Fundamentally, when the Government levies taxes on the direct/financial income of its citizens within their jurisdiction, that tax payable is referred to as Income Tax. Income tax in India comes with all sorts of complexities, hindrances, issues and features. As much as the entire process could render life convoluted sometimes, proper handling of the matter can have great repercussions on the citizens of the country.
Income tax is a way of the Government to ensure public duties are catered to and activities for the communal are taken care of effectively, in a timely manner. The income tax law in India demands every citizen of the country (salaried as well as self-employed) to file an income tax return every year to basically compute whether taxes are owed or whether they are eligible for a tax refund.
Types of Income Tax in India
The law of Income tax in India differs vastly from those in other countries. Where the income tax system in India is more organized, most countries follow a progressive income tax system wherein high income earners are liable to pay more tax than a low income earner. The United States employs the Internal Revenue Service (IRS) each year to collect taxes and set tax norms and laws.
Considering that, Income tax in India can be further classified into the following subcategories :
- Direct Tax : When an individual or an organisation pays his/her tax directly to an entity, that kind of tax is referred to as a direct tax. The Government levies direct taxes on individuals and these encircle real property tax, personal property tax, taxes on assets and so on.
- Indirect Tax : Entirely different in nature from a direct tax, an indirect tax is when the tax is paid by a different entity. An indirect tax is levied on one entity, say a retail seller, but is finally paid off as a sales tax (GST) by a buyer in the retail setting.
- Business Income Tax : Businesses and trades managed by an entrepreneur also attract a certain share of Income tax every financial year. These entities report their business and their tax rate is slightly different than a salaried individual. Their taxable business income comprises of the main difference.
- Property and Sales Tax : Based on the current value at that point of time, property tax is levied on multiple properties and possessions. Person, business or entity owning that piece of property is thereby is required to remit the tax to the governing authority.
The Value of Online or E-payment
The payment of direct taxes is facilitated through this mode of payment. To avail this facility, one has to have an internet account in any one of the authorized banks. Tax Information Network, popularly known as TIN makes use of modern technology and employs it in the current system to have a smoother collection, processing, monitoring and accounting of direct taxes. TIN is considered to be one of the major initiatives of the Income Tax Department of India (ITD) that utilizes information technology to smoothen the process of tax collection.
Step By Step Procedure to Pay Income Tax Online
- Visit the website of TIN and under that select Challan 280
- Enter information/details such as PAN card number, assessment year, taxpayer’s address, mode of payment, the holding bank, and minor head code. On the website of TIN NSDL you will find a webpage of a list of Authorised Banks. Using this webpage, one can easily make an online payment of their income tax.
- Verify the information that you have recorded. In case of any discrepancy, you can always click on the Edit button and correct the same. Once all the cross checking is over with, click on the submit button and you will be redirected to the netbanking site provided by your holding bank.
- Next step is logging into the netbanking portal with your username and password that’s been provided by the bank. Place your payment details at the bank site. Please note, it is of utmost importance that you break up your payable taxes into multiple components such as “Income Tax”, “Education Cess” and so on.
- Thereon, your bank will process your online transaction by debiting the indicated bank account and generating a printable acknowledgement receipt also known as the Challan Identification Number (CIN). The CIN, payment details, and bank name are contained in a Challan counterfoil that is essentially the proof of payment being made.
Filing Income Tax Return in India
As much as the concept of Income tax is arduous enough, the process of filing an income tax return might seem like an even more tedious job. Nevertheless, it is one of the strongest foundations holding up the very concept of taxation in India. A tax return is basically a statement of all your earnings from multiple sources. It also provides details such as tax liability, tax refund to be given by the Government and so on. The deadline to file tax returns is kept four months from the end of the financial year. The reason behind this is to offer enough time to taxpayers to aggregate all information and accumulate in one place, for the whole year and presenting an accurate report to the government.
In case you are not able to file your tax returns on time, you are most susceptible to attract factors like extra interest, penalty, scrutiny and prosecution from the Income Tax Department. However, the loss of benefits for not filing tax return is much more grave than the penal provisions imposed by government/income tax officials.