Individuals and businesses pay income tax, which is a direct tax imposed by the government on their annual earnings and profits. It is based on a person’s or entity’s net taxable income for the applicable financial/fiscal year, which begins on April 1st and ends on March 31st of the following calendar year.
Also Read: Income Tax Return Filing
Who is obligated to pay income tax?
Under current IT Act requirements, any individual or corporation with income, regardless of the amount received, is required to file income tax filings. However, income tax is currently only payable if a fiscal’s net taxable income exceeds Rs. 2.5 lakh.
- Individuals who earn a living
- Individuals who earn a living
- Professionals who work for themselves
- Undivided Hindu Family
- Artificial persons who have been legally recognised
- Individuals as a group
- People’s Organization
- Corporations and business firms
- Local Governments
What are Slab Rates on Income Tax?
In India, income is taxed at regulated income tax slab rates that fluctuate depending on the tax assessee’s net annual income. The progressive aspect of the slab rates for income taxation is that the slab rate rises with the individual’s net annual income. The income tax slab rates are subject to change on a regular basis and are released as part of the Union Budget announcement.
Filing Returns is Mandatory
- The Income Tax Department is in charge of all aspects of the taxes procedure.
- Every taxpayer is required to submit his income to the Income Tax Department in a form stipulated by the Government of India at the end of the financial year.
- Individuals and companies making income in India are required to file a return, regardless of whether or not tax is deducted at source.
- This ITR (Income Tax Return Form) details earnings for a certain fiscal year.
- Income can come from a variety of sources, including a business, a wage, a pension, rental income, or capital gains.
- The ITR form (Income Tax Return form) is used to notify the government of your earnings and the tax you paid on them.
- When you file an income tax return, you’re proving that you earned money and paid taxes on it.
- Every year, you must file an ITR in accordance with the Income Tax Act.
- Failure to file income tax returns might have serious consequences. You can be considered a tax evader by the IT department.
- It may result in penalties from the Internal Revenue Service.
- If you have paid more tax than is necessary, you will be refunded the difference.
What are the many types of taxable earnings?
The following are the main types of income that are subject to taxation at the applicable rates under the existing rules of the Income Tax Act 1961:
- Salary-based income
- Gains on Capital Assets
- House Property Rental Income
- Profits from Business
- Other sources of revenue include lotteries and other forms of legal gaming, dividends, and so on.
The Benefits of Filing a Tax Return (ITR)
Individuals with taxable income are required to file tax returns. You are exempt from paying income tax if you are under 60 years old and have an annual income of less than 2.5 lakhs. Many salaried individuals mistakenly believe that their employer has deducted tax at source and that their burden is therefore resolved. The filing of IT returns and the payment of income taxes are two independent responsibilities. Even if you don’t owe any taxes, you should still file your tax returns. There are a number of benefits to submitting tax returns:
- Ensures that loans are processed quickly.
- Return submission is required for VISA processing.
- It is feasible to register immovable properties quickly.
- The bank will not issue a credit card until the applicant files his returns on a regular basis.
- Filing income tax returns establishes a record with the Internal Revenue Service.
Returns on Income (Returns on Income)
The Income Tax Act states that you must file income tax reports if you:
- If your gross total revenue in a fiscal year exceeds $250,000. This restriction rises to 3,00,000 for senior citizens and 5,00,000 for those above the age of 80.
- You exist as a business regardless of whether you make a profit or a loss.
- You’re looking forward to getting your tax refund.
- If you are a resident of India and have assets outside of India, you must file an income tax return.
- If you receive money from a research association, a political party, an educational institution, a news agency, or a medical or educational institution that is kept under a trust for religious and charitable reasons.
- Income earned in India is taxable for non-resident Indians.
Suggested Read: Income Tax Notice