Before we delve deep into the matter it is very important to define the term income tax so that it becomes easy for the readers to understand the topic. Income tax is a kind of levy that is imposed by the government on all the financial income that is generated by different entities within its jurisdiction. Each and every individual as well as the company is by law bound to make sure that the income tax returns are filed each year. These returns determine that whether the person is entitled for tax refund or does he owes any tax to the government. Income tax is one of the most important keys that is used by the government to serve the people ad to make sure that the general public welfare projects continue in the best possible manner.

Income tax has been impose by most of the countries of the world in a progressive manner which means that a person who earns high pays higher amount in terms of tax and vice versa. In the USA the income tax was fort imposed in the year 1812 when there was a war going on. The main purpose of this tax imposition was to make sure that the $100M are covered which the government had already spent on terms of war expenses.

Under the progressive tax system it is also to be noted that the corporations as well as large multinationals needs to pay more tax as compared to the individuals who are working for the economy of the country. Tax codes are therefore defined in a very easy manner to make sure that before filing a return the exact amount is calculated so the entity does not have to go through all the process again. In most of the countries of the world the income from the employees is generally collected by the employers who in return make sure that a combined return is filed to avoid any hassle. The income tax codes may vary for such organizations who the n implement them with the help of the professionals who are hired for the same purpose.

With the passage of time the term tax evasion has given birth to loop holes identification to make sure that the income tax systems are monitored strictly. It is also known as tax avoidance which makes sure that the income tax is always ignored or not paid by using legal means that are permitted by the law. All such practices have also tend the governments to create income tax inspectors who visit the entity to make sure that the return filed is true and nothing has been concealed in this regard. The need of the hour is to make sure that the tax avoidance is eliminated totally from the world’s economy as it leads to more vicious ideas related to the phenomenon making the idea even hard to understand.

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