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Everything you need to know about income tax

A simple and straightforward definition for income tax is- the tax that is on someone’s income is called income tax. So, to fully understand the charge, we need to understand the basics of the income tax, that is- tax and income.

What is tax and what is income?

Tax is an amount of payment that is mandatory to be paid to the government. So, income tax would be- the amount of tax of one’s income, needed to be paid.

An income tax is that type of charge which government imposes on someone’s financial income produced by all within the government supervision. As per the law, the individuals doing businesses and services must file the income tax every year. Income tax is a fundamental source of the funds which the government uses to continue its activities and in serving the public.

Separating the term, Income Tax

In every country, fees must be paid to the government, so that the government can build up the various facilities for us. So, the main logic behind paying tax is that we use the services of the state so, we must pay the fee.

We pay a certain amount of tax to the government in many ways. Also, we pay another way of charge through our income, what we call the income tax. The important word that is needed to be understood here is income. Otherwise, you will not have a proper idea of what the income tax is.

Paying the income tax

In every country, fees must be paid to the government, so that the government can build up the various facilities for us. So, the main logic behind paying tax is that we use the services of the state so, we must pay the fee.

Various types of income tax

  • Ordinary resident tax
A person who is residing in India for more than 182 days of one financial year, must pay the fee.
  • Non-ordinary residents
A person who is residing in India less than 182 days of a financial year, must pay the income tax gathered in India.
  • Non-Indian residents
NRI or non-resident Indians are those who stayed outside of India for more than 7 to 9 years. He has to give income tax only for the income he did in India.

The Indian income tax system is based on the income tax section 80C. The list of the qualifying investments is given below.

  • Provident Fund: Payments which are done on the provident fund are taken as deductible as per the 80C deductions.
  • Voluntary Provident fund: As per the 80C section, the discretionary provident fund is also accountable for deduction.
  • The Public Provident Fund.
  • The payments done in the public provident fund is accounted tax-free as per the 80C.
  • LIC premiums: Any money paid for the LIC is included as tax-exempt.
There are also some only avenues such as National Savings, Infrastructure Bonds, Fixed Deposits, Post office deposits, children education expenses, etc. which are taken into consideration under the Section 80C.

Various tax penalties of the Indian Taxation system

Several defaults are needed to be filed for income tax return failing to which penalties are charged. Some defaults are mentioned here,
  • The default in the making of payment of tax, source of the tax deduction, advanced tax,
  • If fee is not paid, it is directed to the assessing officer,
  • If someone is hiding the particulars regarding his payment,
  • Failure in keeping specified book of accounts
  • Failure in filing the tax return as needed,
  • Failure in submitting the income tax in mentioned time.

Income Tax Slab Rates for FY 2017-18(AY 2018-19)
For FY 2017-18, the slab rate for income tax up to Rs. 5 lakh has gone down from 10% to 5%.

PART I: Income Tax Slab for Individual Tax Payers & HUF (Less Than 60 Years Old) (Both Men & Women)

Income Slab Tax Rate
Income up to Rs 2,50,000* No tax
Income from Rs 2,50,000 – Rs 5,00,000 5%
Income from Rs 5,00,000 – 10,00,000 20%
Income more than Rs 10,00,000 30%
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.

Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.

Cess: 3% on total of income tax + surcharge.
*Income tax exemption limit for FY 2017-18 is up to Rs. 2,50,000 for individual & HUF other than those covered in Part(II) or (III)

PART II: Income Tax Slab for Senior Citizens (60 Years Old Or More but Less than 80 Years Old)(Both Men & Women)


Income Slab Tax Rate
Income up to Rs 2,50,000* No tax
Income up to Rs 5,00,000* No tax
Income from Rs 5,00,000 – 10,00,000 20%
Income more than Rs 10,00,000 30%
Surcharge: 15% of income tax, where total income exceeds Rs.1 crore.
Cess: 3% on total of income tax + surcharge.
*Income tax exemption limit for FY 2017-18 is up to Rs. 5,00,000 other than those covered in Part(I) or (II)

PART III: Income Tax Slab for Senior Citizens(80 Years Old Or More) (Both Men & Women)

Income Slab Tax Rate
Income up to Rs 2,50,000* No tax
Income up to Rs 5,00,000* No tax
Income from Rs 5,00,000 – 10,00,000 20%
Income more than Rs 10,00,000 30%
Surcharge: 15% of income tax, where total income exceeds Rs.1 crore.
Cess: 3% on total of income tax + surcharge.
*Income tax exemption limit for FY 2017-18 is up to Rs. 5,00,000 other than those covered in Part(I) or (II)

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