Income Tax

What is Income Tax?

Income Tax Return (ITR) is a form which a person is supposed to submit to the Income Tax Department of India. It contains information about the person’s income and the taxes to be paid on it during the year. … Income can be of various forms such as : Income from salary. Profits and gains from business and profession

Who Should file ITR?

Following has to file Income Tax Return:

  • Individuals (Resident of India & NRI’s) – Mandatory for people exceeding the prescribed income limit. Optional for others
  • Sole Proprietors
  • Companies
  • LLPs and Partnership Firm

The ITR filing is mandatory for Partnerships Firm, Sole Proprietorship Firm, Companies, and LLPs irrespective of their turnover, income, profit or loss.

Individuals are also classified as residents and Non-resident Indians. The resident taxpayers are liable to pay tax on the global income in India ( Both on income earned in India and Abroad). Whereas those who are identified as Nonresident Indians need to pay the taxes only on the income earned or that is accrued in India.

The resident individuals are further classified based on their age group.

  • Individuals who are less than 60 years of age
  • Individuals between 60 to 80 years of age
  • Individuals aged more than 80 years.

Types of Income

Everyone who earns or gets an income in India is subject to income tax.(Yes, be it a resident or a non-resident of India ). For simpler classification, the Income tax department breaks down income into five main heads:

Head of Income Nature of Income Covered
Income from Other Sources Income from savings bank account interest, fixed deposits, winning in lotteries is taxable under this head.
Income from House Property Income earned from renting a house property is taxable under this head of income.
Income from Capital Gains Surplus Income from sale of a capital asset such as mutual funds, shares, house property etc is taxable under this head of Income.
Income from Business and Profession Profits earned by self employed individuals, businesses , freelancers or contractors & income earned by professionals like life insurance agents, chartered accountants, doctors and lawyers who have their own practice, tuition teachers are taxable under this head.
Income from Salary Income earned from salary and pension is taxable under this head of income

Benefits of Filing Income Tax Returns

Income Tax Benefits 911 Consultancy

What are the different ITR Deductions Available?

  • Deduction under Section 80C
    The amount paid or deposited in PF, PPF, LIC premium paid, NSC (National Savings Certificate), ULIP, principal repayment of housing loan, tuition fees, term deposit in the bank, deposit in Senior Citizen savings scheme, etc.
  • Deduction under Section 80D
    It can be claimed by individuals as well as HUF for medical insurance & preventive health checkup.
  • Deduction under Section 80E
    Individuals can request for an 80E deduction for the repayment of interest on the loan, concerning a loan obtained for a higher education.
  • Deduction under Section 80EE
    An additional deduction can be claimed under this section like interest paid on housing loan paid through EMI.
  • Deduction under Section 80G
    The deduction under section 80G is claimed in respect of the donations to specific funds, charitable institutions.

Type of income Tax forms.