Broadly Speaking there are two types of Taxes in India one is Direct tax and other is Indirect taxes.
Direct Tax – Income Tax, Wealth Tax (Now Abolished).
Indirect Taxes – Service Tax, Sales Tax, Entertainment tax, Excise Duty. Normally these taxes are on spending or happening of certain events it is not directly related to earning of the person. A major part of indirect taxes is now going to be merged as single tax called as Goods and service tax also called G.S.T.
When a person required to pay Income Tax.
Table of Contents
Incomes under Income Tax Act is Divided into following heads to file income tax returns and assessment.
1. Salaries – If you receive any salary from any person in the capacity of the employee then your salary income is taxable subject to exemptions and deductions available.
2. Income from House Property – If you having rental income from any type of immovable property then such income will be chargeable under this head.
3. Capital Gains – If you have any gains by selling any capital asset then such gain will be chargeable under this head.
4. Profits and Gains from Business or Profession – If you are having any income by way of profits from business or profession then it is chargeable under this head of income.
5. Income from other sources – If you have any income other than those mentioned above it is chargeable under this head of income eg: bank Interest, Winnings from lotteries, winnings from games etc.
After calculation Income under These Heads, the loss is set off if carried forward from the previous year and from the resulting amount Chapter VI-A deductions are reduced and thereafter income tax is calculated. You can also use income tax calculator provided by income tax department
Financial Year 2019-2020.
Income tax rates For individual Age Less Than 60 Years.
Basic Exemption Limit –
0 to Rs. 250000 – Nil
250001 to Rs. 500000 – 5 %
500000 to Rs. 100000 – 20 %
100000 and Above – 30 %.
Income tax rates For individual Age of 60 and less than Than 80 Years.
Basic Exemption Limit –
0 to Rs. 300000 – Nil
300001 to Rs. 500000 – 5 %
500001 to Rs. 100000 – 20 %
100001 and Above – 30 %.
Income tax rates For individual 80 Years and above.
Basic Exemption Limit –
0 to Rs. 250000 – Nil
300001 to Rs. 500000 – Nil
500001 to Rs. 100000 – 20 %
100001 and Above – 30 %.
1. Surcharge
Total Income is above 50 lakhs and up to 1 Crore or above – 10 %
Total Income is above 1 crores and up to 2 Crore or above – 15 %
Total Income is above 2 crores and up to 5 Crore or above – 25 %
Total Income is above 5 crores and above – 37 %
2. Educational Cess of 4 % applicable on Income Tax Plus Surcharge.
3. If your total Income is Less than 5,00,000 then 87A Rebate of Rs.12500 is applicable.
And it also matters how your Tax consultant supports you in providing proper advice on tax savings.
