Income Tax

The term income tax refers to a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. By law, taxpayers must file an income tax return annually to determine their tax obligations.

Income taxes are a source of revenue for governments. They are used to fund public services, pay government obligations, and provide goods for citizens.

Income Tax is a direct tax that is charged on an individual’s or entity’s income. The tax is calculated on the next taxable income of the entity based on the income slabs which are pre-defined by the IT Department.

Income tax is a tax charged on the annual income earned by an individual. The amount of tax paid will depend on how much money you earn as income over a Tax year. One can proceed with Income tax payment, TDS/TCS payment, and Non-TDS/TCS payments online. All taxpayers must fill in the relevant details to make these payments. The entire process becomes simple and quick.

Income tax for FY 2020-21 applies to all residents whose annual income exceeds Rs.2.5 lakh p.a. The highest amount of tax an individual could pay is 30% of their income plus cess at 4% if their income is more than Rs.10 lakh p.a.

Who should pay Income Tax?

It is mandatory to file ITR for individuals If the gross total income is over Rs.2,50,000 in a Tax year. This limit exceeds Rs.3,00,000 for senior citizens and Rs.5,00,000 for super senior citizens. The entities listed below are required to pay tax and file their income tax returns.

• Artificial Judicial Persons
• Corporate firms
• Association of Persons (AOPs)
• Hindu Undivided Families (HUFs)
• Companies
• Local Authorities
• Body of Individuals (BOIs)

Taxpayers and Income Tax Slab Rates

In the Union Budget 2020, the Finance Minister of India has announced a new income tax slab. However, the new income tax regime is optional, and individuals can either opt for the new regime or file their taxes as per the old regime.