who needs to pay income tax in india
Income tax in India The government imposes a tax on taxable income of all persons who are individuals, Hindu Undivided Families (HUF's), companies, firms, LLP, association of persons, body of individuals, local authority and any other artificial juridical person. Levy of tax on a person depends upon his residential status. The CBDT administers the Income Tax Department, which is a part of the Department of Revenue under the Ministry of Finance, Govt. of India. Income tax is a key source of funds that the government uses to fund its activities and serve the public.
Optimal tax Optimal tax theory or the theory of optimal taxation is the study of designing and implementing a tax that reduces inefficiency and distortion in the market under given economic constraints.[1] Generally, this criterion consists of individuals' utility and the optimization problem involves minimizing the distortions caused by taxation.[2][3] A neutral tax is a theoretical tax which avoids distortion and inefficiency completely.[4][5] Other things being equal, if a tax-payer must choose between two mutually exclusive economic projects (say investments) that have the same pre-tax risk and returns, the one with the lower tax or with a tax exemption would be chosen by a rational actor.[3] Thus economists argue that taxes generally distort behavior.