Income tax is a tax paid by salaried individuals or people who have a source of income. There are a number of things that you need to keep in mind about income tax. You need to know whether or not you are eligible to pay income tax. To find out all about income tax, some tips to save tax and other things about income tax, make sure you read the whole article.
A certain percentage of your income is payable to the government, and that is the income tax you pay. The money that is collected using this direct tax route is further used by the Government of India for all sorts of infrastructural developments as well as to pay the employees of state and central government bodies.
Passed in the year 1961, the Income Tax Act of India governs the provisions for deductions in income tax and multiple other deductions that are applicable to income tax. However, since the year 1961, the law has been amended a number of times to take care of a lot of things like inflation as well as other socio-economic situations.
Key points about income tax
The income tax department of India has worked on digitizing the entire process of Income Tax return filing and collection. Over the years, the whole process has been digitized successfully. Hence, it has made things very easy for individuals as well as businesses. They can now easily file returns, pay their taxes online, and finally even track the history of their payments with the help of the various portals of the Income Tax Department of India. There is also something called an income tax slab. The slab system makes sure that different tax rates are prescribed based on different ranges of income.
Who will be eligible to pay the income tax?
All Indian citizens that are aged below 60 years are liable to pay a certain percentage of their annual income as income tax if their yearly income exceeds the amount of 2,50,000 rupees. If the person is above the age of 60 years and earns more than 3,00,000 rupees per year, then they will have to pay income tax to the government of India.
The following is a list of entities that generate income and are liable to pay the direct taxes:
Association of Persons (AOP)
Body Of Individuals (BOI)
Hindu Undivided Family (HUF)
All Artificial Juridical Persons
How is income tax collected?
Primarily, there are three ways that help the government collect income tax. They are:
TCS, which stands for Tax Collected at Source
TDS, which stands for Tax Deducted at Source
Voluntary payments are made by the taxpayers into the designated banks.
What are income tax returns?
Every individual with a source of income, be it regular or irregular, must file their income tax returns legally. Even when their income ranges below the Taxable bracket, it is important to file income tax returns. Prescribed forms are available through which the income earned by you and income tax paid thereon are all informed to the Income Tax Authority.