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Importance Of The Finance Act

by Aashish Ramchand | 6 March 2013

 

Every year, a new Finance Act is introduced to the people of India and the Central Government, through the Budget Session in Parliament, gives the nation a brief introduction to the highlights of this Act. The main ingredients of the Act are of course the elements related to the Income Tax slabs. Though the slabs are the centre of attention each year, the other elements in the Act are also equally important. The Act contains details that lay out the tax plans for the country for a particular Financial Year and for this reason, a new refurbished Act is introduced each year.

The Finance Act therefore lays down the tax and financial framework for each Financial Year through an avatar that changes each year. The Finance Act of 2012, for example was related to the rules and regulations that were to be followed in the Financial Year 2012-13. Every Finance Act therefore applies to the period from 1 April to 31 March of the relevant Financial Year. The Finance Acts are divided into different chapters so that each topic may be dealt with systematically. Most Finance Acts have the same chapter name such as Preliminary, Rates of Income Tax, Direct Taxes, and Miscellaneous. The new chapter of Schedule has been seen in the last two Finance Acts and is more of a rundown of all that is important in the particular Act.

The Finance Act is extremely important to the financial well being of the country as each Act sees the Central Government make relevant changes to its financial policies. Each year, the current financial situation of the country, and even the world at large, are taken into consideration before drafting the changes that need to be made concerning the preceding Finance Act. The new Finance Act of every new Financial Year therefore charts the financial route map of the nation.

 

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