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Advantages And Disadvantages Of Income Tax

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Direct taxes are the taxes that are levied on the income of individuals or organizations. Income tax, corporate tax, inheritance tax are some instances of direct taxation. Income tax is the tax levied on individual income from various sources like salaries, investments and interest. Corporate tax is the tax paid by companies or firms on the incomes they earn (Moneycontrol.com, 2013).
Progressive tax refers to the taxing instrument in which the taxing authority charges more taxes as the income of the taxpayer rises. A higher tax is collected from the taxpayers who earn more and lower taxes from taxpayers earning less. The government uses a progressive tax mechanism. Under progressive taxes, it is believed that people who earn more should pay more. The income tax is divided into slabs. As the income of the tax payer crosses a level income, a new rate of tax which is higher than before is charged to him (The Economic Times, 2015).
As governs under Section 3 of Income Tax Act, charge of income tax is subject and in accordance with this Act, a tax to be known as income tax shall be charged for each year of assessment upon the income of any person …show more content…

The advantages of indirect tax such as, person not possible to evade indirect tax because the collection takes place automatically when goods are bought and sold. Secondly, the indirect tax more convenient because they are wrapped in prices. The consumer often does not know that he is paying tax. Another advantage of tax is that every member of society contributes something towards revenue of state. Next, Indirect tax is also elastic to a certain extent; the state can increase its revenue within limits by increasing rates of taxes. Lastly if the state wishes to discourage consumption of intoxicants and harmful drugs, it can raise their prices by taxing them. This is a great social advantage which a community can achieve from tax (economicsconcepts,

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