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Income Tax
In India, income tax constitutes a financial and legal obligation. Any person with annual earnings surpassing a specified threshold are mandated to pay income tax to the Government. The government regulates and may alter the income tax rates, income slabs, and other regulations, from time to time.
Nevertheless, it is the responsibility of all taxpayers to precisely declare their income through Income Tax Returns (ITR) and pay taxes punctually. Neglecting this obligation may cause imposition of penalties and fines.
The Last date of filing ITR
- Individuals, Partnership Firms/LLPs – 31st July of every financial year
- Entities requiring Audit of Accounts – 31st October of every financial year
- …and if you somehow failed to file by the above dates- BELATED RETURNS can still be filed by 31st of December, with applicable Late Fees.
New Vs Old Regime of Taxation
Income Slab | Old Tax Regime | New tax Regime (until 31st March 2023) | New Tax Regime (From 1st April 2023) |
₹0 – ₹2,50,000 | – | – | – |
₹2,50,000 – ₹3,00,000 | 5% | 5% | – |
₹3,00,000 – ₹5,00,000 | 5% | 5% | 5% |
₹5,00,000 – ₹6,00,000 | 20% | 10% | 5% |
₹6,00,000 – ₹7,50,000 | 20% | 10% | 10% |
₹7,50,000 – ₹9,00,000 | 20% | 15% | 10% |
₹9,00,000 – ₹10,00,000 | 20% | 15% | 15% |
₹10,00,000 – ₹12,00,000 | 30% | 20% | 15% |
₹12,00,000 – ₹12,50,000 | 30% | 20% | 20% |
₹12,50,000 – ₹15,00,000 | 30% | 25% | 20% |
Above ₹15,00,000 | 30% | 30% | 30% |
Which ITR you should file?
ITR-1
Those residing in India with a total income of up to ₹ 50 lakh -from following sources
- Salary/Pension
- House Property Income
- Income from other sources i.e., Interest earned from Saving Bank/FD, Dividend.
ITR-2
Individuals and Hindu Undivided Families (HUF) earning income from sources other than Business or Profession are eligible to file Form ITR-2.
- Every income covered under ITR-1
- Capital Gains – from Sale of Properties/ Share/ Mutual Funds etc.
- Foreign income
- All NRIs.
- Other sources i.e., winning a lottery, income from owing or income taxable at special rates.
ITR-3
Individuals and Businesses are required to disclose their income derived from any Business or Profession in ITR 3.
Salaried individuals who are Trading in Futures & Options (FnO) and Intra-day stock trading should use Form ITR-3 for filing their tax returns.
- Income covered under ITR-2
- Profits and Gains from Business & Profession
- Income from Trading in F & O
- Speculative Income
ITR 3 calls for detailed information contained in the Financial Statements i.e. Profit & Loss Account and Balance Sheet
ITR-4
Individuals, Hindu Undivided Families (HUFs), and Partnership Firms can choose to opt for Presumptive taxation, If
- Gross annual receipts from business do not Exceed ₹ 2 Crore
- Income computed @ 8% of Cash Receipts and
- Income computed @ 6% of Non-cash receipts
- Gross annual receipts from Profession do not exceed ₹ 50 lakhs
- Income computed @ 50 % of Total Receipts
- Gross annual receipts up to ₹ 10 Crore and atleast 95% of of total receipts and 95 % of total expenses are made through Banking channel/ UPI
- Entities coming under the Tax Audit, cannot opt for Presumptive Taxation.
- Income in the nature of Commission, Brokerages etc cannot be computed on presumptive basis.
ITR-5
Limited Liability Partnerships (LLPs), Association of Persons (AOPs), Body of Individuals (BOIs) and Society are all acronyms referring to alliance business.
LLPs, partnership firms, AOPs, BOIs and society are required to file ITR-5 forms to declare the profits earned from their business/profession, along with other sources of income.
ITR-6
All the Companies, Private or Public are required to file their n income tax return in form ITR 6 to report income generated from their industry or occupation, along with all other sources of income. This is an elaborate form covering financial and certain non-financial parameters. Audited Annual accounts are the main source of data input in this tax return.
