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ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
Read ahead to learn what income tax is, section 80C, the income tax act 1961, and some other important income tax FAQs.
Paying income tax is the duty of every earning individual in the country whose income falls in the tax slab. FAQ on income tax can help you understand the rules and regulations regarding taxation.
However, all the rules and regulations regarding taxation can get confusing at times. These FAQs can help you understand it better.
You first have to ask yourself ‘‘what is income tax’’ before you can learn about anything related to it. It is the tax imposed by the Government of India on the earning citizens of the country. The Income Tax Act of 1961 dictates the taxation system of India.
The financial year refers to a one-year period used by taxpayers for accounting and financial reporting purposes. It represents the year in which income is earned. As per the Income Tax Act, this period begins on April 1st of the calendar year and ends on March 31st of the following calendar year. It is abbreviated as “FY.” For instance, the financial year starting from April 1, 2023, and ending on March 31, 2024, is denoted as FY 2023-24.
The assessment year is the one-year period immediately following the financial year, spanning from April 1st to March 31st. It is called the assessment year because taxpayers are required to evaluate their income earned during the financial year and pay taxes during this period. For example, incomes earned during FY 2023-24 will be assessed in the assessment year AY 2024-25.
The Income Tax Act categorizes the taxable income tax deduction into different sections:
The double taxation relief is offered to individuals who are charged taxes on the same source of income in India and a foreign country. This is allowed under Section 91 of the Income Tax Act 1961. The relief is also offered if the foreign country in question has a ‘Double Taxation Avoidance Agreement’ with India.
The Institute of Chartered Accountants of India has set many guidelines that Indian companies need to follow. Under the Companies Act, the books of accounts are arranged for the organizations. For individuals, the book of account and related documents are required so the Assessing Officer can determine the total income of every individual.
The Permanent Account Number (PAN) is a ten-digit number issued by the Income Tax Department. The number is unique to every taxpaying individual.
The PAN is mandatory to pay taxes and for other financial transactions like buying high-end products, availing of financial credit, opening a bank account, and trading in securities, among others. It is also accepted as a valid identity card.
As a developing country, India has a very high number of citizens who earn less than the minimum income tax slab of ₹3 lakhs. Hence, they do not pay any income tax. Also, India is an agricultural country, and income from agricultural sources is tax exempted.
There are different ways to save taxes in India:
The existing/old income tax regime refers to the traditional system of calculating and paying income tax as per the prevailing tax laws. Under this regime, taxpayers are required to calculate their taxable income based on the income tax slabs and rates specified by the government and claim deductions and exemptions as applicable.
The old and new tax slabs are as follows:
Income tax slabs |
Income tax rate |
From 0 to ₹2,50,000 |
0% |
From ₹2,50,001 to ₹5,00,000 |
5% |
From ₹5,00,001 to ₹7,50,000 |
10% |
From ₹7,50,001 to ₹10,00,000 |
15% |
From ₹10,00,001 to ₹12,50,000 |
20% |
From ₹12,50,001 to ₹15,00,000 |
25% |
From ₹15,00,001 and above |
30% |
Income tax slabs |
Income tax rate |
Up to ₹2,50,000 |
Nil |
₹2,50,001- ₹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 |
Exceptions to the income tax slab typically refer to various deductions, exemptions, and allowances that can be claimed by taxpayers to reduce their taxable income. These exceptions can include deductions for investments in specified schemes, exemptions for certain types of income, allowances for specific expenses, and so on.
Some common documents often required for ITR filing include:
Income tax calculator is very easy to use to figure out the tax payable on your income. Here are the steps:
Step 1: Choose the Financial Year
In the first step, you need to select the financial year from the dropdown menu for which you want to calculate the income tax.
Step 2: Enter Basic Details
In the second step, enter your basic details such as your age, earnings, the type of house you are living in, the rent that you pay if you are living in a rented house, etc.
Step 3: Income Details
Now, add your income details, such as your basic and gross salary, and income from other sources, such as interest on deposits and rental income.
Step 4: Add Your Exemptions
Next, you need to add the exemptions such as HRA, special allowance, and EPF contribution.
Step 5: List Down Your Capital Gains
In this part, you can list down all the capital gains you have earned in the year through the sale of equity investments, unlisted shares, or debt investments.
Step 6: Add the Deductions
In this step, you need to provide details of your tax investments (such as ELSS, term insurance premiums, NPS, PPF, health insurance, and donations to charities) under sections 80C, 80D, 80G, 80E, and 80TTA, etc.
Step 7: Get the Results
After hitting “Continue,” you will see your total taxable income and the total tax that you need to pay under the tax regime you have chosen.
Computation of income refers to the process of calculating an individual’s or entity’s total income for a specific period. It involves determining all the sources of income, accounting for deductions, exemptions, and allowances, and arriving at the final taxable income. Computation of income is a crucial step in calculating the amount of income tax that needs to be paid.
ITR-V stands for Income Tax Return Verification. It is a document generated after successfully filing the income tax return online. Once you file your return electronically, the ITR-V is generated, which serves as an acknowledgment of your filed return. You are required to sign this document and send it to the Income Tax Department within the specified time for verification purposes.
Income tax saving instruments are financial products or investment options that provide tax benefits to individuals and help in reducing their taxable income. These instruments are designed to encourage savings and investment while offering tax advantages. Examples of income tax-saving instruments include Public Provident Funds (PPF), Employee Provident Funds (EPF), National Savings Certificates (NSC), tax-saving fixed deposits, and certain insurance policies.
In addition to the deduction available under Section 80C, taxpayers can also avail themselves of a tax benefit by utilizing Section 80D for health insurance premiums and medical expenses incurred by themselves, their family, and their parents.
Person insured |
Maximum deduction Below 60 years |
Maximum deduction 60 years or older |
You, your spouse, your children |
₹25,000 |
₹50,000 |
Your parents |
₹25,000 |
₹50,000 |
Preventative health checkup |
₹5,000 |
₹5,000 |
Maximum deduction (includes preventive health checkup) |
₹50,000 |
₹1,00,000 |
To qualify for the deduction, you must provide the necessary paperwork to either your employer or the income tax department, depending on the situation. These documents might comprise the loan agreement, interest certificate, and other pertinent records. Therefore, it is advisable to consider this opportunity if you have obtained a home loan for your property.
The important income tax dates for the years 2023-24 include:
Common documents that may be required to be enclosed include:
In general, it is advisable to disclose all your income in return, even if it is exempt from tax. This helps in maintaining transparency and compliance with tax laws. Additionally, certain exemptions or deductions may have specific reporting requirements or impact the calculation of other taxes or benefits. It is recommended to report all your income, including exempt income, accurately.
The process of e-verification is often required to complete the filing and processing of income tax returns. E-verification can be done through various methods, such as using Aadhaar OTP, net banking, or Electronic Verification Code (EVC). Verifying your return is important to ensure that it is considered valid and to facilitate the processing of any refunds due to you.
Section 87A offers a rebate for tax on both long-term and short-term capital gains. Nevertheless, if you have long-term capital gains from the sale of equity shares or equity-oriented funds (covered under Section 112A), you are not eligible to apply the rebate provided by Section 87A to offset the tax on those gains.
The assessment year refers to the year immediately following the financial year for which the income is being assessed. Generally, income tax returns are required to be filed within the specified due date, which is usually before the end of the assessment year. However, in some cases, the tax laws may allow for filing a belated return or filing a return after the completion of the assessment year, subject to certain conditions and penalties.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
