A Detailed Guide to Income Tax
Income tax is the annual tax on income which every individual, corporate firm, local authority or company has to pay to the government. The tax is calculated on the annual income of a person or entity where the cycle starts from 1st April of the year and ends on 31st March of the next calendar year. You need to be aware of the tax slab under which you fall to pay your taxes accordingly. The income tax slab rates for financial year 2018-2019 are as follows:
Income Tax Slab for Individuals
|Income Slab||General Category||Senior Citizens (60 years and above but below 80 years)||Very senior citizens(above 80 years)|
|Up to ₹ 2,50,000||Nil||Nil||Nil|
|₹ 2,50,001 – ₹ 3,00,000||5 %||Nil||Nil|
|₹ 3,00,001 – ₹ 5,00,000||5 %||5 %||Nil|
|₹ 5,00,001 – ₹ 10,00,000||20 %||20 %||20 %|
|Above ₹ 10,00,000||30 %||30 %||30 %|
- Between ₹ 50 Lakhs to ₹ 1 Crore – A surcharge of 10% of the income tax has to be paid as well.
- Above ₹ 1 Crore – A surcharge of 15% of the income tax has to be paid.
4% of the income tax has to be paid as Health and Education Cess by all taxpayers irrespective of the slab they fall into.
Income Tax Slab for Businesses
For co-operative societies:
|Income tax slabs||Income tax rates|
|When income is within ₹ 10,000||10 % of the income|
|When income lies between ₹ 10,000 – 20,000||20 % of the amount which exceeds 10,000|
|Above ₹ 20,000||30 % of the amount which exceeds 20,000|
For Firms and Domestic Companies:
- The slab rates do not apply in the case of domestic companies, local authorities and firms.
- A tax of flat 30% is computed on the total income.
- A surcharge of 7% is levied on domestic companies if their total income exceeds ₹ 1 Crore.
- A surcharge of 12% is levied on domestic companies if their total income exceeds ₹ 10 Crore.
- An education cess of 3% of tax plus surcharge is also charged from such entities
Filing Returns is Mandatory
- The Income Tax Department is responsible for activities related to the taxation process.
- At the end of the financial year, every tax payer has to declare his income to the Income Tax Department in a form prescribed by the Govt. of India.
- It is mandatory for individuals and entities earning income in India to file a return, irrespective of the tax being deducted at source.
- This ITR (Income Tax Return Form) summarizes income earned in a particular financial year.
- The income can be from business, salary, pension, income from housing property, or even income from capital gains.
- By filing the ITR form (Income Tax Return form) you inform the government about your earnings and the tax paid on it.
- When you file the Income Tax Return, it is a proof of the income on which you have paid the tax.
- As per the Income Tax Act, it is mandatory to file ITR every year.
- Not filing Income Tax Returns can have serious implications. The IT Department may consider you as a tax defaulter.
- It can attract penalties from the Income Tax Department.
- If you have paid more tax than required, the excess amount paid by you will be refunded.