This introductory lecture explains the fundamental concepts of income tax, defining what a tax is, its purpose, and differentiating between direct and indirect taxes, as well as introducing the concepts of assessment and the distinction between previous and assessment years.
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notifications hello everyone welcome to
my YouTube channel from this particular
video we'll be starting a new subject
that is income tax law and practice so
in this particular subject that is
income tax subjects there are totally
five chapters in that from this video
we'll be dealing with the first chapter
that is basic concepts of income tax so
in this chapter it is mostly the theory
chapter but easy Theory and you'll have
only little problems so in this
particular video that is part one I'll
be touching the introduction part of
this particular
chapter now basically what is the
meaning of tax now if you see my slides
the tax is a compulsory contribution
made by the citizen of a Nation to meet
various expenditure of the government so
if you just observe this slide have made
uh three words have highlighted three
words first one is the compulsory
contribution the second one is citizen
of nation and third one is meet various
expenditure now
uh the people may ask question why we
need to uh pay the tax to the government
that question comes to us right why we
need to pay the tax now what [Music]
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happens government it is providing us uh
too many services isn't this isn't it
now the government is providing security
for the nation for which it requires
defense so the government is providing
water facility the government is
providing El electricity facility the
government is constructing the roads
isn't it it is giving all facilities
live about this water roads and
electricity mainly the government is
giving the military security to our
nation so if any war attacks happen the
soldiers who are guarding the nation
they will protect us if we are living
happily then because of the soldiers who
are protecting our nation now they need
to give salary to the soldiers they
should take care of the recommendation
they should take care of the food they
should have a strong military force so
for that the government needs the money
isn't it without money we cannot run all
these things so to collect that money
the government has come up with the idea
of tax so whatever the tax we pay for
the government using that money or we
can call it as a Revenue tax revenue the
government will try to to develop the
nation now if you see
here the first one
is compulsory contribution what is this
compulsory contribution compulsory means
everyone has to do it nobody can escape
from that if a person is liable to pay
the tax then he should definitely pay
the tax nobody can escape from that compuls
contribution
next he made by the citizen of nation so
who will pay the tax the tax will be
paid by the citizen of India Nation our
our nation is India so whatever the
amount paid as a tax will be used to
meet various expenditure whatever the
taxes the one person pays to the
government using that tax amount the
government will meet the various
expenditures this this is the meaning of
tax next is types of taxes so in India
we are having two types of taxes so what
are those two types of taxes one is the
direct tax and second one is the
indirect tax so India two tax systems
one the direct tax system and the
indirect tax system now let us see what
is the meaning of direct tax so the
incidence and impact is on the same
person the incidence and impact on the
same person so what is meaning of
incidence incidence means liability
impact means the burden of paying tax
liability to pay the tax and impact
means you are paying the tax the
incidence and impact is on the same
person now let us try to like understand
this particular statement by taking up
an example now here there is a m
X he is a citizen of the India next here
on the other party it is government so
government is there on the other side
and on one side we have Mr X he is a
person so in our my future slides I'll
tell you what is the meaning of person
so now Mr
X he has the liability to pay the tax of
20,000 so Mr X has to pay 20,000 rupees
tax for whatever the income he has
earned to the government Mr x 20,000
tax now who has the liability to pay the
tax Mr X so that
is incidence incidence means what
incidence means liability incidence is
nothing but liability means he has a
liability to pay the taxability
taxability
tax what is the impact who will pay the
tax Mr X only has to pay the tax so he
is going to pay the tax Mr X has a wife
you think wife is wife will his wife pay
tax on behalf of Mr X no Mr X has earned
the income so he need to pay the tax off
his own so the incidence and impact the
liability to pay the tax and the person
who is going to pay the tax is the same
so whatever definition says the
incidence and the impact is on the same
person here x is only earn the income
x
we call it as Direct Tax so why it is
called Direct Tax you should remember
this particular line the incidence and
the impact is on the same person so hope
you have understood about the direct tax
now you may ask me what is indirect tax
so indirect tax means the incidence and
the impact is on two different person
different person now let us try to
understand the particular statement by
taking up an example now one side we are
having government okay next here we are having
having
manufacturer some person has
manufactured and here we have
consumer so there are three different
persons one is the government second one
is the manufacturer and third one is the
consumer now
manufacturers manufacturer fan okay he
will sell it to the
consumer so here he's selling it to the consumer
manufactur now the value of fan is let
us think it is
20,000 and uh let us assume that tax is
10% so the tax how much he need to pay
it is 2,000 Rupees 2,000 Rupees tax he
need he need to pay to the government so
who need to pay the tax manufacturer has a
a liability
manufacturer so liability
here the incidence incidence means what
the liability to pay the tax incidence
is on the part of manufacturer incidence
is on the pack of manufacturer but who
is going to pay the tax tax will
manufacturer pay the tax directly to the
government no he will make his consumer
pay the tax so what he will do instead
of selling the fan at 20,000 he will
sell the fan at
22,000 so the burden to pay tax so here
impact impact means what the burden of
paying the tax is on the consumer so the
consumer will pay the tax so who is
having the burden consumer is having the
burden so the impact is on the consumer
so here if you you can see that the
incidence is on the part of manufacturer
and impact is on the part of consumer so
what does the indirect tax mean the
incidence and impact is on the two
different person so here also
manufacturer is having the incidence and
impact is on the consumer so two
different persons have been involved so
this is the meaning of indirect tax
next what is
assessment now for example you have
written an exam for 50 marks let us
assume that you have exam written a
paper for 50 marks you will submit it
your paper to the teacher and teacher
evaluates what she will evaluat she will
evaluate which are the correct answers
you have written and which are the wrong
answers you have written and for correct
answers how much marks you should get
she will allot the marks this is known
as assessment
similarly in the income tax so for
example you're earning an income of 5
lakh per anom so let us think that per
anom anom means for one year you're
earning the income for 5 lakh so it
doesn't mean that you have to pay the
tax on this 5 lakh there are certain
exemptions exemptions will be there so
regarding this exemptions I'll be doing
in another video now just have an idea
in your mind that there's something
called as exemption now we need to know
how much tax you need to pay isn't it if
you have a Commerce background uh you
can easily know but let us think that a
person is a doctor a person is an
engineer okay he should know that how
much tax he need to pay so the process
of knowing how much tax he need to pay
is known as assessment so the assessment
now it is a process of computation of
taxable income computation means what
you're finding out that is assessing
you're assessing you're finding out what
is the taxable
income and the tax liability so here
here two different terms you have to
observe one is taxable income and one
more is tax liability now let us take an
example Mr a is earning an income
of 5 lakh okay yeah is earning an income
of 5 lakh now
in the income tax there is a concept of
deductions and exemptions deductions exemptions
exemptions
uh topic
so let us think there's a deductions of
20,000 and exemption of 10,000 now if
you subtract this 20,000 and 10,000 from
5 lakh I think we will get 4 lakh
70,000 so this is the income earned so
earned income he has earned certain
income but 4 lakh 70,000 is taxable
income so we should charge the income
tax rate not on 5 lakh rupees but on
470,000 so this is taxable income now
let us think there is a 10% tax which is
nothing but
47,000 isn't it so I'm assuming it but
tax rate will be different just for
giving the example I'm assuming it has a
10% tax rate so I need to subtract this
47,000 from 4 lakh 7 uh
th000 so 47,000 sorry so when I subtract
47,000 from 470,000 I will get 423,000
423,000
so here what is this 47,000 this 47,000
is the tax
liability means Mr a Mr a has to pay
this 47,000 to the government
so you understood what is taxable income
and tax liability so computation means
finding out how much is my taxable
income and what is the tax liability I
need to pay as per the income tax act
assment
assessment next assessment year now we
got to know what is assessment mean it's
a process of calculating how much tax
you need to pay now assessment year is
an year in which you will calculate how
much tax you need to pay so it is a
period of 12 months so in one assessment
year there will be 12 months it will
start from 1st April and ends at 31st
March as usual you know assessment 12
months 1 April in the start 31st March
so the this is very important line
please focus on this the income of the
previous year is
assessed to the tax in the assessment
year so previous year concept there is a
concept of previous year previous year
means what I'll tell in the next slide
so whatever the income earned so you
have earned certain in income income
earned in the previous year in previous
year you have earned the income for that
you will pay the tax in assessment year
so don't get
confused whatever the income you have
earned in the previous year that all
income will be calculated in the
assessment year and you have to pay the
tax in assessment year now which is our
current assessment here can anybody
answer you can put the answer in comment
box which is a present assessment
Year yes our present assessment year is
2023 to
24 means current assessment we uh we are
starting from 1st April
2023 and our current assessment year
ends at 31st March
2024 so this is assessment year just
remember this one diagram whatever the
income we have earned in previous year
we will pay the tax in the assessment year
year previous
assment now then what is previous year
so previous year same it is also having
12 months and it will also start from
1st April to 31st March so it is a
financial year immediately preceding the
assessment year the Year preceding the
assessment year now don't get
confused look here now for example let us
us
take the our assessment year is 2023 to
24 preceding year means one year before
means 2022 to
2023 so this is known as previous year
so whatever the income you have earned
in this 2022 23 that is previous year
for that you will calculate the taxx and
you will pay the tax in assessment year
previous year income
income
assment so it is the financial year
immediately preceding the assessment
year so one year before the assessment
year is known as previous
year now which is our present previous
year yes it is 2022 to
2023 because our assessment year is 2023
to 2024 one year before so it will be
2022 to
2023 so what is the basic difference
between previous year and assessment
year means in previous year you have
earned the income so whatever the income
you have earned in the previous year you
will pay the tax in assessment year so
the assessment year the income of
previous year is taxed this is the basic
difference between previous year as well
as income uh sorry assessment year so
hope you have understood about this
introduction part very well if you have
any doubts or queries please post your
queries in the comment box so we'll try
to respond to your queries as soon as
possible thank you for watching my video
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Channel please subscribe to my YouTube
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thank you for watching the video let us
meet in the next video if you have any
queries regarding today's session kindly
send your queries to education. mbro
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