Income Tax in India: An Overview
Income Tax is a direct tax levied by the Government of India on the income earned by individuals, businesses, and other entities during a financial year. The tax collected is used for public services, infrastructure development, and other government activities.
Who Needs to Pay Income Tax?
- Individuals: Salaried or self-employed persons whose income exceeds the exempt limit.
- Hindu Undivided Families (HUFs): Joint families recognized under Indian law.
- Businesses: Companies, partnerships, LLPs, and sole proprietors.
- Others: Trusts, associations, and non-residents earning income in India.
Types of Income Tax
| Type | Description |
|---|---|
| Personal Income Tax | Tax on income earned by individuals and HUFs. |
| Corporate Tax | Tax on the profits earned by businesses and companies. |
Sources of Taxable Income
- Income from Salary: Salaries, allowances, and benefits.
- Income from House Property: Rental income or deemed income from property ownership.
- Income from Business/Profession: Profits from business or professional services.
- Capital Gains: Profit from the sale of assets like property, shares, or gold.
- Income from Other Sources: Dividends, interest, lottery winnings, etc.
Income Tax Slabs for Individuals (FY 2023-24)
Under New Tax Regime
| Income Range (₹) | Tax Rate |
|---|---|
| 0 – 3,00,000 | Nil |
| 3,00,001 – 6,00,000 | 5% |
| 6,00,001 – 9,00,000 | 10% |
| 9,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000 | 20% |
| Above 15,00,000 | 30% |
Under Old Tax Regime
| Income Range (₹) | Tax Rate |
|---|---|
| 0 – 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
How to File Income Tax Returns (ITR)
- Determine the Applicable ITR Form: Based on income type and source.
- Collect Documents:
- Form 16 (for salaried individuals).
- Bank statements, investment proofs, and TDS certificates.
- Login to the Income Tax Portal:
- Fill the ITR Form Online:
- Enter income, deductions, and tax paid details.
- Verify and Submit:
- E-verify using Aadhaar OTP, net banking, or digital signature.
Deductions and Exemptions
- Under Section 80C: Investments in PPF, ELSS, and life insurance (up to ₹1,50,000).
- Under Section 80D: Health insurance premiums.
- HRA Exemption: For salaried individuals living in rented houses.
- Standard Deduction: ₹50,000 for salaried taxpayers.
Penalties for Non-Compliance
- Late Filing Fee:
- Up to ₹5,000 if filed after the due date.
- Interest:
- 1% per month on unpaid taxes under Section 234A.
- Prosecution:
- Severe cases of tax evasion may lead to legal action.
For detailed assistance with income tax planning, filing, or queries, feel free to contact AK Mehta & Associates😊