Updated on June 19, 2025 02:53:19 PM
Income tax, as we are aware is one of the most basic features of company finance.The impact of the landscape in India cuts across, from individuals in the society to corporate entities. Every individual is required by the law to be in possession of this act to enable him or her to understand the fundamentals of income tax to enable him or her to observe legal requirements that pertain to it and also to enable him or her to undertake financial planning. So in this article, let us discuss first the basic information about the income tax in India which will suit beginners best.
Table of Content
Income tax is a direct tax charged by the government of India from the income that has been earned by one or any entity. The Income Tax Act of the year 1961 defined it in such a way that any individual or a company that receives an income amount more than a certain exemption limit or is bound to pay income tax. This tax is one of the major revenue-earning taxes, which the government uses to finance public services, development projects, and welfare.
In India, taxpayers can be classified into various categories, including:
Any amount earned or received by the taxpayer and allowed as income for tax computation is known as taxable income. It includes income from various sources, which are classified into five heads:
The Indian income tax is a progressive tax, where it is organised in terms of tax bands which are the rates of tax charged for different amounts of earnings. For the financial year 2024-25, the tax slabs for individuals under the old and new tax regimes are as follows:
The residential status of an individual is very important in prescribing tax. Individuals are classified as:
To ensure compliance, taxpayers must be aware of key dates related to income tax:
Advance tax is the amount of tax paid on income that is earned during that particular financial year. Whenever your tax liability crosses ₹ 10,000/- then you are expected to pay advance tax in four installments. Most employees are not required to be concerned with this because tax at source (TDS) is paid by the employer from the employee’s salary.
TDS is a technique that is applied while making payment to a third party whereby tax is actually deducted at the source itself. It is obligatory for employers and other persons to deduct TDS on salary, interest, rent, and any other payment that is subjected to tax. The amount is then deducted from the payment made to the organization and has to be paid to the government, the taxpayers are entitled to claim this amount while filing their income tax returns.
ITR is a process of completion of returning income tax and it is compulsory for people earning above the limit of exemption. The process entails submitting information on earnings and taxes remitted to the Income Tax Department. The forms that are used in filing the ITR depend on the source of income and even the category of the taxpayer. Common ITR forms include:
Before filing your ITR, ensure you have the following documents ready:
Section 16 of the Income Tax Act allows a standard deduction of ₹ 50,000 from the gross salary of the salaried person. It is a claim regardless of the real cost of the deductions taken.
Currently, the government offers tax rebates under Section 87A where those earning up to ₹ 5 lakh net taxable income can get a rebate. This rebate enables eligible taxpayers to have a decent reduction on the tax amount payable to them which can reach zero.
Any Form ITR which is not filed before the due date attracts certain penalties. Another thing that must be noted is that the late filing penalty cannot exceed ₹10,000 as laid under Section 234F. Further, taxpayers may incur interest for the failure to pay the amount of taxes due.
Any Form ITR which is not filed before the due date attracts certain penalties. Another thing that must be noted is that the late filing penalty cannot exceed ₹10,000 as laid under Section 234F. Further, taxpayers may incur interest for the failure to pay the amount of taxes due.
To check the status of your filed ITR, follow these steps:
Conclusion
It is paramount for everyone to know at least the rudimentary form of income tax to avoid contravening the Indian laws on the subject. Even the basic ways of calculating income and tax slabs, the procedure, and the deadlines are presented here to help people who just started learning about it. Through gaining as much information as possible and being in order, taxpayers can confidently work around the income tax issuance and fulfillment, in order to ensure they access the best possible breaks.
At Professional Utilities, we leverage our industry knowledge and expertise to help businesses navigate complex regulations, minimize risks, and optimize operations for maximum efficiency and profitability.
There is a correlation between the status of a person’s residence and Taxation. The domestic individual is taxed on his global income and an international person is taxed only on Indian income. There is also the mortality referred to as ‘Not Ordinarily Resident’ but this applies in certain circumstances only.
Key dates include:
Advance tax is the amount of tax that is paid on the basis of the estimated income of the financial year. Any tax liability exceeding ₹ 10,000 needs to be paid in four stages and you have already learned what the advance tax is all about.
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