Tax Rate Determination for Income Tax
The rate at which income tax is collected is not a permanent fixture. It is determined on a year-to-year basis.
Legal Basis for Tax Rate Fixation
In India, the power to legislate on taxes on income, other than agricultural income, rests with the Parliament, as per the Constitution.
- The Union Government prepares the budget annually.
- As part of the budget, the government proposes the tax rates for the upcoming financial year through a bill.
- This bill, known as the Finance Bill, is presented in Parliament.
- Upon discussion and approval by both houses of Parliament (Lok Sabha and Rajya Sabha), it is enacted as the Finance Act.
- Therefore, the annual Finance Act is the legislative instrument that specifies and fixes the tax rates applicable for that particular fiscal year.
This process ensures that tax rates are reviewed and approved annually, aligning with the government's fiscal policies and economic conditions.
Correct Option Analysis
Based on the legislative process, the tax rate for collecting income tax is fixed by the annual Finance Act, which requires parliamentary approval.
Correct Answer: The annual Finance Act
Important Questions from Income-tax
The ratio of income and expenditure is 9:5. Income increases by 40% and expenditure decreases by 10%. If the initial income is ₹45,000 then the final saving (in ₹) is:
As per the new tax regime of India, what is the exemption limit of income tax for financial year 2022-23?
What is the basic difference in the aggregates at market price and factor cost?
If assesssee is engaged in the business of growing and manufacturing tea in India, the non-agricultural income in that case be:
Arrange the steps to e-filing of Income Tax Return in correct sequence:
a) Register yourself
b) Verify ITR V
c) Select the requisite form
d) Fill form and upload
Choose the correct option from those below:
