Understanding the Income tax in India:
Taxes in India are levied (charge) by the Central Government and the State governments. Some minor taxes are also levied by the local authorities such as the Municipality.

Income tax is that part of your income that a person pay to the government for the purpose of financing its various operations. All taxes are levied based on the law that governs the provisions for our income tax is the Income Tax Act, 1961.


Income tax in India:
The major tax enactment in India is the Income Tax Act, 1961 passed by the Parliament, which imposes a tax on the income of persons. This Act imposes a tax on income under the following five heads.

1. Income from house property
2. Income from business and profession
3. Income from salaries
4. Income in the form of capital gains
5. Income from other sources

In terms of the Income Tax Act, 1961, a person includes who are subject to file income tax return after paying levied taxes.

1. Individual
2. Hindu Undivided Family (HUF)
3. Association of Persons (AOP)
4. Body of Individuals (BOI)
5. Company
6. Firm
7. Local authority
8. Artificial Judicial person not falling in any of the preceding categories


Income Tax - In Detail:
The sum of income from all the five aforementioned sources is calculated according to the provisions of Income Tax Act. Income tax has to be paid by every person as mentioned above. 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 2016 and March 31st 2017 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 2017.

The tax rates in India vary according to the earnings of an individual and are referred to as Income Tax slabs. Generally, these Income Tax rates are revised every year during the budget.


The Income Tax deadlines are as follows:
31st July -Last Date of Return filling for non-audit cases
30th September -Last Date of Return filling for audit cases


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:

Income Tax Slabs & Rates for AY 2017-18

The Income Tax Slabs and Rates for the Assessment Year 2017-18 (applicable on income earned during 01.04.2016 to 31.03.2017) for various categories of Indian Income Tax payers.

Individual resident aged below 60 years both for male and female.
Senior Citizen aged above 60years
Super Senior Citizen aged above 80 years


Individual resident aged below 60 years: (i.e. born on or after 1st April 1957)
Income Tax Slab Income Tax Rate
Income upto Rs. 2,50,000 NIL
Income between Rs. 2,50,001 - Rs. 500,000 10% of income exceeds Rs. 2,50,000/- Less : Tax Credit u/s 87A - 10% of taxable income upto a maximum of Rs. 5000/-
Income between Rs. 500,001 - Rs. 10,00,000 Rs. 25,000/- + 20% of the amount by which income exceeds Rs. 5,00,000/-
Income above Rs. 10,00,000 Rs. 125,000/- + 30% of the amount by which income exceeds Rs. 10,00,000/-


Tax Slab for Senior Citizens Above Age 60 Years But Less Than 80 Years
Income Tax Slab Income Tax Rate
Income upto Rs. 3,00,000 NIL
Income between Rs. 3,00,001 - Rs. 500,000 10% of income exceeds Rs.3,00,000/- Less : Tax Credit u/s 87A - 10% of taxable income upto a maximum of Rs. 5000/-
Income between Rs. 500,001 - Rs. 10,00,000 Rs. 20,000/- + 20% of the amount by which income exceeds Rs. 5,00,000/-
Income above Rs. 10,00,000 Rs. 120,000/- + 30% of the amount by which income exceeds Rs. 10,00,000/-


Tax Slab for Senior Citizens Above 80 Years of Age
Income Tax Slab Income Tax Rate
Income upto Rs. 5,00,000 NIL
Income between Rs. 500,001 - Rs. 10,00,000 20% of Income exceeding Rs. 5,00,000
Income above Rs. 10,00,000 30% of Income exceeding Rs. 10,00,000


Additional Note : The rate of Surcharge has been increased in FY 2016-2017

Surcharge : For Individual, Partnership Firm, LLP, HUF 12% of the Income Tax, where taxable income is more than Rs. 1 crore. And is charged on total income tax of individual and not on total income of an individual.

Education Cess : 3% of the total of Income Tax and Surcharge.


Income Tax Deduction for Investment Specified Under Section
Section Nature of deduction Who can claim
80CCC Contributions to certain pension funds of LIC or any other insurer (up to Rs. 1,50,000 covered under section 80 C) (subject to certain conditions) Individual
80CCD Contribution to National pension scheme covered under section 80 C However, amount of deduction could not exceed 10% of salary of the employee Individual
80 D Amount paid other than cash for medical insurance of self, spouse and dependent children, In case of HUF - Any member thereof
Deduction for preventive health check-up shall not exceed in aggregate Rs. 5,000.
Payment on account of preventive health check-up may be made in cash.
Individual/HUF
80DD Deduction of Rs. 75,000 (Rs. 1,25,000 in case of severe disability) to a resident individual/HUF for medical tratment Resident Individual/HUF
80EE Interest payable on loan taken by an individual from any financial institution for the purpose of acquisition of a residential house property subject to certain condition. (Maximum deduction 50,000) Individual
80G Donations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc. [amount of deduction is 50 per cent of net qualifying amount]. 100 per cent of qualifying donations to National Defence Fund, Prime Minister's National Relief Fund. All assesses
80GG Deduction available is the minimum of
1. Rent paid minus 10% of total income
2. Rs. 2000/- per month
3. 25% of total income
For Financial year 2016-17 – For calculating deduction above, Rs 2,000 per month has been raised to Rs 5,000 per month. Therefore a maximum of Rs 60,000 per annum can be claimed as a deduction.
Individuals not receiving any house rent allowance
80GGB Sum contributed to any political party/electoral trust Indian company
80TTA Interest on deposits in savings bank accounts (up to Rs. 10,000 per year) Individuals/HUFs
80U Deduction of Rs. 75,000 to a resident individual who, at any time during the previous year, is certified by the medical authority to be a person with disability, in the case of a person with severe disability, allowable deduction is Rs. 1,25,000 (subject to certain conditions). Resident individuals
87A Tax rebate in case of individual resident in India, whose total income does not exceed five hundred thousand rupees; quantum of rebate shall be an amount equal to hundred per cent of such income-tax or an amount of five thousand rupees, whichever is less. Individual


Under section 80C, a deduction of Rs 1,50,000 can be claimed from your total income. In simple terms, you can reduce up to Rs 1,50,000 from your total taxable income through section 80C. This deduction is allowed to an Individual or a HUF


How to choose the correct ITR form?
The Income Tax Return forms are classified under different categories. You can determine the applicable ITR form from the table below:

Categories Details
ITR 1 (SAHAJ) Individuals with income from salary and interest
ITR 2 Individuals and Hindu Undivided Families (HUF) not having income from business or profession
ITR 3 Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship
ITR 4 Individuals and HUFs having income from a proprietary business or profession
ITR 4S (SUGAM) Individuals/HUF having income from presumptive business
ITR 5 Firms, AOPs,BOIs and LLP
ITR 6 Companies other than companies claiming exemption under section 11
ITR 7 Persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D)


Income Tax Filing Procedure
With the introduction of e-Filling, Income Tax Returns have become simpler and convenient. You can e-File Income Tax Returns from the comfort of your home or office at any hour of the day. You can follow these simple steps to e-File Income Tax Returns online:-

Log on IncomeTaxIndiaeFiling.gov.in
Register permanent account number or PAN ID
Select the appropriate Financial Year( Previous Year) carefully
Choose the Income Tax Return Form ITR 1/ITR 4S for the Assessment Year
Fill in the required details and click the submit button
Once submission is done successfully, you will be provided with an acknowledgement (ITR V)
Everify Your ITR using Aadhar or any other mode suitable.
Click on the link to view or generate a printout of acknowledgement/ITR V form

To know more about Income Tax filing, ITR forms, registration on Income Tax Department website, read our Guides on Income Tax.

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