Indian income tax is a tax levied by the Government of India on the income of individuals, Hindu Undivided Families (HUFs), companies, firms, and other entities. The Indian income tax system is governed by the Income Tax Act, 1961. Here’s an overview of key aspects of Indian income tax:

1. Types of Taxable Income:

• Salary Income: Earnings from employment.
• Income from House Property: Earnings from rental properties.
• Profits and Gains of Business or Profession: Earnings from business activities or professional services.
• Capital Gains: Profits from the sale of assets like real estate, stocks, etc.
• Income from Other Sources: This includes interest, dividends, lottery winnings, etc.

2. Tax Slabs and Rates (for FY 2023-24):

India follows a progressive tax system, where higher income is taxed at a higher rate. There are two tax regimes: the Old Tax Regime (with deductions) and the New Tax Regime (with lower rates but no deductions).

Old Tax Regime:

• Up to ₹2.5 lakh: Nil
• ₹2.5 lakh to ₹5 lakh: 5%
• ₹5 lakh to ₹10 lakh: 20%
• Above ₹10 lakh: 30% Senior citizens (above 60 years) and super senior citizens (above 80 years) have higher exemption limits.

New Tax Regime:

• Up to ₹2.5 lakh: Nil
• ₹2.5 lakh to ₹5 lakh: 5%
• ₹5 lakh to ₹7.5 lakh: 10%
• ₹7.5 lakh to ₹10 lakh: 15%
• ₹10 lakh to ₹12.5 lakh: 20%
• ₹12.5 lakh to ₹15 lakh: 25%
• Above ₹15 lakh: 30%

Taxpayers can choose between the old and new regimes based on what benefits them the most.

3. Deductions and Exemptions:

• Section 80C: Deduction up to ₹1.5 lakh for investments in specified instruments like PPF, NSC, ELSS, etc.
• Section 80D: Deduction for health insurance premiums.
• House Rent Allowance (HRA): Exemption for salaried individuals living in rented accommodation.
• Standard Deduction: A flat deduction for salaried individuals.

4. Filing of Income Tax Returns (ITR):

• Taxpayers must file ITR annually to declare their income and pay taxes due. The due date for filing ITR is usually July 31st of the assessment year, though it may be extended.
• Different forms are used depending on the nature and source of income (e.g., ITR-1 for salaried individuals, ITR-3 for business income).

5. Tax Deducted at Source (TDS):

• TDS is a mechanism where tax is deducted at the source of income (e.g., employers deducting tax from salaries) and remitted to the government.

6. Advance Tax:

• Taxpayers with a substantial income not subject to TDS (e.g., business income) must pay advance tax in installments throughout the year.

7. Penalties and Interest:

• Non-compliance with tax laws (e.g., late filing of returns, under-reporting of income) can lead to penalties and interest charges.

8. Recent Changes:

• The introduction of the New Tax Regime aims to simplify tax calculations by offering lower rates without the complexity of deductions.
• Increased use of technology for tax filing and assessment, including the faceless assessment scheme.