Answer
Income tax is an amount of money imposed by government on an individual or entity to be paid. It is a direct tax as paid directly to the government by an individual or entity.
Work Step by Step
Income tax is a tax that government imposed on an individual or an entity. Every individual or entity who comes under taxable income has to devotee certain amount of his/her income or profit to the government. This amount is further used by the government for the development of the society and the nation. Now a day’s income tax is paid in monetary terms only.
Taxes are broadly categorized into two types:
1) Direct Tax
2) Indirect Tax
Direct tax are the taxes paid directly to the government. Income tax, wealth tax, corporate tax comes under the direct tax category.
Indirect tax are the taxes paid indirectly to the government, that is, first the intermediator pay tax to the government, then this paid amount is imposed on the product or goods by the manufacturer.
