Tax is compulsory levy imposed by the Government on individuals and legal person.Here legal person means company,institution and corporations.Commercial banks are treated as company.Multinational company is also treated as legal person.City corporation is also legal person.Educational institution is also legal person.They are the principal.They work through their agent .Agents are their brain.Here liability is strictly separated. Agents liability and principal liability is totally different.Tax has no penal character.Tax is not imposed as a fine or penalty.Tax is the most important fiscal mechanism of transferring private property to state property.The imposition of tax is made for public purpose without reference to any special benefit to be conferred upon the payer of tax.The principal object of income tax is to collect revenue with a view to running various government functionaries.It accelerate economic growth by encouraging savings and investment.
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