Income Tax Basics in India
Income tax is a type of tax that the central government charges on the income earned during a financial year by the individuals and businesses.Taxes are sources of revenue for the government.Government utilizes this revenue for developing infrastructure, providing healthcare,education,subsidy to the farmer/ agriculture sector and in other government welfare schemes. Taxes are mainly of two types,direct taxes and indirect form of taxes.Tax levied directly on the income earned is called as direct tax,for example Income tax is a direct tax.The tax calculation is based on the income slab rates applicable during that financial year. https://www.registerkaro.in/income-tax-filing-online Types of Income Tax payers The Income tax Act has classified the types of taxpayers in categories so as to apply different tax rates for different types of taxpayers Income tax return filing online. Taxpayers are categorized as below: Individuals, Hindu Undivided Family (HUF), Association of Persons(AOP) and Body of Individuals (BOI) Firms Companies Further, Individuals are broadly classified into residents and non-residents.Resident individuals are liable to pay tax on their global income in India i.e. income earned in India and abroad.Online file ITR Whereas, those who qualify as Non-residents need to pay taxes only on income earned or accrued in India. The residential status has to be determined separately for tax purposes for every financial year on the basis of the individual tenor of stay in India.ITR filling Resident Individuals are further classified into below mentioned categories for tax purposes- Individuals less than 60 years of age Individuals aged more than 60 but less than 80 years Individuals aged more than 80 years Types of Income / Heads of Income Everyone who earns or gets an income in India is subject to income tax.(Yes, be it a resident or a non-resident of India ).Income tax e filing For simpler classification, the Income tax department breaks down income into five main heads: Head of Income Nature of Income covered Income from Other Sources Income from savings bank account interest, fixed deposits, winning in lotteries is taxable under this head. Income from House Property Income earned from renting a house property is taxable under this head of income. Income from Capital Gains Surplus Income from sale of a capital asset such as mutual funds, shares, house property etc is taxable under this head of Income. Income from Business and Profession Profits earned by self employed individuals, businesses , freelancers or contractors & income earned by professionals like life insurance agents, chartered accountants, doctors and lawyers who have their own practice, tuition teachers are taxable under this head. Income from Salary Income earned from salary and pension is taxable under this head of income e filing income tax Taxpayers and income tax slabs Each of these taxpayers is taxed differently under the Indian income tax laws. While firms and Indian companies have a fixed rate of tax calculated on their tax profits, the individual,HUF, AOP and BOI taxpayers are taxed based on the income slab they fall under. People’s incomes are grouped into blocks called tax brackets or tax slabs indian income tax e filing. And each tax slab has a different tax rate.Rate at which income is charged to tax increases with increase in income. Income tax return online Budget 2020 introduced a ‘New tax regime’ for the Individuals and HUF taxpayers :
