Income Tax is a sort of annual or monthly charge that Federal Government directly levies on the financial income generated by all the individuals within their jurisdiction. It is the primary source of government to collect funds that they use to finance their Government and military operations, social welfare programs and serve the public. The government has employed a progressive income tax system in which a higher income earner pays higher tax than their lower counterparts. It is mandatory for every tax payer to file Income Tax Return every year to identify whether the payer is free of any pending taxes and are eligible for a tax return. If they are not, a notice will be issued by Income Tax department on the terms of Tax invasion.
The income tax is applied on both earned income (Wages, salaries, commission) and unearned income (dividends, interest, rent). Income taxation is designed to distribute wealth more evenly in public. There are two types of Income Tax, First Personal Tax, imposed on personally earned income, household, proprietorship, and Corporate Income Tax, charged on Net profits made by incorporated firms. However, several tax loopholes are available through which some rich people may evade taxes without defying the principles of tax laws.
Tax advisor or consultants are the experts in these matters and have been a reliable source for many wealthy people to escape higher tax for many years. They are trained in tax laws. Companies hire them to verify their balance sheets above a certain size. They guide individuals and corporate on how to minimize tax, make a proper statement of tax, and how to handle a complicated financial situation.