What is Income-tax?
It is a tax levied by the Government of India on the income of every person. The provisions governing the Income-tax are covered in the Income-tax Act, 1961.
What is the administrative framework of Income-tax?
The revenue functions of the Government of India are managed by the Ministry of Finance. The Finance Ministry has entrusted the task of administration of direct taxes like Income-tax, Wealth tax, etc., to the Central
Board of Direct Taxes (CBDT). The CBDT is a part of Department of Revenue in the Ministry of Finance.
CBDT provides essential inputs for policy framing and planning of direct taxes and also administers the
direct tax laws through the Income-tax Department. Thus, Income-tax Law is administrated by the Income-tax Department under the control and supervision of the CBDT.
What is the period for which a person’s income is taken into account for the purpose of Income-tax?
Income-tax is levied on the annual income of a person. The year under the Income-tax Law is the period starting from 1st April and ending on 31st March of next calendar year. The Income-tax Law classifies the year
as (1) Previous year, and (2) Assessment year.
The year in which income is earned is called as previous year and the year in which the income is charged to tax is called as assessment year.
e.g., Income
earned during the period of 1st April, 2021 to 31st March, 2022 is treated as income of the previous year 2021-22. Income of the previous year 2021-22 will be charged to tax in the next year, i.e., in the assessment
year 2022-23.
