Filing Annual Tax Return

In India Taxes can be categorized into direct and indirect taxes. Direct tax is a tax which is directly charged on your income the indirect tax on the other hand represents a tax which needs to be collected by someone else on your behalf.

Income Tax in india is a major source of revenue of the Central Government and is required to be filed annually.

As per the Income Tax Act, every taxable person who earns income more than the exemption limit is required to file the return of income.

Assessees responsible for filing return of income are categorized below:

1. Individual
2. HUF
3. Partnership
4. Company
6. Artificial Judicial Person
7. Government

There are five major heads of income under which the income chargeable to tax is computed

1. Income From Salary

Income from the salaries and pension are covered under this head

2. Income from other sources

Income from interest (Savings/Deposits), Winning from lotteries are chargeable to tax under income from other sources

3. Income from House Property

Any rental income of house property is chargeable under this head

4. Income from capital gains

Income arising out of sale of any capital assets is chargeable under this head

5. Income from Business or Profession

Any income arising out of business or profession like freelancing, contractor, commission income and professional fees are chargeable under this head.

The applicable tax rates under the different heads of income differs according to their nature and status of the assessees.

Residents and Non-Residents in India

The applicability of income tax in India depends upon the residential status of the taxpayer. The individuals who are resident in India for a particular financial year must pay taxes on their global income i.e income earned in India as well as abroad while the non residents are only required to pay taxes on their Indian income only.

It is to be noted here that the residential status of the taxpayer need to be calculated for every financial year separately.

Deductions from Income

Various deductions have been provided under the Income Tax Act which are allowed to be deducted from total income in order to calculate the taxable income of the taxpayer providing a relief to the higher as well as lower income assessees.

Some special deductions are also given under the act for the lower income class assessees.

Payment of Advance Tax

If the amount of tax in any financial year exceeds or likely to exceed Rs. 10,000/- the provisions for advance tax will be applicable.

This is to be noted here that if the TDS has been deducted on the income and the tax liability does not exceed the amount of TDS there is no need to pay advance tax.

The payment of advance tax shall be made according to the below mentioned schedule:

On or before 15th June – 15% of the tax liability less advance tax already paid

On or before 15th Sept – 45% of the tax liability less advance tax already paid

On or before 15th Dec – 75% of the tax liability less advance tax already paid

On or before 15th March – 100% of the tax liability less advance tax already paid

In case the taxpayer does not pay the advance taxes , the interest will be applicable.

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