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No changes in Income Tax slabs or rates have been proposed. Also, no changes in additional tax exemptions or deductions been introduced. Standard Deduction for the salaried and pensioners also remains same as before. With no change in the income tax slabs and rates and basic exemption limit. An individual tax payer will continue to pay the tax at the same rates applicable in FY 2021-22/FY 2020-21.
Finance Minister Nirmala Sitharaman announced no filing of Income Tax Return by senior citizens (above 75 years of age) who have only pension and interest income.
Pension from the ex-employer is taxed under the income tax head of Salary while family pension is taxed as ‘income from other sources’.
Interest income received from SCSS, Bank FD etc., is taxed as per one’s income slab under the head ‘income from other sources’.
Budget 2021 has extended the ITR filing due dates for a certain category of taxpayers whose accounts need to be audited. The timeline for filing revised returns has also been proposed to be reduced from April 1, 2021.
ITR filing is made easy. Details of capital gains, income from list securities, dividend income, income from interest on bank deposits will come pre-filled in ITR.
Income tax in India is what the government levy for the objective of financing several operations. Basically, there are two major Types of Taxes - direct and indirect. In the former category, income tax is covered. And, VAT, excise, service tax, as well as goods and services tax (GST) all come in the indirect taxes.
Along with funding governmental activities, collected taxes are also used as a fiscal stabilizer that helps in the adequate distribution of wealth among the population. There are several aspects that Indian income taxation system comprises. Let's find out more about it.
Income tax can be divided into three different categories, based upon the payee and the time of payment, such as:
Any sort of income tax that is deducted and paid on the taxpayer’s behalf by a second person (who generates the source of income for the taxpayer) is called TDS. This tax is a measurement method that the income tax department uses to ensure timely payment of taxes.
Throughout the financial year, professionals and businessmen have to pay the income tax in four instalments. Those instalments are known as Advance Tax. There are certain fixed dates for the payment of these taxes, such as:
Self-assessment tax means any sort of balance tax that is paid by the taxpayer on the calculated income after taking TDS and advance tax into account.
As per the Indian Income-tax laws, income in India, when generated from the following sources, is meant to be taxable:
The income sum from all of these sources is calculated as per the provisions of the Income Tax Act. The tax rates vary based on the earnings of the individual and are called Income Tax slab rates. During the budget, every year, these income tax rates get revised.
A financial year is that year in which you have earned your income. Assessment year, on the other hand, is the succeeding year in which you have to file the income Tax Return for the previous year. So, for instance, you have earned your income in 2019, it will be considered as your Financial Year. And, since you are going to file the return for 2019 in 2020, it will be considered as your Assessment Year.
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When it comes to filing the ITR online, you would require a certain set of documents. These documents vary as per the source of income.
Below-mentioned is the detail regarding the same:
Income Source | Required Documents |
---|---|
Salaried Individuals | Form 16, 16A, 26AS. Receipt of Rent for HRA. Payslips. Investment done under Section 80C, 80D, 80E, and 80G. |
Capital Gains | SIPs, ELSS, mutual fund statement, Debt fund, sale and purchase of Equity Funds. Purchase/selling price, details of capital gains, details of registration if any house property is sold. Statement of capital gains via selling shares and stock trading (if available). |
House Property | Certificate of home loan interest. Property address. Details of the co-owner, including capital share and PAN card details. |
Other Sources | Bank details, if receiving interest on Savings Account. Income received from an account in a post office. Details of interest received from tax-saving and/or corporate Bonds. |
Apart from the ones mentioned above, there are certain mandatory documents as well, like bank account details, and PAN card.
Income tax forms are the approved forms from the income tax department. These are the ones used by taxpayers to furnish information regarding the earned income and paid taxes for that financial year. In total, there are seven different forms, and each of them belongs to a set category of taxpayers.
So, for instance, a form that is approved for income tax for professionals in India cannot be used by salaried individuals and vice versa.
Income Tax Return Form | Taxpayer Income Eligibility |
---|---|
ITR 1 (SAHAJ) | ✔Pension or Salary ✔One residential property ✔Other sources (except lottery, horse race, etc.) ✔Total income up to Rs. 50 lakhs. |
ITR 2 | hindu undivided family (HUFs) and individuals with no income from gains and profits of a profession or a business. |
ITR 3 | Hindu Undivided Family (HUFs) and individuals earning income from a profession or a business, including partnership companies. |
ITR 4 (SUGAM) | Anybody with income for presumptive tax. |
ITR 5 | Everybody apart from: ✔Individuals ✔HUFs ✔Companies ✔Those who are eligible to File ITR 7. |
ITR 6 | For companies apart from the ones that claim an exemption under section 11. |
ITR 7 | People, including companies, need to furnish returns under Section 139 (4A)/ 139 (4B)/ 139 (4C)/ 139 (4D)/ 139 (4E)/ 139 (4F). |
As mentioned above, the income tax is chargeable as per the income of an individual. The more the income, the more will be the tax. Basically, there are three categories of taxpayers, such as:
The income tax and slab rates applicable for different categories is mentioned below.
Note: As per the amendments to Section 87(A), if your annual taxable income is lower than INR 5,00,000, you can avail the Tax Rebate. The existing laws made way for a 2,500 income tax rebate. However, the updated law ensured that the limit was increased to a 12,500 income tax rebate.
Income Range Per Annum | Tax Rate | Health and Education Cess |
---|---|---|
Up to INR 2,50,000 | No tax | Nil |
Above INR 2,50,000 to 5,00,000 | 5% | 4% cess |
Above INR 5,00,000 to 10,00,000 | 20% | 4% cess |
Above INR 10,00,000 to 50,00,000 | 30% | 4% cess |
Above INR 10,00,000 to 1 crore | 30% + 10% surcharge | 4% cess |
Above INR 1 crore | 30% +15% surcharge | 4% cess |
Note: As per the amendments to Section 87(A), if your annual taxable income is lower than INR 5,00,000, you can avail the tax rebate. The existing laws made way for a 2,500 income tax rebate. However, the updated law ensured that the limit was increased to a 12,500 income tax rebate.
Income Range Per Annum | Tax Rate | Health and Education Cess |
---|---|---|
Up to INR 3,00,000 | No tax | Nil |
Above INR 3,00,000 to 5,00,000 | 5% | 4% cess |
Above INR 5,00,000 to 10,00,000 | 20% | 4% cess |
Above INR 10,00,000 to 50,00,000 | 30% | 4% of cess |
Above INR 50,00,000 to 1 crore | 30% + 10% surcharge | 4% of cess |
Above INR 1 crore | 30% +15% surcharge | 4% cess |
Here's the tax slab from super senior citizens of India:
Income Range Per Annum | Tax Rate | Health and Education Cess |
---|---|---|
Up to INR 2,50,000 | No tax | Nil |
Up to INR 5,00,000 | No tax | Nil |
Above INR 5,00,000 to 10,00,000 | 20% | 4% cess |
Above INR 10,00,000 to 50,00,000 | 30% | 4% cess |
Above INR 50,00,000 to 1 crore | 30% + 10% surcharge | 4% cess |
Above INR 1 crore | 30% +15% surcharge | 4% cess |
Tax rates for domestic companies:
Turnover Particulars | Domestic Companies | Firms |
---|---|---|
Income Tax for turnover upto INR 400 crores | 25% | 30% |
Income Tax for turnover above INR 400 crores | 30% | 30% |
Cess | 3% + surcharge | 3% + surcharge |
Surcharge | 7% if the income is more between INR 1 crore to 10 crore. And, income above INR 10 crore will be taxed 10% | 12% of tax if the total income exceeds INR 1 crore |
With the introduction of e-filing, the process to file ITR and claim deductions has become an easier one. Being a young earning individual, you would no longer have to undergo a strenuous process of filing. Now that this post covers almost every aspect of income tax in India, don’t miss out on your responsibilities.
By Rohini Hiremath
Rohini Hiremath works as a Content Head at Fincash.com. Her passion is to deliver financial knowledge to the masses in simple language. She has a strong background in start-ups and diverse content. Rohini is also an SEO expert, coach and motivating team head! You can connect with her at rohini.hiremath@fincash.com