FinTech Glossary

What Is Income Tax

Income tax is a direct tax levied by the government on the income earned by individuals, businesses, and other entities. The tax is calculated based on applicable tax slabs, rates, and provisions defined under the law.

Taxation Context

Income tax is one of the primary sources of government revenue and plays a key role in funding public services and infrastructure.

It applies to various forms of income, including salaries, business profits, professional earnings, capital gains, and income from other sources.

In India, income tax is governed by the Income Tax Act, 1961, and administered by the Income Tax Department.

Types of Income Subject to Tax

Income tax is levied on income classified under different heads, such as:

• Income from salary
• Income from house property
• Profits and gains from business or profession
• Capital gains
• Income from other sources

Each category has specific rules for computation and deductions.