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Unit 1: Income Tax: Basic Framework
Gopika Juneja, Lovely Professional University

Unit 1: Income Tax: Basic Framework Notes

CONTENTS

Objectives
Introduction
1.1 Concept of Income
1.1.1 Features of “Income”
1.1.2 Tax Treatment of “Income”

1.2 Historical Background of Income Tax
1.2.1 Importance of Income Tax
1.2.2 Principles of Income Tax
1.3 Overview of Income Tax Law in India

1.4 Basic Concepts of Income Tax
1.5 Agricultural Income
1.5.1 Certain Income which is Treated as Agricultural Income
1.5.2 Certain Income which is not Treated as Agricultural Income
1.6 Income Tax Systems in India

1.7 Summary
1.8 Keywords
1.9 Review Questions
1.10 Further Readings

Objectives

After studying this unit, you will be able to:
Explain the concept of income
Discuss the historical background of tax
Elaborate the Income Tax Law in India

Describe the basic concepts of income tax
Discuss agricultural income
Explain an overview of income tax systems in India

Introduction

An income tax is a tax levied on the financial income of persons, corporations, or other legal
entities. Various income tax systems exist, with varying degrees of tax incidence. Income
taxation can be progressive, proportional, or regressive. When the tax is levied on the income
of companies, it is often called a corporate tax, corporate income tax, or profit tax. Individual

income taxes often tax the total income of the individual (with some deductions permitted), while
corporate income taxes often tax net income (the difference between gross receipts, expenses, and

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