UNDERSTANDING INCOME TAX IN INDIA

Tax is a contribution paid to the government to fund the government spending in national interest. Every person having source of income in India and incase of Indian resident having income source globally is covered under income tax.

The Income Tax Act 1961 specifies the taxation law, rules and procedures in India. There are numerous sections, sub sections, provision, rules etc. provided in Income Tax Act 1961 to ensure proper implementation, administration and procedures for levy and collection of tax. Let’s understand few basic concepts and provision of income tax.

1. Who shall file Tax return?

• Every Individual person who’s total income exceeds the exemption limit.

• All companies (Private or Public limited), LLP, Partnership firms, Trust.

• A foreign entity located or doing business in India.

• A resident who have assets located out of India or is signatory to account located outside India or beneficiary in any asset located outside India

• Has deposited in aggregate an amount exceeding Rs. 1 crore in one or more current account.

• Has incurred expenditure exceeding Rs. 2 lakhs for foreign travel

• Has incurred expenditure of amount exceeding Rs. 1 lakh for consumption of electricity

• Has total turnover/ gross receipt exceeding Rs. 60 lakhs (from business)/ Rs. 10 lakhs (from profession)

• Is subject to TDS/TCS of Rs 25,000 or more (Rs. 50,000 incase of senior citizen)

• Has deposited in one or more saving bank account Rs. 50 lakhs or more

2. How much tax shall I pay?

The tax to be paid depends on the income you earned and tax regime an Individual taxpayer chooses namely, Old Tax Regime and New Tax Regime. Each tax regime has its own pros and cons. The individual is given right to choose the tax regime which he feels is more beneficial for him. The tax rates under both tax regimes are as below:

*Surcharge and Health & Education cess is additional

*Above tax rates are applicable for FY 2024-25

OLD TAX REGIME

*Surcharge and Health & Education cess is additional

*Above tax rates are applicable for FY 2024-25

NEW TAX REGIME

Comparative chart of difference between both tax regime – An indicative list

3. When shall I pay tax and file tax return?

The Income tax Act provides for pay taxes proportionately as you go on earning income. This concept is called Advance Tax. The taxpayer is expected to estimate the income and pay tax in installment as below

The individual aged above 60 yrs and not having business income is exempt from payment of advance tax.

The taxpayer opting for presumptive taxation scheme is required to pay entire tax in one advance tax installment on or before 15th March.

Tax returns are to be filed after the end of financial year i.e. 31st March.

The due dates for filing tax returns are as below

4. Benefits of filing Tax return in time.

• Late fees, interest and penalties are avoided.

• Claim for carry forward and setoff of losses is allowed only if tax returns are filed within due dates.

• Tax returns are accepted as income proof incase of Bank loans or VISA purpose.

• Tax refund if any can be claimed by filing tax refund.

• Tax return is accepted as income proof in court of law.

Disclaimer :

The information comments and analysis expressed above is for informational purpose only and should not be considered or interpreted as any professional or legal advice. We have made efforts to ensure the information given above is reliable however we do not warrant for its accuracy or completeness. We shall not be liable for loss or damages (if any) for any decisions taken based on above content. We recommend obtaining proper professional advice before acting on basis of information contained herein.