Income tax is a tax imposed by the Government of India on any body who earns income in India. This tax is levied on the strength of an Act called Income tax Act.
Income earned in Indiaµ is not limited to income earned within the geographical limits or boundaries of the country. Certain incomes are also deemed to have been earned in India although they may have been earned outside the country. The Income Tax Act applies to all persons who earn income in India, irrespective of whether they are residents or non-residents. It must be mentioned here that if an individual stays in India for 182 days or more in a year, he is treated as resident in that year regardless of his citizenship. If such stay is less than 182 days, he is a non-resident.
Income earned in the twelve months contained in the period from 1st April to 31st March commonly called Financial Year is taken into account for purposes of calculating Income Tax under the Income Tax Act.
Any individual or groups of individuals or artificial bodies who have earned income during the previous years are required to pay Income tax on it.
The IT Act recognizes the earners of income under seven categories. Each category is called a Status. These are as follows-
