Income tax is a direct levy charged by the government on the earnings of individuals and organizations operating within its jurisdiction. Regulated under the Income Tax Act of 1961, this tax is collected by the central government. Adjustments to tax slabs and rates are announced annually in the Union Budget. It’s important to understand that income includes far more than salaries—it also covers returns from property, business income, professional receipts, capital gains, and various other earnings.

Direct taxes are mainly divided into income tax and corporate tax. Income tax applies to individuals, Hindu Undivided Families (HUFs), and other non-corporate taxpayers. The applicable tax rates are defined by law. Corporate tax, however, is charged on the profits earned by companies.