Taxation of Individuals and Return filing
This post is Taxation of Individuals (AY 2019-20) & Return filing and we will be covering the following topics:
- Introduction
- Why, Need
- Heads of Income , Slab in India
- Exemptions
- Deduction
- ITR filing procedures
- ITR Filing claiming relief u/s 89
Introduction of Income Tax in India:
Tax is a mandatory liability for every citizen of the country. There are two types of tax in India i.e. direct and indirect.
Taxation in India is rooted from the period of Manu Smriti and Arthasastra. Present Indian tax system is based on this ancient tax system which was based on the theory of maximum social welfare.
In India, this tax was introduced for the first time in 1860, by Sir James Wilson in order to meet the losses sustained by the Government on account of the Military Mutiny of 1857.
In 1918, a new income tax was passed and again it was replaced by another new act which was passed in 1922. This Act remained in force up to the assessment year 1961-62 with numerous amendments.
In consultation with the Ministry of Law finally the Income Tax Act, 1961 was passed. The Income Tax Act 1961 has been brought into force with 1 April 1962. It applies to the whole of India and Sikkim (including Jammu and Kashmir).
Since 1962 several amendments of far-reaching nature have been made in the Income Tax Act by the Union Budget every year.
Below is Present Scenario in India for Income Tax Return Filing
ITR wise receipt of e-filing of returns upto August | ||||
S.No. | ITR | FY 2017-18 | FY 2018-19 | FY 2019-20 |
1 | ITR-1 | 2,90,67,029 | 3,17,00,240 | 1,68,37,557 |
2 | ITR-2 (Till AY 2016-17) | 3,76,948 | 43,752 | 14,404 |
3 | ITR-2 (From AY 2017-18) | 46,55,177 | 47,77,808 | 20,02,244 |
4 | ITR-2A (For AY 2015-16 & 2016-17) | 3,13,934 | 5,460 | 233 |
5 | ITR-3 (Till AY 2016-17) | 1,75,896 | 9,584 | 3,016 |
6 | ITR-3 (From AY 2017-18) | 99,08,934 | 1,25,11,740 | 27,58,072 |
7 | ITR-4S(Till AY 2016-17) | 44,95,327 | 77,283 | 6,065 |
8 | ITR-4 (Till AY 2016-17) | 29,85,995 | 1,21,011 | 20,109 |
9 | ITR-4 (From AY 2017-18) | 1,27,61,551 | 1,47,73,246 | 47,90,834 |
10 | ITR-5 | 15,12,496 | 15,57,596 | 1,85,177 |
11 | ITR-6 | 9,38,620 | 9,62,573 | 27,850 |
12 | ITR-7 | 2,82,997 | 2,68,836 | 18,182 |
Total | 6,74,74,904 | 6,68,09,129 | 2,66,63,743 | |
Still People raise the question 'Why should I pay tax?
They argue:
I have to pay for my food, for my house, for my travel, for my medical treatment, for owning a vehicle not only cost of vehicle but also vehicle tax and what not.
Even on many roads, one has to pay toll tax! They also say that if we compare with countries like USA and UK, the people get social security as also medical facilities virtually without any cost. But India does not offer such facilities.
So what does Government do from our TAX?
- The major expenditure of Government has to be incurred on National Defense, Infrastructure Developments etc.
- Taxes are used by the government for carrying out various welfare schemes including employment programs.
- There are Lakhs of employees in various departments and the administrative cost has to be borne by the Government.
- Though the judicial process involves delay, yet the Salaries, perks of Judges, Magistrates and judicial staff has also to be paid by the Government.
- Thus on considering these various duties of the Government, we need to appreciate that we must pay tax as per law. We have to act like a responsible citizen.
- The Government provide Health care through Government hospitals (usually they offer service without any cost), Education (In Municipal and Government schools the fee is negligible).
- The Government also provides cooking gas at concessional rate or gives subsidy.
Income Tax Slab
First, what is income tax slab ?
Indian Income tax levies tax on individual taxpayers on the basis of a slab system. Slab system means different tax rates are prescribed for different ranges of income. It means the tax rates keep increasing with an increase in the income of the taxpayer. This type of taxation enables progressive and fair tax systems in the country. Such income tax slabs tend to undergo a change during every budget.These slab rates are different for different categories of taxpayers. Income tax has classified three categories of “individual “taxpayers such as:
- Individuals (aged less than of 60 years) including residents and non-residents
- Resident Senior citizens (60 to 80 years of age)
- Resident Super senior citizens (aged more than 80 years)
Income Tax Slab Rates for FY 20-21 (AY 2021-22 )
a. Income tax slab rate for New Tax regime -FY 2020-21 – Why is it optional?
In this new regime, taxpayers has an OPTION to choose either :
- To pay income tax at lower rates as per New Tax regime on the condition that they forgo certain permissible exemptions and deductions available under income tax, Or
- To continue to pay taxes under the existing tax rates.The assessee can avail rebates and exemptions by staying in the old regime and paying tax at the existing higher rate.
Income tax slab rate applicable for New Tax regime – FY 2020-21.
| Income Tax Slab | New Regime Income Tax Slab Rates for FY 2020-21 (Applicable for All Individuals & HUF) |
|---|---|
| Rs 0.0 – Rs 2.5 Lakhs | NIL |
| Rs 2.5 lakhs- Rs 3.00 Lakhs | 5% (tax rebate u/s 87a is available) |
| Rs. 3.00 lakhs – Rs 5.00 Lakhs | |
| Rs. 5.00 lakhs- Rs 7.5 Lakhs | 10% |
| Rs 7.5 lakhs – Rs 10.00 Lakhs | 15% |
| Rs 10.00 lakhs – Rs. 12.50 Lakhs | 20% |
| Rs. 12.5 lakhs- Rs. 15.00 Lakhs | 25% |
| > Rs. 15 Lakhs | 30% |
Now lets discuss Heads of Income under which income is taxable
There are five heads of income—salary, income from house/property, profit from business or profession, capital gains and income from other sources
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