All About Income Tax Return In India

In simple words, Income Tax is a direct tax levied by the government of India on individuals and organisations based on their earnings. The income tax rate varies from person to person based on their income—the government of India timely changes the rate of income tax. The lower income group is taxed at lower rates and the higher income group or organisation is levied at higher rates. The government provides for deduction of the tax to the individual by providing tax incentives. The government offers tax savings schemes for collecting long-term tax in which individual invests their amount which is later deducted from their gross pay and this is how it reduces taxable income.

 In this article, we are going to let you know All About Income Tax in India.

 

·        Income Tax

·        Taxable Income

·        Eligibility for Income Tax

·        How is Income Tax calculated on a financial year?

·        Income Tax Return

·        How to file Income Tax Return in India?

·        Required documents for filing Income Tax Return

 

Income Tax

 

Income Tax is a direct tax that is paid by individuals and organizations to the government as per their earnings. The income tax rate is different for different people based on their earnings. Income tax plays a major role in the Government’s revenue by holding 71% part of revenue. This revenue is used by the government in many ways like pension, the budget of many schemes, projects, expenditure on defence etc.

 

Taxable Income

 

There are some areas of income on which tax is imposed by the Government of India.

·        Income generated by House property/Rental Property

·        Income from Business/Profession/Self-employment income

·        Income generated by Salary/Pension/Bonus/Wages/Royalties

·        Income from Capital gains/Lottery/Gambling winning/Prizes

·        Income generated by selling a property

 

Eligibility for Income Tax

 

As it is clear Income tax is paid by individuals based on their earnings. There is zero per cent tax on income up to Rs.2, 50,000. Tax rate on Rs.2, 50,000 to Rs.5, 00,000 income slabs is 5%. There is 20% tax on income up to Rs. 5,00,000 to Rs.10, 00,000. The tax rate for Income slabs whose income is more than 10,00,000 is 30%. In the case of senior citizens, there is no tax on income up to Rs.3, 00,000. There is a 25% of tax rate on domestic companies whose turnover was up to Rs.250 crore in the previous year, besides this 4% cess and a 7 % surcharge levied on the income up to 1 to Rs.10 crore.

 

How is Income Tax calculated in a financial year?

 

Income tax is calculated on the taxable income. The rate of tax is determined by the government for a financial year. There are some steps to calculate income tax.

Income tax Return

The income tax return is a form that includes all the details of your earnings and investments. It is compulsory to fill out this form as it gives a transparent view of an individual’s earnings. By filing Income Tax Return you can also get your income tax refund if you have paid more than the taxable amount. 7 types of ITR forms are filed in India by the citizens based on their income.

• ITR - 1 OR SAHAJ

Those who have one house property and agricultural income less than 5000 can fill this form. Income from other sources like pension, and salary also comes under this category.

•  ITR-2

This form is valid for individuals and HUF (Hindu undivided family) whose income does not come from business or profession.

This form is the same as ITR1 but those whose agriculture income is more than 5000 can fill this form.

•  ITR-3

This form is valid for individuals and HUF whose income comes from business or profession. It also includes income from salary/pension/investments. Those who are not eligible to file ITR1 and ITR2 can file ITR3.

•  ITR-4 OR SUGAM

This form is applicable for individuals and HUF, a partnership whose income from salary, pension/business/property/income from other sources is not more than Rs. 50 lakh.

•  ITR-5

This form is valid for firms, LLPs (limited liability partnership), AOPs, BOIs (body of individuals), AJP, Investment funds, Business trusts etc.

•  ITR-6

This form is valid for property held for charitable or religious purposes. This return is filed electronically only.

•  ITR-7

This form is valid for individuals or organization that is required to grant return under section 139 (4A), 139 (4B), 139 (4C), 139 (4D), 139 (4E) and 139 (4F).

 

How to file Income Tax Return in India?

There are two ways to file an Income tax return.

 

Required document for filing Income Tax Return

 

It is essential to file an Income tax return for individuals and organizations as it gives precise details of your income to the government