The Indian Income Tax Act – Need For A Substantial Re-Think

The purpose of this Article is to request a fresh thinking in the way the Indian Income-tax Act, 1961 is applied for computing income tax payable for Individuals and Corporate Businesses.

I. TAXABILITY OF INDIVIDUALS

We are aware that any individual who is earning income will largely get the Income from two main sources where he carries out active economic activity. Those sources are:

a. As an employee — where he gets salary, which salary is subject to income tax and to the provisions of tax deduction at source (TDS);

b. As a businessman — where his income is his share of profits from the business or vocation that he is running.

In both cases (a) and (b) above, the individual pays his income tax and the balance in his hands is his post tax income.

This post tax income will be divided into two parts:

i) Consumption of Goods and Services.

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