Income tax is levied by the Central Government on the income that is earned during a financial year by the individuals and the business. The taxes are considered to be a source of revenue for the government. The revenue that is collected from the source of tax is then utilized on developing infrastructure, proving better healthcare, education subsidies to the farmers or people employed in the agriculture sector, and also for the government welfare schemes.
Taxes in India are of two types Direct tax and Indirect Tax. The tax that is levied directly on the income is called Direct tax. For instance, Income tax is a direct tax and the calculation of the tax is based on the income tax slab rates that are applicable during a given financial year.