Commerce · Class 11 Commerce

Ch 32Direct Taxes — Class 11 Commerce, concept-first.

A tax is a compulsory financial contribution levied by the government on individuals and organisations, to be used for public purposes, without the taxpayer receiving any direct, specific benefit in return proportional to the amount paid.

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Direct Tax — Meaning, Merits and Demerits

A direct tax is one where the impact and incidence fall on the same person, who cannot shift its burden to anyone else — e.g. income tax.

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Meaning of Tax and Direct Tax

Merits and Demerits of Direct Taxes

Merits of direct taxes: - Equity — direct taxes (especially a progressive income tax, where the rate rises as income rises) are based on the taxpayer's ability to pay, so they distribute the tax burde…

Basic Concepts of Income Tax

Income tax in India is governed by the Income Tax Act, 1961, and a specific vocabulary of terms is used throughout the Act.

Residential Status and Scope of Total Income

The extent to which a person's income is taxable in India depends heavily on their residential status for that previous year, determined afresh each year under Section 6 of the Income Tax Act.

Heads of Income

Section 14 of the Income Tax Act classifies all taxable income under five heads, and every source of income a person earns must be classified under one (and only one) of these:

Computation of Total Income and Tax Liability

The overall computation of a taxpayer's income tax liability broadly follows these steps:

Types of Direct Taxes in India

India levies several kinds of direct taxes, though Income Tax is by far the most significant in terms of both revenue and the syllabus's own emphasis.

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Sample & Board Papers

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