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Questions and Answers
Which type of tax is levied directly on individuals or entities?
Which type of tax is levied directly on individuals or entities?
- Excise tax
- Sales tax
- Property tax
- Income tax (correct)
What is the main focus of the Income-tax Act, 1961?
What is the main focus of the Income-tax Act, 1961?
- Definition of indirect taxes
- Computation of property tax
- Tax rates for different income components
- Tax computation procedures (correct)
What is the term used for the circumstances when income of the previous year would be assessed to tax in the previous year itself?
What is the term used for the circumstances when income of the previous year would be assessed to tax in the previous year itself?
- Advance assessment
- Retroactive assessment (correct)
- Current year assessment
- Immediate assessment
Which tax is levied on the sale of goods within a country?
Which tax is levied on the sale of goods within a country?
In the context of income taxation, what does 'assessment year' refer to?
In the context of income taxation, what does 'assessment year' refer to?
What is the basic source of revenue to the Government?
What is the basic source of revenue to the Government?
Which type of tax is Incometax considered as?
Which type of tax is Incometax considered as?
What does the Constitution of India lay down in Article 265?
What does the Constitution of India lay down in Article 265?
What is the power given to the Parliament and State Legislatures in terms of making laws for the purpose of levy of taxes?
What is the power given to the Parliament and State Legislatures in terms of making laws for the purpose of levy of taxes?
What does Union List contain in terms of powers to make laws?
What does Union List contain in terms of powers to make laws?
What does 'previous year' refer to in the context of computing income chargeable to tax under the Income-tax Act, 1961?
What does 'previous year' refer to in the context of computing income chargeable to tax under the Income-tax Act, 1961?
Which component of total income determines the tax liability of a person under the Income-tax Act, 1961?
Which component of total income determines the tax liability of a person under the Income-tax Act, 1961?
What is the difference between direct and indirect taxes?
What is the difference between direct and indirect taxes?
What does 'assessment year' refer to in the context of income taxation?
What does 'assessment year' refer to in the context of income taxation?
What is the primary purpose of taxes as mentioned in the text?
What is the primary purpose of taxes as mentioned in the text?
What is the distinguishing characteristic of direct taxes?
What is the distinguishing characteristic of direct taxes?
Which article of the Indian Constitution lays down the principle that 'No tax shall be levied or collected except by authority of law'?
Which article of the Indian Constitution lays down the principle that 'No tax shall be levied or collected except by authority of law'?
Who has the exclusive power to make laws on the matters contained in the State List according to the Indian Constitution?
Who has the exclusive power to make laws on the matters contained in the State List according to the Indian Constitution?
What power is given to the Parliament and State Legislatures for making laws for the purpose of levy of taxes?
What power is given to the Parliament and State Legislatures for making laws for the purpose of levy of taxes?
Which list contains matters under which the Parliament has exclusive power to make laws in terms of levy of taxes?
Which list contains matters under which the Parliament has exclusive power to make laws in terms of levy of taxes?
In what way does indirect tax differ from direct tax?
In what way does indirect tax differ from direct tax?
What does the Seventh Schedule to Article 246 contain?
What does the Seventh Schedule to Article 246 contain?
What is the key feature of indirect taxes?
What is the key feature of indirect taxes?
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Study Notes
Taxation Basics
- Direct tax is levied directly on individuals or entities.
- Income-tax Act, 1961, focuses on taxing income of individuals and entities.
Income Tax
- 'Assessment year' refers to the year in which the income tax is levied on the income earned in the previous year.
- 'Previous year' refers to the year in which the income is earned, which is chargeable to tax under the Income-tax Act, 1961.
- Taxable income is the component of total income that determines the tax liability of a person under the Income-tax Act, 1961.
Taxation Principles
- The primary purpose of taxes is to generate revenue for the government.
- The Constitution of India, in Article 265, lays down the principle that 'No tax shall be levied or collected except by authority of law'.
- The distinguishing characteristic of direct taxes is that they are levied directly on individuals or entities.
- Indirect taxes, on the other hand, are levied on goods and services.
Constitutional Provisions
- The Parliament has exclusive power to make laws on the matters contained in the Union List.
- The State Legislatures have exclusive power to make laws on the matters contained in the State List.
- The Seventh Schedule to Article 246 contains the Union List, State List, and Concurrent List.
Types of Taxes
- Direct tax is considered as income tax.
- Indirect tax is levied on the sale of goods within a country.
- Indirect tax differs from direct tax in that it is levied on goods and services rather than on individuals or entities.
- Key feature of indirect taxes is that the burden of the tax can be shifted to another person.
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