INCOME TAX INDIA
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INCOME TAX
RETURN FILING
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Income Tax - Latest Updates, Basics, Tax Slabs, Rules
You’ve heard about income tax, filing returns, TDS, exemptions, and deductions, but you’re still not clear how the entire system works. Let’s go over the fundamentals of income tax and its framework. This post will go over all of the major provisions that one should be aware of if they want to understand basic taxation in India.Â
What is income tax?
- Income tax is levied on the income produced by the taxpayer during the relevant fiscal year.
- Income tax is characterized as a direct tax because the taxpayer bears the tax burden, which cannot be passed on to others like indirect taxes.
- Every taxpayer (assessee as defined in the Income Tax Act) who meets certain qualifications must file a tax return by law.
- Failure to file tax returns may result in penalties, interest, and attention from the tax agency.
- Individuals in India are taxed at a progressive rate, which means that the tax rate grows as the assessee’s income increases.
- Income tax implications vary depending on the taxpayer’s legal entity, age, residency status, and type of income obtained.Â
Browse Categories
House Property
Business, Professional, and Freelance
Filing Income Tax Return
Income Tax Refunds
Paying Tax Due
Salary Income
Capital Gains Income
Other income sources:
Advance Tax
NRI
HUF
Income Tax Notices
Income Tax Laws in India
- The Indian Constitution explicitly says that taxes can only be imposed in accordance with the requirements of any law. Any tax imposed by the government that is not covered by any legislation is unconstitutional.
- The Income Tax Act of 1961 governs all laws for levying and collecting income tax in India.
- Income tax falls under the union list, which is directly under the supervision of the central government. Only Parliament has the authority to enact laws for the collection of income tax.
- Every year, the Finance Bill presented during the Budget session amends the Act to increase tax compliance by establishing and removing specific parts. These modifications are known as amendments to the Act.
- The Finance Act implements amendments to the Income Tax Act.
- Aside from the IT Act, other components of the income tax law include income tax rules, circulars, notifications, and case laws. All of these factors contribute to the establishment and collection of income taxes.
Income Tax Department
- The Income Tax Department is a governmental agency.
- The Act authorizes the Income Tax Department to collect direct taxes on behalf of the Government of India.
- The Ministry of Finance administers the Government of India’s revenue functions. The finance ministry has delegated the administration of direct taxes, including as income tax, to the Central Board of Direct Taxes (CBDT).
- The CBDT is part of the Ministry of Finance’s Department of Revenue. The CBDT’s IT Department executes direct tax laws.Â
Types of Taxpayers
- According to the Income Tax Act, anybody in India who makes taxable income must file income tax returns.
- The person whose income is subject to taxation is known as an assessee.
- The Income Tax Act divides assessees into several groups. Different tax rules apply to different categories of assessees.
   Below are the categories of taxpayers:Â
- Individuals
- Â Hindu Undivided Family (HUF)Â
- “Firms”
- Companies
- Association of Persons (AOP)
- The Body of Individuals (BOI)
- Local Authority
- Artificial Judicial Person
Some assessees are required to file an ITR if they meet specific criteria.
Residential Status
 The extent of an assessee’s taxable income is defined by their residential status. Assessees can be classed based on their residential status.
- Resident and Ordinarily Resident
- Resident but Not Ordinarily Resident
- Non-Resident
The following table specifies the income that will be subject to tax for different types of assessees based on their residential status:
| Income Type | Residential Status | ||
|---|---|---|---|
| Resident and Ordinarily Resident (ROR) | Resident but not–Ordinarily Resident (RNOR) | Non-Resident (NR) | |
| Income received in India | Taxable | Taxable | Taxable |
| Accrued income in India | Taxable | Taxable | Taxable |
| Income accrues from outside India, but the profession or business is in India. | Taxable | Taxable | Non-taxable |
| Income accrues from outside India | Taxable | Non-taxable | Non-taxable |
| The untaxed past foreign income brought into the country. | Non-taxable | Non-taxable | Non-taxable |
Types of Income -What are the five categories of income?
For tax purposes, we must appropriately classify any income we earn under the appropriate headings as stipulated by the statute. All taxable income under this statute is essentially categorized into the following five major categories.
Deductions Under the Income Tax Act
- If taxpayers make certain investments or incur certain expenses, the amount of investment or expense can be deducted from their income, leaving just the net income liable to taxation. This is known as the concept of deduction.
- Furthermore, if the income is of a specified character or comes from a specific source, the act expressly allows for a deduction on that income.
- Therefore, deductions under the act can eb given on the basis of investments made, expenses incurred or income earned. Read more to find out the popular forms of deductions available under the act.    Â
  Popular deductions
Taxpayers can save money by arranging their taxes ahead of time. Investing in tax-saving gadgets allows a person to prepare their taxes. It helps to reduce income tax liability.
   Section 80C Deductions
- Sections 80C to 80U of the Income Tax Act allow for the deduction of certain expenses and investments from total income.
- Some of the most common Section 80C investment alternatives for claiming deductions are: