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Income Tax

The Income Tax Department in India, overseen by the Central Board for Direct Taxes (CBDT), is responsible for collecting direct taxes on individuals and entities based on their income. Income tax is categorized into various types, including salary, property, business, capital gains, and other sources, with specific eligibility criteria for taxpayers. The Income Tax Act of 1961 and the Income Tax Rules of 1962 govern the taxation process, and taxpayers can file their returns online for convenience.

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6 views3 pages

Income Tax

The Income Tax Department in India, overseen by the Central Board for Direct Taxes (CBDT), is responsible for collecting direct taxes on individuals and entities based on their income. Income tax is categorized into various types, including salary, property, business, capital gains, and other sources, with specific eligibility criteria for taxpayers. The Income Tax Act of 1961 and the Income Tax Rules of 1962 govern the taxation process, and taxpayers can file their returns online for convenience.

Uploaded by

Naveenkumar
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© © All Rights Reserved
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INCOME TAX

Income Tax in India


About Income Tax Department India
A government agency that undertakes the direct collection of tax in India is the
Income Tax Department. All operations of the department are handled by the
Central Board for Direct Taxes (CBDT). Individuals can get details such as
international taxation, tax laws and rules, organizational setup, etc., on the
official website of the department.
Income Tax is a direct tax that is charged on an individual's or entity's income.
The tax is calculated on the next taxable income of the entity based on the
income slabs which are pre-defined by the IT Department.
What is Income Tax?
Income tax is a direct tax imposed by the central government on the income
earned by individuals and businesses during a financial year.
There are two main types of taxes:

 Direct Taxes: Direct tax is paid directly to the government by the


organization or an individual and cannot be paid to anyone else.
 Indirect Taxes: The manufacturer pays to the Government of his
country on the use of products and services is named as Indirect Taxes.

The government utilizes the generated revenue to fund essential sectors such
as agriculture, education, and healthcare. Online platforms facilitate easy
payment of income tax, TDS/TCS, and non-TDS/TCS payments, streamlining
the process for taxpayers.
Who Should Pay Income Tax (Eligibility Criteria)?
Taxpayers in India, including individuals under 60 earning more than Rs.2.5
lakh and those above 60 earning above the same threshold, are obligated to
pay income tax under old regime. Resident Individuals are further classified
based on age, with those below 60 and those aged 60 to 80 having different
tax rules.
It is mandatory to file ITR for individuals If the total Gross Income is over
Rs.3,00,000 in a financial year (Including standard deduction). This limit
exceeds Rs.3,00,000 for senior citizens and Rs.5,00,000 for super senior
citizens. The entities listed below must pay taxes and file their income tax
returns.

1. Artificial Judicial Persons


2. Corporate firms
3. Association of Persons (AOPs)
4. Hindu Undivided Families (HUFs)
5. Companies
6. Local Authorities
7. Body of Individuals (BOIs)

Income Tax Rules in India


The legislature enacted the Income Tax Act of 1961 to administer and govern
income tax in the country. Still, the Income Tax Rules, 1962, were created to
help in applying and enforcing the law constituted in the Act. Moreover, the
Income Tax Rules can only be read with the Income Tax Act.
The Income Tax Rules are within the framework of the Income Tax Act and
are not allowed to override its provisions.
What are the Different Types of Income?
In India, every individual, regardless of their residency status (whether a
resident or non-resident), is obligated to pay income tax on their earned or
received income. To facilitate a systematic classification, the Income Tax
Department has delineated income into five distinct heads, each
encompassing specific sources:

 Property Income - This category includes income generated from


renting a residential property. Individuals earning rental income are
subject to taxation under this head.
 Salary Income - Income derived from employment, including salaries
and pensions, is classified under this head. Tax liabilities arise from
earnings related to one's employment.

 Business or Professional Income - Self-employed individuals,


freelancers, businesses, contractors, and professionals like life
insurance agents, chartered accountants, doctors, lawyers, and tuition
teachers with independent practices fall under this head. Profits
generated from these endeavors are taxable.
 Capital Gain Income - Surplus income generated from the sale of
capital assets like stocks, mutual funds, or real estate is taxable under
this type of income.
 Income from Other Sources - Income earned as interest from savings
bank account, fixed deposits, and lottery winning are considered as
income from other sources.
Income Tax Return
Income Tax Return (ITR) is a form submitted by Individuals to Income Tax
Department about his Income. Here is all you need to know about how to file
ITR online. Before you file your taxes, you will need your Form 16, provided
by your employer, and any proof of investment. You can compute the tax
payable and any refunds for the year.
Once you have all the documents ready, you can start the Income tax
return filing process.
For MSMEs and professionals, the next-generation common IT form has been
introduced; if their cash receipts are less than 5%, presumptive tax limitations
have been raised to Rs 3 crore (turnover) and Rs. 75 lakh (income).
E-Filing Income Tax
E-filing your return has apparent advantages like you won't have to deal with
the hassle of paperwork and waste time sorting through it all. You can log on
to the secure website and e-file your return.
E-Filing Income Tax Returns, TDS returns, AIR returns, and Wealth Tax
Returns can be completed online at https://incometaxindiaefiling.gov.in.
This government website also has provisions for you to submit returns,
view form 26AS, outstanding tax demand, CPC refund status, rectification
status, ITR - V receipt status, online application tools for PAN and TAN, e-pay
your tax and even has tax calculator.
Taxpayers and Income Tax Slab Rates
In the Union Budget 2024, the Finance Minister of India announced changes
to the income tax slab for the new regime. However, the new income tax
regime is optional, and individuals can opt for it or file their taxes as per the
old regime.
Income Tax slab under New Regime for FY 2024-25

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