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Income tax is tax levied on the income of a person by the Government of India as per the provisions contained in the Income Tax Act 1961. It is levied on income earned during the year starting from 1 April and ending 31st March.
Every person is liable to pay tax in India if his total income is more than the income notified by the government in the slab rates. Here, the definition of person includes:
Individuals are required to file income tax return each year if they have taxable income of more than Rs.2.5 lakhs. The income tax rate AY 2019-20 or FY 2018-19 for salaried individuals is as follows.
Note: Financial year starts from 1st April and ends on 31st March. For example, the financial year 2018 – 19 would be 1st April 2018 to 31st March 2019. Assessment year is the year immediately following the financial year wherein the income of the financial year is assessed. Hence, in the assessment year 2019 – 20 the income tax for the period from 1st April 2018 to 31st March 2019 would be assessed.
Income Tax Rate AY 2019-20 | FY 2018-19 – Individuals less than 60 years
| Taxable Income | Tax Rate |
|---|---|
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,000 to Rs. 5,00,000 | 5 % |
| Rs. 5,00,000 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Income Tax Rate AY 2019-20 | FY 2018-19 – Individuals betwen 60 years and 80 years
| Taxable Income | Tax Rate |
|---|---|
| Up to Rs. 3,00,000 | Nil |
| Rs. 3,00,000 to Rs. 5,00,000 | 5 % |
| Rs. 5,00,000 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Income Tax Rate AY 2019-20 | FY 2018-19 – Individuals above 80 years
| Taxable Income | Tax Rate |
|---|---|
| Up to Rs. 5,00,000 | Nil |
| Rs. 5,00,000 – Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
In addition to the Income Tax amount calculated, based on the above-mentioned tax slabs, individuals are required to pay Surcharge and Cess.
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.
Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore. Health & Education Cess: 4% of Income Tax. (Newly introduced through 2018 Budget)
Any person whose income exceeds the basic exemption limit as specified in the Income Tax Act, 1961 is required to file an Income Tax Return. Now, the basic exemption limit changes from year to year.
If your taxable income is more than slabs notified in Finance Act for that Year. Example for an Individual Resident below 60 years of Age the Slab is 2,50,000 /-(A.Y. 2019-2020) and for senior citizen it is 3,00,000. Thus if his income is more than 2,50,000/- ( or 3,00,000 in case of senior citizen) then it is mandatory for him to file Income Tax Return.
If you are an entity registered as a firm or a company, irrespective of the income or loss during the year.
If you have losses under any head and want to carry forward those losses to next year.
If you want to claim refund of taxes already paid i.e., TDS, Advance Tax etc.
If you are a resident individual holding any kind of Foreign Asset e.g. Immovable property, Bank account etc. or are a signing authority in a foreign bank account then you are compulsorily required to file the return.
The type of return form in which you should file your return varies as per the category of Assesse:
