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    INCOME TAX

    Income tax is defined as the tax charged on the annual income earned by a person. The amount of tax applicable to you will depend on how much money you earn as income over the course of a financial year. Taxpayers can make their income tax payment, TDS/TCS payment, and Non-TDS/TCS payments online as well. All relevant details must be filled by taxpayers in order to make these payments. The process to make the payments online is simple and can be completed quickly.

    Income Tax Department

    A government agency that undertakes the direct collection of tax in India is the Income Tax Department. All operations of the department are handled by the Central Board for Direct Taxes (CBDT). Individuals can get various details such as international taxation, tax laws and rules, organisational setup, etc., on the official website of the department.

    Income Tax Act

    Passed in 1961, the Income Tax Act of India handles all income tax provisions as well as any tax deductions that may be applicable. Since its introduction, there have been many changes to the law because of economic situations and inflation.

    Income Tax Rules

    The legislature enacts the Income Tax Act, 1961, to administer and govern income tax in the country, but the Income Tax Rules, 1962, were created in order to help in the application and enforcement of the law constituted in the Act. Moreover, the Income Tax Rules can only be read in conjunction with the Income Tax Act. The Income Tax Rules are within the framework of the Income Tax Act are not allowed to override its provisions

    Who should pay Income Tax in India?

    The amount of tax that must be paid depends on the individual’s age and the income they make. The entities listed below are required to pay tax and file their income tax returns.

    ·         Artificial Judicial Persons

    ·         Corporate firms

    ·         Association of Persons (AOPs)

    ·         Hindu Undivided Families (HUFs)

    ·         Companies

    ·         Local Authorities

    ·         Body of Individuals (BOIs)

     

    Important Dates to Remember when Paying Income Tax

    The important dates to remember for individuals who fall under the bracket to pay Income Tax for the year (AY 2020-21) is mentioned in the table below:

    Important Due Dates

    The task that must be completed

    Before January 31

    Individuals must submit their proof of investment

    Before March 31

    It is deadline before which any investments under Section 80C of the Income Tax Act, 1961 must be made

    Before 31 July

    Due date to file income tax return

    Between October and November

    Tax returns must be verified by this time

    Income Tax Collection

    Taxes are collected by the government in three primary ways:

    1.      Voluntary payment by taxpayers into designated banks, like advance tax and self-assessment tax.

    2.      TDS (Taxes Deducted at Source) which is deducted from your monthly salary, before you receive it.

    3.      TCS (Taxes Collected at Source).

     

    Under the Department of Revenue of the Ministry of Finance, the Income Tax Department (IT Department) is responsible for monitoring the collection of Income Tax, Expenditure Tax, and various other Financial Acts that are passed every year in the Union Budget. The Central Board of Direct Taxes (CBDT) regulates the policy and planning of taxes. CBDT is also responsible for administering the direct tax laws through the IT Department. In addition to the collection of taxes, the IT department is also involved in prevention and detection of tax avoidance.

    Income Tax Calculator

    Income tax calculation can be done either manually or by using an online income tax calculator. The income tax rate applicable to you will depend on the tax slab under which you fall. For salaried employees, income from salary includes the basic pay plus House Rent Allowance (HRA) plus Transport Allowance plus Special Allowance plus any other allowance. However, certain components of your salary are tax exempt, like Leave Travel Allowance (LTA), reimbursement of telephone bills, etc. In case HRA is part of your salary and you reside in a rented house, you are eligible to claim exemption on the HRA. Apart from these exemptions, there is a standard deduction of up to Rs.50,000.

    Online Income Tax Payment

    Taxpayers can pay direct taxes online by using the e-Payment facility. In order to avail the online tax payment facility, taxpayers must have a net-banking account with an authorized bank. The Permanent Account Number (PAN) or Tax Deduction and Collection Number (TAN) will have to be provided for validation as well.

    ITR Forms

    If an individual needs to claim income tax refund, he/she will need to first file his/her income tax return. Depending on the income assessment group, the individual will need to submit one of the ITR form listed below:

    ITR Form Name

    Description

    ITR-1

    For Individuals having Income from Salaries, One house property, Other sources (Interest etc.)

    ITR-2

    For Individuals and HUFs not having Income from Business or Profession

    ITR-2A

    For Individuals and HUFs not having Income from Business or Profession and Capital Gains and who do not hold foreign assets

    ITR-3

    For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship

    ITR-4

    For individuals and HUFs having income from a proprietary business or profession

    ITR-4S

    Presumptive business income tax return

    ITR-5

    For persons other than, - (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7

    ITR-6

    For Companies other than companies claiming exemption under section 11

    ITR-7

    For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)

    ITR-V

    The acknowledgment form of filing a return of income

     

    Income Tax Refund

    In case you have paid more tax than your actual tax liability, you will be eligible to claim an income tax refund of the extra money you have paid. For example, if your TDS liability was Rs.35000 and your employer deducted Rs.40,000 instead, you can claim a refund for the additional Rs.5,000 that was deducted. You can also claim an income tax refund in case you forgot to declare your tax-saving investments and tax has been charged to you without taking your deductions into consideration. Individuals can check the status of the refund on the official website of Income Tax Department