Beginner Guide to Income Tax
As part of this blog, I will bring forth the primary definition of Income tax, major updates on it, and corresponding basics.
Income tax is a direct tax levied by the central government on the income earned during a financial year by individuals and businesses. It gets calculated based on the tax slabs specified by the Income Tax Department.
Individuals, Association of Persons (AOP), Hindu Undivided Family (HUF), firms, companies, and Body of Individuals (BOI) are the six categories of taxpayers. Individual, BOI, AOP, and HUF taxpayers are taxed based on their income slab. Businesses and Indian companies have a fixed value of tax computed on their taxable profits.
Additionally, there is a broad classification of individuals as residents and non-residents. Resident individuals are liable to pay tax on their global income in India, that is, the income earned in India and abroad. Non-residents are liable to pay taxes only on income earned in India.
Let us dive into a few updates by the Income Tax Department and budget 2022:
1) Form 26A, Form 10BD, Form 10BE Form, and 27BA are available on the income tax portal.
2) Central Board of Direct Taxes announced the form for filing the ‘Updated’ income tax returns.
3) Unique Document Identification Number (UDIN) update functionality is now open for forms filed from June 2021 onwards.
4) A new provision got introduced to allow taxpayers to update their past returns and include omitted income by additional tax payment.
5) Income from the transfer of digital assets such as crypto is now taxed at 30%.
6) The surcharge on the long-term capital gains (LTCG) will get capped at 15%.
The new portal offers miscellaneous options to taxpayers, such as RTGS/NEFT, credit card, UPI, and net banking via any account of the taxpayer in any bank. It facilitates effortless and efficient payment for taxpayers.
Let us take a quick glimpse at tax slab rates FY 2021-22 (AY 2022-23)
Rs 0.0 – Rs 2.5 lakh - NIL
Rs 2.5 lakh – Rs 3.00 lakh and Rs 3.00 lakh – Rs 5.00 lakh - 5% (tax rebate u/s 87a is available)
Rs 5.00 lakh- Rs 7.5 lakh - 10%
Rs 7.5 lakh – Rs 10.00 lakh - 15%
Rs 10.00 lakhs – Rs 12.50 lakh - 20%
Rs 12.5 lakhs – Rs 15.00 lakh - 25%
More than Rs 15 lakh- 30%
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