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The Indian Income Tax department (IT) has the power to levy income tax on your income from all sources; whether Business, Salary, Capital gains, or Agriculture. It is a direct tax because you pay tax on the gross amount and not the net profit of your income for that year. So it is essential that any person seeking employment in India should have a knowledge of the income tax provisions as he/she might face taxation at least on their residence-based salary and they should also be aware of the various types of incomes that are taxable. 

In simple words, according to the concept of Income Tax, if an individual earns a certain amount of money annually, he/she is supposed to pay tax for the same at a predefined rate. Let’s discuss this in detail income tax here so that it becomes easier for you to understand what income tax is and why we pay it.

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What is Income Tax and Who Should Pay It?
Income tax is one of the most important taxes in India. It is a compulsory tax charged on the income earned by an entity. This includes individuals, businesses, and other entities that earn income. The income tax rate will depend on how much money you make as income in a year. It is compulsory to file Income Tax Return in India if the gross total income exceeds Rs.2,50,000 in a financial year. This limit exceeds Rs.3,00,000 for senior citizens and Rs.5,00,000 for super senior citizens. An income tax is a system of planning and organizing government revenue and spending, based on the principle of taxation to fund government operations. The government uses your tax money to pay for healthcare, defence, education, Social Security, transportation, and other requirements. Let’s take a look at the entities that are required to pay taxes:

 

  • Artificial Judicial Persons
  • Corporate firms
  • Association of Persons (AOPs)
  • Hindu Undivided Families (HUFs)
  • Companies
  • Local Authorities
  • Body of Individuals (BOIs)

What are the Tax Slab Rates?

Tax slab rates mean the percentage of tax that is to be paid by an individual. The government sets different tax slabs to help people pay their taxes according to their income.  When it comes to income tax slab rates what you have to determine is whether your total income qualifies for the four different slabs under personal income tax, or if you fall under the non-taxable minimum limit. Tax slab rates are the fixed tax charged for taxable income under the different tax slabs, to which every tax-paying citizen belongs to. There is a different percentage of tax charged on each of these slabs which vary from person to person. 
Income Tax slab under New tax regime for FY 2022-23 & AY 2023-24

Up to Rs.2,50,000

Nil

From Rs.2,50,001 to Rs.5,00,000

5%

From Rs.5,00,001 to Rs.7,50,000

10%

From Rs.7,50,001 to Rs.10,00,000

15%

From Rs.10,00,001 to Rs.12,50,000

20%

From Rs.12,50,001 to Rs.15,00,000

25%

Income above Rs.15,00,001

30%

 

Note: New income tax rates are changeable 

Income tax slab for individuals who are less than 60 years old:

Up to Rs.2,50,000

Nil

From Rs.2,50,001 to Rs.5,00,000

5% of the amount exceeding Rs.2.5 lakh

From Rs.5,00,001 to Rs.10,00,000

Rs.12,500 + 20% of the amount exceeding Rs.5 lakh

More than Rs.10,00,000

Rs.1,12,500 + 30% of the amount exceeding Rs.10 lakh

*An additional cess of 4% will be applicable to the tax amount calculated above.
Advance Tax and How it Works 

The basic concept of advance tax is that the payment of taxes is made before the due date. And on the basis of this calculation, if any dues are paid then there is no problem. The payers of tax after the deduction according to their income, have to pay money to the government according to their assessment. There are some conditions for them. Sometimes this will be clear in advance how much percentage must be deposited as a tax deposit.

Below are some due dates mentioned that can help you implement advance taxes: 

Due Date

Advance Payable Tax

On or before 15th June

15% of advance tax

On or before 15th September

45% of advance tax

On or before 15th December

75% of advance tax

On or before 15th March

100% of advance tax

 

How to File Income Tax Returns

The Income Tax department offers various modes to file ITR. While some prefer to do it on their own and use the software that’s available on the e-filing website, the others take help from third parties like chartered accountants and income tax consultants. Even if you take the help of a professional, there are a few documents that you will need to provide. You will need your Form 16, provided by your employer, and any proof of investment. Using that you can calculate the tax payable and refunds, if any, for the year. You can also file your income tax online with the help of a process called E-filing.  E-filing an income tax return means simply filing your income tax return electronically using the internet. This can be done from anywhere in India and at any time, except when it’s processing.

Here is the step-by-step process of how you can register and file your income tax online:

Step 1  Visit https://www.incometax.gov.in/iec/foportal 

Step 2: Register or Login to e-file your returns, based on if you have registered yourself earlier or not. 

Step 3: Select the ‘Taxpayer’ option and enter the details of your PAN 

Step 4: Now click on ‘validate’ following with a click on ‘Continue’.

Step 5: Fill in personal information such as your name, address, gender, residential status, date of birth, etc.

Step 6: Fill in your Email address and registered mobile number.

Step 7: After filling up the entire form, click on ‘Continue’.

Step 8: After verifying the given details a 6-digit OTP will be sent to your registered mobile number and Email address.

Step 9: Enter the OTP and follow the given instructions to complete the registration process successfully.

Step 10: After a successful OTP verification, you will be redirected to a new window where you will have to verify the details given by you. 

Step 11: The final step of your registration will be to set a password and secure login message.

Step 12: Click on ‘Register’, following which you will receive a confirmation message on your registered mobile number. 

Now when you have successfully registered yourself to pay your income tax returns, let’s discuss the steps that you need to follow to file your income tax returns:

Step 1: Visit https://www.incometax.gov.in/iec/foportal and login with your username and password. 

Step 2: Now click on the E-file tab, following with a click on ‘file income tax returns’ 

Step 3: Select the year for which you are filing your return, then click on – Continue

Step 4: Select your mode of filing and click on – Online

Step 5: Choose whether you wish to file your income tax returns as an individual, Hindu Undivided Family (HUF), or others. Choose the option ‘individual’

Step 6: Choose the ITR Form you need to proceed with

Step 7: In the next step, you will have to answer the reason for filing your returns above the basic exemption limit or because of the seventh provision under Section 139(1).

Step 8: Fill in the details of your Bank Account if you haven’t provided them previously

Step 10: You will be now taken to a new page to file your income tax returns. Check the details that you have filled in prior to make sure all the details mentioned are correct. 

Step 11: Confirm the summary of your returns and validate it.

Step 12: The final step would be to verify your returns and send a hard copy of them to the Income Tax Department. The verification process will be mandatory.

Important Income Tax Forms List 

A process to claim an income tax refund may appear a bit complex at the first glance. But there are various income tax forms that ease the process of claiming the refund and assist in filling them. We will discuss ITR forms in detail below, beginning with the form that is most frequently used by an individual for filing his taxes.

ITR-1

For Individuals having Income from Salaries, one house property, other sources (Interest, etc.)

ITR-2

For Individuals and HUFs not having Income from Business or Profession

ITR-2A

For Individuals and HUFs not having Income from Business or Profession and Capital Gains and who do not hold foreign assets

ITR-3

For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship

ITR-4

For individuals and HUFs having income from a proprietary business or profession

ITR-4S

Presumptive business income tax return

ITR-5

For persons other than, – (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7

ITR-6

For Companies other than companies claiming exemption under section 11

ITR-7

For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)

ITR-V

The acknowledgment form of filing a return of income

Income Tax by Banks

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