What is Income Tax?

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Hiral Vakil

Direct Tax
Income Tax
ITR-1
ITR-2
ITR-3
ITR-4
Taxpayer Categories
TDS

Income Tax is a tax on income collected by the government to fund infrastructure development, pay salaries, etc. Income Tax is a direct tax like capital gains tax and securities transaction tax etc. Tax Deducted at Source (TDS) is means through which the government generates steady revenues by levying taxes at sources such as salary or other payments. Additionally, Income Tax is to be paid by every Individual, HUF, AOP, BOI, Firms, and Companies.

Who should File ITR?
It is important to file your Income Tax Return (ITR) if your taxable income is more than the basic exemption limit. Read more to understand scenarios that it is mandatory to file an income tax return in India.
Read More
Who should File ITR?
It is important to file your Income Tax Return (ITR) if your taxable income is more than the basic exemption limit. Read more to understand scenarios that it is mandatory to file an income tax return in India.
Read More

Income Tax in India

In India, a direct tax is governed as per Income Tax Act, 1961 along with Income Tax Rules, 1962, Notifications and Circulars issued by Central Board of Direct Taxes. Moreover, Income Tax is levied based on the different types of incomes and taxpayers. Furthermore, there are different categories of taxpayers under the Income Tax Act.

Tax Savings & Deductions
This article explains the deductions the taxpayers can claim on certain investments and expenses during the financial year
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Tax Savings & Deductions
This article explains the deductions the taxpayers can claim on certain investments and expenses during the financial year
Read More

Income Tax for Resident Individuals

An individual’s income is divided under different income heads such as salary, house property, capital gains, business or profession, and other sources. Income is taxed at slab rates except for a few special rate incomes.

Residential Status Calculator
Residential Status Calculator for Income Tax. Taxability in India depends on residential status. Know your residential status from Resident, NRI, Resident but Not Ordinarily Resident(RNOR)
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Residential Status Calculator
Residential Status Calculator for Income Tax. Taxability in India depends on residential status. Know your residential status from Resident, NRI, Resident but Not Ordinarily Resident(RNOR)
Explore

Income Tax for NRI

A Non-Resident Indian (NRI) has to file an income tax return in India only if he has earned any income in India. He does not have to disclose his foreign income from the country of residence while filing the tax return.

The type of return forms will be the same as applicable to resident India. While filing the return, NRI can claim the credit if the income earned in India is also taxed in the country of his residence. The basic principle here is that a single income should not be taxed twice. So if income earned in India is taxed in a foreign country as well, then NRI can claim the credit of the taxed paid in a foreign country while filing return in India. Credit will be allowed only if India has an agreement to avoid double taxation with a foreign country.

Residential Status Flowchart

Income Tax for HUF (Hindu Undivided Family)

Income Tax Act recognizes Hindu Undivided Family (HUF) as a separate legal entity from its members. It has a unique PAN which if different from its Karta and members. HUF also enjoys a basic exemption limit of Rs. 2,50,000 just like the individuals.

Income Tax for Partnership Firms

Partnership firm / LLP is a separate legal entity, independent from its partners. It has its own PAN.

Income Tax for Companies

Companies have a separate legal identity and a unique PAN. In India, there are Domestic Companies and Foreign Companies.

ITR Forms, TDS Certificate, Tax Credit Statement and Filing
Learn more about the ITR forms and TDS certificates in depth
Read More
ITR Forms, TDS Certificate, Tax Credit Statement and Filing
Learn more about the ITR forms and TDS certificates in depth
Read More

FAQs

What is Income Tax Return (ITR)?

An income tax return is a form used to report income and file taxes with tax authorities such as the Income Tax Department (ITD) in India. Commonly known as ITR, tax return allows the taxpayer to calculate his/her tax liability and pay dues or request refunds. There are different prescribed ITR forms in India depending on one’s income situation.

How to calculate Income Tax?

Income Tax can be calculated by applying slab rates on taxable income, which is the addition of all the gross incomes such as salary, rent, business or profession, minus Chapter VI A deductions such as Provident Fund, Life Insurance Premium, ELSS, NSC, Medical Insurance Premium, etc.

Who can file Income Tax Return (ITR)?

It is mandatory to file the Income Tax Returns (ITR) online for all the registered taxpayers whose taxable income. However, paper returns can be filed by those who are above 80 years of age and do not have any income from regular business or profession.

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