Income Tax Guide 2024-25: Latest Updates, Tax Basics, Slabs, Rules | Complete Income Tax Information




Income Tax Guide 2024-25: Latest Updates, Tax Basics, Slabs, Rules | Complete Income Tax Information

Income Tax India

Income tax in India is a significant component of the country’s financial system. It is contributing significantly to government revenue. It is a direct tax applied on individuals, Hindu Undivided Families (HUFs), companies, and other entities based on their income or profits earned during a financial year. Let’s know about it in depth-




Must Read:-

How to File Income Tax Returns Online: Step-by-Step Guide for Taxpayers

What is Income Tax?

Income tax is a type of direct tax paid to the central government of India. It is the primary source of revenue for the government. It plays an important role in financing various developmental and welfare activities. It is governed by the Income Tax Act of 1961, and is administered by the Central Board of Direct Taxes (CBDT) under the Ministry of Finance, Government of India. there are various types of income tax like

  • Personal Tax: It applies to the income earned by the individual and HUFs. It is calculated by the individual’s s;s total taxable income sourced from salary, house property, capital ga, etc.

  • Corporate Income Tax: It applies to the companies registered under the Companies Act, 2013.

  • Capital Gains Tax

  • Securities Transaction Tax (STT)

  • Dividend Distribution Tax (DDT)

  • Minimum Alternate Tax (MAT)

  • Tax Deducted at Source

Interim Budget 2024 Updates:

1. Maintenance of Existing Tax Rates: The interim budget for 2024 keeps the current tax rates unchanged for both direct and indirect taxes.

2. Tax Exemption for Lower Income Groups: Individuals earning up to Rs 7 lakh annually have no tax liability, providing relief for lower income groups.

3. Withdrawal of Tax Dispute Provisions: Finance Minister Nirmala Sitharaman withdraws tax dispute claims up to Rs 25,000 for disputes pertaining to the financial year 2009-10 and Rs 10,000 for disputes from financial years 2010-11 to 2014-15.

4. Enhanced Leave Encashment Limit: The limit for leave encashment for non-government employees has been raised significantly from Rs 3 lakh to Rs 25 lakh.

5. Reduction in TDS Rate on EPF Withdrawal: The Tax Deducted at Source (TDS) rate on Employee Provident Fund (EPF) withdrawals has been decreased from 30% to 20%, providing relief to EPF subscribers.

6. Standard Deduction for Salaried Employees: Salaried employees and pensioners can claim a standard deduction of Rs 50,000 under the new tax regime.

7. Reduction in Highest Surcharge: The highest surcharge for individuals earning more than Rs 5 crore has been reduced to 25% from the previous 37%, resulting in a decreased tax rate for this bracket.

8. Opt-Out Provision for New Tax Regime: While the new tax regime will be the default option, taxpayers have the option to opt out before the due date for filing income tax returns for the respective assessment year.




Budget 2023 Major Updates:

1. Tax Rebate for Lower Income Groups: Individuals earning up to Rs 7 lakh annually receive a tax rebate in the New Tax Regime, exempting them from paying taxes if their taxable income is below Rs 7 lakh.

 

The new tax slabs under the new tax regime will be:

Income Slabs

Tax Rates

up to Rs 3 lakh

Nil

Rs 3 lakh- Rs 6 lakh

5%

Rs 6 lakh-Rs 9 lakh

10%

Rs 9 lakh-Rs 12 lakh

15%

Rs 12 lakh- Rs 15 lakh

20%

Above Rs 15 lakh

30%

 

 

2. Standard Deduction for Salaried Employees and Pensioners: Salaried employees and pensioners can claim a standard deduction of Rs 50,000 under the new tax regime, reducing their taxable income.

3. Reduction in Highest Surcharge: The highest surcharge for individuals earning over Rs 5 crore has been lowered to 25% from 37%, resulting in a reduced tax rate of 39% for this group.

4. Default New Tax Regime: The new Income Tax (IT) regime becomes the default tax regime, providing a simplified tax structure for taxpayers. However, individuals have the option to opt out before the due date for filing IT returns for the respective assessment year.

5. Enhanced Leave Encashment Limit: Non-government employees benefit from an increased limit for leave encashment, raised from Rs 3 lakh to Rs 25 lakh, offering greater flexibility in utilizing accrued leave benefits.

6. Decrease in TDS Rate on EPF Withdrawal: The Tax Deducted at Source (TDS) rate on Employee Provident Fund (EPF) withdrawals has been reduced from 30% to 20%, easing the tax burden on EPF subscribers during withdrawal.




Who should pay Income Tax?

Income Tax applies to individuals, businesses and other entities as per their income or profit earned in a particular year.

Different tax rules apply to different types of taxpayers.

   Below are the categories of taxpayers:

  • Individuals
  • Hindu Undivided Family (HUF)
  • Firms
  • Companies
  • Association of Persons(AOP)
  • Body of Individuals (BOI)
  • Local Authority
  • Artificial Judicial Person

Here are some point about who should pay tax-

Individual

  • Individuals who are residents of India need to pay income tax on their total taxable income.

  • Non-resident individuals also need to pay taxes earned or received in India.

  • Income tax is applicable on sources like salaries, house property, capital gains, business or profession, and other incomes like interest, dividends, etc.

  • The tax rates vary as per age, tax slabs, etc.

Hindu Undivided Families (HUFs)

  • HUFs are also eligible to pay income tax on their total taxable income.

  • HUFs are taxed separately from the income of individual members of a family.

Companies, Partnership & LLPs

  • Companies, Partnerships and Limited Liability Partnerships (LLPs) registered under the Companies Act, 2013 need to pay income tax on the profit gained in the particular financial year.

  • The tax rate is based on the turnover, business structure, etc.

Other Entities

  • Trusts, associations, institutions, and other legal entities are also liable to pay income tax as per their income and source.

Types of Income – What are the 5 heads of income?

All individuals earning income in India, whether residents or non-residents, are liable to pay income tax. To simplify categorization, the Income Tax Department divides income into five primary heads:




Head of Income and Nature of Income Covered:

Head of Income Nature of Income Covered
Income from Other Sources Taxable income from sources such as interest earned on savings bank accounts, fixed deposits, and winnings from lotteries.
Income from House Property Taxable income derived from renting out a property, including residential and commercial spaces.
Income from Capital Gains Taxable surplus generated from the sale of capital assets like mutual funds, shares, and real estate properties.
Income from Business and Profession Taxable profits earned by self-employed individuals, freelancers, contractors, and professionals like doctors, lawyers, and insurance agents.
Income from Salary Taxable income earned from employment, including salaries and pensions.

Simplified Explanation:

  • Income from Other Sources: Tax on money earned from savings account interest, fixed deposits, or lottery winnings.
  • Income from House Property: Tax on money earned from renting out properties, whether residential or commercial.
  • Income from Capital Gains: Tax on profits made by selling investments like mutual funds, stocks, or real estate.
  • Income from Business and Profession: Tax on profits earned by self-employed individuals, freelancers, and professionals like doctors or lawyers.
  • Income from Salary: Tax on money earned through employment, including salaries and pensions.

Components of Income Tax

Here is the key component of income tax, that you should know

  • Gross Total Income (GTI): Gross Total Income is the total income earned by the individual business or other entities during a financial year before any deduction or exemption. It includes salaries, wages, profit, capital gains, house property, etc.

  • Deductions: It is expenses or investments that taxpayers can claim to reduce their income amount. There are various sections in the Income Tax Act like Section 80C, Section 80D, Section 80 G, etc. It lowers the tax liability and encourages saving and investments.

  • Taxable Income: It is the income remaining after deducting a deduction from the GTI. It is the amount on which income tax is calculated and paid to the government.

  • Tax Slabs and Rates: Income tax in India is levied at progressive tax rates, which means higher incomes attract high-income tax rates. It is revised every year by the government through the union budget.

  • Tax Credit: Tax Credits are incentives provided by the government. Common tax credits include deductions for taxes paid in advance (TDS), taxes paid on self-assessment, foreign tax credits for taxes paid in another country, etc.

  • Tax Liability: It is the total amount of tax needed to be paid by the taxpayer to the government. It is calculated by applying the applicable tax rates to the taxable income after considering deductions and tax credits.

What is the Income Tax Regime?

Income Tax Regime is the system and framework established by the government to levy taxes on the income earned by individuals, businesses, and other entities within the country. It is a tax slab by the government.

Latest New tax regime FY 2023-24

  • Income up to Rs 3 lakh: Nil

  • Income Rs 3 lakh to Rs 6 lakh: 5%

  • Income Rs 6 lakh to Rs 9 lakh: 10%

  • Income Rs 9 lakh to Rs 12 lakh: 15%

  • Income Rs 12 lakh to Rs 15 lakh: 20%

  • Income above Rs 15 lakh: 30%

 

Last Tax Regime FY 2022-23

  • Income up to Rs 2.5 lakh: Nil

  • Income Rs 2.5 lakh to Rs 5 lakh: 5%

  • Income Rs 5 lakh to Rs 7.5 lakh: 10%

  • Income Rs 7.5 lakh to Rs 10 lakh: 15%

  • Income Rs 10 lakh to Rs 12.5 lakh: 20%

  • Income Rs 12.5 lakh to Rs 15 lakh: 25%

  • Income above Rs 15 lakh: 30%

Taxpayers and Tax Slabs

– Taxpayers in India are divided into different categories like individuals, Hindu Undivided Families (HUFs), associations of persons (AOPs), and bodies of individuals (BOIs).
– Tax rates for firms and Indian companies are fixed, whereas individual taxpayers are taxed based on income slabs.
– Income is categorized into blocks called tax slabs, each with a different tax rate.
– As income increases, the tax rate also increases, following a progressive tax system.
– This means that higher income earners pay a higher percentage of their income in taxes.

What is the Existing/Old Income Tax Regime?

– The old income tax regime had three slab rates: 5%, 20%, and 30%.
– Taxpayers could opt for this regime and claim various deductions.
– Allowances like Leave Travel Concession (LTC), House Rent Allowance (HRA), and specific other allowances were deductible.
– Deductions for tax-saving investments under sections 80C to 80U were allowed.
– A standard deduction of Rs 50,000 was applicable.
– Taxpayers could also claim a deduction for interest paid on home loans.

Tax slab rates applicable for Individual taxpayers below 60 years for the Old tax regime are as below:

Income Range

Tax rate

Tax to be paid

Up to Rs 2,50,000

0

No tax

Rs 2.5 lakhs – Rs 5 lakhs

5%

5% of your taxable income

Rs 5 lakhs – Rs 10 lakhs

20%

Rs 12,500+20% on income above Rs 5 lakh

Above 10 lakhs

30%

Rs 1,12,500+30% on income above Rs 10 lakh




There are additional tax slabs for individuals aged 60 and above, as well as those above 80.
It’s worth noting that some people mistakenly assume that if they earn Rs. 12 lakh, they’ll pay 30% tax on the entire amount (Rs. 3,60,000). However, under the progressive tax system, someone earning Rs. 12 lakh would pay Rs. 1,12,500 + Rs. 60,000, totaling Rs. 1,72,500.

Income Tax Slabs Under New Tax Regime

In the 2020 budget, a new tax system was introduced with reduced tax rates and fewer deductions for Individuals and HUFs. As a result, many taxpayers didn’t choose the new system. However, to promote it in Budget 2023, the income tax slabs for FY 2023-24 (AY 2024-25) have been updated as mentioned below:-

New tax regime FY 2023-24
(After budget)

New tax regime FY 2022-23
(Before budget)

Income up to Rs 3 lakh

Nil

Up to Rs 2.5 lakh

Nil

Rs 3 lakh to Rs 6 lakh

5%

Rs 2.5 lakh to Rs 5 lakh

5%

Rs 6 lakh to Rs 9 lakh

10%

Rs 5 lakh to Rs 7.5 lakh

10%

Rs 9 lakh to Rs 12 lakh

15%

Rs 7.5 lakh to Rs 10 lakh

15%

Rs 12 lakh to Rs 15 lakh

20%

Rs 10 lakh to Rs 12.5 lakh

20%

Income above Rs 15 lakh

30%

Rs 12.5 lakh to Rs 15 lakh

25%

Income above Rs 15 lakh

30%

Under the New Tax Regime, many deductions and exemptions are not applicable. However, there are some exemptions and deductions available, such as:

1. Transport allowances for specially-abled individuals.
2. Conveyance allowance received for work-related travel expenses.
3. Compensation for travel costs during tours or transfers.
4. Daily allowance for regular expenses during absence from the regular place of work.

 

 

Exceptions to the Income Tax Slab:

Capital gains income is taxed differently based on the type of asset and how long it’s been owned.
Assets are categorized as long-term or short-term based on the holding period, which varies for different assets.
Here’s a summary of the holding period, asset type, and corresponding tax rates:

Financial Year (FY):

The financial year is the period from April 1st to March 31st during which income is earned and reported for taxation purposes. For example, FY 2022-23 starts from April 1st, 2022, to March 31st, 2023.

Assessment Year (AY):

The assessment year follows the financial year, spanning from April 1st to March 31st of the following year. Taxpayers assess their income earned during the financial year and pay taxes during this period. For instance, AY 2023-24 is for incomes earned in FY 2022-23.

Assessee:

An assessee is an individual or entity that assesses their income and pays taxes according to the Income Tax Act. This includes individuals, partnership firms, companies, Associations of Persons (AOPs), Trusts, etc.

 




What is PAN?

A PAN, or Permanent Account Number, is a special 10-digit alphanumeric code given by the Indian Income Tax Department to taxpayers. This number serves as a unique identifier for individuals and helps in tracking their tax-related activities. Whenever a person pays taxes or files returns, they must mention their PAN. Additionally, PAN is shared with banks, mutual funds, and other financial entities. This allows the Income Tax Department to monitor all financial transactions associated with that PAN. Essentially, PAN links an individual’s financial activities with the tax department, making it easier for tax authorities to manage taxation processes and track incomes.

What is TAN?

TAN, or Tax Deduction and Collection Account Number, is a unique 10-digit alphanumeric code issued by the Income Tax Department. It is primarily meant for entities responsible for deducting or collecting taxes at the source. Any entity involved in tax deduction (TDS) or tax collection (TCS) must obtain a TAN. This number is crucial for filing TDS/TCS returns, making tax payments, and issuing TDS/TCS certificates. By quoting TAN in all relevant documents and transactions, organizations ensure compliance with tax regulations and facilitate smooth processing of tax-related activities.

Residents and Non-residents

The levy of income tax in India hinges on the residential status of taxpayers. Residents are individuals who qualify under Indian tax laws and are liable to pay taxes on their worldwide income, including earnings from both within and outside India. Conversely, non-residents are only required to pay taxes on income earned within India. Determining residential status is crucial and must be done for each financial year separately. This classification ensures that tax liabilities are appropriately assessed based on the taxpayer’s presence and economic activities within the country’s jurisdiction.

Income Tax Payment

Tax Deducted at Source (TDS)

Tax deducted at source (TDS) is a mechanism where tax is deducted by the payer while making certain payments to the recipient. The recipient can later claim credit for this TDS amount by adjusting it against their final tax liability.

Advance Tax

Advance tax is tax paid in advance by taxpayers if their estimated tax liability for the year exceeds Rs 10,000. The government specifies due dates for paying advance tax installments throughout the financial year.

Self-Assessment Tax

Self-assessment tax is the balance tax that taxpayers have to pay on their assessed income after adjusting for advance tax and TDS. It is calculated based on the total income tax liability determined by the taxpayer.

E-Payment of Taxes

Taxpayers can conveniently pay advance tax and self-assessment tax online through the NSDL website. However, they need to have net banking facilities with authorized banks for e-payment.

Filing your ITR: A Simple Guide

E-filing your income tax return has become mandatory for most taxpayers, except for a few exceptions:

1. Taxpayers aged 80 and above are exempt from e-filing.
2. Taxpayers earning less than Rs 5 lakhs and not seeking a refund also do not need to e-file.
For everyone else, e-filing is compulsory. The deadline for filing returns is typically July 31 after the financial year ends.

If you miss the deadline, here are the consequences:

– You won’t be able to carry forward losses (except for house property loss) to future years.
– Your refund claims may be delayed.
– Obtaining home loans might become more challenging.
– Late filing fees of up to Rs 5,000 (for incomes above Rs 5 lakhs) or Rs 1,000 (for incomes below Rs 5 lakhs) may be levied under Section 234F.
– Interest may be charged under Section 234A if taxes are due as of July 31.

E-filing offers several benefits beyond just submitting your return. Platforms like Clear help you maximize deductions and invest wisely. After filing online, you can either e-verify the return or print the ITR V and send it to CPC, Bengaluru, for processing.

Income Tax Return

Taxpayers must file their income tax return annually using the prescribed ITR forms provided by the income tax department. There are seven ITR forms available, and taxpayers need to select the appropriate form based on their income sources and other relevant factors.

 

Income Tax Forms: A Quick Overview

When filing your income tax return (ITR), you’ll need to choose the appropriate form based on your income sources and other factors. Here’s a simple breakdown of the seven ITR forms:

1. ITR-1: For individuals (residents) with income from salary, one house property, other sources, agricultural income less than Rs 5,000, and total income up to Rs 50 lakh.

2. ITR-2: For individuals/HUFs without any business or profession under proprietorship, but with more than one house property.

3. ITR-3: For individuals/HUFs with income from proprietary business or profession, and income as a partner in a firm.

4. ITR-4: For individuals/HUFs with presumptive income from business or profession, along with one house property.

5. ITR-5: For partnership firms or Limited Liability Partnerships (LLPs).

6. ITR-6: For companies.

7. ITR-7: For trusts.

Choose the form that best matches your income sources and follow the instructions carefully to complete your tax filing process.

 

Essential Documents for ITR Filing Simplified

Before filing your income tax return (ITR), make sure you have these key documents ready:

1. Form 16: This is provided by your employer and summarizes your salary income and tax deductions.

2. Form 26AS: It’s a consolidated statement showing all tax-related information like TDS, TCS, and advance tax paid against your PAN.

3. AIS (Agricultural Income Statement): If you have income from agriculture, ensure you have this statement ready.

4. TIS (Taxable Income Statement): Prepare a statement summarizing all your taxable income sources.

5. Form 16A: If you have income from sources other than salary, like interest income, you might need this form.

6. Proof of Tax Saving Investments: Keep documents supporting your investments in tax-saving instruments like LIC, PPF, NSC, etc.

7. Bank Account Details: You’ll need details of the bank accounts where you wish to receive any tax refunds.

Ensure you gather these documents based on your income sources to make the filing process smoother and accurate.

 

 

Simple Steps to Calculate Income Tax

1. Compile All Income Sources: Gather details of all your income sources such as salary, rental income, interest income, etc.

2. Identify Exempt Incomes: Exclude incomes exempted under the law like agricultural income or LTCG on listed equity shares up to Rs 1 lakh.

3. Apply Applicable Deductions: Claim deductions available under each income source. For instance, deduct municipal taxes from rental income or business-related expenses from business turnover.

4. Utilize Exemptions: Make use of exemptions allowed for specific incomes. For example, reinvested amount in another house property can be exempted from capital gains income.

5. Claim Deductions from Total Income: Utilize deductions under Section 80C, 80D, 80TTA, etc., to reduce your taxable income.

6. Calculate Taxable Income: Subtract all deductions from your total income to arrive at your taxable income.

7. Determine Tax Liability: Check the tax slab you fall under and calculate your income tax payable accordingly.

8. Consider Government Updates: Stay informed about changes in tax slabs, schemes, and benefits introduced by the government through the Budget.

By following these simple steps and staying updated with tax regulations, you can accurately calculate your income tax liability.

 

Understanding Income Computation and Tax Rebates

1. Computation of Income:

It involves calculating taxable income by considering earnings from all sources and applying deductions, exemptions, and rebates as per the Income Tax Act.

2. Rebate u/s 87A:

Taxpayers can reduce their tax liability with a rebate under Section 87A. Residents with total income not exceeding Rs 5 lakh after deductions can claim a rebate of up to Rs 12,500.

3. e-File Returns:

Taxpayers must electronically file their income tax returns via the IT department’s e-filing platform. Register at www.incometax.gov.in, log in, and submit your ITR. E-verification completes the process without sending physical documents.

4. Understanding ITR–V:

ITR-V is an acknowledgment generated after filing your income tax return. It must be e-verified or sent to CPC Bangalore for verification to initiate processing.

5. E-filing Assistance:

Many Companies offers step-by-step guidance for e-filing your Income Tax Return. Even with minimal tax knowledge, you can file your taxes hassle-free.

Income Tax Saving Instruments

Taxpayers can lower their tax burden through tax planning, achieved by investing in tax-saving tools. These investments reduce the taxable income, as permitted by Sections 80C to 80U of the Income Tax Act. Notable options under Section 80C include:

Popular Section 80C Investments

Particulars

ELSS

PPF

NSC

5-Year Tax Saving FD

SCSS

Section 80C Benefit

Yes

Yes

Yes

Yes

Yes

Type of Investment

Equity

Fixed Income

Fixed Income

Fixed Income

Fixed Income

Lock-in Period

3 Years

15 Years

5 Years

5 Years

5 Years

Maximum Investment

No Max Limit

Rs 1.5 lakh

No Max Limit

Rs 1.5 lakh

Rs 15 lakh

*ELSS and NSC have no upper investment limit. However, you get tax benefits under Section 80C only up to Rs 1.5 lakh per financial year.

Health Insurance and Medical Expense Deduction

Apart from the Section 80C deduction, a taxpayer can also take a tax benefit under Section 80D for health insurance premium and medical expenditure incurred for self, family and parents.

Person insured

Maximum deduction Below 60 years

Maximum deduction 60 years or older

You, Your Spouse, Your Children

Rs. 25,000

Rs. 50,000

Your parents

Rs. 25,000

Rs. 50,000

Preventative health checkup

Rs. 5,000

Rs. 5,000

Maximum deduction (includes preventive health checkup)

Rs. 50,000

Rs. 1,00,000

Education Loan Deduction:

According to Section 80E, taxpayers can get a deduction for the interest paid on a loan taken for higher education. There’s no limit to this deduction when filing income tax returns.

Home Loan Deduction:

As per Section 24, taxpayers can claim a deduction for the interest paid on a home loan in the relevant financial year. The deduction amount depends on whether the house is self-occupied or rented out. Additionally, taxpayers can claim a deduction on the principal amount of the loan under Section 80C, up to Rs 1.5 lakh.

Deduction on

Maximum allowed (for self-occupied house property)

Maximum allowed (for property on rent)

Stamp duty and registration + principal

Rs 1,50,000 within the overall limit of Section 80C

Rs 1,50,000 within the overall limit of Section 80C

Deduction on home loan interest under Section 24

Rs 2,00,000

No cap (but rental income must be shown in the income tax return). Further, the maximum loss from house property is capped at Rs 2 lakhs

Deduction for first-time homeowners under Section 80EE *certain conditions apply

Rs 50,000

Deduction for Interest Income

The taxpayer can also claim a deduction for interest on deposits from banks under Section 80TTA of the Income Tax Act. Individuals can claim up to Rs 10,000 deduction under the said section.

Important Income Tax Dates for 2024:

– March 15, 2024: Deadline for the fourth installment of advance tax for the financial year 2023-24.
– June 15, 2024: Due date for the first installment of advance tax for the financial year 2024-25.
– July 31, 2024: Last date for filing income tax returns for the financial year 2023-24 for individuals and entities not subject to tax audit or involved in international/domestic transactions.
– September 15, 2024: Deadline for the second installment of advance tax for the financial year 2024-25.
– September 30, 2024: Submission of audit report (Section 44AB) for the assessment year 2024-25 for taxpayers liable for audit.
– October 31, 2024: Deadline for ITR filing for taxpayers requiring audit (without international/domestic transactions) and submission of audit report.
– December 15, 2024: Due date for the third installment of advance tax for the financial year 2024-25.
– December 31, 2024: Last date for filing belated or revised returns for the financial year 2023-24.

How to Pay Income Tax In India?

Paying income tax is an important responsibility for all eligible taxpayers. If you are eligible to pay tax, then here is the step-by-step guide to pay it-

  • You should begin by calculating your tax liability for the financial year. Calculate it with total income, applicable tax rate, deduction and exemption.

  • Decide your payment method. You can pay online or offline. However, online methods are more convenient and efficient.

  • Now, visit the official website of the Income Tax Department. Click on https://www.incometaxindia.gov.in/ and go to the “e-Payment” section.

  • Select the appropriate tax payment as you calculated.

  • Provide necessary documents like PAN card, tax type, etc. and proceed to the payment option. For online, you have payment options like internet banking, debit card, credit card, UPI, etc.

  • For offline payment, get a physical copy of the tax payment challan generated from the nearby bank branches. Fill out the required document, visit the nearest authorized bank branch and submit the filled challan along with documents, cash, etc.

  • After completing the payment process, it is important to verify the payment status to ensure successful processing.

  • Save the copy of the payment receipt, acknowledgement and transaction reference number for future use

  • Lastly, ensure timely filing of your income tax returns (ITR) after making the tax payment. If you do not file a return before the specified date, then you have to bear penalties and late fees.

 

Income Tax Law:

The Income Tax Act is the main law governing taxation in India. It undergoes amendments every year during the presentation of the Union Budget by the Finance Minister. This budget introduces changes to the Income Tax Act, including the recent introduction of a new tax regime.

Apart from the Income Tax Act, other components of income tax law include income tax rules, circulars, notifications, and case laws. These elements aid in the implementation and collection of taxes.

About Income Tax Department India:

The Income Tax Department is a government agency responsible for collecting direct taxes on behalf of the Government of India. It operates under the Ministry of Finance, which oversees the country’s revenue functions. The Central Board of Direct Taxes (CBDT), a part of the Ministry of Finance, supervises the administration of direct taxes like Income Tax. The CBDT manages direct tax laws through the Income Tax Department, ensuring compliance and enforcement. Therefore, the Income Tax Department administers income tax laws under the guidance of the CBDT, collecting direct taxes for the government.

Budget 2023 – Income Tax Updates:

1. Deduction from Capital Gain: Capital gains from reinvesting in a residential house property under sections 54 and 54F of the Income Tax Act are now capped at Rs. 10 crores.

2. Surcharge Reduction: The highest surcharge rate has been reduced from 37% to 25%.

3. Insurance Policies: Income from insurance policies with a premium exceeding Rs 5,00,000 annually is now taxable under ‘Income from other sources’. This rule applies to policies issued on or after April 1, 2023. Deductions will be allowed for premiums not previously claimed under any other provisions of the act. Exemptions are granted for income received on the insured person’s death.

4. E-gold Receipt: Converting gold into E-gold receipts or vice versa is no longer considered a capital gain.

5. Presumptive Taxation: The limit for MSMEs and certain professionals to avail presumptive taxation benefits has been increased to Rs 3 crore and Rs 75 lakh, respectively. This increase applies if total cash receipts do not exceed five percent of the total gross receipts or turnover.

 

 

Conclusion:

Income Tax in India is an important responsibility for eligible people. It has to be paid every financial year in March or April. Before filing income tax, ensure compliance with tax laws and optimize their tax liabilities through legitimate means such as tax planning and availing tax deductions and exemptions. By following the easy steps, taxpayers can easily fulfill their income tax. While paying your income tax, it is essential to collect the required document with the payment receipt. Well, both options are available, online and offline. If it seems difficult to you, then it is advised to consult a professional advisor or consult the Income Tax Department’s website for detailed information and updates on income tax regulations.

FAQs:-

1. What is income tax?
– Income tax is a tax levied on the income of individuals, businesses, and other entities by the government. It is a direct tax that is based on the income earned by taxpayers.

2. Who should pay income tax?
– Any individual or entity earning income in India, whether a resident or non-resident, is required to pay income tax based on the applicable tax slabs and rules.

3. What are the types of taxpayers?
– Taxpayers can be classified into different categories such as individuals, Hindu Undivided Families (HUFs), companies, firms, and other entities recognized under the Income Tax Act.

4. What are the five heads of income?
– The five heads of income include salary, house property, capital gains, business or profession, and other sources.

5. How are taxpayers and tax slabs related?
– Taxpayers are taxed based on their income slabs, which determine the applicable tax rates. Different tax slabs have different tax rates, with higher incomes generally taxed at higher rates.

6. What is the existing (old) income tax regime?
– The old tax regime has different slab rates of 5%, 20%, and 30% for various income brackets, along with various deductions and exemptions allowed under Sections 80C to 80U.

7. What are the income tax slabs under the new tax regime?
– The new tax regime introduced lower tax rates but fewer deductions/exemptions. Taxpayers can choose between the old and new regimes based on their preference and financial situation.

8. What are exceptions to the income tax slab?
– Capital gains income is an exception to the income tax slab and is taxed based on the nature of the asset and the duration of ownership.

9. What is PAN (Permanent Account Number)?
– PAN is a unique 10-digit alphanumeric number issued by the Income Tax Department to individuals and entities for tax purposes.

10. What is TAN (Tax Deduction and Collection Account Number)?
– TAN is a 10-digit alphanumeric number allotted by the Income Tax Department to entities responsible for deducting or collecting tax at source.

11. What is the difference between residents and non-residents for tax purposes?
– Residents are taxed on their global income, while non-residents are taxed only on income earned in India.

12. What are the different types of taxes paid by taxpayers?
– Taxpayers pay various taxes, including income tax, advance tax, self-assessment tax, and tax deducted at source (TDS).

13. How can I file my income tax return (ITR)?
– Income tax return can be filed electronically through the income tax department’s e-filing portal using the appropriate ITR form based on the taxpayer’s income sources.

14. What documents are required for filing ITR?
– Documents like Form 16, Form 26AS, bank statements, investment proofs, and other relevant financial documents are needed for filing ITR.

15. What are the important income tax dates for 2024?
– Key dates include due dates for advance tax installments, ITR filing, audit report submission, and belated return filing.

16. What is the Income Tax Act?
– The Income Tax Act comprises provisions governing taxation in India, with amendments introduced through the Union Budget every year.

17. What is the Income Tax Department of India?
– The Income Tax Department is a government agency responsible for collecting direct taxes on behalf of the Government of India.

18. What are some deductions available for taxpayers?
– Deductions like those for health insurance, education loans, home loans, and interest income can help taxpayers reduce their taxable income.

19. How can taxpayers save tax in India?
– Taxpayers can save tax through tax planning strategies like investing in tax-saving instruments, claiming deductions, and utilizing exemptions available under the Income Tax Act.

20. How can I pay income tax in India?
– Income tax can be paid through various modes such as online payment, physical payment at designated banks, or through tax professionals.

 

 

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