Income Tax

Income tax is a Direct Tax imposed by the Government of India (GoI) on individuals, Hindu Undivided Families (HUFs), and businesses based on their earnings and profits. The Income Tax Act, 1961 governs the rules of income tax in India. This tax is imposed on various sources of income, including salaries, investments, and capital gains. Understanding and complying with the provisions of income tax law is essential for both individuals and businesses operating in India.

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What is Income Tax?

Income Tax is the tax paid directly to the government based on the income or profits earned by individuals and businesses. It is governed under the provisions of the Income Tax Act 1961. 

Income tax is administered by the Central Board of Direct Taxes (CBDT), which is a department of the Ministry of Finance, Government of India. It is a major source of revenue for the government and is used to fund public services, pay government obligations, and provide goods for citizens. 

Income tax is levied on all income, such as follows:

  • Salary

  • Business profits

  • Capital gains

  • Rental income

There are different income tax slab rates for different types of income. You are taxed on the basis of a progressive income tax regime in 2023, meaning that the higher your income, the higher the tax rate you pay.

There are also a number of deductions and exemptions available for you, mainly under the old tax regime, which can reduce your taxable income. Some common deductions include the following:

  • For Various Investments & Expenses u/ Section 80C

  • For Investing in Life Insurance Policies u/ Section 10(10D)

  • House Rent Allowance (HRA)

  • Leave Travel Allowance (LTA)

  • Medical Expenses

  • Charitable Donations

You are required to file your Income Tax Returns (ITRs) every year. The deadline for online tax payment and e-filing your ITR is 31st July for salaried individuals and 30th September for self-employed individuals. 

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Who are the Tax Payers?

You are a taxpayer for the Financial Year 2023-24 (FY 2023-24) in the Assessment Year 2024-25 (AY 2024-25) depending on your choice of the Old vs. New Tax Regime. The conditions are as follows:

  • Old Tax Regime 2023-24: You are liable to pay income tax if your income is more than Rs. 2.5 lakhs per year. 

  • New Tax Regime 2023-24: If you are an individual who earns more than Rs. 3 lakhs annually, you will have to pay taxes to the Government of India.

Eligibility Criteria for Income Tax Payment

The following entities that generate income are liable to pay direct taxes:

  • Individuals (further categorised as individuals below 60 years of age, those between 60 and 80 years old, and individuals who are 80 years or older)

  • Hindu Undivided Family (HUF)

  • Body of Individuals (BOI)

  • Association of Persons (AOP)

  • Local Authorities

  • Corporate Firms

  • Companies

  • All Artificial Juridical Persons

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Types of Taxpayers Based on Residential Status

Under the Income Tax Act, the residential status of an individual can fall into one of the following categories:

  • Resident and ordinarily resident in India (ROR)

  • Resident but not ordinarily resident in India (RNOR)

  • Non-resident (NR)

Nature of Income
Residential Status
ROR RNOR NR
Income originating in India Taxed Taxed Taxed
Income considered to originate in India Taxed Taxed Taxed
Income received in India Taxed Taxed Taxed
Income considered to be received in India Taxed Taxed Taxed
Income from a business controlled from India or a profession set up in India, but accruing outside India Taxed Taxed Not taxed
All other income (not related to India) Taxed Not taxed Not taxed

Different Types of Incomes under Income Tax Criteria 

In India if you earn an annual income, you are required to pay income tax. The Income Tax Department classifies income into 5 categories:

  • Property Income: Income Tax is imposed on properties that are rented out by the owner, provided that the property isn't used for business or professional purposes.

  • Salary Income: This includes the taxable income received by employees from their employers or as pension. Employers withhold Tax Deduction at Source (TDS) as per the Section 192 of the Income Tax Act. The details about tax deductions and net income are provided in Form 16.

  • Business or Professional Income: This category covers profits generated by self-employed individuals, freelancers, businesses, contractors, and income from professionals such as chartered accountants, life insurance agents, lawyers, doctors, and even tuition teachers practicing in their respective fields. 

  • Capital Gain Income: Taxation on capital gains applies to profits from selling capital assets, which can include properties like buildings, lands, bonds, equities, ULIP funds, mutual funds, debentures, jewellery, and more.

  • Income from Other Sources: This category encompasses income from any sources not covered in the previous categories, including winnings from lotteries or horse races, dividends, posthumous pension, rental income (excluding house properties), gifts received, and interest from government securities, debentures, and bonds.

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Income Tax Act, 1961

The Income Tax Act, 1961 is the main legislation that governs income tax in India. It was enacted by the Parliament of India on September 13, 1961, and has been amended numerous times since then.

The Income Tax Act performs the following major functions:

  • Defines income tax

  • Sets out the rates of tax

  • Prescribes the rules and procedures for calculating and paying tax

  • Provides for the administration and enforcement of the income tax laws

Within the Income Tax Act of 1961, there are various sections and subsections, such as Section 80C, Section 80D, Section 80G, Section 10(10D), and others. These sections specify exemptions, deductions, and limits, which are designed to assist you in reducing your taxable income and accurately determining your tax obligations.

Income Tax Slab for Financial Year 2023-2024 (AY 2024-25)

The following table shows the income tax slab and related tax rates for the new tax regime and old tax regime:

Income Tax Slab Income Tax Rate (in % p.a.)
Old Tax Regime  New Tax Regime (since April 1, 2023)
0 – Rs. 2.5 lakhs NIL NIL
Rs. 2.5 lakhs – Rs. 3 lakhs 5% (Rebate u/ Section 87A is available) NIL
Rs. 3 lakhs – Rs. 5 lakhs 5% (Rebate u/ Section 87A is available) 5% (Rebate u/ Section 87A is available)
Rs. 5 lakhs – Rs. 6 lakhs 10% 5% (Rebate u/ Section 87A is available)
Rs. 6 lakhs – Rs. 7.5 lakhs 10% 5% (Rebate u/ Section 87A is available)
Rs. 7.5 lakhs – Rs. 9 lakhs 15% 10%
Rs. 9 lakhs – Rs. 10 lakhs 15% 15%
Rs. 10 lakhs – Rs. 12 lakhs 20% 15%
Rs. 12 lakhs – Rs. 12.5 lakhs 20% 20%
Rs. 12.5 lakhs – Rs. 15 lakhs 30% 20%
Rs. 15 lakhs & above 30% 30%

Surcharge Rates for Old Vs New Tax Regime FY 2023-24

Income Range Old Tax Regime 2022-23 New Tax Regime 2023-24
Rs. 50 lakhs- Rs. 1 crore 10% 10%
Rs. 1 crore- Rs. 2 crores 15% 15%
Rs. 2 crores- Rs. 5 crores 25% 25%
Rs. 5 crores- Rs. 10 crores 37% 25%
Rs. 10 crores & above 37% 25%

How is the Income Tax Collected?

There are primarily three ways in which the Income Tax Department collects taxes:

  • TDS (Tax Deducted at Source): Employers deduct tax from their employees' salaries and remit it to the government.

  • TCS (Tax Collected at Source): Certain businesses collect tax from their customers and remit it to the government.

  • Voluntary Payment by Taxpayers: Taxpayers can make voluntary payments of income tax into designated banks. 

e-Tax Payment

Online e-tax payment in India is a convenient and secure way to pay your taxes electronically. The Income Tax Department of India has made it easy for you to pay your taxes, file your Income Tax Returns (ITR), TDS Returns, and Wealth Tax Returns online through a variety of methods, including

  • e-filing 2.0 portal

  • e-Pay Tax

  • TIN- NSDL

E-filing your returns eliminates the need to deal with paperwork and the time-consuming task of organizing it all. Instead, you can securely log in to the website and effortlessly file your returns.

You must have a Permanent Account Number (PAN), or Tax Deduction and Collection Number (TAN) for online tax payment and e-tax payment.

Income Tax Return (ITR)

An Income Tax Return (ITR) is a document that taxpayers submit to the Income Tax Department each year to declare their income and claim deductions and exemptions.

 The ITR form that you need to file depends on your income and type of employment, such as follows:

TR Form Applicable Individuals/Entities
ITR-1 (SAHAJ) Individuals with simple income, e.g., salary, interest, and house property income.
ITR-2 Individuals with income from business, profession, capital gains, and other sources.
ITR-3 Individuals with income from business, profession, and capital gains.
ITR-4 (SUGAM) Individuals, Hindu Undivided Families (HUFs), and firms with business, profession, and capital gains income.
ITR-5 Limited Liability Partnerships (LLPs), non-resident individuals, and foreign companies.
ITR-6 Individuals and Hindu Undivided Families (HUFs) with income from foreign sources.
ITR-7 Individuals and Hindu Undivided Families (HUFs) with income from international transactions.

You can file your ITR online or offline. The process of online ITR filing is faster and more convenient. Online tax payment and e-filing 2.0 are also the preferred methods of the Income Tax Department.

Income Tax Refund FY 2023-24

If you have paid more in taxes than you are expected to pay, then you are eligible for an income tax refund of the extra amount you have paid.

For instance, if your tax liability for the Financial Year 2023-2024 is Rs. 35,000, but your employer deducted Rs. 40,000, you can request a refund for the excess Rs. 5,000 withheld.

You can also seek an income tax refund if you forgot to declare your tax-saving investments and you were charged taxes without accounting for your deductions.

Income Tax Calculator

You can calculate your income tax either manually or by using an income tax calculator. An income tax calculator is a tool that helps you estimate the amount of income tax you owe. It takes into account your income, tax slab, deductions, and tax credits to calculate your tax liability. 

For instance, in the case of a salaried employee, your income from salary comprises the basic income, House Rent Allowance (HRA), Transportation Allowance, and any Special Allowance. 

However, certain elements of the salary are tax-exempt, such as Leave Travel Allowance (LTA), reimbursement of telephone bills, and more. Additionally, you can also claim a tax exemption on HRA if you live in a rented house.

The Basics of Income Tax Calculation in India

Income Tax in India has been filed annually based on 'Previous Year' and Assessment Year.'

  1. Previous Year

    According to income tax rules, the 'Previous Year,' also known as the 'Financial Year,' begins on 1st April of the current year and ends on 31st March of the next year. Therefore, it doesn't matter in which particular month you have started earning, the financial year will end on the 31st of March, and the new tax year will begin 1st of April onwards. Hence, planning your taxes in advance for each financial year is necessary.

  2. Assessment Year

    Simply put, the upcoming fiscal year comes after the 'Previous Year,' and one must assess and file their income tax returns in the 'Assessment Year.'

Income Tax Saving Investments

Income Tax Saving Investments are the financial tools that help you to reduce your taxable income in order to lower your tax liability. By investing in these, you can benefit from tax deductions under various sections of the Income Tax Act, ultimately saving on your tax bill.

Some of the major tax-saving instruments include the following investment options:

Tax Saving Investments Details
Unit Linked Insurance Plan (ULIP)
  • Insurance-cum-investment product
  • Offers flexibility in investment funds
  • Tax benefits under Section 80C and 10(10D)
Sukanya Samriddhi Yojana (SSY)
  • Savings scheme for the girl child
  • Tax benefits under Section 80C
  • EEE (Exempt-Exempt-Exempt) tax benefits
Public Provident Fund (PPF)
  • Long-term savings with fixed interest rate
  • Tax deductions under Section 80C
  • EEE tax benefits
Employee Provident Fund (EPF)
  • Mandatory retirement savings for employees
  • Tax deductions under Section 80C
  • Employer and employee contributions
Senior Citizen Savings Scheme (SCSS)
  • For senior citizens seeking regular income
  • Tax benefits under Section 80C
  • Quarterly interest payouts
National Pension Scheme (NPS)
  • Retirement savings with equity exposure
  • Tax benefits under Section 80CCD
  • Annuity options at maturity
Tax-Saver Fixed Deposit Scheme
  • Fixed deposit with a lock-in period
  • Tax deductions under Section 80C
  • Fixed interest rate
Equity-Linked Savings Scheme (ELSS)
  • Equity mutual fund with tax-saving benefits
  • Tax deductions under Section 80C
  • Market-linked returns
Life Insurance Policy
  • Provides life coverage and savings
  • Tax benefits under Section 80C and 10(10D)
  • Maturity benefits and death benefits 

Tax Deductions under the Income Tax Act, 1961

The following are the various sections of the Income Tax Act of 1961, which allows the reduction of one's Taxable Income.

  • Section 80C

    Under this section, a deduction is available to individuals and HUF. On the payment made towards life insurance policies, provident fund, or superannuation, the tax deduction is available up to the amount of Rs. 1.5 lakhs.

  • Section 80CCC

    Tax exemptions under this section are on payments made to insurance companies and LIC under approved pension plans. The pension policy must be taken from the individual himself and must be up to Rs. 1.5 lakhs out of taxable income.

  • Section 80CCD

    Tax exemption under this section is for contribution by the assessee and the employer to the new pension scheme. The tax exemption under this section equals the contribution, not exceeding 10% of an individual salary.

  • Section 80D

    The premiums paid on the health insurance comes under this section of income tax deduction. Health insurance policies generally provide coverage to the insured person, spouse, and dependent children. If you pay your health insurance premiums, you can save your taxes up to Rs. 15,000 to Rs. 20,000. In the case of Hindu Undivided Family, the general deduction is up to Rs. 15,000, and the additional deduction is Rs. 5,000.

  • Section 80DDB

    Under this section, the tax deduction is made on medical expenses arising from treating any disease or illness specified in the rule (11DD). The tax benefit applies to the taxpayer, the family member, or any member of HUF.

  • Section 80E

    The interest paid on education loans in the country comes under this tax deduction section.

  • Section 80EE

    The first-time homeowners come under this section of tax benefit. Those whose first home purchase value is less than Rs. 40 lakh and the loan taken for Rs. 25 lakh or less are applicable for the tax deduction.

  • Section 80RRB

    Under this section, the tax deduction applies to the income earned by royalties and patents. For the patent registered under the patent act, 1970, up to the amount of Rs. 3,00,000 income tax can be saved.

  • Section 80TTA

    Tax deductions apply on interest earned in the post office and co-operatives society and saving bank accounts. Up to Rs 10,000 of interest income individuals and HUFs can claim the deduction.

  • Section 80U

    This section of income tax deduction applies to disabled people. To avail of the tax benefit under this section, one needs to show their disability certificate. Depending on the severity of the disability, up to Rs 1,00,000 can be non-taxed.

  • Section 24

    The interest paid on a housing loan comes under this tax exemption section. In addition to the deduction under sections 80C, 80CCF, and 80D, up to Rs 2,00,000 per year can be claimed as the deduction. For the rented properties, 30% of the received rent and municipal taxes paid are eligible for tax savings.

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FAQ's

  • Define the administrative framework of the Income Tax?

    Ans: The Government of India's revenue functions is managed by the Finance Ministry. The ministry of finance confides tasks such as wealth tax, income tax, etc., to the CBDT or Central Board of Direct Taxes. Basically, the CBDT is a wing of the Ministry of Finance's Department of Revenue. The CBDT gives essential inputs for policy planning and framing of the direct taxes and administers the laws of direct taxes through the IT department. In this way, the Income Tax laws are administrated by the IT department only under the supervision and control of the CBDT.
  • What is the meaning of Financial Year in the Income Tax context?

    Ans: As per the Income Tax laws, the Financial Year is the period that starts from the 1st of April and ends on the March 31st of the next year (calendar).
  • What is the time period during which the income of a person is taken into account to calculate their income tax?

    Ans: The income that a person earns during the period of 12 months starting from the 1st of April to March 31st (in one financial year) is considered to calculate the Income Tax.
  • What are the different income collection forms?

    Ans: The Government of India collects taxes through different means, which are:
    • Self-assessment tax
    • Advance tax
    • Tax on the regular assessment
    • Taxes that are collected at the source (TCS)
    • Taxes that are deducted at the source (TDS)
    • Attachments, etc.
  • Who should pay the income tax?

    Ans: Any individual, group of people or some artificial body who has earned the income during the previous financial year(s) must pay the Income Tax on their earnings. As per Section 2 (3) of the Income Tax Act, the Income Tax Department recognizes the earners of the income in the below-mentioned seven categories, which are called Status:
    • Hindu Undivided Family (HUF)
    • Individual
    • Association of Persons (AOP)
    • Companies
    • Body of Individuals (BOI)
    • Firms
    • Local Authority and Artificial Judicial Person
    Companies pay income tax as per the Income Tax Act, which is known as the Corporate Tax.
  • What are the means of Income Tax collection? Or how does the Indian Government collect the Income Tax?

    Ans: The Government of India collects the taxes in three ways –
    • The taxpayers of India make voluntary payments in different designated banks, for example, self-assessment tax and advance tax paid by Indian taxpayers.
    • Taxes that are collected at the source (TCS)
    • Taxes are deducted at the source (TDS) from the receiver's income.
    It is mandated by the Income Tax Department of India for every earning person to compute their income and make the tax payment correctly.
  • Mention different heads under which the Income Tax is levied in India?

    Ans: As per the Income Tax Act, the income of any taxpayer is classified under 5 various heads of the income, which are:
    • Salaries
    • Capital gains
    • Income from the house property
    • Gains and profits of profession or business
    • Income through other sources
  • Is there any provision for Double Taxation Relief in India?

    Ans: Yes, a taxpayer can claim relief concerning the income charged to tax abroad and in India. The taxation relief is either granted according to the provision of the double taxation avoidance agreement mentioned along with the country (if there is any) by the Indian Government or by allowing the relief according to section 91 of the Income Tax Act with respect to the tax that is paid in the foreign country.
  • What are the account's books prescribed under the Income Tax law that is to be maintained?

    Ans: The companies' account books are prescribed under the Companies Act. However, other people are expected to maintain and keep such account books and other documents that may enable the officer to compute the total income as per the provision of the Income Tax Act.
    In addition, the Institute of Charted Accountants of India has mentioned different accounting standards and guidelines that business entities must follow.
  • What is PAN?

    Ans: The full form of PAN is the Permanent Account Number. It is a ten-digit alphanumeric code issued by the Department of Income Tax. It is a unique code.
  • Define the benefits of having PAN?

    Ans: Permanent Account Number or PAN is required for each and every transaction with the Department of Income Tax. The PAN is made mandatory for various other financial transactions like when one opens a bank account, for purchasing high-end consumer goods, availing financial credits of institutions, foreign travel, dealing with securities, making a transaction of some immovable property, etc. In addition, a PAN card is considered one of the most valuable ways of photo identification that is accepted by all of the non-Government and Government institutions of India.
  • How does one know the income tax they must pay?

    Ans: The corporate tax and income tax rates are provided in the Finance Act that is passed by the Parliament each year. One can as well check their tax liability by using the free tax calculator online available at www.incometaxindia.gov.in
  • If I want to discuss some tax-related matters, where should I ask for the help of an Income-tax expert?

    Ans: If you want to discuss some tax-related matter, you can discuss it with the tax professionals or take the help of any Public Relations Officer (PRO) in every local Income Tax office. You can also discuss your issue with Tax Return Preparers (TRPs). To locate the nearest TRP, you can visit – www.trpscheme.com
  • What do the terms like Income-tax other than companies and Income-tax on companies mentioned in Challan mean?

    Ans: The tax that companies pay on their income is known as corporate tax, and to pay the same in the Challan, it is specified as Income-tax on companies – 0020. However, the tax paid on the non-corporate assessee is known as income-tax, and to pay this in the challan, this tax is mentioned as Income-tax other than companies – 0021.
  • What is the process to calculate advance tax and pay it?

    Ans:  The advance tax is calculated as per the expected liabilities of tax of the year. This tax is paid in installments as mentioned below:
    • For all the assessees (except the assessees mentioned in the Section 44AD and 44ADA):
      • Up to 15% - By 15th June
      • Up to 14% - By 15th September
      • Up to 75% - By 15th December
      • Up to 100% - By 15th March
    • For the eligible assessees who are referred in the Section 44AD and 44ADA:
    • Up to 100% - By 15th March
    Note: Any advance tax paid by 31st March is also treated as the tax paid during the same FY. One can make the deposits of the advance tax through challan ITNS 280 by selecting the relevant column for advance tax.
  • What is the meaning of tax on regular assessment, and what is the process to pay it?

    Ans: As per the Income-tax Act, every person must calculate and pay their due taxes. When the Income Tax Department underestimates the income and the consecutive due tax, it takes special measures to calculate the amount of tax that should be paid. This kind of demand raised on the person is known as Tax on Regular Assessment. This tax on regular assessment – 400 must be paid within 30 days of receiving the demand notice.
  • What precautions should one take while filling the challan of the tax payment?

    Ans: At the time of tax payment, with other things, a person should clearly mention the below things:
    • The Head of the payment can be Income-tax or Corporation tax (other than the organizations).
    • Mode of payment and amount of the tax.
    • Type of the payment, for example, Self Assessment Tax, Advance Tax, Tax on Dividend, Tax on Regular Assessment, Surtax, or Tax on the Distributed Income to the Unit Holders.
    • Assessment year
    • PAN issued by the Income Tax Department
  • Do I need to get some payment proof from the Banker to whom I have given (or submitted) the challan?

    Ans: The bank should return the stamped counter-foil of the IT challan filed by the taxpayers. Therefore, you should get this counter-foil with the stamp. It is recommended to make sure that the bank's stamp contains the Banker's Serial Number Code (BSR), the date of payment, and the Challan Identification Number (CIN).
  • How does a taxpayer know that the Government of India receives the amount deposited by him/her as tax in the bank?

    Ans: The website – www dot tin-nsdl dot com gives online services known as Challan Status Enquiry. One can also check their tax credit by seeing their Form 26AS from the e-filing account from www dot incometaxindiaefiling dot gov dot in. The Form 26AS also discloses the information related to TCS/TDS of one's account.
  • What should one do if their particulars related to tax payment are not found against their name on the website?

    Ans: There are the following reasons due to which the particulars of a person are not displayed in their Form 26AS:
    • The collector or deductor has not filed the TCS/TDS statement.
    • The PAN number provided to the collector or deductor by the taxpayer is not correct.
    • The taxpayer has forgotten to provide the PAN number to the collector/ deductor.
    • The deductor or collector has made some errors while quoting the PAN of the taxpayer in the TCS/ TDS return.
    • The deductor or collector has not provided the PAN of the taxpayer.
    • The challan's details for which one's TCS/ TDS was deposited were quoted wrongly in the statement through the deductor, or the bank uploaded the wrong challan details.
    For the rectification of these errors, a taxpayer may request the deductor to:
    • File the TCS/TDS statement if it has not been filed.
    • Furnish the statement to correct if the deductor has filed the TCS/ TDS statement and has missed providing the details, or the taxpayer has forgotten to provide the PAN details before filing the TCS/ TDS return.
    • Rectify the PAN through the PAN correction statement mentioned in the TCS/ TDS statement already uploaded if there is some error in the quoted PAN.
    • If the TCS/ TDS filed by the deductor is mistaken in the challan details, then furnish the correction statement.
    • Take to the bank to rectify the issue in the challan details uploaded through the bank.
  • Are the responsibilities of a taxpayer over once they pay their taxes?

    Ans: No, the responsibilities do not get over after paying the taxes. This is because the taxpayer has to ensure that the tax credits are available in their tax credit statement. The certificates of TDS/ TCS received by them, and the complete particulars of the income and the taxpayers are given to the Department of the Income Tax as Return of Income that must be filled before the mentioned due date.
  • Define Assessing Officer in brief.

    Ans: Assessing officer is an officer appointed by the Income Tax Department. This officer has given a particular jurisdiction in a specific geographical area in the town or city or on the class of people. One can find out his/her area's Assessing Officer from the department's website – www dot incometaxindia dot gov dot in or through the PRO.
  • Since income tax is levied on each person's income. So, according to the income tax law, what is considered income?

    Ans: As per the Income Tax laws, the word income has an inclusive meaning. If we talk about a salaried person, all the money that one gets from their employer comes under the category of income. If we talk about a business person, their net profit is considered as their income. Income can also come from investments such as commission, dividends, interest, etc. In addition, the income can also be earned on the sale of some capital assets such as gold, building, etc.
  • Define taxable income and exempt income?

    Ans: The income that is chargeable to tax is known as taxable income, whereas the income that does not fall in the tax category is considered exempt. The law of the Income Tax exclusively grants tax exemptions to some income.
  • What are a capital receipt and revenue receipt?

    Ans: The receipts can be classified into two categories – (1) Capital Receipt and (2) Revenue Receipt.
    The capital receipts have an isolated nature, such as receipts of sale of personal jewelry, receipt of sale of some residential property, etc.
    On the other hand, the revenue receipt has recurring nature, such as salary receipts, interest income, etc.
  • Are these receipts, which are revenue and capital, charged to tax?

    Ans: According to the income tax law, all the receipts (revenue) are taxable unless they have some special permission or grant exemption from tax. All the capital receipts are exempted from tax unless there is some special provision to charge tax on them.
  • Do the income of agriculturists taxable?

    Ans: The income from agriculture is not taxable. However, if one has some non-agriculture income also, then at the time of tax calculation, while calculating the tax on the income through non-agriculture mode, one's agricultural income is also taken into account for the purpose of rate. To understand more about agricultural income, read the Income Tax Act's Section 2(IA).
  • According to the Income Tax law, is the income earned from animal husbandry taken as agricultural income?

    Ans: No
  • Does one need to maintain some record or proof of their earnings?

    Ans: One should maintain the proof of income from every source and make the records according to the Income Tax Act. However, failing to maintain such records, one should maintain other reasonable records through which one can provide support for the claim of income.
  • As an agriculturist, should one maintain proof of expenditures and earnings incurred?

    Ans: Even if one's source of income is only agriculture, they are also suggested to maintain all the proofs of their expenditure and earnings.
  • If one wins price money or lottery in some competition, do they need to pay the income tax on it?

    Ans: Yes, these winnings also attract a flat rate of 30% tax without any limit on the basic exemptions. In such situations, the price money payer deducts the tax at the source (TDS) itself from the contestant's winnings and pays the balance amount only.
  • If a person's income is taxed abroad and in India, can they claim any kind of relief on the double taxation?

    Ans: Yes, in such a case, one is eligible to claim relief with respect to the income that is charged abroad and in India. This relief is either granted according to the double taxation avoidance agreement provided with that country by the Indian Government or by allowing relief under Section 91 of the Income Tax Act in respect of the tax payment in foreign currency.
  • What is the meaning of Profession?

    Ans: The profession's basic meaning is the independent exploitation of one's knowledge and skills. The profession also involves vocation. Some examples of the profession are engineering, medical, legal, accountancy, agriculture, artist, technical consultancy, writing, interior decoration, etc.
  • Which books of accounts are prescribed to be maintained by the people with a profession or business under the Income Tax Act?

    Ans: According to the Income Tax Act, no books are prescribed for the account of a person involved in some business or non-specified profession. However, it is suggested to such persons to maintain and keep account books and other documents that can help the accessing officer to calculate that person's total income as per the Income Tax Act, if:
    Particular Details HUF or Individual Any Other Assessee
    If some existing profession or business, the income or the gross turnover in any of the three preceding years exceeds the below:
    1. Income through profession or business
    2. Gross income receipts or turnover in the profession or business
    Rs. 2,50,000
    Rs. 2,50,000
    Rs. 1,20,000
    Rs. 10,00,000
    In the situation of some newly setup profession or business, the gross turnover or income of the 1st previous year is most likely to exceed the below:
    1. Income through profession or business
    2. Gross income receipts or turnover in the profession or business
    Rs. 2,50,000
    Rs. 2,50,000
    Rs. 1,20,000
    Rs. 10,00,000
    For the organizations, the account books are prescribed according to the Companies Act. Different accounting guidelines and standards need to be taken care of by the business entities. According to the maintenance of the account books by an individual professional who is engaged in some specific profession, they have to maintain some prescribed account books if the annual receipt through their profession exceeds Rs.1,50,000 in all 3 years soon after the previous year (in the situation of new business set up, their annual receipts provided in the business for that specific year are most likely to exceed Rs.1, 50, 000).
    The specified professions cater to medical, engineering, legal, accountancy, architecture, technical consultancy, company secretary, authorized representative, interior decoration, information technology, or film artist.
  • Where should the account books related to business be kept, and for how long?

    Ans: All the account books and related documents must be kept at the business's principal place. It is recommended to keep these documents for at least six years, calculating from the end of a relevant year of Assessment, which is for seven financial years from the end of a relevant year. However, when the assessment is reopened, all the account books and other relevant documents that were being maintained and kept at the reopening must be maintained and kept until the assessment occurs.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

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