Income Tax return

Income tax is a type of tax that the central government charges on the income earned during a financial year by the individuals and businesses. Taxes are sources of revenue for the government. Government utilizes this revenue for developing infrastructure, providing healthcare, education, subsidy to the farmer/agriculture sector and in other government welfare schemes. depends on your business structure and business location.

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NATURE OF INCOME TAX

Direct Taxes are 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 – This is the tax that companies pay on the profits they make from their businesses. Here again, a specific rate of tax for corporates has been prescribed by the income tax laws of India.

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 ).For simpler classification, the Income tax department breaks down income into five main heads:

Head of Income Nature of Income covered
Income from Salary	Income earned from salary and pension is taxable under this head of income
Income from House Property	Income earned from renting a house property is taxable under this head of income.
Income from Capital Gains	Surplus Income from sale of a capital asset such as mutual funds, shares, house property etc is taxable under this head of Income.
Income from Business and Profession	Profits earned by self-employed individuals, businesses , freelancers or contractors & income earned by professionals like life insurance agents, chartered accountants, doctors and lawyers who have their own practice, tuition teachers are taxable under this head.
Income from Other Sources	Income from savings bank account interest, fixed deposits, winning in lotteries is taxable under this head.

It has been formed to offer financial assistance, guidelines, and information concerning planned product development. These prepared products have been listed in the Act mentioned above, and the exporters of such products are required to register themselves under the APEDA. In this article, we look at APEDA Registration and the essentials surrounding the same.

INCOME TAX SLAB RATE

Tax rates for individuals (other than senior and super senior citizens) or HUF

*Net Income Range*	*Rate of income-tax*
Up to Rs. 2,50,000	–
Rs. 2,50,001 to Rs. 5,00,000	5%
Rs. 5,00,001 to Rs. 10,00,000	20%
Above Rs. 10,00,000	30%

Tax rates for senior citizens (i.e., an individual whose age is 60 years or more at any time during the previous year but less than 80 years on the last day of the previous year)

*Net Income Range*	*Rate of income-tax*
Up to Rs. 3,00,000	–
Rs. 3,00,001 to Rs. 5,00,000	5%
Rs. 5,00,001 to Rs. 10,00,000	20%
Above Rs. 10,00,000	30%

Tax rates for Super senior citizens (i.e., an individual whose age is 80 years or more at any time during the previous year)

*Net Income Range*	*Rate of income-tax*
Up to Rs. 5,00,000	–
Rs. 5,00,001 to Rs. 10,00,000	20%
Above Rs. 10,00,000	30%

tax rates for individual or HUF opting for an Alternate Tax Regime under Section 115BAC:

Income-tax Act provides for the progressive tax system for individuals or HUFs. Under a progressive tax system, the tax rate increases as the total income increases. The general slab rates applicable in the case of an individual or HUF are 5%, 20%, and 30%. The highest slab rate of 30% applies on income exceeding Rs. 10,00,000.

The Finance Act, 2020 inserted a new Section 115BAC which provides for an alternative tax regime for individuals and HUF. This provision provides an altogether new tax slab wherein the tax rates have been significantly reduced. However, to avail the benefit of this tax regime, the assessee has to forgo specified exemptions and deductions.

If an Individual or HUF opts for the alternate tax regime, the income shall be taxable at the following rate:

*Net Income Range*	*Rate of income-tax*
Up to Rs. 2,50,000	–
Rs. 2,50,001 to Rs. 5,00,000	5%
Rs. 5,00,001 to Rs. 7,50,000	10%
Rs. 7,50,001 to Rs. 10,00,000	15%
Rs. 10,00,001 to Rs. 12,50,000	20%
Rs. 12,50,001 to Rs. 15,00,000	25%
Above Rs. 15,00,000	30%

Tax rebate under section 87A?

An individual, who is resident in India, is allowed a tax rebate under section 87A if the total income of such individual does not exceed Rs. 500,000. The rebate is allowed to the extent of Rs. 12,500. Thus, if the total tax (excluding health & education cess) is less than or equal to Rs. 12,500, then the whole amount can be claimed as a rebate by a resident individual.

What is the tax rate for Association of Person (AOP) or Body of individuals (BOI) or Artificial Jurisdical Person (AJP)

Various entities are taxable under the status of AOP or BOI such as Joint Ventures, Trusts, Societies, etc. Therefore, the tax rates depend upon the type of entity. However, in general, an AOP or BOI is not liable to pay tax if its normal income is up to the maximum exemption limit or basic exemption limit.

An association of persons or body corporate having perpetual succession, and a common seal, with power to acquire and hold property, which can sue or be sued by the name by which it is known is an artificial juridical person. For example, a Bar Council is a juristic person covered by the expression artificial juridical person

The basic exemption limit and the tax rates in case of an AOP or BOI or AJP have been enumerated below:

*Net Income Range*	*Rate of income-tax*
Up to Rs. 2,50,000	–
Rs. 2,50,001 to Rs. 5,00,000	5%
Rs. 5,00,001 to Rs. 10,00,000	20%
Above Rs. 10,00,000	30%

Tax rates for Domestic Company

Income-tax Act allows a domestic company to choose from the following taxation regime subject to fulfillment of prescribed conditions.

*Section*	*Conditions*	*Tax Rates*
Section 115BA	The co. is set up and registered on or after 01-03-2016; It is engaged in the manufacture or production of any article or thing; and It does not claim specified exemption, incentive, or deduction.	25%
Section 115BAB	The co. is set up and registered on or after 01-10-2019; It is engaged in the manufacture or production of any article or thing; It commences manufacturing on or after 01-10-2019 but on or before 31-03-2024; and It does not claim specified exemption, incentive, or deduction.	15%- Income from manufacturing activities and short-term capital gain from the depreciable asset; 22%- Income from non-manufacturing activities and short-term capital gain from non-depreciable asset
Section 115BAA	If the company does not claim specified exemptions, incentives, or deductions	22%
First Schedule to Finance Act	If total turnover or gross receipts during the financial year 2020-21 does not exceed Rs. 400 crores	25%
First Schedule to Finance Act	Any other domestic company	30%

Tax rates for Foreign Company

A foreign company is liable to pay tax at the flat rate of 40% of normal taxable income.

Tax rate for a Co-operative Society

In general, co-operative societies are taxed at the slab rates and the highest slab rate is 30% which applies when income exceeds Rs. 20,000. However, the Finance Act, 2020, introduced an alternative tax regime under section 115BAD for resident co-operative societies.

The tax rates in the case of co-operative societies have been enumerated below:

Normal Tax Rates

In general, a co-operative society is liable to pay tax as per the following rates:

*Net Income Range*	*Rate of income-tax*
Up to Rs. 10,000	10%
Rs. 10,001 to Rs. 20,000	20%
Above Rs. 20,000	30%

EXCEPTION FOR INCOME TAX SLAB

One must bear in mind that not all income can be taxed on slab basis. Capital gains income is an exception to this rule. Capital gains are taxed depending on the asset you own and how long you’ve had it. The holding period would determine if an asset is long term or short term. The holding period to determine nature of asset also differs for different assets. A quick glance of holding periods, nature of asset and the rate of tax for each of them is given below.

Type of capital asset	Holding period	Tax rate
House Property	Holding more than 24 months the Long-Term Holding if less than 24 months – Short Term	20% Depends on slab rate
Debt mutual funds	Holding more than 36 months the Long-Term Holding if less than 36 months – Short Term	20% Depends on slab rate
Equity mutual funds	Holding more than 12 months the Long-Term Holding if less than 12 months – Short Term	Exempt (until 31 March 2018) Gains > Rs 1 lakh taxable @ 10% 15%
Shares (STT paid)	Holding more than 12 months the Long-Term Holding if less than 12 months – Short Term	Exempt (until 31 March 2018) Gains > Rs 1 lakh taxable @ 10% 15%
Shares (STT unpaid)	Holding more than 12 months then Long-Term Holding if less than 12 months – Short Term	20% As per Slab Rates
FMPs	Holding more than 36 months the Long-Term Holding if less than 36 months – Short Term	20% Depends on slab rate

INCOME TAX FORM

ITR 1

Income from Other sources
Salary
Pension
Income from up to one house
Agriculture Income less than Rs. 5000
Total Income is less than Rs. 50 lakhs

ITR 2

For Individuals and HUF having

Income from items in ITR 1 which is more than Rs. 50 lakh.
Income from capital gains
Foreign Income
Agricultural Income more than Rs. 5000
Income from Business or Profession under a Partnership firm

ITR 3

For Individuals and HUF having

Income from House Property (Multiple)
Income from Capital Gains (Short Term and Long Term)
Income from Business or Profession carried under a Proprietorship Firm (where the Individual/ HUF is the proprietor)
Income from Other Sources (Including Winning from Lottery, bets on Race Horses and other legal means of gambling)
Income from Foreign Asset

ITR 4

Income from presumptive business:

Section 44AD – Business (Deemed Profit-8% or 6%)
Section 44ADA – Profession(Deemed Profit-50%)
Section 44AE – Transporters (Deemed Profit- Rs. 7500/vehicle per month)

ITR 5

Firm
LLP formation
Association of Person
Body of Individuals
Artificial Juridical Persons
Local Authority or Co-operative Society

ITR 6

Companies not claiming exemption under Section 11

ITR 7

Section 139(4A)
Section 139(4B)
Section 139(4C)
Section 139(4D)

DOCUMENT ACCORDING TO SOURSE OF INCOME

Basic Documents

Bank account details
PAN Number
Bank Passbook or Statement
TDS certificates – Form 16/16A (If taxes are deducted from any of your incomes)
Self-assessment tax & advance tax payment challans (if paid)

1. Income from salary

Salary Certificate in Form 16 (PART-B) which is received from the employer including Basic Pay, Dearness Allowance, House Rent Allowance, and other taxable or exempt allowances and perquisites along with TDS deducted (PART-A) after taking benefit of deductions.
If the taxpayer is a pensioner his pension certificate from the bank or the bank statement where his pension is received

Also Submitted to the employer for deduct TDS

The amount which is to be contributed to the NSC, Public Provident Fund (PPF), Premium towards Life Insurance policies and other tax saving instruments under Section 80C. Contribution to the recognized pension funds under section 80CCCContribution to the National Pension Scheme under section 80CCDMedical Insurance Premium paid for self and family which are tax deductible under Section 80DAmount of donations that are made under Section 80G during the previous year

2. Income from business and profession

If you are earning any income from Business and Profession during the year, then following are the documents required to file return –

Profit & Loss statement
Balance Sheet
Supporting documents for expenses incurred
Bank account statement/passbook
Cash register
Any other documents required to maintain the books of accounts of the business & profession
Audit Report in case the Total Turnover exceeds Rs. 25 Lakhs for Profession and Rs. 1 crore for Business

3. Income from residential property

The bank statement showing the rent received
Details of tenant including Name and PAN
The housing loan repayment certificate for Interest, deduction
The Municipal Corporation tax receipt
The certificate of TDS deducted on rent received (if any)

4. Income from capital gains

Stock trading statement is required along with purchase and sales details if there are capital gains from selling the shares
In case a house or property is sold, you must seek sale price, purchase price, details of registration and capital gain details
Details of mutual fund statement, sale, and purchase of Equity Funds, Debt Funds, ELSS, and SIPs

5. Income from other sources

The Individual details of all the income from other sources (e.g. interest, dividend, income from sources not included above) and the TDS certificates that are relating to it.

FAQs FOR iNCOME TAX

Q1. What is income tax return and its types?

There are different types of income tax return forms depending on the taxpayer’s category and income type. Such forms are: ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6, and ITR 7. However, one should be cautious before choosing a tax return form to file.

Q2. Who introduced income tax?

To fill the treasury, the first Income-tax Act was introduced in February 1860 by Sir James Wilson (British India’s first finance minister). The act received the assent of the governor-general on 24 July 1860, and came into effect immediately. It was divided into 21 parts, with 259 sections.

Q3. What is purpose of file income tax return?

Filing returns is a sign that you are responsible. Not just that, it also makes it easier for individuals and businesses to enter into subsequent transactions since their income is recorded by the tax department with applicable tax, if any, having been paid.

Q4. What are 3 types of taxes?

Progressive tax—A tax that takes a larger percentage of income from high-income groups than from low-income groups.
Proportional tax—A tax that takes the same percentage of income from all income groups.
Regressive tax—A tax that takes a larger percentage of income from low-income groups than from high-income groups.

Q5. Who should file income tax?

Indian citizens and individuals who are earning an income and come under the Indian government’s tax jurisdiction mandatorily must pay income tax. Income tax returns should be filed as per Section 139 (1) of the Income Tax Act.

Q6. Who is required to file income tax return?

If a person’s gross annual income exceeds ₹2,50,000 under the new tax regime in a fiscal year, submitting a tax return is required, per tax regulations. Gross annual income comprises earnings from a variety of sources, including salaries, real estate, capital gains, etc.

Q7. What is in a tax return?

A tax return is a documentation filed with a tax authority that reports income, expenses, and other relevant financial information. On tax returns, taxpayers calculate their tax liability, schedule tax payments, or request refunds for the overpayment of taxes.

Q8. What are the 5 types of income tax?

Income from salary.
Income from house property.
Income from profits and gains from business or profession.
Income from capital gains.
Income from other sources.

Q9. What are 3 purposes of taxes?

Taxes are the primary source of revenue for most governments. Among other things, this money is spent to improve and maintain public infrastructure, including the roads we travel on, and fund public services, such as schools, emergency services, and welfare programs.

Q10. How much income is tax free?

If your income is below ₹2.5 lakh, you do not have to file Income Tax Returns (ITR).