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Author - Associate Runa Jasia

An income tax can be defined as a tax imposed on a different person (may vary) for different people. It depends on the amount of income or profits that one receives. Amount of tax to be paid depends upon the amount of salary or benefits. The tax rates may reduce or increase as per the amount. The taxes paid by companies are known as corporate tax. There is a scale or a bandwidth through which an individual decides the amount to be paid. People who run charitable organization have to pay less tax or no tax as agreed by most of the jurisdictions of India.  

According to the Income Tax Act, 1961:

It applies to the whole of India. It was first enacted in the year 1962. It is a mandatory pay income tax every year. It covers almost all the sources through which all the residents of India have gained payment or amount. People residing outside of India who are a citizen of this country must pay taxes accordingly. The income which accrues to him outside India shall not be included unless it is derived from a business controlled in or a professional set-up in India. An individual is said to be resident of India in any last or previous year if he or she is in India in that year for a period amounting to one hundred and eighty-two days or more provided that individual is born in India. 

There are certain types of income which are not included in total income. There are specific sectors of fields whose income are not included while computing income tax. They are:

1. Agricultural income

2. Any money received by an individual who is a member of an undivided Hindu family. 

3. A person who is a partner in a firm which is separately assessed as such, share in the total income of the firm. 

4. Money transactions held under for charitable and religious purposes in India.

If the income of an individual exceeds the amount of INR 2.5 lakhs then they are liable to pay income tax to the Government of India. There are various slab rates or band rates based on earnings of an individual or a taxpayer. It is not gender-specific.  Both male and female have to pay their income tax on time. 

Slab rates change over time for every financial year in India. For instance, less than INR 2.5 lakhs income tax rates do not apply to that group of people.  People whose income is greater than INR 2.5 lakhs need to pay income tax rates as per the defined percentage of different income amount by the income tax department of India. It may vary accordingly. It can go from 5%, 20%, 30%, etc. It also varies for:

• An individual

• For Co-operative societies

• For domestic companies

• For local authorities

• For foreign companies

Income tax can be filed offline as well as online. Through https://www.incometaxindiaefiling.gov.in, one can do e-filing by filling ITR form. There are different categories of ITR filing, like: ITR 1, ITR 2, ITR 3, ITR 4, etc. Through the e-filing portal, the taxpayer can select the type of ITR or form as per their eligibility of income tax rates. Income tax forms are provided with their correct instructions. There are also types of ITR which cannot be filed online. One has to do it offline in this situation. There is a registration process that has to be completed to give income tax online.

Every person who has a source of income as defined by the Income Tax Act, 1961, they need to file their income tax returns. 

For an employee:

Any salary due from an former or current employer to an assessed in the previous year, whether paid or not;

Any salary allowed or paid to him in the previous year by or on behalf of a current employer or a former employer though not due or before it became due to him.

Salary also includes wages, gratuity, any fees, commissions, advance salary, etc. 

The income chargeable shall be computed after making certain deductions:

• A deduction concerning any allowance like an entertainment allowance granted explicitly by an employer to the assessed who receives a salary from the Government, a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisites) or five thousand rupees, whichever is less;

• Any deduction of the sum paid by the assessee on account of a tax on employment within the meaning of clause (2) of Article 276 of the Constitution or under any law.

From last few years, the Indian Government has made it very easy to do income tax filings. It is the responsibility of every individual to pay their income tax on time.