Tax

• Tax


  A financial charge or levy imposed by a government on individuals, businesses, or other entities for funding various public expenditures and government functions
• Taxes are typically enforced by governments and collected by government agencies at various levels (local, regional, national) and can take various forms, including income tax, sales tax, property tax, corporate tax, and others
• Under the specific conditions set by tax collecting agencies, payment of tax is a legal binding
• Failure to pay taxes can result in penalties, fines, or legal consequences
• Primary purposes of taxes

  • Revenue generation
  • Redistribution of wealth
  • Regulation and control
• Progressive tax


  A taxation system where the tax rate increases as the taxable amount increases
• Regressive tax


  A taxation system where the tax rate decreases as the taxable amount increases
• Tax Authorities


  • Central Board of Direct Taxes (CBDT)
  • Central Board of Indirect Taxes and Customs (CBIC)
  • State revenue departments
• Tax compliance in India is mandatory for individuals and entities earning taxable income or engaged in taxable activities
• Tax Entity


  • Individuals
  • Businesses
  • Nonprofit Organizations
  • Trusts and Estates
  • Foreign Entities
• Financial Year (FY)


  A period of 12 months that begins on April 1st and ends on March 31st of the following year
• Assessment Year (AY)


  The year in which the income earned during the previous financial year is assessed and taxed
• Income Tax Slabs - Old Regime

  • Up to ₹2,50,000 - Nil
  • ₹2,50,000 - ₹5,00,000 - 5% above ₹2,50,000
  • ₹5,00,001 - ₹10,00,000 - ₹12,500 + 20% above ₹5,00,000
  • Above ₹10,00,000 - ₹1,12,500 + 30% above ₹10,00,000
• Income Tax Slabs - New Regime u/s 115BAC


  • Up to ₹2,50,000 - Nil
  • ₹2,50,000 - ₹5,00,000 - 5% above ₹2,50,000
  • ₹5,00,001 - ₹7,50,000 - ₹12,500 + 10% above ₹5,00,000
  • ₹7,50,001 - ₹10,00,000 - ₹37,500 + 15% above ₹7,50,000
  • ₹10,00,001 - ₹12,50,000 - ₹75,000 + 20% above ₹10,00,000
  • ₹12,50,001 - ₹15,00,000 - ₹1,25,000 + 25% above ₹12,50,000
  • Above ₹15,00,000 - ₹1,87,500 + 30% above ₹15,00,000
• TDS (Tax Deducted at Source)


  A system of tax collection by which a person (or entity) responsible for making payments such as salary, interest, commission, rent, professional fees, etc., deducts a certain amount of tax at the time of making such payment
• Income Tax Rebate


  A form of tax relief provided by governments to certain taxpayers, resulting in a reduction or refund of the amount of income tax owed
• Filing Income Tax Returns (ITR)

  1. Gather Required Documents

  2. Choose the Correct ITR Form

  3. Calculate Total Income and Tax Liability

  4. File Your Return Online or Offline

  5. Verify Your Return

  6. Keep Records

  7. Pay Any Taxes Due

  8. Review Your Return

  9. File Within the Deadline

  10. Seek Professional Assistance if Needed
• Tax Planning


  The legitimate and legal arrangement of one's financial affairs in a manner that minimizes tax liability within the bounds of the law
• Tax Avoidance


  Exploiting legal loopholes to reduce tax liability beyond what was intended by the law
• Legality


  Tax planning involves legal strategies, whereas tax avoidance may involve pushing the boundaries of legality
• Intent


  Tax planning aims to minimize taxes within the confines of the law, while tax avoidance focuses on minimizing taxes through aggressive strategies, sometimes exploiting technicalities