Frequently Asked Questions
The New Income Tax Regime (Budget 2023) is observed to be prepared with the sole aim to help poor people, middle-class people and farmers, because the tax rates on the tax slabs have gone significantly lower:
|
Annual
Income Slabs |
New
Income Tax Rates |
|
Up to INR 3 L |
Exempted |
|
INR 3 L to 6 L |
5% |
|
INR 6 L to 9 L |
10% |
|
INR 9 L to 12 L |
15% |
|
INR 12 L to 15 L |
20% |
|
Above INR 15 L |
30% |
There is also a tax rebate of Rs. 7 lakhs included in Budget 2023 in the New Income Tax regime. This means you are exempted of paying income tax if your annual taxable income is below Rs. 7 lakhs.
The individuals can also benefit from lower tax rates along with nil requirements of furnishing proof of investments/expenses incurred by the salaried taxpayer.
Here is the twist in the happy tale: Individuals who wish to pay their taxes as per the new tax regime will have to waive off some exemptions and deductions. For example, exemptions such as LRA and HRA whereas deductions available including Insurance Premium payout and Savings Account Interest under chapter VI A of the IT Act Section 80 such as 80C, 80CCC, 80CCD, 80D, 80DD, 80E, 80EE, 80G, 80GG, 80GGA, 80GGC etc.
The income tax rates for FY 2022-2023 will remain the same as FY 2021-2022. The basic limit for paying income tax in India is Rs. 2.5 lakhs for people under the age of 60. This limit becomes Rs. 3 lakhs for Senior Citizens (age 60 and above). For Super Senior Citizens, the basic limit is Rs. 5 lakhs. The basic limit remains Rs. 2.5 lakhs regardless of the age of the person.
Yes. You can.
Invest in a five-year time deposit at a post office. It is similar to investing in a five-year fixed deposit. However, the post office time deposit garners higher interest than the tax saving account.
Yes. You should.
When you file your income tax returns, it generates proof of payment of all taxes due. This can help you extremely well when applying for a loan in the future.
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Any excess tax deducted during the year is refunded by the government after the ITR has been filed. The income tax refund gets credited to your bank account.
You have the option to claim for the extra tax deducted while filing for your ITR. It gets credited to your account through an ECS. Ensure that bank details are accurate while filing.
Yes. You should. You can easily take over any losses in the subsequent year given that you are filing returns.
As per Income Tax Act 1961, you are eligible to file income tax returns if your annual income is more than Rs. 2.5 lakhs for any financial year.
Salary income, revenue from capital gains, profit or gains from a business or profession, income from real estate and other sources of income are five income categories.
Income Tax – This type of tax is paid by an individual, Hindu Undivided Family (HUF) or any other taxpayer except corporations on the income earned. There are tax rates pre-set by the law on the basis of income earned.
Corporate Tax – This type of tax is paid by the corporates/companies on the profits earned in their businesses. Again, there are tax rates pre-set by the law on the basis of income earned.
Not all income is taxed on the basis of tax slabs. Some of the income, like capital gains, are an exception to the income tax slab. The tax on capital gains largely depends upon the duration of time you have had the asset in your possession. The holding period helps in deciding whether the asset is long-term or short-term. The holding period to decide the nature of assets is also different for different assets.
|
Type
of Capital Asset |
Holding
Period |
Tax
Rate |
|
House property |
Holding more
than 24 months – Long Term Holding less than 24 months – Short Term |
20% depends upon the slab rate |
|
Debt mutual funds |
Holding more
than 36 months – Long Term Holding less than 36 months |
20% depends upon the slab rate |
|
Equity mutual funds |
Holding more
than 12 months – Long Term Holding less than 12 months – Short Term |
Exempt (until 31 March 2018) Gains > Rs. 1 lakh taxable @ 10% 15% |
|
Shares (STT paid) |
Holding more
than 12 months – Long Term Holding less than 12 months – Short term |
Exempt (until 31 March 2018) Gains > Rs. 1 lakh taxable @ 10% 15% |
|
Shares (STT unpaid) |
Holding more
than 12 months – Long Term Holding less than 12 months – Short Term |
20% depends upon the slab rate |
|
FMPs |
Holding more
than 36 months – Long Term Holding less than 36 months – Short term |
20% depends upon the slab rate |
Once the taxpayer has filed and submitted his ITR to the income tax department, the document called ITR-V is generated. ITR-V is an income tax return verification form. ITR_V must be e-verified and delivered to CPC Bangalore for verification at the Income Tax Department. It is only after the completion of its verification process that the ITR process commences.
Section 87A rebate facilitates the taxpayers in lowering their income tax liability. If you are a resident person and your total income after subtracting Chapter VI-A deductions (Section, 80C, 80D, 80U and so on) does not goes above Rs. 5 lakhs in a financial year, you are eligible to claim a tax rebate for the amount up to Rs. 12, 500. In other words, you won’t have to pay any additional tax if the total tax payable is less than Rs. 12,500.
On the payment of additional tax, Budget 2022 proposed an Update return that can be filed within 24 months of the end of the said assessment year (AY). You can file the Updated Return even if you have failed to file the initial return by the due date according to the Income Tax Act 1961.
Income computation can help you compute your income tax liability as per Income Tax Act 1961.
Income computation or the computation of income simply means the process of computing taxable income after accounting for income from all 5 categories, exemptions, deductions, set off of losses, and so on.
Even though the individuals/businesses with total annual income less than Rs. 5 lakhs do not need to pay taxes, yet it is advisable to file for the returns. In case of failing to do so, you may receive a notice from the Income Tax Department.
