BUSINESS STUDIES (CLASS 11) WORKSHEET 24-TAXES

TAXES

What is tax?

Tax is an amount of money that you have to pay to the government so that it can pay for public services such as roads and schools and hospitals.

A direct tax can be defined as a tax that is paid directly by an individual or organization to the imposing entity (generally government). A direct tax cannot be shifted to another individual or entity. The individual or organization upon which the tax is levied is responsible for the fulfilment of the tax payment.

Direct taxes are paid straight or directly to the government, such as income tax, poll tax, land tax, gift tax and personal property tax.

A direct is an equitable tax. A direct tax is equitable in the sense that it is levied according to the taxable capacity of the people.

1860- The Tax was introduced for the first time by Sir James Wilson. India’s First “Union Budget” Introduced by Pre-independence finance minister, James Wilson on 7 April, 1860. The Indian Income Tax Act of 1860 was enforced to meet the losses sustained by the government on account of the military mutiny of 1857. Income was divided into four schedules taxed separately: (1) Income from landed property; (2) Income from professions and trades; (3) Income from Securities; (4) Income from Salaries and pensions.

1886- Separate Income tax act was passed. This act remained in force up to, with various amendments from time to time. The Indian Income Tax Act of 1918 repealed the Indian Income Tax Act of 1886 and introduced several important changes. 1922- Again it was replaced by another new act which was passed in 1922. The organizational history of the Income-tax Department starts in the year 1922.The Income Tax Act of 1922 had become very complicated on account of innumerable amendments. The Government of India therefore referred it to the law commission in1956 with a view to simplify and prevent the evasion of tax.

1961– In consultation with the Ministry of Law finally the Income Tax Act, 1961 was passed. The Income Tax Act 1961 has been brought into force with 1 April 1962.It applies to the whole of India (including Jammu and Kashmir). Since 1962 several amendments of far-reaching nature have been made in the Income Tax Act by the Union Budget every year which also contains Finance Bill. After it is passed by both the houses of Parliament and receives the assent of the President of India, it becomes the Finance act. At present, there are five heads of Income: (1) Income from Salary; (2) Income from House Property; (3) Income from Profits and Gains of Business or Profession; (4) Income from Capital Gains; (5) Income from Other Sources. There are XXIII Chapters, 298 Sections and Fourteen Schedules in the Income Tax Act.