The charge of Income Tax: Income tax is a direct tax which is charged upon a person in respect of his taxable income. The Income Tax is the charges levied by the government on the income of a person. The chargeability of income tax means the imposition of tax on the income earned in an income year at the rate specified by the parliament or proper authority in an assessment year in accordance with and subject to the provisions of the ITO. It is a direct tax whose burden to pay cannot be shifted to any other person.
The basic principles of charging income tax are as follows –
- Income tax should be charged at the rate of rates prescribed by the finance Act enacted every year by the parliament.
- The charge is every person, here person means an individual, a firm association of a person, a local authority, a company and any other artificial judicial person.
- The income that is taxed must pertain to the Income year and not to the assessment year.
- The tax is charged, levied, paid, and collected in accordance with and subject to the provisions of ITO.
- Where under the provisions of this ordinance, income tax is to be deducted at source, or paid or collected in advance; it shall be deducted, paid, and collected accordingly.
- The income has to be brought under any of the heeds of income and can be charged to tax only if it is so chargeable under the computing election corresponding to that head of income.