all entities within the legal power of the government. Law has made this mandatory for the businessmen and individuals that they have to file an income tax return every year to make sure whether they owe any taxes to the government or they are eligible for a tax refund. Income tax is one of th most important source of funds that the government utilizes to fund its activities and serve the whole mass of the country.
Taxation is the very word from where the Tax was derived. This word does mean 'Estimate.' Thus, it can easily be inferred that Income Tax means estimation of your income which helps the government to know the actual economic strength of a person. It is also a rational and legal way to determine an economic standard for general people. It helps the Government to know the distribution of money among the common people of the country.
Income Tax has been in force in different forms since a long time. If you can give a deep delve in the history of India, we get relevant information regarding the taxation system of India. In ancient history, it is mentioned that at about such system which were imposed on the income, expenditure and other subject. Even information of such is given Manu Smriti and Arthasatra which confirms its existence at that time. In the modern India, Income Tax received a proper enforcement in 1860 with the implementation of first Income Tax Act. After implementation of this Act, people became aware of the actual meaning of Income Tax.
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