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About Income Tax

Income tax refers to the tax levied by the government of India on all salaried individuals in India. As a part of income tax, a certain percentage of your income is taxable and is thus deducted. These taxes are of two types, direct and indirect taxes. Direct taxes are those that are directly deducted from your salary, and indirect taxes on the other hand are those that are charged on services and goods. The taxes thus collected are used by the government of India for the welfare of Indian citizens, infrastructural development, and other needs. Read on to know all about income tax in India.

Income Tax Slab rates for individuals below 60 years of age

Income

Tax slab rates

Up to INR 2,50,000 per year

None

INR 2,50,001 to INR 5,00,000 per year

5% on the amount above INR 2,50,000

INR 5,00,001 to INR 7,50,000 per year

INR 12,500 + 10% over INR 5 lakh

INR 7,50,000 - INR 10,00,000

INR 37,500 + 15% over INR 7.5 lakh

INR 10,00,000 - INR 12,50,000

INR 75,000 + 20% over INR 10 lakh

INR 12,50,000 - INR 15,00,000

INR 1.25 lakh + 25% over INR 12.5 lakh

INR 15,00,000 and more

INR 1,87,500 + 30% over INR 15 lakh

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**Tax benefits are subject to changes in Income Tax Act.

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Income Tax Payers in India

All the earning individuals in India who are above the age of 60 years and are generating an income of more than 2.5 lakhs are liable for paying tax in India. Both salaried individuals and businessmen are liable to pay income tax in India. Listed below are the different groups of individuals who are income taxpayers in India:

  • All the earning individuals who are below the age of 60 and has income greater than 2.5 lakhs
  • Senior citizens above the age of 60 who have an income of more than 3 lakhs
  • Corporate firms owner generating income, despite them making said profit in that year
  • Individuals who are generating income from their house property, qualify for a minimum income of more than 2.5 lakhs
  • NRI who earn more than 2.5 lakhs in India in a given financial year

Income Tax Slab Rates

As per the annual income of individuals, the income tax slab rates vary from individual to individual. The tax slab rates directly depend on the income of individuals and increase as does the income. The tax slab rates are also subject to changes and are revised during the union budget presentation.

Filing Income Tax Returns

Income tax return or ITR is a form in which an individual specifies their income and analyses their tax liability. So, here is the online process of filing income tax returns:

  • First, click on the income tax e-filling portal
  • You need to log in on the portal by entering your PAN number, password, and captcha
  • Next, click on the e-file menu and then click on the income tax return link
  • Then, select the assessment year for which you need to file returns. Also, enter all the relevant details as asked
  • Next, continue and then click on ‘I would like to e-verify otherwise sent the income tax return form to the registered office in Bengaluru
  • You can also check all the data entered by you and then finally submit the ITR. Also, enter the OTP for a successful e-verification

Benefits of Filing Income Tax Returns

It is mandatory for all Indian citizens who have specified earnings as mentioned under the tax slab. There are also several benefits of filing income tax returns. Listed below are some of the benefits of filing income tax returns that you need to be aware of:

  • Filing income tax works as proof of income and is recorded by the Income Tax Department of India. The ITR returns are submitted to the government of India and thus are considered official wordings.
  • If you file income tax returns on a regular basis, then it becomes easier for you to get loans. The reason behind this is that for getting loans, your ability to return it back is considered and the same is justified based on your income. Thus, with ITR filing, the process of getting loans becomes comparatively easier and hassle-free.
  • ITR filing is also mandatory for applying for a visa as well as for getting your credit card issued.

So, make sure to file your income tax returns on time so that you can enjoy the above-mentioned benefits. The process of filing income tax returns is quite simple.

How to do Tax Planning?

If you have just entered the taxable income category or are still wondering about effective ways for saving income tax, then proper tax planning is what can help you. With the right tax planning, you can save a lot on taxes as well as effectively plan for future goals. So, in the section below, we have enlisted some of the best ways to do tax planning:

  • Start early: Many times, people start planning for tax savings only when a financial year is coming to an end. However, this should not be the practice, as it is very important to start planning for tax savings early to avoid any confusion.
  • Identify your goals: If you are planning to buy any investment tool for saving tax, then first and foremost identify your goals. As you have identified your future goals, it becomes easier to invest in the right plan as well as enjoy tax savings.
  • Consider the risk factors: While investing in any investment tools in order to save taxes, you need to be extremely careful in considering the risk factors involved. For instance, if you are investing in ULIP, then the risk comparatively is higher. So, be careful about the risk associated with different tax-saving investment options.
  • Choose from a variety of tax-saving investment options: There are a number of tax-saving investment options available that can easily help you in saving taxes. With so many tax-saving investment options available, it is important to pick the right plan and effectively do tax planning.

Furthermore, to plan for tax savings in an even better way, you can also contact a consultant or professional who will provide you with the right assistance.

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FAQs

  • Am I liable to pay income tax if my income exceeds 5 lakhs?

    Yes, if your income exceeds 5 lakhs, then you are liable to pay taxes.

  • How is the income tax calculated?

    The income tax is calculated on the basis of your income. You can also use an income tax calculator to evaluate the same.

  • What are some of the benefits of filing income tax?

    Some of the benefits of filing income tax are for estimating your tax liability, easily getting loans, and more.

  • What are the two different types of tax levied by the government of India?

    There are basically two types of taxes, direct and indirect tax. While the direct tax is calculated on your income, indirect taxes on other hand are levied upon goods and services.

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