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“The hardest thing to understand in the world is the Income Tax.” -Albert Einstein

Definition: Income tax is a tax imposed on individuals based on their earnings, whose income is more than Exemption Limit as prescribed by the Income Tax Act, 1961 and Finance Act (if any changes made yearly as the case may be).

Sources of Income: When filing Return,Individual should disclose the Sources of Income he earned. There are 5 heads of income prescribed by Act, they are:

1. Income from Salary.

2. Income from House Property.

3.Income Business and Profession.

4. Income from Capital Gain.

5. Income from Other Sources.

 

Tax Deductions: Investing in government-specified options (Section 80C to 80U of Income Tax Act, 1961) can entitle taxpayers to get the tax deductions. For instance, in India, taxpayers can avail deductions of up to ₹1,50,000 per year by investing in options covered under Section 80C of the Income Tax Act, 1961.

Return Filing Requirement: All individuals earning above a certain threshold limit must file income tax returns to stay tax compliant annually.

 

MARKET WATCH:

Net income tax receipts for the 2023/24 Financial Year ending in March rose to 19.58 trillion rupees ($234.9billion), up from 16.64 trillion in the previous financial year – Source: Central Board of Direct Taxes (CBDT)

ITRs filed by individual taxpayers register increase of 90% from 3.36 crore in Assessment Year (AY) 2013-14 to 6.37 crore in AY 2021-22. Source: Ministry of Finance, press information bureau.

 

INCOME TAX RETURN
Sources of Income for Filing Return

Definition: An ITR is a form used to declare gross taxable income of a person in a year, when his income crossed the threshold limit.
 

Purpose: It formally declares Income earned, deductions, exemptions, and calculating the net income tax liability.

 

Components of Total Income:

1. Salary Income: Includes allowances, leave encashment,and other earnings related to employment of Individual.

2. House Property Income: From owned or rented properties/Houses.

3. Capital Gain Income: Gains or losses from selling capital Assets.

4. Business or Profession: Gains or losses from Business or Professions.

5. Other Sources income: income from Dividend, lotteries etc.,

Assessment Year (AY):The year in which individual file return for the previous year in which he earned income. For example, Individual earned income in January 2023, then the tax paying i.e. AY 2023-24 for the previous year 2022-23.

 

SMARTER INVESTING:
Income and Liability

How to File?

1. Calculate Returns by entering Income, Deductions, Investments.

2. Pre-fill personal details.

3. Compute taxes and interest liability.

4. Make payment of Tax

5. Submit your income tax returns.

Where to File Return?

1. Visit the Income Tax e-Filing Portal : Go to the official Income Tax e-Filing website by visiting - https://www.incometax.gov.in/iec/foportal/

2. Log In : Enter your User ID (PAN), password, and the captcha code, click on Login.

3. Navigate to ITR Filing : After logging in, click on the “e-File” menu and Select “File Income Tax Return”

4. Choose the Right (AY) : Select the relevant AY for which you want to file your return. For example, if you are filing for the financial year 2023-24, the AY will be 2024-25.

5. Select Your ITR Type : Choose the appropriate ITR form based on your income sources and category (e.g., ITR-1 for salaried individuals, ITR-4 for business income, etc.)

Remember, understanding Income Tax basics empowers you to navigate your Financial Responsibilities Confidently!

 

Article by – Vivek Hegde
Email : contact@likeways.co.in