All You Need To Know About Income Tax


Income Tax - Basic Definition

Income tax is the tax charged by the government on the annual income of an individual. It is a form of direct tax where the individual, business or other entity must pay the tax it owes to the government. The Income Tax Act, 1961 states the rules and regulations for income tax assessment, calculations and collection processes in India.

The Government of India has categorised eligible taxpayers into separate slabs and assigns applicable tax rates to each slab. All eligible taxpayers must file their Income Tax Returns at the end of every financial year as per their respective tax slab.

The Income Tax Act, 1961 also allows a number of exemptions and deductions that help in the reduction of tax liability for a given financial year.

Key Takeaways

  • Income tax is a tax which the Government of India charges to eligible citizens on their annual income. As an eligible taxpayer, you must declare your income, expenses, and investments by the end of every financial year and file your Income Tax Returns.
  • The government collects and assesses income tax as per the policies laid down in the Income Tax Act. The Income Tax Department, under the governance of the Central Board for Direct Taxes (CBDT), governs and monitors whether these policies are being followed thoroughly or not.
  • Individual citizens of India are eligible to file an ITR. This category of taxpayers is further divided into below 60 years, 60 to 80 years and above 80 years.
  • You can file ITR offline and through online processes by visiting the Income Tax Department's official portal and authorised third-party platforms.

Who Pays Income Tax?

According to the Income Tax Act, of 1961, any individual or firm with an annual income above Rs. 2.5 lakh must file Income Tax Returns every year (under the old regime). As per the new tax regime for AY 2024-25, your applicable tax rate is zero if your annual income is up to Rs.3 Lakh.

You can file an ITR offline or online by visiting the website of the Income Tax Department. Or you can e-file Income Tax Returns by visiting third-party websites.

Entities belonging to the following categories are eligible to file ITR:

  • Self-employed individuals
  • Salaried individuals
  • Hindu Undivided Families
  • Body of Individuals
  • Local authorities
  • Self-employed professionals
  • Association of Persons
  • Companies and corporate firms
  • Legally recognised artificial juridical persons

As an individual investor, you must have the following residential status in India:

  • Non-resident
  • Resident and ordinarily resident in India
  • Resident but not ordinarily resident in India

Income Tax Return (ITR) & E-filing

As stated earlier, you can file your income tax returns offline or online. For the latter, you must visit the official portal of the Income Tax Department or any RBI-recognised third-party websites.

For e-filing of ITR through the Income Tax Department's official portal, follow the steps below.

  • Step 1: Open the official e-filing portal and log in by typing your PAN in the user ID section. Tick the security message and click on ‘Continue’ to enter your password.
  • Step 2: Once your account opens, locate 'e-Filing' and then click on ‘Income Tax Returns’ and finally click on ‘File Income Tax Returns’.
  • Step 3: Choose the assessment year from the respective dropdown menu. You will also find an option to choose a mode of ITR filing. Click on ‘Online’.
  • Step 4: Select one option from: Individual, HUF and Others.
  • Step 5: Choose the ITR form.
  • Step 6: The portal will display a few options to choose as reasons to file ITR.
  • Step 7: A new page will open. Enter your bank account details and other information. If your details are already there, consider ensuring they are pre-validated.
  • Step 8: Review your details carefully. Check the summary of your returns and confirm them.
  • Step 9: Verify your ITR form to complete your Income Tax Return filing. Failing this, your ITR might not be considered as filed. You can E-Verify your returns using Aadhaar OTP, net banking, electronic verification code or by sending a physical document of ITR-V to CPC to Bangalore.

About Income Tax Department, India

The Income Tax Department started its operation to exercise the regulations set in the Income Tax Act 1922. This would be replaced by the Income Tax Act, 1961, detailing the provisions and guidelines to establish a well-knit administrative system in India.

Under the governance of the Central Board for Direct Taxes (CBDT), the Government of India introduced the Income Tax Department. The points below highlight the important roles and responsibilities of the Income Tax Department:

  • Cases related to levying and collection of direct taxes.
  • Conducting income tax rebate procedures
  • Prosecuting assesses for instances of tax evasion
  • Charging fine for late ITR filings
  • Enforcing laws like the Black Money Act 2015, Benami Transaction and Double Taxation Avoidance Agreements (DTAA).

Some of the broad areas of services that the Income Tax Department provides are ITR filing, TDS-related services PAN application, status checks and Aadhaar linking.

Final Word

Every taxpayer in India must file an Income Tax Return form wherein he/she declares his/her income, expenses, investments, taxes, tax deductions, etc. The Income Tax Department looks into whether every regulation set in the Income Tax Act is adhered to while filing an ITR.

You can e-file your ITR returns online through the Income Tax department's official portal or third-party website. If you are opting for a third-party portal to file ITR, consider checking whether it is verified by RBI or not. This will prevent you from falling victim to online fraud instances.

Other Words

  • Interest rate

Apply for A Loan

Business Loan Logo

Business
Loan

Business Loan Logo

Business
Loan

Professional Loan Logo

Professional
Loan

Professional Loan Logo

Professional
Loan

personal loan Logo

Personal
Loan

personal loan Logo

Personal
Loan

Car Loan Logo

Pre-Owned
Car Loan

Car Loan Logo

Pre-Owned
Car Loan

Medical Equipment Loan Logo

Medical Equipment Loan

Medical Equipment Loan Logo

Medical Equipment Loan

Machinery Loan Logo

Machinery Loan

Machinery Loan Logo

Machinery Loan

Loan Against Property Logo

Loan Against
Property

Loan Against Property Logo

Loan Against
Property

Apply for A Loan

Contact Us logo Quick Apply CIBIL Score logo Free CIBIL Whatsapp logo Connect on WhatsApp