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Most individuals prefer not to talk about income tax unless they complain about it. Yet, it is the expense of doing business and making a living within a country's sovereign limits. Income tax has two components. The first is the payment of tax liabilities or the amount owed in the form of taxes, and the second is the filing of a return, which is essentially a thorough breakdown of the stable income and the calculation of taxation on such revenue.
Unlike in Western countries, where taxation is charged at a flat rate for all citizens, India has a slab rate system in which the rate of taxation varies depending on the economic group. Those with annual incomes below a specific threshold are totally tax-free. Everyone earning less than 2.5 lakhs per year is currently exempt from taxation. As a result, the question arises. Is it necessary for those without tax liability to file an income tax return? This is the question that we will address in this blog.
Individuals are taxed on their annual earnings based on their income is known as Income Tax. The amount of tax you pay is specified by how much money you earn in a fiscal year. Income tax payments, TDS/TCS payments, and Non-TDS/TCS payments can all be made online. To make these payments, all taxpayers must provide the necessary information. The entire procedure is simplified and expedited.
For the fiscal year 2023-24, income tax is levied on all citizens whose annual income exceeds Rs.3 lakh per annum. If an individual's annual income exceeds Rs.15 lakh, the maximum amount of tax they can pay is 30% of their income plus a 4% cess.
The income tax rebate has been enhanced to Rs.7 lakh from the previous limit of up to Rs.5 lakh under the latest tax system, while the tax rate on income of Rs.5 crore and above has been reduced from 37% to 25%.
An income tax return provides a detailed picture of the entire taxable income earned and taxes paid during the year. Everybody earning an income in India is required to file an income tax return on or before the 31st of August of each fiscal year. Most of us have the same question: Is submitting an income tax return necessary if your salary is less than 2.5 lakhs? Indeed, the answer is yes. Even when there is no taxable income, the fact that there was no income above the taxable level for the year must be disclosed on the income tax return. Let's take a closer look at the exemptions and tax slabs.
Income Tax slab under New tax regime for FY 2023-24
|Income Tax Slab||Tax Rate|
|Up to Rs.3 lakh||Exempted|
|Above Rs.3 lakh - Rs.6 lakh||5%|
|Above Rs.6 lakh - Rs.9 lakh||10%|
|Above Rs.9 lakh - Rs.12 lakh||15%|
|Above Rs.12 lakh - Rs.15 lakh||20%|
|Above Rs.15 lakh||30%|
The three categories into which individual resident taxpayers are classified based on their age are listed below:
The following is the income tax slab for individuals under 60 years of age:
|Income Tax Slab||Tax Rate|
|Up to Rs.2,50,000||Nil|
|From Rs.2,50,001 to Rs.5,00,000||5%|
|From Rs.5,00,001 to Rs.10,00,000||20% of the amount exceeding Rs.5 lakh|
|More than Rs.10,00,000||30% of the amount exceeding Rs.10 lakh|
To file an ITR, you must first enrol on the income tax department's e-filing website. There are particular procedures to fill out from the website while e-filing an income tax return online. After completing the e-filing form, proceed with the next 10 steps for ITR filing:
1. Gather the necessary documentation, such as TDS (Tax Deducted at Source) statements and capital gains statements. Form 16, salary slips, and interest certificates are required documentation. These documents will assist you in calculating your gross taxable income and will detail the TDS deducted from your earnings.
2. Download and examine 26AS Form - It is your tax passbook, which contains all of the information about the taxes deducted from your earnings and deposited against your PAN.
3. Rectify Form 26AS errors - If the amounts displayed on the TDS certificates and Form 26AS do not match, you must consult with your deductor to get the inaccuracies corrected. Ask the deductor, who could be your company, bank, or others, to modify the facts.
4. Calculate the total income for the fiscal year - Total income is calculated by adding income from five separate categories, claiming all relevant deductions allowed under the Income Tax Act, and deducting any losses.
5. Calculate your tax liability - You must determine your tax liability by using the tax rates applicable to your income slab.
6. Determine the final tax payable, if any - After you have performed the preceding process, deduct the taxes that you have already paid during the year through TDS, TCS, and Advance Tax.
7. Submit an income tax return after all taxes have been paid. Be sure that you use the correct ITR form when filing your ITR.
8. ITR Verification- There are six ways to validate your ITR. There are five electronic systems and one physical verification system. You have 120 days to do so. If you do not verify your ITR, it will be assumed that you did not file an ITR.
9. E-verification acknowledgment - The tax department will send you an electronic method confirmation regarding the verification of your ITR.
10. After verification, the return will be processed by the IT department - The income tax department will begin processing your tax return. This is to ensure that all of your information is correct in accordance with the Income Tax Act.
As a result, even if your income is less than Rs 2.5 lakh, you must file an income tax return. In addition, anyone with a total gross income of more than Rs.2.5 must file an ITR. Submitting an ITR also facilitates loan approval, claiming a tax return, expediting visa procedures, and avoiding fines.