Income tax is one of the most crucial direct tax reforms in India. It refers to the annual charge levied on the income generated from salaries, wages and commission (earned income) or from rents and interests (unearned income). Progressive income taxation is implemented to ensure even distribution of wealth among the entire population, in addition to raising public revenue in stabilizing the economy. The Income Tax Act (1961) establishes rules that govern income tax in India. Personal income tax is the one levied on income generated by individuals. This paper presents an overview of the income tax imposed on the private and public sector employees and its effect on the economic growth of the country.
Tax, Private Sector, Public Sector, Income tax, India
