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Income Tax in India

Personal Tax filing

Personal Tax filing

Income tax eFiling for salaried individuals and business persons. File ITR-1 to ITR-7 tax returns by importing Form 16 or Form 26AS documents on Tax Rupees @Rs449.


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Business Tax filing

File income tax return for your business online at just Rs.2599. Tax Rupees is an Income Tax eReturn Intermediary authorised to file business tax returns.


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TDS Return Filing

File TDS return online through Tax Rupees with TDS Expert Support just Rs 4499. TDS return is a quarterly statement to be given to the I-T department.


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Income Tax in India

As a responsible citizen, it is important to have basic knowledge about the taxes we pay to the government. Tax Rupees provide a step-by-step guide on how to file for Income Tax return in India.
 
In India, the process of filing income tax return is an annual event. The financial year in India starts from 1st April and ends on 31 March. Hence, the due date for filing your income tax return is usually 31 July of every year. However, this may vary depending on the assessment year. The assessment year is the period during which your tax liability is decided. For instance, if you are filing your taxes for the financial year 2017-18 (which ended on 31 March 2018), then your assessment year will be 2018-19.
 
There are two main types of taxes that we pay in India – direct and indirect taxes. Direct taxes are levied directly on our income, while indirect taxes are levied on goods and services that we purchase. Income Tax is a direct tax that is imposed on our income.
 
Income Tax Return (ITR) is a form that taxpayers need to fill up and submit to the Income Tax Department in order to declare their incomes and calculate their tax liabilities. It contains details such as your name, address, PAN number, total income earned during the financial year, deductions claimed etc.

Individual taxpayers can file their Income Tax Return either manually or electronically. In order to file your return electronically, you will need to have a digital signature.

If you are e-filing your return for the first time, then you will need to register on the e-filing portal of the Income Tax Department. After registering on the portal, you will be given a user ID and password which you can use to login and access your account.
Once you have logged in, you will need to select the appropriate ITR form based on your income and status (individual, HUF, company etc.). After filling up the form, you will need to calculate your tax liability and make the payment online. Once the payment is made, you can submit your return online.

What is Income Tax?

Income Tax is a tax that is levied on our income. It is a direct tax, which means that it is imposed directly on our income. Income Tax is calculated on the basis of our total income earned during the financial year. The financial year in India starts from 1st April and ends on 31 March.
Income Tax is levied by the government on our income to generate revenue. The money collected through income tax is used by the government for various development activities. It is also used to provide subsidies and other benefits to the people of India.
Income Tax is calculated according to the slab system. Under this system, different tax rates are applicable for different ranges of income. The Income Tax slab for financial year 2020-21 (assessment year 2021-22) is given below:
 

Income Slab Tax Rate

  • Up to Rs 2,50,000 Nil
  • Rs 2,50,001 – Rs 5,00,000 5%
  • Rs 5,00,001 – Rs 10,00,000 20%
  • Above Rs 10 lakh 30%
Income Tax is payable by an individual if his/her total income exceeds the basic exemption limit. The basic exemption limit for financial year 2020-21 (assessment year 2021-22) is Rs 2,50,000. This means that if your total income is less than Rs 2,50,000, you are not required to pay any Income Tax.
However, even if your total income is below the basic exemption limit, you may still have to pay tax on certain types of income such as interest from bank deposits and capital gains from the sale of assets such as property or shares.

Who has to pay Income Tax in India?

Citizens of India who earn an income are required to pay Income Tax. An individual is required to pay tax on his/her total income, which includes income from salary, business, interest, rent, capital gains etc.
Income Tax is payable by an individual if his/her total income exceeds the basic exemption limit. The basic exemption limit for financial year 2020-21 (assessment year 2021-22) is Rs 2,50,000. This means that if your total income is less than Rs 2,50,000, you are not required to pay any Income Tax.
Income Tax is not payable by an individual if his/her total income does not exceed the basic exemption limit. However, an individual may still be required to pay tax on certain types of income, such as interest from bank deposits, dividends from shares etc.
Income Tax is also payable by firms, companies and other assessees on their income. The Income Tax Act provides for different rates of tax for different types of assessees.
The Income Tax Department is responsible for collecting Income Tax in India.

How is Income Tax calculated in India?

As mentioned earlier, Income Tax is calculated on the basis of our total income earned during the financial year. The financial year in India starts from 1st April and ends on 31 March. Hence, the due date for filing your income tax return is usually 31 July of every year. However, this may vary depending on the assessment year.
Income Tax is levied at different rates for different ranges of income. The Income Tax slab for financial year 2020-21 (assessment year 2021-22) is given below:
 
Income Slab Tax Rate
  • Up to Rs 2,50,000 Nil
  • Rs 2,50,001 – Rs 5,00,000 5%
  • Rs 5,00,001 – Rs 10,00,000 20%
  • Above Rs 10 lakh 30%
 
Senior citizens (60 years and above but less than 80 years)
  • Income Slab Tax Rate
  • Up to Rs 3,00,000 Nil
  • Rs 3,00,001 – Rs 5,00,000 5%
  • Rs 5,00,001 – Rs 10 lakh 20%
  • Above Rs 10 lakh 30%
 
Very senior citizens (80 years and above)
  • Income Slab Tax Rate
  • Up to Rs 5,00,000 Nil
  • Rs 5,00,001 – Rs 10 lakh 20%
  • Above Rs 10 lakh 30%
 
In addition to the above rates, a surcharge of 10%, 12% or 15% is levied on the tax payable, depending on the total income.
Education Cess: 3% of the tax liability is charged as Education Cess. This cess is used for funding education in India.
Secondary and Higher Education Cess: 1% of the tax liability is charged as Secondary and Higher Education Cess. This cess was introduced in 2006-07 and is used for funding secondary and higher education in India.

What are the different types of taxes in India?

Rate of tax for companies 30%
Rate of tax for firms 30%
Rate of tax for other assessees 30%
Surcharge 10%, 12% or 15%
Education Cess 3%
Secondary and Higher Education Cess 1%
 
  1. Income Tax: This is a tax levied on the income of individuals, firms, and companies.
  2. Corporate Tax: This is a tax levied on the profits earned by companies.
  3. Capital Gains Tax: This is a tax levied on the gains made from the sale of capital assets such as shares, property, and gold.
  4. Wealth Tax: This is a tax levied on the wealth or net worth of individuals and firms.
  5. Gift Tax: This is a tax levied on the transfer of gifts from one person to another.
  6. Customs Duty: This is a tax levied on goods imported into India from foreign countries.
  7. Excise Duty: This is a tax levied on the manufacture and sale of goods within India.

What are the benefits of paying taxes?

  • Education: Taxes collected by the government are used for funding education in India.
  • Infrastructure: Taxes collected by the government are used for developing and maintaining infrastructure such as roads, bridges, railways etc.
  • Social Welfare: Taxes collected by the government are used for providing subsidies and other benefits to the people of India.
  • National Security: Taxes collected by the government are used for funding the armed forces and other security agencies.
 
The benefits of paying taxes can be summarized as follows:
  1. Taxes help fund important public services that we all rely on, such as education and infrastructure.
  2. Taxes are used to provide social welfare benefits to vulnerable groups in society.
  3. Taxes help keep our country safe by funding national security measures.
 

How can one file for Income Tax return in India?

One can file for Income Tax return in India by either filing manually or electronically. In order to file your return electronically, you will need to have a digital signature.
If you are e-filing your return for the first time, then you will need to register on the e-filing portal of the Income Tax Department (www.incometaxindiaefiling.gov.in). After registering on the portal, you will be given a user ID and password which you can use to login and access your account.
Once you have logged in, you will need to select the appropriate ITR form based on your income and status (individual, HUF, company etc.). After filling up the form, you will need to calculate your tax liability and make the payment online. Once the payment is made, you can submit your return online.
If you are filing your return manually, then you will need to fill up the ITR form and submit it along with the required documents (such as your bank statements, TDS certificate etc.) to the Income Tax Department.
You can find more information on how to file your Income Tax return here: Income Tax India Website

What are the documents required for filing Income Tax return in India?

One will need to submit the following documents while filing for Income Tax return in India:
  1. Form 16: This is a certificate issued by your employer that contains details of your salary and tax deducted at source (TDS).
  2. Bank statements: You will need to submit your bank statements for the financial year in which you are filing your return.
  3. TDS certificate: This is a certificate issued by the deductor (usually your employer) that contains details of the tax deducted at source from your salary.
  4. Capital gains statement: If you have made any capital gains during the financial year, then you will need to submit a capital gains statement along with your return.
  5. Investment proofs: If you have made any investments during the financial year, then you will need to submit investment proofs (like copies of bank statements, investment receipts etc.) along with your return.
  6. Self-assessment tax payment challan: If you have made any advance tax or self-assessment tax payments during the financial year, then you will need to submit the relevant challans along with your return.

What is the deadline for filing Income Tax return in India?

What is the due date for filing Income Tax return?
The due date for filing Income Tax return in India is usually 31 July of every year. However, this may vary depending on the assessment year. The assessment year is the period during which your tax liability is decided. For instance, if you are filing your taxes for the financial year 2017-18 (which ended on 31 March 2018), then your assessment year will be 2018-19.
 
  • If you are an individual, HUF, AOP or BOI, the due date for filing your Income Tax return is 31 July of the assessment year.
    For example, if you are filing your taxes for the financial year 2017-18 (assessment year 2018-19), then the due date for filing your Income Tax return is 31 July 2018.

  • However, if you are a partnership firm, company or LLP, the due date for filing your Income Tax return is 30 September of the assessment year.
    For example, if you are filing your taxes for the financial year 2017-18 (assessment year 2018-19), then the due date for filing your Income Tax return is 30 September 2018.

Are there any penalties for not filing Income Tax return in India on time?

  1. Default in filing return of income on time A penalty of Rs 5,000 will be levied if you file your return after the due date but on or before 31 December of the assessment year. A penalty of Rs 10,000 will be levied if you file your return after 31 December of the assessment year.
  2. Default or failure to furnish return of income A penalty of Rs 1,000 will be levied if you fail to furnish your return on time.
  3. Default or failure to pay tax, interest, penalty or any other amount A penalty of Rs 1,000 will be levied if you fail to pay the tax due on time.
  4. Default or failure to comply with notices under section 143(2) A penalty of Rs 5,000 will be levied if you fail to comply with a notice issued under section 143(2).
 
On a concluding note, it can be said that filing Income Tax return is a legal obligation of every citizen in India. It is important to file your return on time in order to avoid any penalties. Taxes collected by the government are used for various development activities, such as education, infrastructure, social welfare etc. Therefore, it is important for every citizen to contribute their bit by paying taxes.

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