The Income Tax Act is a law that governs how individuals and businesses in a country report and pay their income taxes. It outlines the rules for calculating taxable income, allowable deductions, and tax rates. This act ensures that everyone contributes fairly to government revenue based on their earnings. In many countries, the Income Tax Act is updated regularly to reflect changes in the economy and social policies. It also includes provisions for tax credits and exemptions, which can reduce the overall tax burden for eligible taxpayers. Understanding this act is essential for compliance and effective financial planning.