Income Tax

Income Tax

Income tax is a type of direct tax that a government imposes on its people' earnings. The central government is required to collect this tax under the Income Tax Act of 1961 Every year in its Union Budget, the government can adjust the income slabs and tax rates.

What is Income Tax?

Income tax is a type of direct tax that a government imposes on its people' earnings. The central government is required to collect this tax under the Income Tax Act of 1961. Every year in its Union Budget, the government can adjust the income slabs and tax rates. Money earned in the form of a wage is not the sole source of income. Income from a residence, profits from a business, gains from a profession (such as a bonus), capital gains income, and 'income from other sources' are all included. The government also frequently allows for certain deductions from an individual's income before calculating the tax that will be levied.

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Direct Taxes are broadly classified as :

Income tax: Income tax is a type of tax that an individual, a Hindu Undivided Family, or any other taxpayer, other than corporations, pays on their earnings. The rate at which such income should be taxed is set by legislation.

Corporate tax : Corporate tax is a tax that corporations pay on the profits they make from their operations. The income tax laws of India have established a specific rate of tax on corporations once again.

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Types of Income Tax: Who should pay Income Tax

  • The Income Tax Act divides taxpayers into categories in order to apply different tax rates to distinct groups of people.

    The following are the different types of taxpayers:

    • Individuals
    • Association of Persons (AOP)
    • Body of Individuals (BOI)
    • Firms
    • Companies
    • Hindu Undivided Family (HUF)

    Individuals are also divided into two groups: residents and non-residents. Individuals who live in India must pay tax on their worldwide income, which includes money received both in India and abroad. Non-residents, on the other hand, are only required to pay taxes on income earned or accrued in India. For tax purposes, the residence status must be decided separately for each financial year based on the length of stay in India. For tax purposes, residents are further divided into the categories listed below.

    • Individuals less than 60 years of age
    • Individuals aged more than 60 but less than 80 years
    • Individuals aged more than 80 years

Income Tax Slabs Under New Tax Regime

New regime slab rates

  • Income from Rs 2.5 lakh to Rs 5 lakh
  • Income from Rs 5 lakh to Rs 7.5 lakh
  • Income from Rs 7.5 lakh to Rs 10 lakh
  • Income from Rs 10 lakh to Rs 12.5 lakh
  • Income from Rs 12.5 lakh to Rs 15 lakh
  • Income above Rs 15 lakh

 

Existing regime slab rates

 

  • Income from Rs 2.5 lakh to Rs 5 lakh
  • Income from Rs 5 lakh to Rs 10 lakh
  • 5%
  • 20%
  • 5%
  • 10%
  • 15%
  • 20%
  • 25%
  • 30%
  •  

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Read More