Income Tax Guide - Laws, Slabs & Deductions, Rules, ITR Filing

What is Income Tax?

Individuals and corporations pay income tax, which is a sort of direct tax levied by the government on their earnings over the course of a year. It is determined using the tax slabs established by the Income Tax Department.

The Income Tax Department is responsible for collecting income tax. The tax rates and rules can vary based on the type of income, the amount of income, and the taxpayer's status (such as individual, company, or partnership).

Who Should Pay Income Tax?

In the following conditions, one must file the Income Tax Return and pay taxes if leviable.

1. If your total income exceeds the basic exemption limit If an individual's income exceeds the maximum exemption level, i.e., 2.5 Lakhs in case of an individual whose age is less than 60 years, 3 lakhs in case of a resident senior citizen (age 60 years or more), 5 lakhs in case of a resident super senior citizen (age 80 years or more), he or she must file a return. If you opt for the new tax regime, you are not eligible to claim the different exemptions available under the old tax regime.
2. If you have assets outside India, An individual must file a tax return if he/she:
   - has (as a beneficiary or otherwise) any asset (including any financial interest in any company) located outside of India
   - has signing authority in any account located outside India
   - is a beneficiary of any asset located outside of India (including any financial interest in any organization).
   This clause will apply to both residents and ordinary residents in India.
3. If you deposit more than Rs 1 crore in a bank account, If a person has deposited Rs 1 crore or more in one or more current accounts with a bank during the previous year, he/she must file his return.
   There has been no mention of the deposit placed in a Post Office current account. Thus, if a person deposits more than Rs 1 crore in a post office current account and his income is less than the basic exemption limit, he may not be obliged to file a return.
4. If you spend Rs 2 lakh on international travel, If an individual spent more than Rs 2 lakh on travel to a foreign nation for himself or for anybody else in the previous year, he must file a return.
5. If your annual electricity bill is Rs 1 lakh, If a person spent more than Rs 1 lakh on power consumption in the preceding year, he or she must file a return.
6. If the gross receipts from a profession exceed Rs 10 lakh, If a person's total gross receipts from his or her profession exceeded Rs 10 lakh in the preceding year, he or she must file a return.
7. If the total amount of TDS and TCS is Rs 25,000 or more, If the total amount of tax deducted at source (TDS) and tax collected at source (TCS) in his case during the previous year was Rs 25,000 or more, an individual (under 60 years of age) is required to file his return. In the event of a resident senior person whose age is 60 years or more at any point during the preceding year, the Rs 25,000 threshold limit is increased to Rs 50,000.
8. If the turnover of your business is more than Rs 60 lakh, If a person's total sales, turnover, or gross receipts for the preceding year exceeded Rs 60 lakh, he or she must file a tax return.
9. If you have a deposit of Rs 50 lakh or more in a savings bank account, If an individual's total deposit in one or more savings bank accounts during the previous year was Rs 50 lakh or more, he or she must file a return.

There are many useful tax-saving tools that help common citizens know hundreds of sections of the Income Tax Act of India and help taxpayers reduce their tax liabilities. Tax2win also launched one such tool - Tax Planning Optimizer. Tax experts find that it is the easiest solution for tax saving. Taxpayers of all ages find it a useful tool to reduce their tax burden.

Taxpayers and Income Tax Slab Rates

Once the income is categorized under specific income heads, the gross taxable income is evaluated. Taxpayers can avail of tax exemptions and standard deductions (wherever applicable) on the taxable income for a financial year. In other words, the net taxable income is then subject to the calculation of tax liability. There are income tax slabs that specify the tax payable on the net taxable income. In India, income tax is charged on a progressive basis meaning as the income increases, so does the tax liability.

Income Tax slab under New tax regime for FY 2024-25 & AY 2025-26

The income tax slab rates can be changed by the Government of India if felt necessary. Currently, the income tax slab rates are as follows –

Income Tax Slab Rates under the New tax regime for Financial Year 2024-25 and Assessment Year 2025-26 are as follows:

If Person is Resident Individual or HUF: -

Note:
1. In Addition to basic Income Tax as discussed above, the following are also to be taken care of:-
- Surcharge: Surcharge is levied on the amount of income tax at the following rates if the taxable income of an assessee exceeds specified limits:-

- Health & Education Cess @4%
- Rebate u/s 87A (no tax will be payable on total income up to Rs.5 lakh in both regimes)
2. Certain income tax exemptions and deductions, like sections 80C, 80D, 80TTB, HRA, etc., are available in the OLD tax regime but will not be available under the new tax regime. Know it all before filing your ITR.

Income Tax Slabs Under the Old Tax Regime for FY 2024-25

If Person is Resident Individual or HUF: -

Note:
1. In Addition to basic Income Tax, as discussed above, the following are also to be taken care of:-
- Surcharge: Surcharge is levied on the amount of income tax at the following rates if the total income of an assessee exceeds specified limits:-

- Health & Education Cess @4%
- Rebate u/s 87A (no tax will be payable on total income up to Rs.5 lakh in both regimes)
2. Certain income tax exemptions and deductions, like sections 80C, 80D, 80TTB, HRA, etc., are available in the OLD tax regime but will not be available under the new tax regime. Know it all before any income tax login.

Advance Tax

The calculation of tax liability in advance and paying the taxes to the government before the actual filing date is called advance tax. There are specified deadlines for the advance tax payments, which are listed below:

Income Tax Return

An Income Tax Return is a form that is used to submit information about your income and tax to, the Income Tax Department of India. Using this form, taxpayers who have a PAN can declare their source of income under various heads. ITR-form pertains to the financial information for a particular financial year.

Note: A financial year starts on April 1 and ends on March 31. Every individual whose income falls into the tax slab must file an ITR for a financial year.

How to File Income Tax Return online?

Here's a step-by-step guide to help you to file your Income Tax Return:

• Login: Visit the official Income Tax e-filing website and click on 'Login'. Enter your PAN in the User ID section and click 'Continue.' Enter your password and click 'Continue' again.
• Go to 'File Income Tax Return': Click on the 'e-File' tab, then select 'Income Tax Returns' and 'File Income Tax Return'.
• Select the Assessment Year: Choose the relevant assessment year. For example, select 'AY 2024-25' if you are filing for FY 2023-24.
• Select the Filing Status: Choose your applicable filing status, such as 'Individual,' 'HUF,' or 'Others.' Most individuals will select 'Individual'.
• Select ITR Type: Determine which ITR form you need to fill out. There are several forms available, such as ITR 1 to 4 for individuals and HUFs. For example, individuals without income from business or profession but with capital gains can use ITR 2.
• Choose the Reason for Filing ITR: Specify the reason for filing your returns, such as having taxable income above the basic exemption limit or meeting specific criteria that require you to file an ITR.
• Validate Pre-filled Information: Review and validate the pre-filled information, such as your PAN, Aadhaar, name, date of birth, contact information, and bank details. Ensure these details are accurate before proceeding.

How to Download Income Tax Return Acknowledgment?

Click here to download the Income Tax Return – verification acknowledgment.

Income Tax Calculation

The taxable income computation and tax leviable on that income for employees, self-employed individuals, retirees, gig workers, and independent contractors is known as income tax calculation.

Income Tax Calculators are a convenient way to compute payable Income Tax. These are online tools easily available on the internet. In India, so many financial institutions bring their top-notch online income tax calculators for people living in India. These tools help taxpayers to enumerate their net taxable income as per the latest Union Budget projected.

Tax2win’s Income Tax Calculator is an easy-to-use online tool that evaluates income tax for FY 2024-25 with a lot of precision. In addition, it considers all tax benefits and standard deductions applicable to tax calculations.

Put a glance at the step-by-step process to use a one-stop Tax Solution, Tax2win’s Income Tax Calculator, below:

• Visit the specific income tax login.
• Enter personal and financial details such as annual salary, business income, rental income, interest paid on a home loan, income from other sources, etc.
• It also caters to the exemption details and standard deduction limits. Hence, enter the complete information with accuracy.
• At last, it computes the net taxable income per the old and new regimes for the prospecting individual.

Documents required to fill ITR

A number of documents are required to file your income tax, such as PAN Card, Form-16, Bank Account Details, AADHAAR card, 26 AS and AIS/TIS, etc. You can read a detailed guide here.

e-File Returns

The taxpayer must file his or her income tax return online using the IT department's e-filing portal. The taxpayer must first register on the government portal to file an income tax return. The taxpayer can then access the website and file his ITR. In addition, there is no need to manually send the acknowledgment of return (ITR V) to the Bangalore office. The income tax department now offers e-verification of ITRs in a variety of methods.

ITR-V

Document ITR-V is an income tax return verification form that is created after a taxpayer files and submits an income tax return to the Income Tax Department. So enable your income tax login, take in what income tax is, study how to file income tax, and likewise processes. The ITR-V must be e-verified or delivered to CPC Bangalore for verification at "Income Tax Department – CPC, Post Box No – 1, Electronic City Post Office, Bangalore – 560500, Karnataka." Only once the ITR has been verified will it be processed.

Form-16

It is a certificate or acknowledgment (issued under Section 203 of the income tax TDS (tax deducted at source) of the Income-tax Act, 1961, for salaried individuals.

Form-10A

The Income Tax Department prescribes this form for provisional registration of a trust, NPOs, NGOs, or any charitable institution or religious foundation under section 12A(1)(aa).

Form-15G

It is a self-declaration form for individuals with an age <60 years to claim certain receipts without any deduction of tax under subdivisions (1) & (1A) of section 197A. Non-residents are not eligible for claiming relief.

Form-15H

It is a self-declaration form for individuals with age >= 60 years to claim certain receipts without any Tax deduction under sub-section (1C) of section 197A.

Form 26AS

Annual Tax Statement stating a taxpayer’s TDS/TCS details from various sources under section 203AA.

Add details regarding AIS and TIS.

How to check ITR status online?

The individual taxpayer can check ITR Status online using the official website of the Income Tax Department. Register users can use this service (pre-login and post-login):

• All taxpayers who filed ITRs against their PAN
• Authorized ERI, Signatory, and Representative Assessee who filed someone else ITRs in such a role

This service allowed the users to view the details of ITRs filed:

• View && download the ITR-V Acknowledgement, upload JSON, and get a PDF of the complete ITR form and intimation order
• View the status of return(s) pending for verification

Step-by-step guide:
(Pre-login)

• Step 1: Go to the e-filing portal homepage.
• Step 2: Click Income Tax Return (ITR) Status.
• Step 3: On the Income Tax Return (ITR) Status page, enter your acknowledgment number and a valid mobile number and click Continue.
• Step 4: Enter the 6-digit OTP received on your mobile number entered in and click Submit.

On successful validation, you will be able to view the ITR status.
(Post-login)

• Step 1: Log in to the e-filing portal using your valid user ID and password.
• Step 2: Click e-File > Income Tax Returns > View Filed Returns.
• Step 3: On the View Filed Returns page, you will be able to view all the returns filed by you. You will be able to download the ITR-V Acknowledgement, upload JSON (from the offline utility), complete the ITR form in PDF, and intimation order (by using the options on the right-hand side).

Note:

• Click Filter to view your filed returns based on different criteria (AY or Filing Type).
• Click Export to Excel to export your returns data to Excel format.

Click View Details to view the life cycle of the return and action items related to it (e.g., returns pending for e-Verification).

Due Date to file ITR for FY 2022-23

The last date to file an income tax return without penalty or late fee for AY 2023-24 (FY 2022-23) is 31st July 2023.

Important Income Tax Dates - Calendar for AY 2025-26

April of 2025

May of 2025

June of 2025

July of 2025

August of 2025

September of 2025

October of 2025

November of 2025

December of 2023

Income Tax Payment Details

The e-filing of Income Tax Returns requires digital payment transactions after completing the KYC norms. Read the full guide - Self Assessment Income Tax: Payment & Computation of Self Assessment Tax, to learn about Income Tax Payment Details.

About Income Tax Department India

The Income Tax Department is a government body that takes care of direct tax collection from taxpayers of India. It functions under the Ministry of Finance for revenue generation. CBDT, or Central Board of Direct Taxes, is an apex body that heads the Income Tax Department.

In addition, this government body enforces several other economic laws, for example, the Income Tax Act of 1961, the Black Money Act of 2015, and the Benami Transaction Act of 1988.

Income Tax Act

The Income Tax Department brought The Income-tax Act in the year 1961. This act is the charging statute for ITD. It serves for levy, collection, administration, and recovery of Income Tax in India. The Indian government introduces essential amendments to the Income Tax Act every year in the month of February. This year, Hon’ble Union Finance Minister, Ms. Nirmala Sitharaman will present the amendments in the Union Budget 2023 at the parliament of India on 1st February 2023.

As per Income-tax Act, Taxpayers, residents, and non-residents declare their income annually to the Income Tax Department under five heads of income, i. e., (i) Salary, (ii) House Property, (iii) Business or Profession, (iv) Capital Gains and (v) Other Sources. Total gross income for a financial year is computed under these heads.

Income Tax Forms List

The Income Tax Department has introduced seven ITR forms for filing an income tax return for AY 2023-24 . The applicability of these forms rests on the taxpayer’s personal and financial details, for example: what is the source of Income, in which category the taxpayer lies, how much he earns in a year, and likewise.
Know more about these forms below:

Form: ITR-1 or Sahaj
It is a return form for resident individuals having a total income upto 50 lakhs and who match any of the following:

• If the individual is drawing Income from Salary or Pension; or
• If the individual is getting Income from One House Property (excluding some cases where loss is brought forward from previous years); or
• If the individual is generating Income from Other Sources such as Interest, Dividends, Family Pension, etc. (excluding Income from Winning the Lottery and Race Horses)
• Agricultural Income >= ₹ 5000.

Form: ITR-2
This form applies to HUFs and individuals who won’t generate Income under the “Profits and Gains of Business or Profession” head. Plus, for individuals who are not eligible to file the Sahaj Form.

Form: ITR-3
This form applies to HUFs and individuals who earn Income under the “Profits and Gains of Business or Profession” head. Plus, for individuals who are not eligible to use Form: ITR-1, ITR-2 & ITR-4.

Form: ITR-4 or Sugam
This form is applicable for HUFs, individuals, and Firms (excluding limited liability partnerships) generating Income >= ₹ 50 Lakhs from other sources like Interest, Dividend, Family Pension, etc., or any other businesses and professions lying computed under sections 44AD, 44ADA, or 44AE of the Income Tax Act, 1961.
It’s not applicable for an individual or HUF who owns any foreign asset, is either Director in an organization or has invested into unlisted equity shares, or has an agricultural Income of more than ₹ 5000.

Form: ITR-5
This form is applicable for an alternative corporate business- LLP.

Form: ITR-6
This form applies to registered companies not claiming exemption under Section 11 of the Income Tax Act of India.

Form: ITR-7
This form is applicable for furnishing the return of individuals and companies under sections 139(4A), 139(4C), 139(4B), or 139(4D) only.

Income Tax Refund 2023-24

Click here to check your ITR status online for FY 2023-24.

Income Tax Saving Investments

Income Tax Saving Investments help taxpayers reduce their taxable income up to 1.5 lakhs under Section 80C for a financial year. Other than Section 80C, hundreds of other provisions in the Income Tax Act of India help taxpayers to reduce their tax liabilities. Many tax saving schemes or investments are very popular in India, such as Fixed Deposits, PPF, NPS, ULIPs, Medical Insurance, etc.

The Indian marketplace is full of different tax-saving schemes or investment options. But before you start making any tax-saving investment, please read the particular income tax sections under which these investment instruments offer tax deductions. These are given below:

Read the complete Income Tax Saving Investment guide here.

Investment options

Investment options or schemes are the financial products that help taxpayers to save income tax at the time of filing their ITRs. It ultimately helps them in reducing their financial stress. Furthermore, taxpayers end up reducing their tax burden via investing in any of such financial schemes. Salaried people find it very helpful and interesting. It lets them deduct a good amount of tax and avail the benefit of other exemptions when they file their income tax returns.

Income Tax Deduction Section List

As mentioned earlier, there are some tax-free deductions and exemptions that are allowed under the Income Tax Act, -1961. These deductions reduce the gross taxable income and help in the calculation of the net taxable income. The more deductions that you claim, the lower would be your tax liability and vice-versa. The CA-assisted ITR filing is recommended to maximize benefits. The available deductions under Chapter VI-A of the Income Tax Act are as follows –

Other exemptions

Besides the above-mentioned popular deductions given in Chapter VI-A , there are other common exemptions that you can claim. These are as follows –

• Exemption under Section 24 Section 24 of the Income Tax Act allows you an exemption on the home loan interest paid by you on a home loan that you have availed. The maximum exemption which you can claim under Section 24 is INR 2 lakhs.
• Standard deduction Salaried employees can claim a standard deduction of INR 50,000 from their salary income.
• Section 10 (10D) If you receive any benefit from a life insurance policy, such benefits would be tax-free under this section. There is no maximum limit of exemption. The entire benefit that you receive would be considered tax-free in your hands.
• Add Points relating to HRA exemption from salary

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