Whoever said wishes don’t come true hasn’t explored our offers!
  • Income Tax in India


    Income tax is that percentage of your income that you pay to the government to fund infrastructural development, pay the salaries of those employed by the state or central governments, etc. All taxes are levied based on the passing of a law, and the law that governs the provisions for our income tax is the Income Tax Act, 1961.

    Income tax is only of the direct means of taxation like capital gains tax, securities transaction tax, etc., and there are many other indirect taxes that we pay like sales tax, VAT, Octroi, service tax, etc.

    The income tax you pay every month or upon every contractual earning is what forms a large part of the revenue for the Government of India. These revenue functions are managed by the Ministry of Finance, which has delegated the responsibility to managing direct taxes (like income tax, wealth tax, etc.) to the Central Board of Direct Taxes (CBDT).

    Income Tax - In Detail:

    Income tax has to be paid by every individual person, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI), corporate firms, companies, local authorities and all other artificial juridical persons that generate income.

    Taxes are calculated on the annual income of a person, and an annual cycle (year) in the eyes of the Income Tax law starts on the 1st of April and ends on the 31st of March of the next calendar year. The law recognizes and classifies the year as “Previous Year” and “Assessment Year”.

    The year in which income is earned is called the previous year and the year in which it is charged to tax is called the assessment year.

    For example: Income earned between April 1st 2014 and March 31st 2015 is called the income of the previous year and will be charged to tax in the next year, or the assessment year that starts on April 1st 2015.

    Income Tax

    Taxes are collected by the government in three primary ways:

    1. Voluntary payment by taxpayers into designated banks, like advance tax and self-assessment tax.
    2. Taxes Deducted at Source (TDS) which is deducted from your monthly salary, before you receive it.
    3. Taxes Collected (TCS).

    Income Tax Slab Rates:

    Income tax slab rates are for different categories of taxpayers, who are taxed progressively higher based on their earning. The income tax slab rates can be broadly classified into the following categories:

    1. Individuals and Hindu Undivided Families (HUF):

      These are the slab rates as of financial year 2014-2015, i.e. assessment year 2015-2016 and FY 2015-2016 and assessment year 2016-2017.

      On all the tables listed below, Education Cess of 2% and SHEC of 1% will be levied on the tax computed using the rates given below.

      Under Section 87(A), an Income Tax Rebate of Rs.2,000 is provided for all individuals earning an income that’s less than Rs.5,00,000 per annum.

    • For male individuals below the age of 60 and HUF:

    Income Tax Slabs

    Income Tax Rates

    Total income less than Rs.2,50,000.


    Total income greater than Rs.2,50,000 but less than Rs.5,00,000.

    10% of the amount by which it exceeds Rs.2,50,000.

    Total income greater than Rs.5,00,000 but less than Rs.10,00,000.

    20% of the amount by which it exceeds Rs.5,00,000.

    Total income greater than Rs.10,00,000.

    30% of the amount by which it exceeds Rs.10,00,000.

    • For female individuals below the age of 60:

    Income Tax Slabs

    Income Tax Rates

    Total income less than Rs.2,50,000.


    Total income greater than Rs.2,50,000 but less than Rs.5,00,000.

    10% of the amount by which it exceeds Rs.2,50,000.

    Total income greater than Rs.5,00,000 but less than Rs.10,00,000.

    20% of the amount by which it exceeds Rs.5,00,000.

    Total income greater than Rs.10,00,000.

    30% of the amount by which it exceeds Rs.10,00,000.

    • For all individuals above the age of 60 – Senior Citizens:

    Income Tax Slabs

    Income Tax Rates

    Total income less than Rs.3,00,000.


    Total income greater than Rs.3,00,000 but less than Rs.5,00,000.

    10% of the amount by which it exceeds Rs.3,00,000.

    Total income greater than Rs.5,00,000 but less than Rs.10,00,000.

    20% of the amount by which it exceeds Rs.5,00,000.

    Total income greater than Rs.10,00,000.

    30% of the amount by which it exceeds Rs.10,00,000.

    • For all individuals above the age of 80 – Super Senior Citizens:

    Income Tax Slabs

    Income Tax Rates

    Total income less than Rs.5,00,000.


    Total income greater than Rs.5,00,000 but less than Rs.10,00,000.

    20% of the amount by which it exceeds Rs.5,00,000.

    Total income greater than Rs.10,00,000.

    30% of the amount by which it exceeds Rs.10,00,000.

    1. Businesses:

    The following tables indicate the tax slabs for businesses.

    • Co-operative societies:

    Income Tax Slabs

    Income Tax Rates

    Total income less than Rs.10,000.

    10% of the income.

    Total income greater than Rs.10,000 but less than Rs.20,000.

    20% of the amount by which it exceeds Rs.10,000.

    Total income greater than Rs.20,000.

    30% of the amount by which it exceeds Rs.20,000.

    • Firms, Local Authorities, Corporates and Domestic Companies:

      Income tax slab rates do not apply for these, as they are taxed at a flat rate of 30% on the total income declared.

      A surcharge of 5% is levied on the total income tax of domestic companies if their income exceeds Rs.1 crore. This surcharge does not apply to firms and local authorities.

    Income Tax Return (ITR):

    There is a prescribed form through which the particulars of income earned by a person, and the taxes paid thereon, are communicated to the Income Tax Department. There are different forms for the filing of returns based on different status and heads of income. This is called the return of income.

    It’s basically just you telling the government how much you’ve earned, from where you’ve earned it, and how much tax you’ve paid on it.

    Tax Forms:

    The different forms which have been prescribed for different classes of taxpayers are as follows:

    ITR Form Name

    Description of Taxpayer

    ITR – 1

    This is applicable to all individuals having salary or pension income or income from one house property, or income from other sources (which aren’t income from lottery winnings and income from race horses). This is also known SAHAJ.

    ITR – 2

    This is for Hindu Undivided Families that have income from sources other than “Profits and Gains of Business or Profession”.

    ITR – 3

    This is for Hindu Undivided Families or individuals who are partnered in a firm. The income here is either by the way of interest, salary, bonus, commission or remuneration that’s due or received from the partnered firm. The head of income should be “Profits and Gains of Business or Profession”.

    ITS – 4S

    This is for individuals and Hindu Undivided Families who’ve opted for the presumptive taxation scheme of Section 44AD / 44AE. This is also called SUGAM.

    ITR – 4

    This is for individuals or Hindu Undivided Families who carry on a proprietary business or profession.

    ITR – 5

    This is for firms, LLPs, AOPs, BOIs, artificial judiciary persons, co-operative societies and local authorities. This does not apply to trusts, political parties, colleges, etc. who are required to instead file return of income under Sections 139(4A), 139(4B), 139(4C) and 139(4D) and do not use this form.

    ITR – 6

    This for companies that don’t claim exemptions under Section 11. Charitable and religious trusts can claim exemptions under Section 11.

    ITR – 7

    This is for persons and companies who are required to furnish returns under Sections 139(4A), 139(4B), 139(4C) and 139(4D).

    ITR – V

    This is the acknowledgement of filing of return of income.

    One can acquire these forms from http://www.incometaxindia.gov.in.

    You can also file your return electronically through a free software that the Income Tax Department has provided on www.incometaxindiaefiling.gov.in.

    Income Types or Taxable Heads of Income:

    Income from different sources is taxed differently. These sources are called heads of income and are as follows:

    1. Income From Salaries:

      All income received from an employer by an employee is taxed under this heading. Employers are bound to withhold tax compulsorily under Section 192 if the income of their employees falls under a taxable bracket. Employers must also provide a Form 16, which contains details of tax deductions and net paid income.

    2. Income from House Property:

      Income here is taxable if the assesse is the owner of a property that’s been given out on rent. The property should not be used for business or professional purposes. Individuals and HUFs can claim one property as “self-occupied”, which means you and your family live there, and do not have to pay taxes on this. (Learn more about calculating income from house property)

      Income from house property is calculated as under:

      Gross Annual Value (GAV) = x

      Less: Municipal Taxes Paid = (y)

      Net Annual Value = x-y

      Less: Deductions under Section 24 = z

      Income from House Property = (x-y) – z

    3. Profits and Gains Of Business or Profession:

      These are the taxes that will be applicable for income from business or professional services rendered. The provisions for computing the tax on this type of income is in accordance with Sections 30 to 43D.

    4. Income from Capital Gains:

      This is for the taxes applicable on income that arises when capital assets are transferred. Capital assets are property of any value that’s held by the assesse like land, buildings, equity shares, bonds, debentures, jewellery, art, assets, etc. (Learn more about calculating capital gains)

    5. Income from Other Sources:

      Basically, any source of income that cannot be classified under the above heads of income falls under this heading. There are also some specific and pre-determined incomes which fall under this heading, like:

      • Income by way of dividends.
      • Winnings from horse races / lotteries.
      • Employee’s contribution towards staff welfare schemes, any fund set up under the ESIC Act that’s received by the employer from the employees.
      • Interest on securities like debentures, government securities and bonds.
      • Gifts.
      • Interest on compensation.
      • Rental income other than house property.
      • Family pension received after the death of the pensioner.
      • Interest income that is earned other than by way of securities.

    (Learn more about calculating income tax on income from other sources)

    Income Tax E-Filing:

    You can e-file your Income Tax Return, TDS return, AIR return and Wealth Tax Return online through this link https://incometaxindiaefiling.gov.in/. E-filing your return has obvious advantages like the fact that you won’t have to deal with the hassle of paperwork and waste time sorting through it all. You can simply log on to the secure website and e-file your return. (Learn more about e-file your IT returns in Online)

    This government website also has provisions for you to submit returns, view forms 26AS, outstanding tax demand, CPC refund status, rectification status, ITR – V receipt status, online application tools for PAN and TAN, e-pay your tax and even has a tax calculator.


    Deductions for your taxable amount are available under various sections of the Income Tax Act , 1961.

    1. Section 80C:

      Deductions under this section are only available to individuals and HUF. This section allows for certain investments like NSC, etc. and expenditures to be exempt from taxation up to the amount of Rs. 1,50,000.

    2. Section 80CCC:

      Deductions under this section are on payments made to LIC or any other approved insurance company under an approved pension plan. The pension policy must be up to Rs.1,50,000 and be taken for the individual himself out of the taxable income.

    3. Section 80CCD:

      Deductions under this section are for contributions to the New Pension Scheme by the assesse and the employer. The deduction is equal to the contribution, not exceeding 10% of his salary.

      The total deduction available under Section 80C , 80CCC and 80CCD is Rs.1,50,000. However, contributions to the Notified Pension Scheme under Section 80CCD are not considered in the Rs.1,50,000 limit.

    4. Section 80D:

      This is the section that deals with income tax deductions on health insurance premiums paid. In the case of individuals, the insurance policy can be taken to cover himself, spouse, dependent children – for up to Rs.15,000 and parents (whether dependent or not) – for up to Rs.15,000. An additional deduction of Rs.5,000 is applicable if the insured is a senior citizen. In the case of HUF, any member can be insured and the general deduction will be for up to Rs.15,000 and an additional deduction of Rs.5,000.

      A total of Rs.2,00,000 can be claimed as deductions whether the assesse is an individual or a HUF.

    5. Section 80DDB:

      This section is for deductions on medical expenses that arise for treatment of a disease or ailment as specified in the rules (11DD) for the assesse, a family member or any member of a HUF.

    6. Section 80E:

      This section deals with the deductions that are applicable on the interest paid on education loans for an education in India.

    7. Section 80EE:

      This section deals with tax savings applicable to first time home-owners. Applies for individuals whose first home purchased has a value less than Rs.40 lakh and the loan taken for which is Rs.25 lakh or less.

    8. Section 80RRB:

      Deductions with respect to income by way of royalties or patents can be claimed under this section. Income tax can be saved on an amount up to Rs.3,00,000 for patents registered under the Patents Act, 1970.

    9. Section 80TTA:

      This section deals with the tax savings that are applicable on interest earned in savings bank accounts, post office or co-operative societies. Individuals and HUFs can claim a deduction on an interest income of up to Rs.10,000.

    10. Section 80U:

      This section deals with the flat deduction on income tax that applies to disabled people, when they produce their disability certificate. Up to Rs.1,00,000 can be non-taxed, depending on the severity of the disability.

    11. Section 24:

      This section deals with the interest paid on housing loans that is exempt from taxation. An amount of up to Rs.2,00,000 can be claimed as deductions per year, and is in addition to the deductions under Sections 80C, 80CCF and 80D. This is only for self occupied properties. Properties that have been rented out, 30% of rent received and municipal taxes paid are eligible for tax exemption.

      Learn more about Income Tax deductions from under Section 80C to 80U.


    TDS or Taxes Deducted at Source - is a system incorporated by the Income Tax Law to deduct taxes before the income has been disbursed to the person earning it. It is charged depending on your income tax slab, at its point of origin. You do not get a full amount from which to deduct an income tax amount and pay it back, but get charged even before you’ve earned your income.

    The income tax here is deducted by the payer and remitted to the government on your behalf.

    TDS on income will not apply if your net taxable income is below Rs.2,50,000 for individuals, Rs.3,00,000 for senior citizens and Rs.5,00,000 for super senior citizens.

    It’s important to know which tax bracket one falls under and the investments that can be made to exempt a portion of the income from taxation. A lot of money can be saved through investments, and this helps the flow of funds through investible channels in the economy, thus helping the country develop. Health insurance policies, investments and other deductions can be used to your benefit, if you balance them out well.

    Making relevant investments can help save a lot on tax, and earn a lot in eventual interest income. Most tax-saving investments have lock-in periods where the funds cannot be accessed, and in this time compound interest at a rate higher than most savings bank accounts.

    Learn more about TDS.

    News About Income Tax

    • Income Tax Department continues its raids

      The Income Tax Department went forward with its raids on Pothys Private Limited. Tax officials inspected establishment over nine different locations.

      These raids were decided upon after the police were tipped off by an anonymous source. Also, the police caught two individuals carrying over Rs. 1 crore and when asked the culprits declared that they were employees of Pothys Limited.

      Officials conducting the raids said that it is still going on and that they will provide more details once any new information pops up.

      25th October 2016

    • Income Tax Department to give out certificates congratulating taxpayers

      Collecting taxes has been a major problem for the Indian Income Tax Department which often resorted to tactics bordering harassment to get people to pay taxes. However, it has now come up with a more novel idea to get people to pay taxes.

      According to sources, it is now being said that diligent taxpayers will get a certificate signed by Central Board of Direct Taxes chairman Rani Singh Nair. This certificate will include the tax payer’s name, PAN number, and a ‘thank you’ for making a contribution towards “building of this great Nation”.

      Under this regime, taxpayers with no outstanding liabilities will get either a gold, silver, bronze certificate. Bronze certificate will be awarded for paying Rs. 1 lakh to Rs. 10 lakh; gold for Rs. 50 lakh to Rs. 1 crore, and silver for Rs. 10 lakh to Rs. 50 lakh.

      The apex tax authority has been increasing its efforts to collect more taxes and has sent out over 7 lakh notices asking people to pay taxes and declare black money in their names.

      24th October 2016

    • Rs. 1220 crore undisclosed income recovered from Kerala by IT Department

      Income that had not been disclosed of Rs 1200 crore has been recorded through the investigation conducted by the Income Tax Department in Kerala.

      The Income Tax (Inv) Director General carried out 29 search as well as seizure operations around the first 6 months of the year. This lead to seizure of cash worth Rs 15.25 crore and 16 crore worth of jewellery.

      The IT department in Kerala scored information for the immovable deposits and properties in places such as societies or co-operative banks and NBFCs, according to a statement made by the IT department. They also added that the Income Disclosure Scheme 2016 may be useful for such people with undisclosed incomes to come clean safely by September 30, 2016, it added.

      27th September 2016

    • Defaulters issued notices by the Income Tax Department

      The Income Tax Department has identified 5000 tax defaulters and notices have been issued to them. In addition to this, individuals, corporates and cooperative societies in the chief commissioner’s region in Indore have been issued notices as well. The department has also created a database of individuals who have not filed returns.

      An income tax official stated that they have received disclosures as high as Rs. 20 crore from Gwalior and several from Indore worth crores of rupees. Names of women defaulters have also appeared in the list, and notices have been issued to them. Individuals who have taken fake long-term capital gains, those involved in real estate transactions, and those who have refrained from disclosing their bank account balances beyond a certain limit stand liable to penalisation.

      The tax department has also recovered a large amount of unaccounted cash through recent raids.

      30th August 2016

    • I-T Department To Issue Over 7 Lakh Notices On Suspected Tax Evasion

      The Income Tax Department is all set to issue around 7 lakh notices to taxpayers seeking information on suspected tax evasions, such as cash dealings, property purchases and large withdrawals/expenses.

      This is a step towards encouraging individuals and businesses to come clean about their hidden incomes and properties through the Income Declaration Scheme. Under the scheme, taxpayers revealing their black money would be able to escape penalty by paying a flat tax of 45% of the excess income.

      Individuals with cash deposits of Rs. 10 lakh or more in a savings account and purchase or sale of an immovable property worth Rs. 30 lakh or more are among the transactions being reviewed. The I-T department said that it is reviewing over 90 lakh suspected tax evasion transactions between 2009-10 and 2016-17.

      3rd August 2016

    • New Income Tax Rules to Exclude GAAR to FIIs

      Scheduled to kick in next year, the uncertainty over GAAR (general anti avoidance rules) has led the government to announce that the provisions of this tax regime will not apply to FIIs (foreign institutional investors) on the income derived from transfer investment made before the provisions kick in on April 1, 2017.

      After consultation with various stakeholders from the industry, the finance ministry has announced the new changes. It must be noted that the GAAR is aimed at scrutinizing business transactions entered into for evading taxes. Transactions that fail to pass through the GAAR filter will be subject to taxes under prevailing laws. The changes are aimed at reassuring foreign investors about GAAR and reinstalling confidence in the business world. The amendment is in line with recent changes made to the India-Mauritius tax treaty.

      29th June 2016

    • 20 Per Cent Customs Duty Levied On Sugar

      In a bid to boost the domestic supply of sugar and to keep prices in check, the government today levied a 20 per cent customs duty on all sugar exports. The move takes place during a period that has seen prices rise drastically with regards to commodities such as pulses, wheat and tomato. The Finance Ministry stated that in order to keep the domestic prices of sugar from getting out of hand, the government took the decision to implement a 20 per cent customs duty on the export of raw, white or refined sugar. The Finance Ministry also stated that the decision has been notified by the Central Board of Excise and Customs (CBEC). The levying of this duty was also done to keep exports in check due to drastic rise in global sugar prices. India is the second largest producer of sugar in the world, exporting nearly 1.6 million tonnes in the marketing year 2015 - 2016, with only Brazil ahead in terms of production.

      22nd June 2016

    • Subramanian Swamy Pitches For Tax Abolishment

      BJP leader Subramanian Swamy stated on Thursday that in order for the country’s economy to grow further along with an increase in savings rate, income tax on the whole should be done away with. He also claimed that close to Rs 120 trillion in the form of black money is hidden away in offshore tax havens. This figure represents nearly 60 times the total revenue collected through taxation in the country. Taking a dig at Finance Minister Arun Jaitley, Subramanian Swamy said that the finance minister did not adopt the suggestion of nationalisation of funds hoarded in tax havens to aid in the retrieval of black money since his background as a lawyer influenced him to be lenient with regards to the rights of those individuals who have stashed black money overseas. With Prime Minister Narendra Modi encouraging tax officials to double the tax base to 10 crore, Swamy countered this by saying that the national savings rate has fallen to 33 per cent, which needs to be increased to a minimum of 40 per cent.

      20th June 2016

    • 4 New Forms launched by IT Department

      The Income Tax Department has launched 4 new forms for declaration of untaxed funds by taxpayers. The finance ministry has opened up a one-time domestic black money compliance window in June for declaration of untaxed funds and properties.

      The four new forms can be used to file declaration of black money assets under the Income Declaration Scheme. Taxpayers can use both e-filing or manual filing for declaring their assets. The new forms are available on the e-filing website of the government. This four month window opened in June and will be available till 30th of September.

      8th June 2016

    • Domestic companies raising private equity face scrutiny

      Domestic companies in India who have raised private equity in the past and those which are looking to raise stand a chance of enhanced scrutiny into their source of funds. Income tax has sent across queries asking about detailed information pertaining to the fund received by companies that have raised private equity.

      Such enquiries as confirmed by these companies are standard, however, what is alarming is the increased frequency at which these queries are now being made. An income tax official revealed that no specific investigation has been ordered against any such company and all this is standard operation mechanism of the Income Tax Department in the country.

      31st May 2016

  • reTH65gcmBgCJ7k - pingdom check string.
    reTH65gcmBgCJ7k - pingdom check string.
    This Page is BLOCKED as it is using Iframes.