“Income tax is a tax on yearly taxable income of a person levied by the Central Government at prescribed rates.” Tax payers include individual, firm, company, Hindu undivided family, association of persons, trust etc.  Taxable income means income calculated under the provisions of the Income Tax Act.

Salient Feature of Income Tax

 1. Central Tax

2. Direct Tax

3. Tax on Taxable Income 

4. Tax Exemption limit

5. Progressive rates of Tax

6. Scope of Taxation

7. Burden on Rich class of Persons

8. Administration of Income Tax

9. Distribution of Income Tax 

Merits of the Income Tax

1. Helpful in reducing the unequal distribution of wealth

2. Definiteness

3. Elasticity and Productivity

4. Shifting of tax burden not possible 

5. Just and Equitable 

Demerits of the Income Tax

· Bad effect on economic development

· Income cannot be the only measurement of taxable capacity

· Tax evasion