INDIAN INCOME TAX​
Article 265 of the Constitution of India provides that “no tax shall be levied or collected except by the authority of law”. Therefore, no tax can be levied or collected in India, unless it is explicitly authorised by way of legislation. In India, the Income-tax Act, 1961 (‘the Act’) provides for levy, administration, collection and recovery of Income Tax.
Levy of Income Tax in India is primarily dependent on the residential status of a taxpayer. Any person who qualify as a resident in India must pay tax on their global income in India i.e. income earned in India and abroad. Whereas, those who qualify as Resident not ordinarily resident or Non-residents need to pay taxes only on income accrued in India. The residential status has to be determined separately for each financial year for which income and taxes are computed.
Every individual, HUF, AOP and BOI are taxed based on income slab rates prescribed under Finance Act. The slab rates applicable for income earned in FY 2020-21 is mentioned as under:
Income Tax Slabs
Tax Rate*** for Individual & HUF Below the Age of 60 Years
New Regime*
Up to Rs. 2,50,000**
–
–
Rs. 2,50,000 to Rs. 5,00,000
5%
5%
Rs. 5,00,000 to Rs. 7,50,000
20%
10%
Rs. 7,50,000 to Rs. 10,00,000
20%
15%
From 10,00,001 to 12,50,000
30%
20%
From 12,50,001 to 15,00,000
30%
25%
Above 15,00,000
30%
30%
The tax rate*** applicable to firm and Company is 30% (22% under the new regime if the company does not opts for certain deductions).
*The Finance Act, 2020, has provided an option to Individuals and HUF for payment of taxes at the following reduced rates from Assessment Year 2021-22 and onwards.
** For Senior Citizen (age more than 60 years), basic exemption limit is Rs. 3,00,000/- and for super senior citizens (age more than 80 years), basic exemption limit is Rs. 5,00,000/-.
*** The tax rate shall be further increased by surcharge based on the total income of a person and Health and Education cess at the rate of 4% on tax and surcharge.
Filing of Return of Income
In India, it is mandatory to file return of income in case any of the following conditions are applicable in case of any assessee:
- In case the income exceeds the maximum amount not subject to tax, the assesse has to file return of income in India;
- In case of claiming refund from the Income Tax Department;
- If you have earned from or have invested in foreign assets during the FY;
- If you wish to apply for visa or a loan.
Here, it would be pertinent to note that return filing is mandatory in case of a Company or a Firm, irrespective whether they are earning any profit or loss.
Which ITR to file?
The list of ITRs along with due dates are mentioned as under:
ITR 1
For individuals being a resident (other than not ordinarily resident) having total income upto Rs.50 lakh, having Income from Salaries, one house property, other sources (Interest etc.), and agricultural income upto Rs.5 thousand [Not for an individual who is either Director in a company or has invested in unlisted equity shares].
ITR 2
For Individuals and HUFs not having income from profits and gains of business or profession.
ITR 3
For individuals and HUFs having income from profits and gains of business or profession).
ITR 4
For Individuals, HUFs and Firms (other than LLP) being a resident having total income upto Rs.50 lakh and having income from business and profession which is computed under sections 44AD, 44ADA or 44AE] [Not for an individual who is either Director in a company or has invested in unlisted equity shares.
ITR 5
Applicable to firms, LLPs, AOP, BOIs.
ITR 6
Companies not claiming exemption u/s 11.
ITR 7
Persons/Companies under section 139 (4A), 139 (4B), 139 (4C) and 139(4D).
Requirement of Tax Audit
Applicable if the total turnover exceeds INR 1,00,00,000 (INR 50,00,000 in case of profession).
Transfer Pricing Compliances
In case any company has carried out any international transaction with its associated enterprises, the company will have to undertake following additional compliances:
Name of form
Remarks
Due Date
3CEB
Filing of Accountant’s report in Form 3CEB
31 October
TP Study
Contemporaneous documentation under section 92D
31 October
Indian Income Tax Filing Services
- Income Tax Filing - Salaries and Other Sources (Individuals) - Rs. 1,499/- inclusive of GST
- Income Tax Filing - Capital Gains (Individual) - Rs. 2,499/- inclusive of GST
- Income Tax Filing - Business Income (Presumptive) - Rs. 1,999/- inclusive of GST
- Income Tax Filing - Business Income (Others) - 3,999/- inclusive of GST
- Income Tax Filing - Companies / LLPs - Rs. 4,999/- inclusive of GST
Other Services Offered
- Assistance in preparing/ review / filing of Income Tax Returns, withholding tax returns;
- Conducting Tax Audit;
- Assistance in representation before the Income Tax Department;
- Assistance in representation before the Appellate Authorities;
- Advisory services in relation to day to day queries;
- Advisory services in relation to structuring of a tax-efficient group structure.