BRIEF OF INDIAN INCOME TAX SYSTEM

Tax is a financial charge imposed on the taxpayer. Through this, the Government revenue is raised for the betterment of society and improving the economic situation of a country. Indian government generates major of its revenue from this tax system.

Indian Taxation System is categorized into 2 main parts: – Direct Tax and Indirect Tax.

Direct Tax is a tax that a person pays directly to the government on its own. Unlike Direct Tax, the tax in Indirect Tax is collected by some other on your behalf and paid indirectly to the government.

Income tax is a part of the Direct Tax system, in which the assessee pays taxes and furnishes their return of income to the Income Tax Department.

The power has been given in the constitution of India – Schedule VII – Union List – Entry 82 to the Central Government to levy a tax on any income other than agriculture income.

The Indian Income Tax Law consists of Income Tax Act 1961, Income Tax Rules 1962, Notification and Circulars issued by Central Board of Direct Taxes (CBDT), Annual Finance Acts and judicial pronouncements by the Supreme Court and High Courts.

The Income Tax Department is a part of the Department of Revenue under the Ministry of Finance, Government of India. The Income tax department is administered by the the Central Board of Direct Taxes (CBDT).

WHEN AN INCOME TAX RETURN (ITR) IS REQUIRED TO FILE?

As per the Income Tax Act, in case of Individual, any person who is less than 60 years of age (Normal Individual) and has annual income of more than Rs. 2.5 Lakhs has to file the Income Tax Returns. For senior citizens, the limit is Rs. 3 Lakhs, and for who are more than 80 years old (Super Senior Citizens), the same exemption limit is Rs. 5 Lakhs.

In case of HUF/AOP/BOI, the exemption limit to file the ITR is Rs. 2.5 Lakhs.

(Even if your income does not exceed the above exemption limit, you can file the ITR voluntarily)

But there is no exemption limit in case of company and firms/LLPs. Therefore, it is mandatorily to file the Income Tax Returns in case of Company and Firms.

WHERE TO FILE THE INCOME TAX RETURNS?

The process to file the ITR is referred to as Income Tax filing. A taxpayer can file the ITR online through E-portal of the Income Tax Department. Taxpayers can find the Income tax return forms on the official website of the Income tax department.

To download the same,

-Visit the Income Tax Website: – https://incometaxindiaefiling.gov.in

– On the homepage, click on the link “IT Return Preparation Software” under download tab.

-Select the appropriate “Income Tax Return Form” option from the drop-down menu list.

The income tax department also notifies ITR forms for every assessment year. Assessment year is the year immediately following the financial year for which the return is to be filed i.e For FY 2019-20, the assessment year is 2020-21.

ITR can be filed by downloading the in Excel or Java utility file. But taxpayers who are eligible to file ITR-1 and ITR-4 also have the option to file it online on Income tax portal without downloading any software utility.

If you are eligible to file ITR-1, then you can use option ‘Prepare and submit online’ after login into your income tax user id on the income tax portal.

You can also read my following suggested articles on Income Tax: –

• Step by Step procedure for registration at Income Tax Portal.
• What is annual income or what types of income to be shown in ITR?
• Which ITR Forms to be selected for different types of Income?