Income tax: what is it? 

Every person’s income is subject to this tax, which is imposed by the Indian government. The Income Tax Act, 1961 contains the rules controlling income tax. ​ 

What does income-tax administration look like? 

The Ministry of Finance oversees the government of India’s revenue-related operations. The Central Board of Direct Taxes (CBDT) has been entrusted by the Finance Ministry with the responsibility of administering direct taxes including income tax, GST, wealth tax, etc (CBDT). The Department of Revenue under the Ministry of Finance houses the CBDT.  Direct tax regulations are also administered by the CBDT through the Income-tax Department. CBDT provides crucial inputs for direct tax policy formulation and planning. Thus, under the direction and authority of the CBDT, the Income-tax Department administers the Income-tax Law. ​ 

What time frame does the IRS use to calculate a person’s income for tax purposes? 

A person’s yearly income is subject to income tax. The period beginning on April 1 and ending on March 31 of the following calendar year is the time frame covered by the Income Tax Law. The year is divided into two categories under the Income-tax Law: (1) Previous year and (2) Assessment year. 

When income is earned, the year is referred to as the preceding year, and when it is taxed, the year is referred to as the assessment year. 

For instance, revenue generated between April 1, 2021, and March 31, 2022, is considered income from the year prior, 2021–2022. Income from the prior year 2021–2022 will be subject to tax the next year, or in the assessment year 2022–2023 ​ 

Exactly who is required to pay income tax? 

Each individual is required to pay income tax. According to section 2(3) of the Income Tax Act, both natural and artificial individuals fall under the definition of “person.” For the purposes of assessing income tax, a “person” is defined as an individual, a Hindu Undivided Family (HUF), an association of persons (AOP), a body of individuals (BOI), a firm, an LLP, a company, a local authority, and any artificial juridical person not included in any of the aforementioned categories. As a result, it is clear from the definition of the term “person” that any artificial entity, in addition to a natural person, or an individual, will be required to pay income tax. 

The government collects income tax in what ways? 

​ Three methods are used by the government to collect taxes: a) taxpayers can voluntarily pay their taxes into a number of recognised banks. As an illustration, advance tax and self-assessment tax paid by the taxpayers, b) taxes withheld at source [TDS] from the recipient’s income, and c) taxes collected at source [TCS]. Every person who earns money is required by the Constitution to accurately calculate his income and pay taxes. What are the current tax rates? 

The Finance Act, which the Parliament passes each year, contains the rates of income tax and corporation taxes. Additionally, you can determine your tax burden using the free online tax calculator at www.incometaxindia.gov.in. 

Check your tax liability by clicking here. 

View tax rates by clicking here. 

There are phrases like “Income-tax on firms” and “Income-tax other than corporations” in the Challan. What do they indicate? 

Corporate tax is the term for the tax that businesses must pay on their income, and the challan reference for this tax is Income-tax on Companies (Corporation tax)-0020. Income-tax is the name of the tax paid by non-corporate assessees, and Income-tax (other than Companies)-0021 must be specified for payment of the tax in the challan.

When taxes are paid, does my obligation under the Income-tax Act end? 

No, you are then in charge of ensuring that the tax credits are present in your tax credit statement and TDS/TCS certificates that you have received and that complete details of your income and tax payment are submitted to the Income-tax Department in the form of a Return of Income, which must be filed before the deadline set forth in this regard. 

An assessing officer or Income Tax Officer is who? 

He/she is a member of the Income-tax Department who has been granted authority over a group of people or a certain area of a city or town. You can learn more about the officer enforcing the law, who may be determined by your location or the type of income you generate, from the PRO or the Department’s website at http://www.incometaxindia.gov.in. The Income Tax Act’s Section 2(7A) may also be used. 

Everyone’s income is subject to income tax. What exactly is considered income under tax law? 

The term “income” has a very wide and broad definition under the Income-tax Law. When someone is paid a salary, anything they receive from their employer—in kind, financially, or as a benefit—is counted as income. A businessman’s income will be made up of his net profit. Additionally, investments may generate income in the form of interest, dividends, commissions, etc. Additionally, income may be generated by the selling of capital assets like gold, buildings, etc. Income must be calculated in accordance with the applicable provisions of the Income-tax Act of 1961, which specify the requirements for calculating income subject to tax under various kinds of income. 

​ What are taxable income and exempt income? 

A tax-exempt income is one that is specifically exempt from taxation under the Income-tax Law. Taxable incomes are defined as earnings that are subject to taxation. 

Where should business accounting records be stored, and for how long? 

The primary place of business, or the location where the business or profession is typically conducted, should have all of the accounting records and supporting paperwork. These records must be kept for a minimum of six years after the conclusion of the applicable Assessment year, or a total of seven financial years. All books of account and other documents that were kept and maintained at the time of the assessment’s reopening, however, must continue to be retained and maintained in this manner until the assessment has been finished. 

My name has not been changed as of the NSDL website? 

An assessee may make a complaint if there is a discrepancy between the information on PAN and the income tax portal. Visit Income Tax India’s website at https://www.incometaxindia.gov.in/Pages/tax-services/pan-grievances.aspx. specific procedures for submitting a PAN-related complaint. 

How can I check the Aadhaar PAN connecting status? 

The following URL will allow you to check the status of your Aadhaar-PAN linking: https://eportal.incometax.gov.in/iec/foservices/#/pre-login/bl-link-aadhaar 

Please provide me with the income tax ombudsman’s email. 

To view the list of email addresses for the income tax ombudsman, please visit https://www.incometaxindia.gov.in/Pages/ombudsman/know-your-ombudsman.aspx. 

What are capital receipts and revenue receipts? 

Receipts go into one of two categories: reception of revenue, and receipt of capital. Such revenue receipts as wages, commercial profits, interest income, etc. are recurrent in nature. 

Capital receipts typically have an isolated nature, such as a receipt for the sale of a home or a piece of jewellery, for example. ​ 

Are capital and revenue receipts both subject to taxation? 

All income sources are generally taxable under the Income Tax Law unless they are expressly exempt from taxation, and all capital receipts are exempt from taxation unless there is a special provision for taxing them. 

I work in agriculture. My income is it taxable? 

Agriculture-related income is not subject to taxation. However, if you also earn non-agricultural income, your agricultural income will be factored in for rate purposes when determining tax on non-agricultural income. Section 2(IA) of the Income-tax Act should be consulted for definitions of agricultural income. 

Is revenue from animal husbandry regarded as agricultural income under the Income-tax Law? 

​​No. 

Do I have to keep any documents or evidence of my income? 

You must retain proof of income and the records required by the Income-tax Act for each source of income. If no such records are required, you should nonetheless keep adequate records to back up your income claim. 

Do I need to keep any records of my earnings or outgoing expenses as an agriculturist? 

It is advisable to keep some documentation of your agricultural revenues and costs, even if you solely have agricultural income. 

Do I have to pay income tax on any winnings from the lottery or contest prizes? 

It is true that such winnings are subject to a flat 30% tax rate without any baseline exemption cap. In this situation, the person awarding the prize will often subtract tax at source (also known as TDS) from the winnings and only give you the remaining sum. 

Can I get any kind of relief from double taxation if my income is taxed both domestically and internationally? 

Yes, you are eligible to file a claim for relief in relation to income that is subject to tax both in India and abroad. The Government of India either grants relief in accordance with the terms of any double taxation avoidance agreements it has (if any) entered into with that nation, or it grants relief in accordance with section 91 of the Act with respect to tax paid in the foreign nation. 

What is meant by profession? 

A profession is the independent use of one’s knowledge and talents. Vocation is a part of profession. Law, medicine, engineering, architecture, accounting, technical consulting, interior design, artists, writers, etc. are a few examples.