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Income Tax

Income Tax in India

Last Updated 31st Oct 2020

  • Income Tax is a tax imposed on all types of incomes including salary income, business income, rental income etc.
  • Individuals with annual income exceeding Rs. 2.5 Lakhs have to pay Income Taxes.
  • Income Tax Slab Rate varies based on age and income level.
  • Get Income Tax deductions on expenses such as HRA, home loans, fees of children etc.
  • File Income Tax Returns through online and offline modes.
  • Calculate Income Tax online by Income Tax Calculator.
INCOME TAX CALCULATOR

Income Tax Act Introduction

Income Tax is a direct tax imposed by the government on all types of income generated by individuals and businesses. It includes incomes such as salary income, business income, trading income, rental income, interest income, dividend etc. In India, Income Tax is governed by the Income Tax Act 1961 and individuals with annual income above Rs. 2.5 Lakhs are required to file Income Tax Returns.

Income Tax Calendar 2020

These are some of the important dates related to tax payments and filing Income Tax returns that you must remember.

Important Dates Events and Tasks to Complete
January 15th 2020 Quarterly statement of TCS deposited for the quarter ending December 31st 2019
January 30th 2020 Quarterly TCS certificate issue for the quarter ending December 31st 2019
January 31st 2020 Quarterly TDS statement filing for the quarter ending December 31st 2019
February 15th 2020 Quarterly issue of TDS certificate for payments other than TDS on salary for quarter-ending December 31st 2019
March 15th 2020 Fourth Installment for Advance tax payment for Financial Year 2019-20
March 31st 2020 Last date for filing Income Tax Returns for Financial Year 2018-19 as per revised dates
May 15th 2020 TCS quarterly filing tax deposited for the quarter ending March 31st 2020
May 31st 2020 Quarterly TDS return filing towards deductions for the quarter ending March 31st 2020
June 15th 2020

  • First Installment for Advance tax payment for Financial Year 2020-21
  • Issue Date for Form 16
  • TDS certificate issue for income other than salary for quarter ending March 31st 2020
July 30th 2020

  • TCS statement filing date for Quarter-ending June 30th 2020

July 31st 2020

  • TDS statement filing for quarter-ending June 30th 2020.
July 31st 2020

  • TDS statement filing for quarter-ending June 30th 2020.
  • Income Tax Return filing for assesses who are falling under categories individuals.
August 15th 2020 TDS certificate issue for income other than salary for quarter ending June 30th 2020
September 15th 2020 Second Installment for Advance tax payment for Financial Year 2020-21
October 15th 2020 TCS deposit statement filing for the quarter ending September 30th 2020
October 30th 2020 TCS certificate for tax payments made quarter ending September 30th 2020
October 31st 2020 Quarterly TDS statement filing for the quarter ending September 30th 2020
November 15th 2020 TDS certificate for income other than salary quarter ending September 30th 2020
November 30th 2020 Last date of ITR filing for assesses requiring account books audit and undertaking international transactions
December 15th 2020 Last date for advance tax payment for the Year 2020-21

Types of Income Tax in India

A tax is an obligatory financial charge imposed on a taxpayer who may be an individual or legal entity to fund government spending and various public expenditures. There are primarily two kinds of taxes- Direct Tax and Indirect Tax.

Direct Tax - A direct tax is a tax that is paid by an individual or any other person directly to the government based on his income. The liability to pay the tax and the burden of the tax falls on the same person.with direct taxes. Income tax is an example of Direct Tax imposed by the government on all types of income which includes salary income, business income, trading income, rental income, interest income, dividend and lottery or betting income.

Indirect Tax - Indirect taxes are the form of taxes where the person depositing the tax with the government and the person having been burdened by the tax are different. Generally, these taxes are included in the prices of the goods or services which are provided to the people and then such taxes are deposited by the person collecting the same from their customers. GST is one of the most popular types of indirect tax.

Income Tax Slabs

In India, Income Tax is levied on the individual taxpayer as per his Income Tax Slab, which increases with the increase in Income Tax Slab. There are primarily three categories of individual taxpayers:

  • Individuals below the age of 60 years.
  • Resident senior citizens who are above 60 years but below the age of 80 years.
  • Resident super senior citizens above 80 years of age.

Case 1. If you are an Indian resident below 60 years of age.

Income Tax Slab New Slab for FY 2020-21 Tax Rate FY 2019-20
Up to ₹ 2.5 lakh NIL NIL
₹ 2.5 lakh to ₹ 5 lakh 5% (Tax rebate of ₹ 12,500 available under section 87A) 5%
₹ 5 lakh to ₹ 7.5 lakh 10% 20%
₹ 7.5 lakh to ₹ 10 lakh 15% 20%
₹ 10 lakh to ₹ 12.5 lakh 20% 30%
₹ 12.5 lakh to ₹ 15 lakh 25% 30%
₹ 15 lakh and above 30% 30%

Case 2. If you are an Indian Resident and have age between 60 years to 80 years.

Income Tax Slab New Slab for FY 2020-21 Tax Rate FY 2019-20
Up to ₹ 3 lakh No tax No tax
₹ 3 lakh to ₹ 5 lakh 5% 5%
₹ 5 lakh to ₹ 7.5 lakh 10% 20%
₹ 7.5 lakh to ₹ 10 lakh 15% 20%
₹ 10 lakh to ₹ 12.5 lakh 20% 30%
₹ 12.5 lakh to ₹ 15 lakh 25% 30%
₹ 15 lakh and above 30% 30%

Case 3. If you are an Indian Resident whose age is 80 years and above

Income Tax Slab New Slab for FY 2020-21 Tax Rate FY 2019-20
Up to ₹ 2.5 lakh No tax No tax
Up to ₹ 5 lakh No tax No tax
₹ 5 lakh to ₹ 7.5 lakh 10% 20%
₹ 7.5 lakh to ₹ 10 lakh 15% 20%
₹ 10 lakh to ₹ 12.5 lakh 20% 30%
₹ 12.5 lakh to ₹ 15 lakh 25% 30%
Above ₹ 15 lakh 30% 30%

Income Tax Calculator

An Income tax calculator is an online tool to calculate the Income Tax using information related to income, deductions and HRA exemption. As the rules of the Income Tax Act 1961 are lengthy and complicated. Thus, it is difficult for a common taxpayer to calculate his income tax liability. Using the Income Tax Calculator can help to get approximate figures of income tax to be paid. To calculate taxes using the Income Tax Calculator, you simply need to put the values against the field, which is relevant for you and get your income tax calculated for the financial year.

Taxpayers in India

In India, Individuals, Hindu Undivided Families (HUFs), Bodies of Individuals (BOIs), Associations of Persons (AOPs), firms and companies need to pay Income Tax if they have a taxable income. As per the rules of Income Tax Act, 1961, regular citizens having an annual Income of Rs.2.5 lakh or above are required to pay Income Taxes. Taxpayers can also get a tax rebate up to Rs.12,500 under Section 87A. Further, the exemption limits for regular, senior citizens and Super Senior Citizen vary as per the Income level.

Income Tax Deduction & Exemption

Income tax deductions are deductions in tax obligation from your gross taxable income that helps to reduce the tax liability by lowering your net taxable income. Under the Income Tax Act 1961, taxpayers can claim deductions under a number of sections on specified investments and expenditures.

You can claim the deductions from taxes while filing the income tax returns. To claim the income tax deductions, you need to submit the essential documents for getting tax benefits for these expenses. These are some of the costs for which you can claim income tax deductions of the following expenses from your salary to save taxes.

  • Medical Insurance Deduction
  • House Rent Allowances, Travel Allowances and food allowances.
  • Section 80C, 80CCC and 80CCD(1)
  • Interest on Home Loan
  • Deduction for Donations

Income Tax Return

Income Tax Return is the process to provide information about all sources of Income, including any deductions and exemptions as specified under the Income Tax Act, 1961. It is mandatory to file ITR in India if you have more than one source of income. The tax slab limit and rate varies as per your Income level and age. For instance, if an individual is below 60 years of age and the gross annual Income is more than Rs. 2.5 Lakhs he needs to file ITR.

E filing Income Tax

An individual with an annual income of Rs. 2.5 Lakh and above are required to file an Income Tax Return with the Income Tax Department. Taxpayers can file ITR both through online and offline modes. Before filing ITR, they must, however, ensure that their Aadhaar and PAN are linked.

Offline method of e-filing:

  • Visit the official Income-tax portal by clicking on https://www.incometaxindiaefiling.gov.in/home.
  • Now, click on IT Return Preparation Software' from and download tab.
  • Next, extract the ZIP file and then open the utility.
  • Fill the relevant fields of the ITR form. You can also download the pre=filled XML by logging in to your account and import it to the utility.
  • Now, validate the tabs of the ITR form and calculate the tax.
  • Generate and save the XML and then login to your account in the e-filing portal using your PAN, password, captcha, and then click on Login.
  • Now, click on the 'e-File' menu and later on the 'Income Tax Return' link.
  • Next, on the ITR page, select the Assessment Year, ITR form Number. Choose the filling type as 'Original/Revised Return' and select Submission Mode as 'Upload XML'.
  • Verify your ITR from the available options such as Digital Signature, EVC using Prevalidated Demat Account etc. and click on 'Continue'.
  • Now, attach the ITR XML file.
  • Finally provide information as per the method chosen and submit your ITR.

Online method of e-filing:

You can also file an Income Tax Return online. The process of filing ITR online is simpler and can be done by following these steps.

  • Visit the e-filing portal by clicking on the e-filing portal at https://www.incometaxindiaefiling.gov.in/home.
  • Create your account using your PAN number.
  • Now, log in to your account by entering your PAN, password, captcha and click on 'Login'.
  • Next, click on the 'e-file' menu and then on the 'Income Tax Return' link.
  • On the ITR page, select the 'Assessment Year', 'ITR Form Number', 'Filing Type' as 'Original/Revised Return', and then select the 'Submission Mode' as 'Prepare and Submit Online'.
  • Now, click on 'Continue', and fill the relevant fields of the Online ITR Form.
  • Select the mode of verification in the 'Taxes Paid and Verification' tab and click on the 'Preview and Submit' button.
  • Finally, verify the data entered in the ITR and 'Submit' the ITR.

ITR Forms

ITR Forms Applicability
ITR-1 or SAHAJ For individuals with annual income below ₹ 50 Lakh and not more than one house property.
ITR-2 For individuals with annual income above ₹ 50 Lakh.
ITR-3 Individuals or HUFs carrying proprietory business or profession.
ITR-4 or Sugam Assesses opted for Presumptive Income Scheme or individuals, HUFs and partnership firms (except LLPs).
ITR-5 For LLPs, AOPs, AJPs, BOIs, etc.
ITR-6 Applicable for all companies except those who are claiming exemption under Section 11.
ITR-7 For all assessees covered under Section 139(4A), or 139(4B), or 139(4C), or 139(4D), or 139(4E), or 139(4F).

How to claim Income Tax Refund?

Income Tax Refund is the process by which the Income Tax department returns the excess tax paid by the taxpayers in a financial year. To claim Income Tax Refund, you don't need to follow a separate procedure for Income Tax Refund. You can claim Income Tax Refund as you file Income Tax Return through online or offline mode. After submitting the Income Tax Returns, the taxpayers can check the status of the refund online at the e-filing website or the TIN NSDL portal.

FAQs

Who must pay income tax?

In India, regular Indian Citizens who are below 60 years of age and their annual income exceeds ₹ 2.50 Lakh are required to pay Income Tax as per Income Tax Act, 1961. The tax slab rate and the limit for paying taxes vary from senior citizens and super senior citizens. The exemption limit for senior citizens and super senior citizens is upto ₹ 3 Lakh and ₹ 5 Lakh respectively.

What is income tax and its features?

Income Tax is a direct tax that the government charges on income earned by individuals and businesses. In India, Income Tax is governed by the Income Tax Act, 196 and the tax slab rate of the Income Tax varies as per the age and Income level.

  • Indian residents are below 60 years of age and have annual income above ₹ 2.50 Lakh are required to pay Income Tax.
  • In India, income tax is charged as per the income slab based taxation system, which means that as the taxable income increases, the tax rate also increases.

What is a person's income tax?

As per Income Tax Act 1961, tax is charged on all Incomes including salary income, business income, trading income, rental income, interest income, dividend and lottery or betting revenue. Further taxpayers can get deductions and exemptions on certain expenses such as Interest on a home loan, expenses on a child's education, any donation or charity. If the net annual income exceeds ₹ 2.50 Lakh then it is mandatory to pay taxes.

Why do we pay income tax?

Income Tax is a direct tax levied by the government for civic activities such as road construction, development projects, improving the infrastructure for education and health etc. and thus is one of the biggest sources of revenue for the government and helps in building the nation.

What are the 3 types of taxes?

There are 3 types of taxation system:

1. Progressive Taxation System: Under this system, as the income level increases the tax slab rate increases. India also follows Progressive Taxation, and tax slab rate ranges between 5% to 30% and varies as per Income level.

2. Regressive Taxation System: It is opposite of the progressive system, and the tax slab decreases with the increase in income level.

3. Proportional Taxation System: Under this system, the tax remains proportional or flat as per your Income level.

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Our News - Oct 2020
  • 2020-10-28 : Income tax return filing deadline for FY20 extended till Dec 31
    The income tax return (ITR) filing deadline for FY 2019-20 has been extended to December 31, 2020, for most individual taxpayers. The earlier deadline of ITR filings was November 30, 2020. This is the second time the tax filing deadline for FY20 has been extended.
  • 2020-09-10 : Faceless assessment ushers in a new era tax transparency
    Income tax authorities are likely to start the faceless tax assessment from 25 September. The objective is to make the tax assessments seamless, painless and faceless. It will bring in transparency and objectivity in tax assessments, foster taxpayer’s trust and confidence, and boost voluntary compliance.
  • 2020-09-10 : CBDT issues over ₹1,01,308 crore refund to 27.55 lakh taxpayers
    Income Tax Department reported that CBDT has issued refunds of over ₹1,01,308 crore to more than 27.55 lakh taxpayers between April 1 to September 8, 2020. Further, The I-T refunds of ₹30,768 crores were issued in 25,83,507 cases and corporate tax refunds of ₹70,540 crores have been issued in 1,71,155 cases.
  • 2020-09-03 : Banks, post offices can now check ITR filing status
    Banks can now check the status of ITRs of their customers based on their PAN. Through this facility banks or post, offices can get the applicable rate of TDS using the PAN of the person withdrawing cash.
  • 2020-08-31 : IT Department to intimate taxpayers under scrutiny about faceless assessment
    The income tax department will start sending out intimation to assessees undergoing scrutiny that such cases would be handled under faceless assessment. Under faceless scrutiny assessment, a central computer picks up tax returns for scrutiny based on risk parameters and mismatch and then allots them randomly to a team of officers.
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