Income Tax

Other Services

What is Income tax?

Taxes levied by the Government are of two types, i.e. Direct Taxes and Indirect Taxes. Direct taxes are levied on profit or income of tax payers and Indirect Taxes are those taxes which are levied on Goods and Services. Income tax is type of direct taxes which refers to the tax you pay directly to the Government depending on your income or profit derived from your business or profession or any other sources of income.

Uses and benefits of filing Income Tax Return

  1. Quick loan approval

  2. For claiming a refund of TDS deducted

  3. Credit card processing

  4. For applying government tenders

  5. Hassle free visa processing, when traveling to foreign countries

  6. Proof of income for self-employed businessman/professionals

  7. To buy an insurance policy with higher cover

  8. To avoid penalty/scrutiny if you are required to file your tax return

  9. Help to carry forward losses

Who are the Tax Payers?

Any Indian citizen aged below 60 years is liable to pay income tax if their income exceeds Rs 2.5 lakhs. If the individual is above 60 years of age and earns more than Rs 2.5 lakhs, he/she will have to pay taxes to the Government of India. Additionally, the following entities that generate income are liable to pay direct taxes:

  • Hindu Undivided Family (HUF)
  • Body of Individuals (BOI)
  • Association of Persons (AOP)
  • Local Authorities
  • Corporate firms
  • Companies
  • All Artificial Juridical Persons

What are the different taxable Heads of Income?

Taxable income that all employees receive from their employers is categorized under this head. As per section 192 of the Income Tax Act, the employer will withhold taxes if the employees do not come within the taxable bracket. All about tax deductions and the net paid income are detailed in Form 16 that must be provided by the employer to the employee.

Capital gains tax applies to earnings from the sale of capital assets held by the tax assessee. Capital assets refer to properties such as buildings, lands, bonds, equities, debentures, jewellery, etc. Taxes are levied on the income of the assessee when such properties are sold.

Income Tax is levied on house property if the house is given out on rent by the owner. However, under this head, the property cannot be used for business or professional purposes.

As per section 30 to 43D of the Income Tax Act, the profits earned from businesses or by providing professional services are considered taxable as per applicable rates. This income head is also known as “Profits and Gains of Business or Profession”.

Income from any sources other than the four listed above is categorized under this head. Some specific income coming under this head is listed below:

  • Lottery/horse race winnings
  • Income from dividends
  • Pension received after the pensioner’s death.
  • Rental income (other than house properties)
  • Gifts received
  • Interest on government securities, debentures, and bonds.

What are the different Income Tax Slab Rates

Income tax slab rates are defined on the basis of the earning of the taxpayers. Income tax slab rates are broadly categorized as follows:

For HUFs and Individuals (Male or Female) Below the Age of 60 Years Income Tax Slabs & Rates 2017-18

For Individuals (Male or Female) Above the Age of 60 Years

For Individuals (Male or Female) Above the Age of 80 Years

For Co-operative Societies

For Domestic Companies

The income tax rate applicable to Domestic Companies will be @ 30%.

For Foreign Companies

For Local Authorities

For local authorities, the tax rate is determined as at 30%.

**Income Tax Slab Rates for the assessment year 2018-19**

How is the Income Tax Collected?

There are primarily three ways in which the Income Taxes are collected by the Government:

  • Taxes Deducted at Source (TDS)
  • Taxes Collected at Source (TCS)
  • Voluntary payment by taxpayers into designated Banks

What is Income Tax Returns?

Every individual, who has a source of income, regular or irregular, is legally required to file their income tax returns. Even if your income is below the taxable bracket, you should file your income tax returns. There are prescribed forms through which the income earned by a person and the income tax paid thereon are informed to the Income Tax Authority. The following table shows different forms prescribed for different classes of taxpayers.