What is Income Tax?

What is IncomeIts an annual tax charged on your annual financial income by Central Government at the rates that are applicable for your financial year ending 31st march.

IT Rates are specified in the Finance Act. Finance act is passed in the budget session of our parliament every year. Every year, budget has to be presented and passed in both the houses of parliament to get the new IT rates applicable for the year. The IT rate as on 1st of April will be the applicable rate for that year’s assessment year. The IT rates as fixed will be charged on your total income according of the provisions of IT act.

IT rates as passed in budget 2013 is the applicable rate for the financial year starting from 1st of April to 31st march 2014 (Assessment year 2014-2015). 

It is charged on every person liable to pay as stated in IT act, 196 provided, such person’s annual income exceeded the basic exemption limit as specified in the Act.

If you are a salaried person then you will be charged as per the rates that are stated in IT Act on your total income after taking out the deductions that are available to you. If you have any other source then that has to be included with your annual gross salary before giving IT deduction.

For non salaried persons, all types of incomes are chargeable unless these are specifically exempted under the act. According to the act, illegal profits or money generated from illegal sources is also chargeable under IT act.

In India we have a progressive system in which the higher group peoples pay more tax at a higher rate compared to lower earning group.

As per the Indian law, every individual liable to pay tax has to file their yearly return as prescribed under IT act before the due date of filling. Certain categories of persons are not liable to file ITR if it’s exempted for them.

Due date of filling ITR

IT Rates for different assessment year

Editorial Staff at Yourfinancebook is a team of finance professionals. The team has more than a decade experience in taxation and personal finance.