The income tax system has been founded by the Government of India just like every other country. It is a tax system levied on the earning population of the country, and is based on their individual income category.
The tax system is mainly required to take care of the revenue matters of the country, its maintenance, repairs, growth, and development. The year of tax calculation is taken from April 31st till March 1st, which is termed as “Previous” year.
On Whom is the Tax Levied?
Income tax is levied on the people who have a stable income in cash, kind, or any sort of facility. For the people in business, it is calculated on their gross profits. For government firms, the final pay cheque at the end of the month is calculated with deductions of tax and other charges, and such is done for certain independent organizations as well.
The final tax calculation is done after taking into account all these minor tabulations, and thus it is charted in an impartial manner. Taxes are also calculated on the basis of property claims by a person, business partnerships and others. As per the Income Tax Act, there are three strata of tax payment.
|Income Slab||Tax %|
|Up to 2,50,000||0%|
|2,50,000 to 5,00,000||5%|
|5,00,000 to 10,00,000||20%|
The above-mentioned slabs are dependable on separate categories of individuals, like the individual residents (below 60 years of age), senior citizens, NRIs HUFs or AOPs, a local firm, a domestic company, and other such remarkable categories.
The overall tax payment calculation is filed after an accurate Income Tax Return is filed. This ITR contains all the extra tax deductions, payments, and total gross income listing all major exemptions. This is very important for any taxable individual.
- Provident Funds
- Public Provident Funds
- Health Insurance Premiums
- Home Loans
- Tuition Fees
- 5 Year Bank Deposits (FD)
- Infrastructure Bonds
- Senior Citizens Savings Scheme
Different Categories of Tax Returns
- Normal Return – Any type of return in business that consists of the final profit, after the expenses have been incurred.
- Revised Return – If any mistakes take place during the calculation of the normal return, the revised tax returns take place within a year of the tax payment.
- Belated Return – In cases of late payment of taxes, the payment can be completed before the completion of one year.
- Defective Return – If there is any fault in the return, the corrected return has to take place within 15 days of the announcement of the defect.
- Returns in Response to Notices – After tax submission, if any major changes take place in the yearly budget, or any other major alterations take place, then the taxpayer has to incur the changes made during the notice period.
There are several exceptions following the different age groups in case of tax payments. Likewise, the income tax is also customized and deduced under every individual’s personal annual expense covering shares, insurances, health benefits, utilities, loans and other deductions annually. It is important for one to be updated with the financial budget calendar and, if not possible, have an audit to go through the tax returns that have been filed.