A PROJECT ON

TAX REGIME IN INDIA

A Field Project Submitted to University of Mumbai for partial completion of

the degree of Bachelor in Commerce (Accounting & Finance)

Under the Faculty of Commerce

BY
MAANYA MANOJ PATHAK
F.23.82

UNDER THE GUIDANCE OF

MS. BHAVNA KOLI
ASSISTANT PROFESSOR

SIES (NERUL) COLLEGE OF ARTS, SCIENCE & COMMERCE

PLOT 1-C, SECTOR-V, NERUL, NAVI-MUMBAI - 400706
 SEPTEMBER, 2024

SIES (Nerul) College of Arts, Science and Commerce

NAAC Re-Accredited ‘A’ Grade (3rd Cycle)
Sri Chandrasekarendra Saraswati Vidyapuram, Plot I-C, Sector 5, Nerul, Navi
Mumbai, Maharashtra 400706

CERTIFICATE
This is to certify that Ms. Maanya Manoj Pathak has worked and duly
completed his/her Field Project Work for the partial completion of degree of
Bachelor in Commerce (Accounting & Finance) under the Faculty of
Commerce in the subject of Accounting & Finance and his/her project is
entitled ‘STUDY ON TAX REGIME’ under my supervision.

I further certify that the entire work has been done by the learner under my
guidance and that no part of it has been submitted previously for any Degree or
Diploma of any University.
It is his own work and facts reported by her personal findings and
investigations.

Date of submission:

Asst. Prof. Bhavna Koli _________________

Internal Examiner/ Project Guide External Examiner

DECLARATION BY LEARNER

I the undersigned Ms. Maanya Manoj Pathak, hereby declare that the work
embodied in this project work titled ‘STUDY ON TAX REGIME, forms my
own contribution to the research work carried out under the guidance of
Bhavna Koli, is a result of my own research work and has not been previously
submitted to any other University for any other Degree/ Diploma to this or any
other University.

Wherever reference has been made to previous works of others, it has been
clearly indicated as such and included in the bibliography.

I, hereby further declare that all information of this document has been obtained
and presented in accordance with academic rules and ethical conduct.

Name and Signature of the learner

Certified by

Ms. Bhavna Koli

Name and signature of the Guiding Teacher
 ACKNOWLEDGMENT

To list who all have helped me is difficult because they are so numerous and the
depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai and College for
giving me the chance to do this project.

I would like to thank my Principal, Dr. Koel Roychoudhury for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Head of Department Dr. Priyanka

Mohan, for her moral support and guidance.

I would also like to express my sincere gratitude towards my project guide,

Ms. Bhavna Koli whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference
books and magazines related to my project.

I would like to thank to express my gratitude to

Lastly, I would like to thank each and every person who directly or indirectly
helped me in the completion of the project especially my Parents and Peers who
supported me throughout my project.
 INDEX

Sr. No. Title of the Chapter Page No.

1. Chapter I-Introduction
1.1 Introduction to Topic
1.2 History
1.3 Concept
1.4 Advantages

2. Chapter II -Research Methodology

2.1 Objective of the study
2.2 Scope of the study
2.3 Limitations of the study
2.4 Significance of the study if any
2.5 Data Collection

3. Chapter III-Literature Review

3.1 Introduction

3.2 Relevant Studies

3.2 Conclusion

4. Chapter IV-Data Analysis and Interpretation

4.1 Analysis of Responses and Interpretation

5. Chapter IV -Conclusion and Suggestions

5.1 Findings

5.2 Suggestions

5.3 Conclusion
6. Bibliography/Webliography

7. Annexure ( Questionnaire)
 EXECUTIVE SUMMARY
The abstract for the research project titled on STUDY OF TAX REGIME IN
INDIA explores the tax regime in India with a focus on recent reforms and their
implication on the taxpayers. This study focuses on the revenue collected by the
Indian government in the form of tax and the views of people on tax regime of
India. The Indian tax system has undergone significant reforms in recent years,
aimed at simplifying tax structures, improving compliance, and reducing the tax
burden on businesses and individuals. The introduction of GST in 2017 marked
a major shift in indirect taxation, consolidating numerous state and central
levies into a single tax. Similarly, corporate tax rates have been reduced to
promote investment and enhance the country's global competitiveness.
 CHAPTER – 1
INTRODUCTION
 INTRODUCTION TO TAX REGIME IN INDIA
The income tax is a direct tax which follows a progressive slab rate, where the
rate of tax increases as the taxpayer's income rises. The Income-tax Act, 1961
provides for two tax regimes: the old regime, which allows various deductions
and exemptions, and the new regime, which offers lower tax rates without
exemptions. Central Government has enacted the Income Tax Act, 1961. The
Act provides for the scope and machinery for levy of Income Tax in India. The
Act is supported by Income Tax Rules, 1961 and several other subordinate and
regulations. Besides, circulars and notifications are issued by the Central Board
of Direct Taxes (CBDT) and sometimes by the Ministry of Finance,
Government of India dealing with various aspects of the levy of Income tax.
Income tax is a tax on the total income of a person called the assesses of the
previous year relevant to the assessment year at the rates prescribed in the
relevant Finance Act. Some of the important definitions under Income Tax Act,
1961 are as follows:

ASSESSMENT YEAR-:

Section 2(9) defines an “Assessment year” as “the period of twelve months

starting from the first day of April every year.” An assessment year begins on
1st April every year and ends on 31st March of the next year. In an assessment
year, income of the assesses during the previous year is taxed at the rates
prescribed by the relevant Finance Act. It is therefore, also called as the “Tax
Year”

PREVIOUS YEAR-:

Section 3 defines “Previous year” as “the financial year immediately preceding

the assessment year”. Income earned in one financial year is taxed in the next
financial year. Total income of a person from all the sources of income will be
taken together and considered in the previous year or the financial year
immediately preceding the assessment year.

ASSESSEE-:
U/s 2(7) “Assessee” means a person by whom income tax or any other sum of
money is payable under the Act and it includes:

Every person in respect of whom any proceeding under the Act has been taken
for the assessment of his income or loss or the amount of refund due to him.

A person who is assessable in respect of income or loss of another person or

who is deemed to be an assessee, or

An Assessee in default under any provision of the Act.

PERSON-:

The term person is defined under section 2(31) of the Income Tax Act. There
are seven categories covered under the term which are as follows-:

 An Individual

 HUF

 A Company

 A Firm

 An Association of persons

 A Local Authority

 Every Artificial Judicial Person

INCOME- There can be many sources of income but for computation of

income for the purpose of income tax, there are only 5 sources or the
heads of income which are as follows-:

 INCOME FROM SALARY

 INCOME FROM HOUSE PROPERTY
 INCOME FROM PROFITS AND GAIN FROM BUSINESS
 INCOME FROM CAPITAL GAINS
  INCOME FROM OTHER SOURCE

COMPUTATION OF TAXABLE INCOME-:

1st head- SALARY

This is the total salary an employee earns before any deductions. It includes all
earnings, such as base salary and additional benefits.

Components of Gross Salary:

 Basic Salary: The core component of the salary (usually a fixed

percentage of the gross salary).

 Allowances: Additional payments provided by the employer, which may

include:

o House Rent Allowance (HRA).

o Travel Allowance or Transport Allowance.

o Medical Allowance.

o Dearness Allowance (DA) (if applicable).

o Special Allowances: Any other allowances specific to the job or

industry.

Gross Salary=Basic Salary+HRA+Allowances (DA, Travel, Medical, etc.)

Net Salary=Gross Salary−Deductions (Taxes, Retirement, etc.)

2nd head- IFHP

Computation of income under the head house property

1. Determine Gross Annual Value (GAV):

The Gross Annual Value (GAV) is the potential income the property could
generate if rented out.

Less: Municipal Taxes Paid:

Municipal or property taxes paid to the local authority can be deducted from the
GAV. These are generally paid by the owner

less: Standard Deductions:

The law allows certain deductions on the Net Annual Value (NAV). These
deductions include:

 Standard Deduction [Section 24(a)]: A flat 30% deduction is allowed

 Interest on borrowing [Section 24(b)]: If the owner has taken a home

loan, the interest paid on the loan can be deducted.

3rd head- Profit and gains from business and profession

Income charged under Profits and Gains from Business or Profession

(PGBP) refers to the taxable income earned from business or professional
activities. Income chargeable under this head are-:

 Profit and gains from any business or profession carried on by the

assessee at any time during the previous year
 Any compensation or other payment due to or received by any
person under business contract
 Sum receivable under non- competing agreement
 Sum receivable under keyman insurance policy

Deduction

Deductions Allowed:

 Business Expenses: All necessary expenses incurred to operate the

business, including salaries, rent, utilities, and raw material costs.

 Depreciation: Deduction for the depreciation of assets used in the

business.

 Interest on Loans: Interest paid on business loans is deductible.

 Repairs and Maintenance: Expenses for maintaining office, equipment,

or property used for business.
 Capital Gains under direct tax refers to the profit or gain arising from the sale or transfer
of a capital asset. This gain is taxable under the head "Capital Gains" in direct tax
systems. Here's a concise explanation of capital gains, types, and how it's computed:

Types of Capital Gains:

Capital gains are classified into two categories based on the period for which the asset
was held:

 Short-Term Capital Gain (STCG):

o Arises when a capital asset is sold within a short holding period (usually less
than 36 months for property and 12 months for stocks/shares). The specific
holding period can vary by jurisdiction.
o Taxed at normal slab rates in most tax systems.
 Long-Term Capital Gain (LTCG):
o Arises when a capital asset is held for a longer period (usually more than 36
months for property and 12 months for listed shares).
o Taxed at a lower rate (e.g., 10% or 20% after indexation, depending on the
country’s tax laws).

2. Capital Assets:

A capital asset can include:

 Land, buildings, houses.

 Shares, bonds, mutual funds.
 Jewellery, patents, trademarks.
 Any other property (except personal-use items like cars, or stock-in-trade).

5. Exemptions for Capital Gains:

Certain exemptions are allowed under tax laws, provided the taxpayer invests the capital
gains in specified assets.
Income from Other Sources is a residual category under direct tax systems,
covering any income that doesn't fall under other heads like salary, house
property, or business income. It is taxable under the head “Income from Other
Sources” in tax filings. Here's a concise guide on its components and
computation.

Common Types of Income from Other Sources:

1. Interest Income:

o Interest earned on savings bank accounts, fixed deposits, recurring

deposits, and bonds.

2. Dividend Income:

o Dividends received from shares or mutual funds (subject to specific

rules in each country regarding taxability).

3. Winning from Lotteries, Races, and Games:

o Income from lotteries, horse races, crossword puzzles, card games,

gambling, etc., is fully taxable.

4. Gifts:

o Money or assets received as gifts are taxable if they exceed a

specified limit (e.g., ₹50,000 in India) unless received from
relatives or on special occasions like marriage.

5. Rental Income from Sub-Letting:

o If you sublet a property that you’ve rented, the rent received from
the sub-tenant is taxable here.

6. Family Pension:
 o Pension received by legal heirs of a deceased person.

7. Interest on Income Tax Refunds:

o Interest received on refunds of income tax paid earlier.

8. Income from Plant/Machinery/Equipment:

o Income from renting out plant, machinery, or equipment.

9. Casual Income:

o Any income that is irregular or not recurring and doesn’t fit into
other categories.

Deductions Allowed under Income from Other Sources:

Certain deductions are permitted when computing income under this head.
These may include:

1. Standard Deduction on Family Pension:

o Deduction up to ₹15,000 or 1/3rd of the pension received

(whichever is lower).

2. Expenses for Earning Interest Income:

o Any commission, legal, or clerical expenses incurred to collect or

manage the interest income can be deducted.

3. Deductions for Rent on Plant/Machinery/Buildings:

o Expenses like repairs, insurance, and depreciation related to the

property rented out can be deducted.

Income NOT Covered under Other Sources:

  Salary income, rental income from owned property, and business or
professional income are taxed under their respective heads and not
included here.

 Agricultural income (in some countries) is exempt from tax or has its
separate tax treatment.

DEDUCTIONS

Common Deductions under Direct Tax

1. Deductions under Section 80C (India):

This section offers deductions for investments in specified financial

instruments. The maximum deduction allowed is ₹1.5 lakh in a financial year.
Common eligible investments include:

 Public Provident Fund (PPF)

 Employee Provident Fund (EPF)

 Equity-Linked Saving Schemes (ELSS)

 National Savings Certificates (NSC)

 Life Insurance Premiums

 Tax-saving Fixed Deposits (FD)

 National Pension System (NPS)

2. Deductions under Section 80D (India):

Allows deductions for premiums paid on health insurance for self, spouse,
children, and parents. The maximum deduction is:
  ₹25,000 for self, spouse, and children

 An additional ₹25,000 for parents (or ₹50,000 if parents are senior

citizens)

3. Deductions under Section 80E (India):

Interest paid on loans taken for higher education is deductible under this
section. There is no upper limit on the deduction, and it is available for a
maximum of 8 years.

4. Deductions under Section 24(b) (India):

Interest on home loans can be claimed as a deduction under this section:

 Up to ₹2 lakh for self-occupied property.

 There is no limit for let-out property (entire interest can be claimed).

5. Deductions for Business Expenses:

In the case of businesses, various expenses can be deducted from gross income,
including:

 Cost of Goods Sold (COGS)

 Rent, salaries, and wages

 Depreciation on fixed assets

 Interest on business loans

 Marketing and advertising expenses

 Repairs and maintenance costs

6. Deductions under Section 80G (India):

Contributions made to specified charitable institutions and funds are deductible.
The deduction can vary based on the institution and the type of donation.

7. Deductions under Section 80TTA/80TTB (India):

 Section 80TTA: Allows a deduction of up to ₹10,000 on interest earned

from savings accounts for individuals below 60 years.

 Section 80TTB: Allows a deduction of up to ₹50,000 on interest earned

from savings accounts for senior citizens.

8. Other Deductions:

 Home Office Deductions: For individuals running a business from home.

 State and Local Taxes: Some jurisdictions allow the deduction of state
and local taxes paid.

 Miscellaneous Deductions: Depending on the tax laws of a country, this

may include deductions for certain job-related expenses, unreimbursed
employee expenses, etc.

How Deductions Work:

1. Subtract from Gross Income: Deductions are subtracted from your gross
income to determine the taxable income.

2. Reduces Tax Liability: The lower the taxable income, the lower the tax
liability, which can lead to substantial tax savings.

HISTORY OF INCOME TAX

The Ancient Taxation System Impact on the History of Income Tax in
India

The ancient system of taxation had a considerable influence on the present

taxation system. Numerous taxation policies and processes could be sourced
back to ancient times.

Impact of Manusmrti

Manusmrti guided having a flexible taxation system. The taxation rate must not
be excessive towards a level that the subjects feel compel to exempted tax
liabilities.

Also, the text also mentioned having diverse taxation slabs for individuals
involved in a different occupation. Altogether, the conditions of the taxpayer
must be taken into account for computing taxable income.

The aspect of flexibility that is found in the present tax system could be traced
from the given text.

Impact of Arthashastra

The Arthashastra put forward the code of maximum social welfare for tax
administration. The book also mentioned the principle of justice and equity.
Both of the policies were accordingly adopted in our current taxation system.

According to the codebook, the privileged must pay higher taxes in contrast to
the less privileged sections of the state.

Individuals deemed unfit for paying income tax like diseased or students were
accordingly exempted from tax liabilities or were given [Link], older
people are levied with a lower rate of taxation in accordance with the present
tax slab of the income tax.
EVOLUTION OF INCOME TAXATION SYSTEM IN
MEDEIVAL AND MODERN TIMES

First time Income Tax Act was introduced in February 1860 by Sir James
Wilson. Basically, it was introduced to cover huge losses incurred by the British
government after military mutiny of 1857. Thereafter, in the year 1918, a new
Income Tax Act was passed. The said Act of 1918 was replaced by passing of a
new Act in the year 1922. Finally, the Indian Income Tax Act, 1922 was
replaced by the Income Tax Act, 1961 and the same was made effective from
1st April 1962.

Short briefing of the Income Tax Act is tabulated hereundunder

Income Tax Act, 1860 was introduced for meeting up with the losses incurred
as a consequence of mutiny; It was made applicable for the period of 5 years.
The tax policies passed by the British government of India made the most
influencing effect of the contemporary tax system of India.

The policy of income tax laws which has been structured under the British India
rule could be credited to the well-known event of mutiny. The mutiny of 1857
through Indian soldiers of the British army caused huge losses towards the
British government of that time.

The Income Tax Act was presented in the year 1860 in order to meet the losses
experienced as a consequence of mutiny. The Act of 1860 was applied for a
period of 5 years and quashed accordingly.

The main features of the Income Tax Act 1860 are;

• Exemption of earnings from agriculture produce from taxation

• Premiums payable for Life Insurance were exempted from Taxation

• Hindu Undivided Family were addressed as a separate taxable unit

Income Tax Act, 1918 bought major revisions and reforms under Indian Tax
System; Notably, receipts as well as deduction of non-reoccurring nature were
incorporated in computation of taxable incomes. For the very first time, the
receipts and deductions of casual or non-occurring nature were also
incorporated under the computation of taxable incomes.

The prominent features of the Income Tax Act 1860 are as followed;

• The receipts of non-re-occurring nature happened during business or

professional operations were also incorporated in computing net income.

• Deductions of non-re-occurring were incorporated in computing taxable

income.

Income Tax Act, 1922 become more comprehensive income tax law; It covered
greater tax base within its ambit; Vide this tax reform, provisional authorities
handed over tax administration responsibilities to central government. The
income tax of 1922 was the most noteworthy milestone in the history of the
income tax system in India. The Act is accredited to represent the primary
organized income tax structure in India.

The Act of 1922 furnished the much-required flexibility in the taxation system
of India for Income Tax. Furthermore, it placed a proper system of tax
administration in India that continued to be in function for the next 40 years.

The features of the income tax act 1922 are;

• The rate of taxes was decided as per the budgetary requirements of the
prevailing period

• Amendments in the Act was no longer a necessity to make changes in the

rate of tax imposition

Income Tax Act, 1961 classified the income under five income heads i.e. Salary
Income; income from business or profession; house property income; capital
gains and income from other sources. The features of the Income Tax Act 1961
are as follows;

• Income tax was levied on income under five heads, they are;

1. Income from earnings

2. Income from business and profession

3. Income in the form of capital gains

4. Income from house property

5. Income from other sources

• A system for revenue audit was presented for the first time to compute taxes
in India

• The evaluation system for the responsibilities discharged through the income
tax officers came into force

There are XXIII Chapters, 298 Sections and Fourteen Schedules in

the Income Tax Act.

OBJECTIVE OF INCOME TAX-:

The main objectives of the Income Tax Act 1961 are as follows:

 Price Stability

The IT Act maintains price stability in the economy by laying out regulations
for direct taxes. It serves as a measure to control private spending, thereby
keeping a check on the inflation of commodity prices.

 Full Employment
This Act reduces the income tax rates in order to promote higher demand for
goods and services. This, in turn, leads to increased employment opportunities,
thus fulfilling the objective of full employment.

 Non-Revenue Objective

A higher tax rate is applicable for wealthy people compared to the poor. In this
way, the Income Tax Act encourages a progressive taxation system that
addresses the inequality in wealth among its citizens, carrying out its non-
revenue objective.

 Cyclical Fluctuations Control

When there is an economic boom, the income tax rates are increased, while in
times of recession, it is reduced. In this way, the Act maintains control over
cyclical fluctuations in the value of money.

 Reducing Balance of Payment Issues

The Income Tax Act imposes customs duties on the import of certain goods.
This helps encourage the domestic production of goods, thereby reducing the
balance of payment difficulties for the authorities.

FEATURES-:
Some of the salient features of the Income Tax Act 1961 are as
follows:

 Income tax is a form of direct tax that needs to be borne by

the taxpayer. It cannot be transferred to another individual.
 The Central Government of India controls this form of
taxation.
It is applicable to the taxpayer's income which was earned
in the previous year.
 Tax calculation is applicable based on the assessee’s
income tax slab.
 The government levies a progressive income tax rate so
that rich and economically powerful individuals have to
pay taxes at higher rates.

 Deductions apply to a maximum limit per financial year in

certain cases.

Advantages of Income Tax in India-:

Personal benefits
 Visa applications
If you are planning to visit countries like Canada, the USA, or the
United Kingdom, it is compulsory for Indians to provide the income
tax return (ITRs) of the last 3 years for easy visa approval. Payment
of income tax to the home country government acts as an assurance
for other countries that you are not leaving the origin country for tax
evasion purposes.

 Quick credit approval

Regular payment of income tax to the Government of India is
considered important when you have applied for big-ticket loans like
home loans, business loans, or personal loans. Before approving the
loan, the lender always asks the loan applicant to submit copies of
ITR.

 Income proof
For all self-employed professionals like freelancers, firm partners, or
consultants, filing income tax acts as income proof. It works in cases
where professionals are not getting a fixed salary from any particular
company. It plays an important role in all financial and business
transactions.

Public benefits

 Acts as the main source for augmenting country’s revenue

The primary objective of taxing the citizens of India is to raise
revenue for the smooth running of government activities.

 Helps to improve public infrastructure

The income tax paid by the citizens of India is used by the
Government of India for improving the quality of infrastructure like
public places, smart cities, and government institutes. All the funding
of infrastructure projects arises from the tax amount collected from
the country’s taxpayers.

 Launching of various welfare schemes

From education and health, to housing and employment, the
government is launching and running various welfare schemes to
provide benefits to Indian citizens. The main source of funding for all
these government schemes is the cumulative income tax paid by
taxpayers.

 Use in defence and scientific research

We are all proud of missions conducted by the Indian Space Research
Organization, and all these missions require huge funding. This is
provided by the Government of India. A percentage of the tax money
collected is earmarked by the government to space research
organizations for running space missions.

 Reducing income inequalities

The taxation policy of the government is the best way to reduce
income inequalities in India. By applying a progressive taxation
system, the rich are asked to pay more taxes as compared to the poor.
Taxes paid by the rich section of the society are utilised for social
services that particularly benefit the disadvantaged sections of society.
 CHAPTER – 2
RESEARCH
METHODOLOGY

Research is an organized inquiry designed and carried out to provide

information for solving problems.” -Fred Kerlinger.
Research methodology is a highly critical component that allows a researcher to
conduct a systematic study. To conduct this study in a systematic manner,
certain research methods were employed. Keeping the objectives in mind,
relevant quantitative and qualitative data was obtained, later used to draw
inferences, through both secondary and primary sources.

The research methodology that has been used is analytical, empirical and
Conclusive:

1. The research is analytical as it involves critical thinking skills in relation to

Tax regime in India

2. The research is empirical as it involves observing the level of Tax regime to

answer the specific research questions and provide inferences regarding Tax
regime in India.

3. The research is conclusive as it leads to a direct and clear observation.

Secondary Sources

At initial stages of the research, secondary methods were employed to obtain

the necessary qualitative data. Sources such as published books, research papers
and internet were actively used to understand the concepts relevant to the topic.
The main purpose of secondary tools was to capture as much information as
possible about Income tax regime In India

Primary Sources
Primary techniques were as important in achieving the objectives of this
research. They played a major rolein collecting first hand data. To conduct
primary investigation, a survey was performed which allowed for collection of
fresh data. Data collection techniques other than the one’s mentioned above
were beyond the range of this project.

This research encompassed a survey which was targeted towards

OBJECTIVE OF THE STUDY-:

 To analyse the awareness of taxpayers about the terms and language of

the Income tax regime
 To know the understandability of the Income tax in India
 To make suggestions regarding the need for reforms in the Indian

SCOPE OF STUDY
The study of Income Tax encompasses various aspects of taxation on
individuals, businesses, and other entities based on their income. The scope
includes the following areas:

1. Concepts and Principles of Income Taxation

Definition of Income: What constitutes taxable income.

Sources of Income: Different income heads such as salary, business income,

capital gains, etc.

Amendments and Trends-:

2. Tax Reforms: Changes in tax laws to address economic needs and socio-
political factors.

Digital Taxation: The evolving framework for taxing income from digital
and online sources.

LIMITATIONS OF THE STUDY

Any study based on a survey through a questionnaire suffers from the basic
limitation of the possibility of difference between what is recorded and what is
the truth, no matter how carefully the questionnaire has been designed and the
field investigation has been carried out. This is so because respondents may not
deliberately report their true perceptions, and even if they want to, there are
bound to be differences owing to problems in the filters of the communication
process. The study has the following limitations are as follows:

1. The study was done in area under Navi Mumbai. .

2. Some respondents were hesitant to provide accurate information.

3. The number of respondents was constrained to 60/100 for data collection as

the time and area was the constraint.

4. . Some respondents do not give timely responses. Sometimes the respondents

may give fake, socially acceptable and sweet answers to cover up the realities.

5. The data collected by the third party may not be reliable party, so the
reliability and accuracy of the data may go down

DATA COLLECTION
The process of gathering data for business decision-making, strategic planning,
research, and other purposes is known as ‘Data Collection’. It is an essential
component of data analytics applications and research projects: Data collection
that is effective provides the information required to answer questions, analyse
business performance or other outcomes, and forecast future trends, actions, and
scenarios.

A. RESEARCH METHOD

The research involves building a unique plan for gathering the necessary
information. This includes making decisions about data sources, research
approaches, research instruments, sampling plans, and contact methods. There
are three types of research design which are as follows:

1. Exploratory Method - The exploratory method is used when a researcher is

unsure of how or why certain phenomena occur. The primary goal of this
research is to learn about the unknown; it is unstructured.

2. Causative Method - Causative method is done to establish the cause-and-

effect relationship.

3. Descriptive Method - The descriptive method is used to describe a

phenomenon or market characteristics. This research is carried out to
understand buyer behaviour better and describe the target market's
characteristics. In addition, this study is being conducted to assess customer
preferences. For the study, I have used the descriptive research method.

[Link] OF DATA COLLECTION

Two methods of data collection have been used in the study:

a) Primary Data

b) Secondary Data

[Link] AND TECHNIQUES

After collecting the required data, the next step is to analyse and interpret the
collected data. The goal of the data analysis and interpretation phase is to turn
the obtained data into credible evidence about the development and
performance of the intervention. Data analysis is the act of analysing, filtering,
transforming, and modelling data to highlight relevant information, suggest
conclusions, and assist decision-making. Data analysis has multiple facts and
approaches in different business, science, and social science fields, spanning
distinct procedures under various [Link] tool used for the collection of data
is a questionnaire. The analysis of data collection is collected and presented
systematically with the use of Microsoft Word and Excel. The various tools
used for the presentation of data are:

1) Pie Charts- It is a presentation of data presenting data in the diagram.

Suppose data is presented in a diagram form, such as a pie chart, so anyone can
easily understand it.

2) Textual Presentation-It means presenting data in words, sentences and

paragraphs. The textual data is beneficial in delivering the data. It helps the
researcher to analyse and explain specific points in data.

3) Bar Chart- It is a presentation of data presenting data in the diagram. Suppose

data is presented in a diagram form, such as a bar chart, so anyone can easily
understand it.

[Link]

A questionnaire is a research instrument consisting of a series of questions or

other types of prompts designed to elicit information from a respondent. A
research questionnaire is typically composed of both closed-ended and open-
ended questions. Long-form, open-ended questions allow the respondent to
elaborate on their thoughts. The Statistical Society of London invented research
questionnaires in 1838. The information gathered from a data collection
questionnaire can be qualitative and quantitative. A questionnaire can be
delivered as a survey or not, but a survey always includes a questionnaire.

To meet the study's objective, primary data was collected through a

predesigned, structured questionnaire. Various studies were reviewed to have a
thorough understanding and knowledge about various aspects to be included in
the questionnaire. Accordingly, a self–administered and structured
questionnaire was designed to collect information from the respondents.

[Link] RESPONDENT

To meet the study's objective, primary data was collected through ___ number
of sample respondents.

F. SAMPLING TECHNIQUE

To meet the study's objective, Random sampling technique is used

CHAPTER- 3
LITRATURE
REVIEW

3.1 INTRODUCTION
A literature review is a thorough summary of earlier studies on a subject. The
literature review examines academic journals, books, and other materials
pertinent to the field of study. This prior research should be listed, described,
summed up, impartially evaluated, and clarified in the review. It needs to
provide a theoretical framework for the study and assist you (the author) in
defining its scope. By acknowledging the contributions of earlier researchers,
the literature review reassures the reader that your work has been thoughtfully
conceived. When a previous study in the subject is mentioned, it is assumed that
the author has read, assessed, and incorporated that study into the current work.
A literature review gives the reader a complete grasp of the developments in the
subject by providing a “landscape” for them. The reader may tell from this
landscape that the author has really incorporated all (or the vast majority) of
earlier, important works in the topic into their own work. 29 The goal of
producing a literature review is to explain to the reader what information and
concepts have been formed on a subject and what their advantages and
disadvantages are. A guiding notion must be used to define the literature review
(e.g., your research objective, the problem or issue you are discussing or your
argumentative thesis). It is more than just a list of the materials that are
available or a collection of summaries.
Nishant Ravindra Ghuge, Vivek Vasantrao Katdare (2015)- This paper aims
at analysing the indian tax structure. Tax is the major source of revenue for the
government, the development of any country's economy largely depends on the
tax structure it has adopted. A Taxation Structure which facilitates easy of doing
business and having no chance for tax evasion brings prosperity to a country's
economy. On the other hand, taxation structure which has provisions for tax
evasion and the one which does not facilitate ease of doing business slows down
the growth of country's economy. Therefore, as taxation structure plays an
important role in country's development. India has a well-developed tax
structure. The power to levy taxes and duties is distributed among the three tiers
of Government, in accordance with the provisions of the Indian Constitution.
Indian taxation structure has gone through many reforms and still it is very far
ahead from being a ideal taxation structure. Many problems like Tax Evasion,
Reliance on indirect taxes, Black money, existence of parallel economy show
that Indian taxation system requires some major reforms in the future ahead to
address all the problems. In the following paper, the study is purely based on
secondary data. Various figures are obtained from the different websites of
government of India. It is seen that there are various number of taxes and
different tax collection authorities in India. Also, it is seen that there is major
dependence on indirect taxes for tax collection than the direct taxes. Both
Indirect taxes and Direct taxes have their own advantages and disadvantages.

Harjit Singh, Arpan Kumar Kar, P Vigneswara Ilavarasan (2019)- The

purpose of this paper is to exemplify the best practices and the lessons learnt
from successful adoption of electronic public services. Governments worldwide
are developing multiple capabilities to deliver e-Services to citizens. India is
also working hard to keep pace with similar efforts. Most of the studies in this
field are done taking cases from developed countries. Case study research
literature on use of electronic public services for developing world context is
inadequate. Using case studies research on e-Filing system of Income Tax
department of India in terms of e-Services usage, we attempted to fill this gap.
Projects documents were analysed and structured interview of key stakeholders
were conducted. Some of the key outputs of those were compared with the
analysed output of the database of the system. In this study, we highlighted the
applicability of the technology adoption models in the context of use of the e-
Services in India. We found that citizens’ satisfaction—Ease of Use, usability
along with flexibility are important factors for adoption of an e-Service. We
also find that Managed Services model for e-Governance projects through
public private partnership in India is a “Success” and replicable. It was
recommended that the same finding are to be collaborated using the survey
based quantitative research and also similar study to be conducted on a state
level e-Government project in India. The findings can be extended in context of
general e-Services in India.

M Govinda Rao, R Kavita Rao (2006)- This paper aims at issue in tax policy
and reforms in India. Tax systems the world over have undergone significant
changes during the last twenty years as many countries across the ideological
spectrum and with varying levels of development have undertaken reforms. The
wave of tax reforms that began in the mid-1980s and accelerated in the 1990s
was motivated by a number of factors. In many developing countries, pressing
fiscal imbalance was the driving force. Tax policy was employed as a principal
instrument to correct severe budgetary pressures. 1 In others, the transition from
a planned economy to a market economy necessitated wideranging tax reforms.
Besides efficiency considerations, these tax reforms had to address the issues of
replacing public enterprise profits with taxes as a principal source of revenue
and of aligning tax policy to change in the development strategy. Another
motivation was the internationalization of economic activities arising from
increasing globalization. On the one hand, globalization entailed significant
reduction in tariffs, and replacements had to be found for this important and
relatively easily administered revenue source. On the other, globalization
emphasized the need to minimize both efficiency and compliance costs of the
tax system. The supply-side tax reforms of the Thatcher–Reagan era also had
their impact on the tax reforms in developing countries.

Yadawananda Neog, Achal Kumar Gaur (2020)- The present study examines
the long-run and short-run relationship between tax structure and state-level
growth performance in India for the period 1991–2016. The analysis in this
paper is based on the model of Acosta-Ormaechea and Yoo (2012), and for the
verification of the relationship between taxation and economic growth the panel
regression method is used. With the use of 14 Indian states data, Panel Pool
mean group estimation indicates that income tax and commodity–service tax
have negative effects whilst property and capital transaction tax have a
significant positive effect on state economic growth. This study finds ‘U’ shape
relationship between tax structure and growth performance. Based on the
analysis, we conclude that for faster growth of Indian states, policymakers
should give more focus on property taxes along with the reduction in income
taxes.

Vaneeta Rani, RS Arora (2011)- Tax policy and tax administration mutually
affect each other. An efficient tax administration is a prerequisite for the
successful implementation of tax policy. Income Tax Department in India
administers direct tax laws. On the other hand, tax professionals play an
important role in the implementation of income tax law of the country. The
present study has been carried out with the objective of analyzing the perception
of tax professionals with respect to some selected parameters, viz., completion
of assessments, unreasonable delay in refunds, physical environment prevalent
in income tax offices and quality of services provided by income tax
administration. The universe of present study comprises of tax professionals, ie,
chartered accountants practising in Punjab (India). A sample of 250 respondents
has been taken by selecting 50 respondents from Chandigarh (L1), Patiala (L2),
Ludhiana (L3), Jalandhar (L4) and Amritsar (L5) each. The primary data was
collected with the help of a well-structured questionnaire. The analysis of data
collected was carried out by using simple frequencies, percentages, average
weighted score, chi-square test, Kendall's coefficient of concordance, etc. The
study offers a few suggestions for improving income tax administration in India.

Minal Ritesh Parekh, Sharma Rashmi (2024)- Income tax, a fundamental

component of fiscal policy in most nations, serves a dual purpose: revenue
generation and the promotion of economic resource redistribution. This research
paper offers an in-depth exploration of income tax's pivotal role in fostering a
more equitable distribution of economic resources within a country. It delves
into the mechanisms that underpin progressive taxation, examines the tangible
impact of income tax policies on income inequality, and scrutinizes the
challenges and potential reforms necessary for optimizing income tax systems
towards achieving a more just and balanced wealth distribution. Through a
thorough analysis of progressive taxation, wealth redistribution mechanisms,
and the broader implications of income tax, this paper sheds light on how
income tax can be harnessed as a potent instrument for advancing economic
resource redistribution goals.
 CHAPTER – 4

ANALYSIS &
INTERPRETATION OF
DATA
 Data Analysis and
Interpretation
4.1) Analysis Of Data

Q.1) Gender

Interpretation-:

Based on the given response, the gender distribution shows

that 70% are female and 30% are male.
Q.2)

Occupation Number of Percentage

responses

Self employed 11 18.3%

Salaried employee 18 30%

Business owner 5 8.3%

Other 26 43.3%

Interpretation-: Based on the provided data, the respondents’

occupations are distributed as follows: Self Employed accounts for
18.3%, Salaried Employee represents 30%, Business Owner
represents 8.3%, and Other represents 43.3%
Q.3)

Annual Income Number Of Percentage

Responses

Below 2.5 lakhs 25 41.7%

2.5 Lakhs- 5 Lakhs 7 11.7%

5 Lakhs- 10 Lakhs 13 21.7%

10 Lakhs- 25 Lakhs 9 15%

Above 25 Lakhs 6 10%

Interpretation-:

Based on the given data, majority of respondents have annual income

below 2.5 lakhs which accounts for 41.7%, 11.7% are having income
between 2.5 lakhs- 5 Lakhs, 21.7% have annual between 5 lakhs – 10
lakhs. 15% have annual between 10 lakhs – 25 Lakhs and 10% above
25 Lakhs

Q.4

How you would Number of responses Percentage

consider your level
of financial literacy

High 16 26.7%

Medium 37 61.7%

Low 7 11.7%

Interpretation-:

Based on the given data, majority of respondents, that is, 61.7% have
medium level of knowledge regarding financial literacy, high level of
knowledge is indicated by 26.7% and the low level are 11.7%
Q.5)

On a scale of 1-5, how well would Number of Percentage

you say you understand tax responses
language and terms ?

0 1 1.7%

1 2 3.3%

2 9 15%

3 24 40%

4 17 28.3%

5 7 11.7%

Interpretation-:

Based on the given data, respondents who have understanding of tax

language and terms are as follows-:
0 scale indicates 1.7%, 1 indicates 3.3%, 2 indicates 15%, 3 indicates
40%, 4 indicates 28.3% and 5 indicates 11.75%

Q.6)

Are you a regular Number of responses Percentage

taxpayer ?

Yes 40 66.7%

No 20 33.3%

Interpretation-:

Based on the given data, majority of respondents, that is, 66.6% who
pay tax regularly and 33.3% does not pay tax regularly

Q.7)
How do you usually Number of Percentage
stay updated on Responses
changes in tax laws
and regulations?

Official government 21 35%

website

Social media 34 56.7%

News 36 60%

From tax 29 48.3%

professional

Other 12 20%

Interpretation-:

Based on the given data, 60% indicates majority of respondents who

are updated through news, 35% indicates official government
websites, 48.3% indicates from tax professionals and 20% indicates
others

Q.8)

How familiar are you Number of responses Percentage

with the current tax
system?

Very familiar 18 30%

Somewhat familiar 39 65%

Not familiar 3 3%

Interpretation-:

Based on the given data, 65% indicates majority are somewhat

familiar, 30% indicates very familiar and 5% indicates not familiar
Q.9)
Do you believe the Number of responses Percentage
tax system in India is
easy to understand
and follow?

Yes 11 18.3%

No 22 36.7%

Maybe 27 45%

Interpretation-:

Based on the given data, 45% indicates majority of respondents have

selected the option maybe, 36.7% indicates that less that majority but
higher than majority have selected option no and the 18.3% represents
the least that have selected option yes

Q.10)

Are you aware of the Number of Percentage

tax slabs under the Responses
Income tax regime in
India?

Yes 52 86.7%

No 8 13.3%

Interpretation-:

Based on the given data, 86.7% indicates majority of people are aware
of the tax slabs and 13.3% are not aware of the tax slabs
Q.11)

Do you prefer the Number of responses Percentage

Old tax regime (with
exemptions and
deductions) or New
tax regime (without
exemptions but lower
tax rates)?

Old tax regime 26 43.3%

New tax regime 20 33.3%

Not sure 14 23.3%

Interpretation-:
Based on the given data, 43.3% have opted for old tax regime, 33.3%
have opted for new tax regime and 23.3% are not sure about which
tax regimes are suitable for them

Q.12)

Do you find the Number of responses Percentage

process of filing
Income Tax return
user-friendly?

Yes 18 30%

No 13 21.7%

Somewhat 29 48.3%

Interpretation-:
Based on the given data, 48.3% indicates that majority of people are
not sure about the process of filing tax as user friendly, 30%
represents that filing tax is user friendly and 21.7% represents that
filing is not user friendly

Q.13)

Are you aware of the Number of responses Percentage

Goods and Services
Tax (GST) system in
India?

Yes 56 93.3%

No 4 6.7%

Interpretation-:
Based on the given data, 93.3% indicates that majority of respondents
are aware of gst system and 6.7% indicates that they are nor aware og
gst system

Q.14)
Do you think GST Number of responses Percentage
has simplified the
overall tax structure
in India?
Strongly agree 12 20%
Agree 23 38.3%
Neutral 17 28.3%
Disagree 6 10%
Strongly disagree 2 3.3%

Interpretation-:
Based on the given data, 20% indicates that the strongly agree that gst
has simplified tax system, 38.3% indicates that they agree, 28.3%
indicates they either agree or disagree with the given statement, 10%
indicates that gst has not simplifies tax system and 3.3% don’t agree
at all.

Q.15)
Do you believe the Number of responses Percentage
GST rates on
goods/services you
use are fair?
Yes 17 28.3%
No 25 41.7%
Maybe 18 30%

Interpretation-:
Based on the given data, 41.7% indicates that majority of respondents
do no believes that rates on good/services are fair, 28.3% agreewith
the given statement and 30% are not sure whether the rates are fair or
not.

Q.16)
Do you believe that Number of responses Percentage
India's tax regime
needs further reforms
to make it more
efficient and
transparent?
Strongly agree 23 38.3%
Agree 24 40%
Neutral 11 18.3%
Disagree 1 1.7%
Strongly disagree 1 1.7%

Interpretation-:
Based on given data, 38.3% indicates that they are strongly in favour
of the need for tax reforms, 40% agree on tax reforms, 18.3% neither
agree or disagree with tax reforms, 1.7% are those who are strongly
against the tax reforms

Q.17)
How satisfied are Number of responses Percentage
you with the current
services and
infrastructure
provided by the
government in return
for taxes paid
Very satisfied 6 10%
Satisfied 10 16.7%
Neutral 33 55%
Dissatisfied 6 10%
Very dissatisfied 5 8.3%
Interpretation -:
Based on the given data, 10% indicates that they very happy with the
given statement, 16.7% indicates that they agree with the given
statement, 55% are in majority which indicates that most of the
respondents are not sure or have no opinion about the given
statement, 8.3% indicates that they are not happy and 10% indicates
that they are not at all happy with the given statement.

Q.18)
Do you think the Number of responses Percentage
government provides
adequate information
and education on tax
compliance and
updates?
Yes 31 51.7%
No 29 48.3%
Interpretation-:
Based on the given data, 51.7% indicates that majority of people are
satisfies with information provided by government and 48.3% do not
agree with information provided by government.

CHAPTER 5
CONCLUSION AND
SUGGESTION

Findings

 Majority of respondents do not understand taxation which also

includes regular tax payers, which means there is lack of
awareness and education of taxation system.
 Tax is the main source of government revenue.
 A significant amount of portion of taxpayers want the reforms to
be introduced in taxation system.
 Majority of people are not happy with the rates applied on
goods/services
 Majority of people are not much satisfied regarding the filing of
tax to be user friendly
  Majority of the respondents (70%) are female
 Majority of people are having annual income below 2.5 lakhs

SUGGESTIONS-:

 The study was conducted with the help of primary data which
was collected from the respondents with the help of a
Questionnaire. The detailed data analysis is made and the
findings were drawn.
 Government of India should introduce tax reforms as soon as
possible which maybe a relief to the middle class society which
plays a very important role in both as a vote bank and also a
significant amount is also generated the middle class society.
 Awareness programs must be done by government to increase
the knowledge of the people of their own country taxation
system.

RECOMMENDATION-:
To improve the tax regime in India, the following
recommendations should be considered:

1. Simplify Tax Structure: Streamlining tax laws and

reducing the complexity of both direct and indirect taxes
 can make compliance easier for individuals and
businesses.
2. Broaden the Tax Base: The government should focus on
bringing more people and businesses into the formal tax
system. This can be achieved through better enforcement
of tax laws, leveraging data analytics, and improving tax
literacy. Policies aimed at reducing the informal economy
will also help.
3. Promote Technology-Driven Tax Administration:
Expanding the use of technology in tax filing, assessment,
and compliance can reduce errors, prevent evasion, and
ensure greater transparency. Expanding initiatives like
faceless assessments and e-invoicing will streamline tax
collection and minimize corruption.

CONCLUSION
The Indian income tax regime has undergone significant reforms
over the years, making strides toward simplification,
transparency, and better compliance. The introduction of digital
platforms, faceless assessments, and progressive taxation has
improved efficiency while reducing the scope for corruption and
tax evasion. However, challenges remain, including the
complexity of tax laws, a relatively narrow tax base, and a
perception of high compliance costs for taxpayers.
Tax reforms in India are essential to create a more efficient,
equitable, and growth-friendly system. The key focus areas for
future reforms should include simplifying the tax structure,
widening the tax base, improving compliance, and fostering a
business-friendly environment. Tax reforms in India are
essential to address the challenges of complexity, inefficiency,
and low tax compliance that have hindered the country's
economic potential. The current tax structure, while
significantly reformed through measures like GST and corporate
tax cuts, remains complicated with multiple tax rates and
frequent regulatory changes, which increases compliance
burdens, particularly for small businesses. Moreover, India has a
relatively narrow tax base, with only a small percentage of the
population contributing to tax revenues, leading to a lower tax-
to-GDP ratio compared to other emerging economies. Tax
evasion and an extensive informal economy further exacerbate
the problem, reducing government resources needed for
development and public welfare. Additionally, there is a need to
modernize tax administration by leveraging technology to
ensure transparency, reduce corruption, and improve
compliance. As India seeks to position itself as a global
economic power, tax reforms focusing on simplification,
digitalization, and broadening the tax base are crucial for
fostering sustainable growth and investment.

CHAPTER 6
 REFERENCE AND
BIBLIOGRAPHY

REFERENCE

1. M Govinda Rao, R Kavita Rao India Policy Forum 2 (1), 55-

122, 2006
2. M Govinda Rao, R Kavita Rao India Policy Forum 2 (1), 55-
122, 2006
3. Tax structure and economic growth: A study of selected Indian
states Yadawananda Neog, Achal Kumar Gaur, Journal of
Economic Structures 9 (1), 38, 2020
4. Indian Tax Structure-An Analytical Perspective Nishant
Ravindra Ghuge, Vivek Vasantrao Katdare International Journal
in Management & Social Science 3 (9), 242-252, 2015
5. Adoption of e-Government services: a case study on e-Filing
system of income tax department of India Harjit Singh, Arpan
Kumar Kar, P Vigneswara Ilavarasan Operations Research in
Development Sector, 109-123, 2019

Bibliography

[Link]

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1385541566IPF_200506_IPF-Vol_51.pdf#page=76

[Link]
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[Link]
([Link])
 Home | Income Tax Department

[Link] ([Link])

Annexure

1)Gender

 Male
 Female

2) Occupation

 Self employed
 Salaried employee
 Business owner
 Retired
 Other
3) Annual income

 Below 2.5 lakhs

 2.5 Lakhs- 5 Lakhs
 5 Lakhs- 10 Lakhs
 10 Lakhs - 25 Lakhs
 above 25 lakhs

4) How would you consider your level of financial literacy ?

 High
 Medium
 Low

5) On a scale of 1-5, how well would you say you understand

tax language and terms?

0
1
2
3
4
5

6) Are you a regular taxpayer ?

 Yes
  No

7) How do you usually stay updated on changes in tax laws

and regulations?

 Official government websites

 Social media
 News
 From tax professionals
 Other

8) How familiar are you with the current tax system?

 Very familiar
 Somewhat familiar
 Not familiar

9) Do you believe the tax system in India is easy to

understand and follow?

 Yes
 No
 Maybe

10) Are you aware of the tax slabs under the Income tax
regime in India?

Yes
No

9. Do you prefer the Old tax regime (with exemptions and

deductions) or New tax regime (without exemptions but lower
tax rates)?

 Old tax regime

 New tax regime
 Not sure

10. Do you find the process of filing Income Tax return user-
friendly?

 Yes
 No
 Somewhat
 Are you aware of the Goods and Services Tax (GST)
system in India?
 Yes
 No

12. Do you think GST has simplified the overall tax structure
in India?

 Strongly agree
 Agree
  Neutral
 Disagree
 Strongly disagree

13. Do you believe the GST rates on goods/services you use

are fair?

 Yes
 No
 Maybe

16. Do you believe that India's tax regime needs further

reforms to make it more efficient and transparent?

 Strongly agree
 Agree
 Neutral
 Disagree
 Strongly Disagree

17. How satisfied are you with the current services and
infrastructure provided by the government in return for taxes
paid

 Very satisfied
 Satisfied
  Neutral
 Dissatisfied
 Very dissatisfied

18. Do you think the government provides adequate

information and education on tax compliance and updates?

 Yes
 No