Income Tax comes under the direct tax category and calculated on the taxable income of an individual according to the pre-defined income slabs of Income Tax department.
Types of Payers
Different rates of income taxes are applicable on different players. These taxpayers can be broadly categorized as follows:
- Hindu Undvided Family (HUF), Individuals, Body of Individuals (BOI), and Association of Persons (AOP)
- Companies
- Firms
The individuals are further divided into two more categories- residents and non-residents. Residents have to pay tax on their complete global income to India whereas non-residents are liable to pay tax only on the income earned in India. The residents are then further divided into certain sub categories-
- People aged less than 60 years
- People aged more than 60 but less than 80
- People aged more than 80 years
Income Tax Slabs
According to the Finance Budget 2020, new income tax slabs were announced by the finance minister. Payment under these slabs is optional and individuals can choose to pay their taxes under this or under the old tax regime.
Slabs Under the New Regime
| Tax Slab | Details |
| Income Upto Rs. 2,50,000 | NIL |
| Income between Rs 2,50,000- Rs 5 Lakh | 5% |
| Income between Rs 5 Lakh- 7.5 Lakh | 10% |
| Income between Rs 10 Lakh – 12.5 Lakh | 20% |
| Income between Rs 12.5 Lakh – Rs 15 Lakh | 25% |
| Income above 15 Lakh | 30% |
Exemptions and deductions of old regime are not allowed under the new scheme. New scheme exemptions are as follows:
- Transport allowances especially if the person is differently abled
- Conveyance allowance for covering the conveyance charges
- Compensations for travel costs incurred on a tour or transfer
- Daily allowances to cover regular charges and expenditure
Old Tax Regime
The old tax regime provided just three basic slabs of tax.
| Slab | Details |
| Income uptill Rs 2.5Lakh | No Tax |
| Income between Rs 2.5 Lakh- 5 Lakh | 5% |
| Income between Rs 5 Lakh- 10 Lakhs | 20% (Rs 12,500+ 20% of income above 5 Lakh) |
| Above 10 Lakh | 30%( Rs 1,12,500+ 30% of income above 10 lakh) |
There are certain allowances that are considered to be deductibles under this slab. These include Leave travel concession, house rent allowance and several other allowances according to the group an individual falls in.
E-filing of Income Tax
The government has given the option of filing Income Tax returns, AIR returns, Wealth Tax return and TDS return online at https://incometaxindiaefiling.gov.in. Before filing your taxes, download the right form applicable for you along with all the investment proofs. This is the used for calculating the payable tax and refunds for the year. E-filing also gives you certain advantages like doing away with all the paperwork hassle and saving of time and resources.
Conclusion
Remember, it is mandatory to file income tax returns for any company. However, not all individuals, BOIs, AOPs and HUFs are required to file their return if their income is less than Rs 2.5 lakhs. The limit differs according to the age group of the individual too. If you are still looking for advice and help in e filing of your income tax returns, consult our financial experts today.
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