| Income tax is an amount of tax which is paid by | | | | rate of 3% on the income tax. |
| workers and business men on their income. There | | | | 8. Wealth tax at the rate of 1% is applicable for |
| is no age limit for a person to be liable to pay | | | | Corporates if their net wealth exceeds Rs.1.5 mn. |
| income tax. You have to pay tax whether you | | | | Section 80C Deductions |
| are working or a pensioner if your income is more | | | | According to Sec 80C of the Income Tax India |
| than a certain level but if your annual income is | | | | the qualifying investments of up to Rs. 1 Lac are |
| below a particular level, no tax is imposed on you. | | | | deductible from income tax. Some Qualifying |
| Income tax in India is charged according to type | | | | Investments which are considered as deductible in |
| of income for example employment income, | | | | are given below. |
| pension income, social security income, | | | | 1. Provident Fund (PF): The payments that are |
| self-employed income from a business or | | | | made to Provident Fund are counted as deductible |
| profession, property income, savings and | | | | according to Sec 80C Deductions. |
| investment income and other miscellaneous | | | | 2. Voluntary Provident Fund: Under section 80C |
| income. Filing for tax return in India depends upon | | | | Voluntary Provident Fund also qualifies for |
| the residential status of a person. Three types of | | | | deduction. |
| residents are mostly considered depending upon | | | | 3. Public Provident Fund: |
| their stay in India. | | | | 4. The payments that are made to Public |
| Types of residents for income tax return | | | | Provident Fund are also considered as tax free in |
| 1. Ordinarily Residents: a person who lives in India | | | | Section 80C Deductions of income tax India. The |
| for more than one hundred and eighty-two days | | | | investments of Rs. 500 to Rs. 70,000 per year |
| of a financial year and he has to pay tax. | | | | are allowed for Public Provident Fund. |
| 2. Non- ordinarily Residents: a person who does | | | | 5. Life Insurance Premiums: Any amount paid for |
| not live in India for more than one hundred and | | | | life insurance premium is included in Section 80C |
| eighty-two days of a financial year. He has to pay | | | | deduction. |
| tax for the income accumulated in India. | | | | 6. Equity Linked Savings Scheme: some mutual |
| 3. Non Residents: a person who stayed outside | | | | fund schemes known as Equity Linked Savings |
| India for 7 to 9 years is considered as non | | | | Scheme are eligible for deduction under Sec 80C. |
| resident. He is entitled for income tax only for | | | | Some other avenues such as National Savings |
| income produced in India. | | | | Certificate, Infrastructure Bonds, Pension Funds, |
| Income exempted from income tax India for | | | | Bank Fixed Deposits, Post Office Time Deposit |
| Assessment Year 2010-11 | | | | Account, children's education expense are declared |
| The income of following individuals/sources is | | | | as deductions under Sec 80C. |
| exempted to file income tax return. | | | | Tax Penalties |
| 1. Men citizens who earn Up to Rs. 1, 60,000. | | | | There are a lot of defaults in filing income tax |
| 2. Women citizens who earn up to Rs. 1, 90,000. | | | | return which can tempt charge of penalty. Some |
| 3. Senior citizens who are 65 years old or above | | | | important defaults are mentioned here briefly. |
| having income Up to Rs.2,40,000 | | | | 1. The default in making payment of tax, source |
| 4. income gained by agricultural is also exempted | | | | of tax deduction, advance tax or the self |
| from income-tax | | | | assessment tax. |
| 5. The investments made in Central Government | | | | 2. Non payment of advance tax as directed by |
| Health Scheme (CGHS) are considered as tax | | | | the Assessing Officer. |
| free. | | | | 3. To hide actual particulars of income. |
| 6. The tax discount of Rs. 20,000 is granted for | | | | 4. Failure to keep prescribed books of accounts |
| investments in certain investment bonds. | | | | and documents of business properly. |
| Tax Rates for income tax India | | | | 5. Failure to file tax return as required. |
| 1. Tax rate is 10% if taxable income is between | | | | 6. Failure to submit income tax return in due time. |
| Rs.1, 60,001 to Rs. 5, 00,000. | | | | The Commissioner of Income-tax has authority |
| 2. Tax rate is 20 % if income is between Rs.5, | | | | to reduce or give up the amount of imposed |
| 00,001 to Rs. 8, 00,000. | | | | penalty and the amount of penalty depends upon |
| 3. Tax rate is 30% if income exceeds from Rs. 8, | | | | the nature of default. |
| 00,001. | | | | The infrastructure of department of income tax |
| 4. Surcharge of 10 per cent of the total tax | | | | India is well organized and consists of a team of |
| liability is applicable if total income is more than Rs | | | | Chairman, Board Members of Direct Taxes, Chief |
| 1,000,000. | | | | Commissioner, Commissioner, Additional |
| 5. The basic tax rate is 35% with 2.5% surcharge | | | | Commissioner, Joint Commissioner, Deputy |
| for domestic corporations | | | | Commissioner, Assistant Commissioner, Tax |
| 6. Foreign corporations pay tax at a basic tax | | | | Officer, Tax Inspector, Tax Assistant and |
| rate of 40% with 2.5% surcharge. | | | | Constable. |
| 7. In addition, education cess is applicable at the | | | | |