Income tax simplified

What is income tax?

Income tax (IT) is the tax levied on income of an individual, firm or organisation in a financial year.

It is charged according to the tax slab rates mentioned in the Union budget in each financial year.

 

Income tax is levied on which income?

The primary sources of income included in income tax are:

• Income from salary
• Income from business or profession
• Income from capital gains
• Income from house property
• Income from other sources (dividend, annuity, winning from lotteries, races, etc.)

 

Who needs to pay income tax?

Income tax is levied on the following categories which are called Status:

• Individuals
• Hindu Undivided Family (HUF)
• Association of Persons (AOP)
• Body of individuals (BOI)
• Firms
• Companies
• Local authority
• Artificial juridical person

Income tax is a direct tax and so its burden to pay cannot be shifted to any other person.

 

What is an income tax return?

Income tax return (ITR) is a proof of income tax paid by you. It is a form which includes details of your income, deductions and the amount of tax paid.

ITR has to be filed by all categories mentioned above with taxable income. In case you pay more tax than what you are required to pay, you can file ITR to obtain a refund.

If you fail to file your ITR, penalty might be levied or you might face legal consequences.

 

How do I file ITR?

ITR filed electronically is called e-filing.

The steps to e-filing are:

• Register on the Income Tax Department’s online tax filing site.
• Keep all the necessary documents handy.
• Choose the appropriate ITR form as per your filing status.
• Fill all the necessary details.
• Submit the form or upload when using offline form.
• Verify ITR V electronically or by mailing signed ITR V to processing centre in Bangalore.

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