Glossary · Income Tax
Income Tax
Direct tax levied on the income of individuals, HUFs, firms, companies, and other entities under the Income Tax Act, 1961.
Income tax is the principal direct tax in India, governed by the Income Tax Act, 1961. It is charged on the total income earned in a financial year (1 April to 31 March). The government fixes slab rates every year through the Finance Act. For individuals and HUFs, two regimes are available: the old regime with most exemptions and deductions, and the new default regime with lower slab rates but limited deductions.
Examples
A salaried employee earning ₹15 lakh a year pays income tax on the amount above the basic exemption limit, after standard deduction of ₹50,000.
Related terms
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