INCOME TAX :- Definition, types, current tax slabs,comparison,Tax exemption, and all about.....

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INCOME TAX | GUIDE | DEFINITION | TAX SLABS | TAX EXEMPTION | 




| Income Tax in India |

In India income tax is categorized as Direct tax and indirect tax. Direct taxes are the tax that is directly paid to the government whereas Indirect taxes are the taxes which is somebody else collects on your behalf and pays to the government GST is an example of indirect tax. Direct tax is broadly classified as:-
  • Income Tax – This is taxes an individual or a Hindu Undivided Family or any taxpayer other than companies, pay on the income received. The law prescribes the rate at which such income should be taxed.
  • Corporate Tax – is a direct tax imposed by a jurisdiction on the income or capital of corporations or analogous legal entities. 

Important dates -  

                             30 January - Deadline to submit your investment proof
                             31 March   - Deadline to invest in 80 C
                             31 July       - Last date to file tax returns

| Income Tax Basics | Heads of Income |

Everyone who earns or gets an income in India is subject to income tax. Yes, be it a resident or a non-resident of India. Income could be salary, pension or could be from a savings account that’s quietly accumulating a 3.5% interest. Even, winners of any amount in the concert show have to pay tax on their prize money. For simpler classification, the Income Tax Department breaks down income into five heads:

  1. Income from Salary -  Income from salary and Pension
  2. Income from Other Sources - Income from the interest Fixed deposits, RD, etc..,
  3. Income from House Property - Any type of income from Rent.
  4. Income from Capital Gains - Income from the sale of capital assets such as mutual funds, shares, and property.
  1. Income from Business and Profession - If you are self-employed like a tuition teacher, carpenter, Doctor running your own clinic, retail shop, CA and Freelancers you will fall in this category  
                                        
                                              

| Taxpayers |

Taxpayers in India include:

  1. Individuals, Hindu Undivided Family (HUF), Association of Persons(AOP) and Body of Individuals (BOI)
  2. Firms
  3. Companies

| Tax Slabs & Rates on Latest Budget 2020 |



Note:- to avail the new tax regime, which is optional, taxpayers will have to let go of income tax exemptions Section 80 C.


| Exceptions to the Tax Slabs |

One must keep in mind that not all income can be taxed on a slab basis. Capital gains income is an exception to this rule. Capital gains are taxed depending on the assets you own and how long you’ve had it. The holding period would determine if an asset is a long term or short term. The holding period to determine the nature of assets also differs for different assets.

Type of Capital Assets:- House property, Debt Mutual Funds, Equity Mutual Funds, Shares, FMPs.


| Resident or Non-Resident |




CATEGORY OF PERSON 

Levy of income tax in India is dependent on the residential status of a taxpayer. Individuals who qualify as a resident in India must pay tax on their global income in India i.e. income earned in India and abroad. Whereas, those who qualify as Non-residents need to pay taxes only on their Indian income. The residential status has to be determined separately for every financial year for which income and taxes are computed.

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