Taxes are typically divided into 2 key categories – direct tax and indirect tax. Direct taxes are payable directly by the assesse to the government and the most common examples are income tax and corporation tax. In case of an indirect tax, the tax burden is passed on to a different entity/individual after it has been paid by the tax payer to the government. Common examples of indirect tax are VAT (Value added Tax) and GST (Goods and Services Tax). While income tax in India features different slab rates, indirect taxes tend to feature different rates that usually vary based on the product or service being taxed.
Under existing rules of the IT Act, any individual/business with income irrespective of the amount earned is liable to file income tax returns. But, currently tax on income is payable only if the net taxable income for a fiscal exceeds Rs. 2.5 lakh. The following are the key types of individuals and entities who are liable to pay tax provided their net taxable income for FY 2018-19 exceeds the prescribed limit:
Income in India is taxable according to prescribed income tax slab rates that vary based on the net annual income of the tax assesse. The slab rates for taxation of income are progressive in nature i.e. the slab rate increases with the net annual income of the individual. The slab rates for tax on income are liable to be changed periodically and are announced as part of the Union Budget announcement. The income tax slab rates for financial year 2018-2019 i.e. assessment year 2019-2020 are as follows:
|Income Slab||General Category||Senior Citizens (60 years and above but below 80 years)||Very senior citizens(above 80 years)|
|Up to 2,50,000||Nil||Nil||Nil|
|2,50,001 – 3,00,000||5 %||Nil||Nil|
|3,00,001 – 5,00,000||5 %||5 %||Nil|
|5,00,001 – 10,00,000||20 %||20 %||20 %|
|Above 10,00,000||30 %||30 %||30 %|
4% of the income tax has to be paid as Health and Education Cess by all taxpayers irrespective of the slab they fall into.
For co-operative societies:
|Income tax slabs||Income tax rates|
|When income is within 10,000||10 % of the income|
|When income lies between 10,000 – 20,000||20 % of the amount which exceeds 10,000|
|Above 20,000||30 % of the amount which exceeds 20,000|
Under existing rules of the Income Tax Act 1961, the following are the key types of income that are subject to taxation as per the applicable rates:
Tax returns should be filed by an individual who has a taxable income. If you are below 60 years of age and have an income up to 2.5 lakhs, you are exempted from paying income tax. It has been seen that many salaried individuals are under the impression that their employer has deducted tax at source and hence their liability is over. Filing IT returns and income tax payment are two separate obligations. Even if you do not have a tax liability, you should file your income tax returns . There are several advantages of filing tax returns:
According to the Income Tax Act, it is mandatory to file income tax returns if:
Before you make your income tax payments you should have a working knowledge of how income tax is computed. This will not only give you an idea on how much you have to pay but also find out ways in which you can save tax. If you are aware of the income tax slabs, computing the tax amount is easy. The final tax which is payable is calculated by applying the tax rates which are in force and then by deducting the taxes which have been paid through TDS (tax deduction at source).
To save the maximum amount of tax, it is necessary that you examine the deductions which have been defined under the different sections of IT Act, 1961. Certain investment avenues such as National Savings Certificate and Public Provident Fund are eligible for deduction under section 80C of the IT Act 1961. However, most tax payers tend to ignore a range of investment avenues which are eligible for tax concessions. Here is a quick rundown on investments which qualify for deductions under different sections of the Income Tax Act:Under section 80C, the Income Tax deductions are allowed for the following:
|SL. NO.||TYPE OF TAXPAYER (ASSESSEE)||DUE DATE||TAX AUDIT CAES|
|1.||Company||30- Sep -2019||30- Sep -2019|
|2.||Limited Liability Partnership||31 July 2019||30- Sep -2019|
|3.||Partnership||31 July 2019||30- Sep -2019|
|4.||Proprietor||31 July 2019||30- Sep -2019|
|5.||Individual||31 July 2019||30- Sep -2019|
ITR FORMS & TYPErnOF INCOME:
ITR-1(SAHAJ )--FOR INDIVIDUALS HAVING INOME FROM SALARYrn& INTEREST.
ITR-2---FOR INDIVIDULAS & HUFS NOT HAVINGrnBUSINESS/PROFESSIONAL INCOME.
ITR-3---FOR INDIVIDULAS & HUFS BEING PARTNERS IN FIRMSrn& CARRYING OUT BUSINESS OR PROFESSION UNDER & PROPRIETORSHIP.
ITR-4---FOR INDIVIDUALS & HUFS HAVING INCOME FROMrnPROPRIETARY BUSINESS OR PROFESSION.
ITR-5---FOR FIRMS, AOP, & BOI
ITR-6---FOR INCOME OTHER THAN COMPANIES CLAIMING EXEMPTIONrnU/S 11
ITR-7---FOR PERSONS INCLUDING COMPANIES REQUIRED TO FURNISHrnRETURN UNDER SECTION 139(4A)/139(4B)/139(4C)/139(4D).
WHAT IS FORM 16 & WHY?
FORM 16 IS ISSUED BY EMPLOYER TO EMPLOYEE. FORM 16 INCLUDESrnSALARY BIFURCATION IN DETAILS. IT ALSO INDICATES TDS AMOUNT DEDUCTED BYrnEMPLOYER FROM EMPLOYEE.FORM 16 IS ISSUED TO EMPLOYEES BEFORE 30 TH APRIL OFrnEVERY YEARS.