Income Tax

Income tax in India is governed by the provisions of Income Tax Act, 1961, rules and regulations made there under and circulars as well notifications issued from time to time.It is a direct tax levied on annual income of every person. Financial year as starting from 1st April and ending on 31st March of next calendar year is consider from computing income tax in India.

The financial year period in which income is earned is called previous year and income earned during the previous year is charged in the next financial year known as assessment year.At present, we are in previous year 2018-19 and income earned during 1st April 2018 till 31st March 2019 will be charged to tax in the year 2019-20 which is the assessment year for previous year 2018-19.

In India income tax is applicable on every person whether natural or artificial. Person includes individual, Firms, LLPs, Companies, Hindu Undivided Family (HUF), Association of Persons (AoPs), Body of Individuals (BoIs), local authority, institutions or any other persons.

Residential status is an important criterion to determine income tax in India. A resident person is required to pay income tax on global income i.e. income earned anywhere in the world, though it gets some relief due to double tax avoidance agreement as signed and in effect. Even NRIs are required to pay tax on income, if it accrues or arises or deemed to be accrue or arises in India.

Broadly, income is charged under five heads, namely:

• Salary
• House Property
• Business or Profession
• Capital Gain
• Other Sources