Income tax plays a vital role as a source of revenue and a measure of removal of economic disparity in a country’s economic structure.
Every person who earns Income in India has a mandatory obligation to pay a certain sum of such Income directly to government for the purpose of financing of various operations of the government. The sum on which Income tax has to be paid is calculated in accordance with various provisions of Indian Income Tax Laws framed by the government.
Any person by whom any Tax or any other sum of money is payable under this Act is known an Assessee.
For the purpose of calculating Income, there are different slab rates for different categories of Income earned for different Assesses in Income tax laws.
Following are the Slab rates of Income Tax:
• Up to Rs. 250000 – Nil
• Rs.250000 to Rs.500000 – 10% (5% w.e.f. FY 2017-18)
• Rs.500000 to Rs.1000000 – 20%
• Above Rs.1000000 – 30%
Income Tax is calculated on an annual basis. The year in which Income tax return is to be filed by the assessee, is known as Assessment year. The Assessment Year is the Financial Year of the Govt. of India during which income a person relating to the relevant previous year is assessed to tax. Every person who is liable to pay tax under this Act, files Return of Income by prescribed dates.
The Financial year in which Income is earned is known as previous year.
According to the Indian Income Tax Laws, There are 5 different Income heads. The Income under each head will be charged to Income Tax.
• Income from House property
• Profits and gains from business and profession
• Capital Gains
• Income from other sources.
The sum of all these Heads is calculated in accordance with the provisions of Income Tax Laws in respect with various deductions and exemptions.Thus the tax will be computed on the basis of total income. Aggregate of taxable income under each head of income is known as Gross Total Income
For the payment of tax, An Income Tax Return (ITR) is to be filed with the government for declaration of Income along with the details of Income earned under different heads. ITR has to filed in the assessment year following the financial year in which income is earned.
There are 7 types of ITR forms available for different types of Assesses.
• ITR-1 (SAHAJ)
• ITR-4 (SUGAM)
The deadlines of filing of ITR are as follows:
• 31st July in case of individuals and non-audit cases
• 30th September in case of audit cases and Companies
For filing of Income tax return, you need to have a PAN card, and you can file your Income tax return manually or through e-filing.
But every person (not being a company or a person filing return in ITR 7) hasto e-file the return of income if
a. its total income for the financial year 2016-17 exceeds Rs. 5,00,000 or any refund is claimed in the return of income except for super senior citizen (Age above 80 years)
b. an individual or a Hindu undivided family, being a resident, having assets (including financial interest in any entity) located outside India or signing authority in any account located outside India or income from any source outside India and required to furnish the return in Form ITR-2 or ITR-3 or ITR-4, as the case may be.
c. Every person claiming tax relief under Section 90, 90A or 91 shall file return in electronic mode.
d. Those who are required to get their Account under Section 44AB
e. A firm required to furnish the return in Form ITR-5 or an individual or Hindu Undivided Family (HUF) required to furnish the return in Form ITR-4 and to whom provisions of section 44AB are applicable
f. A company (i.e. Private Limited or Limited) required to furnish the return in Form ITR-6. Those who are not covered by above can file their Return in any of the below mode:
• furnishing the return in a paper form;
• furnishing the return electronically under digital signature;
• transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V;
• Furnishing a bar-coded return in a paper form.