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Who are the Tax Payers?

Any Indian citizen aged below 60 years is liable to pay income tax, if their income exceeds Rs 2.5 lakhs. If the individual is above 60 years of age and earns more than Rs 2.5 lakhs, he/she will have to pay taxes to the Government of India. Additionally, the following entities that generate income are liable to pay direct taxes:

  •    Hindu Undivided Family (HUF)
  •    Body Of Individuals (BOI)
  •    Association of Persons (AOP)
  •    Local Authorities
  •    Corporate firms
  •    Companies
  •    All Artificial Juridical Persons

What are Income Tax Returns?

Every individual, who has a source of income, regular or irregular, is legally required to file their income tax returns. Even if your income is below the taxable bracket, you should file your income tax returns. There are prescribed forms through which the income earned by a person and the income tax paid thereon are informed to the Income Tax Authority. The following table shows different forms prescribed for different classes of taxpayers.

ITR Form 1Any person who receives regular salary or pension or has an income from residential property or other sources.
ITR Form 2This form is for those who are come under the category of Hindu Undivided Families and have income from any sources other than Profits gained from business and profession.
ITR Form 3This form is for the Hindu Undivided Families whose income fall under the head of Profits and Gains of Business or Profession.
ITR Form 4SThis form, also known as SUGAM, is applicable to HUFs(Hindu Undivided Families) and individuals opting for SUGAM taxation scheme as per section 44 AD/ AE
ITR Form 4This form is applicable to Hindu Undivided Families and individuals who are professionals or proprietors
ITR Form 5This form is applicable for LLPs, Firms, BOIs, AOPs, artificial judiciary persons and local authorities.
ITR Form 6This form is applicable to companies that claim no exemptions as per section 11 of the Income tax Act.
ITR Form 7This form is applicable to the persons who are required to file returns as per Sections 139(4A), 139 (4D), 139 (4C), 139(4B)
ITR Form VITR V is provided to acknowledge that the Income Tax return has been filed.

Frequently Asked Question

As per the Income Tax Act, there are 2 types of taxes in India:

  1. Direct Taxes

It is borne and paid directly by the individual on whom it is imposed such as, wealth tax, income tax, gift tax, etc. The taxpayer pays this tax directly to the government without any involvement of intermediary source.

  1. Indirect Taxes

If a tax is passed on by the taxpayer to the other person, it is an indirect tax e.g. sales tax, Value Added Tax (VAT) etc. This type of tax is paid indirectly to the Income tax department.

Any Indian citizen aged below 60 years is liable to pay income tax, if their income exceeds Rs 2.5 lakhs. If the individual is above 60 years of age and earns more than Rs 2.5 lakhs, he/she will have to pay taxes to the Government of India. Additionally, the following entities that generate income are liable to pay direct taxes:

  •    Hindu Undivided Family (HUF)
  •    Body Of Individuals (BOI)
  •    Association of Persons (AOP)
  •    Local Authorities
  •    Corporate firms
  •    Companies
  •    All Artificial Juridical Persons

Income tax slab rates are defined on the basis of the earning of the taxpayers. Income tax slab rates are broadly categorized as follows:

For HUFs and Individuals (Male or Female) Below the Age of 60 Years Income Tax Slabs & Rates 2017-18

Income Tax SlabsIncome Tax Rates
 Income less than Rs 2.5 lakhsNot applicable
Income greater than Rs 2.5 lakhs but less than Rs 5 lakhs5% of the amount exceeding Rs 2.5 lakhs
Income greater than Rs 5 lakhs but less than Rs 10 lakhs20% of the amount exceeding Rs 5 lakhs
Income greater than Rs 10 lakhs30% of the amount exceeding Rs 10 lakhs

For Individuals (Male or Female) Above the Age of 60 Years:

Income Tax SlabsIncome Tax Rates
Taxable income less than Rs 3 lakhsNot Applicable
Taxable income greater than Rs 3 lakhs but less than Rs 5 lakhs5% of the amount exceeding Rs 3 lakhs
Taxable income greater than Rs 5 lakhs but less than Rs 10 lakhs

20% of the amount exceeding Rs 5 lakhs

 

Taxable income greater than Rs 10 lakhs

 

30% of the amount exceeding Rs 10 lakhs

 

For Individuals (Male or Female) Above the Age of 80 Years:

Income Tax SlabsIncome Tax Rates
Taxable income less than Rs 5 lakhsNot Applicable
Taxable income greater than Rs 5 lakhs but less than Rs 10 lakhs20% of the amount exceeding Rs 5 lakhs
Taxable income greater than Rs 10 lakhs

30% of the amount exceeding Rs 10 lakhs

 

For Co-operative Societies:

Income Tax SlabsIncome Tax Rates
Taxable income less than Rs. 10,00010% of the income
Taxable income greater than Rs. 10,000 but less than Rs. 20,000

20% of the amount exceeding Rs. 10,000.

 

Taxable income greater than Rs. 20,000

 

30% of the amount exceeding Rs. 20,000.

 

For Domestic Companies:

The income tax rate applicable for Domestic Companies will be @ 30%.

For Foreign Companies: 

Nature of Income

Rate of Tax

According to the agreement designed by Indian Government, if the foreign firms are paid by the Indian Government in the form of royalties (After March 31st ,1961 and before April 1st, 1976)

50%

According to the agreement made with an Indian concern, if the payment is done for the technical services (provided by foreign firms – After February 29th 1964, before April 1st 1976)

50%

For any other income

40%

For Local Authorities: 

For local authorities, the tax rate is determined as at 30%.

**Income Tax Slab Rates for the assessment year 2018-19**

There are primarily three ways in which the Income Taxes are collected by the Government:

  • Taxes Deducted at Source (TDS)
  • Taxes Collected at Source (TCS)
  • Voluntary payment by tax payers into designated Banks

Income taxes are levied depending on the source of Income. Following are the five main income heads from which taxes are deducted.

  •  Income From Salaries

Taxable income that all employees receive from their employers is categorized under this head. As per section 192 of the Income Tax Act, the employer will withhold taxes if the employees do not come within the taxable bracket. All about tax deductions and the net paid income are detailed in Form 16 that must be provided by the employer to the employee.

 

  •  Income From Capital Gains

Capital gains taxation applies to earnings from the sale of capital assets held by the tax assessee. Capital assets refer to the properties such as buildings, lands, bonds, equities, debentures, jewelleries, etc. Taxes are levied on the income of the assessee when such properties are sold.

 

  • Income From House Property

Income Tax is levied on house property, if the house is given out on rent by the owner. However, under this head, the property cannot be used for business or professional purposes.

 

  • Income (Profits) From Business

As per section 30 to 43D of the Income Tax Act, the profits earned from businesses or by providing professional services are considered taxable as per applicable rates. This income head is also known as “Profits and Gains of Business or Profession”.

  • Income From Other Sources

Income from any sources other than the four listed above is categorized under this head. Some specific income coming under this head is listed below:

  •   Lottery/horse race winnings
  •   Income from dividends
  •   Pension received after the pensioner’s death.
  •   Rental income (other than house properties)
  •   Gifts received
  •   Interest on government securities, debentures, and bonds.

Income Tax Slabs and Rates FY 2023-24

Income Tax Slabs in India are announced by the finance minister every year. Currently, there are two different Income Tax regimes. Under both the new regime and the old regime, taxpayers can avail tax benefits.

This year, the finance minister Nirmala Sitharaman has announced the Union Budget for 2023 on 1 February 2023. In the latest budget, certain changes to the existing income tax slab has been introduced.

The finance minister announced that under the new tax regime the rebate for income tax has been increased to Rs.7 lakh from the earlier limit of up to Rs.5 lakh. There were certain changes under the tax slab for the new tax regime too. Apart from that surcharge rate on income of Rs.5 crore and above has been decreased from 37% to 25%.

Note: You can now file your taxes through the New income tax portal. The new portal comes with a plethora of features and is designed to ease the tax filing process.

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