Accountstaxlawgyan

What is Income Tax ? Income Tax is a direct tax levied by the government on an individual's or entity's income. It is imposed under the Income Tax Act, 1961 , and collected by the Income Tax Department of India . Every person earning above a certain threshold must pay income tax based on the tax slabs set by the government. Who Pays Income Tax? Income tax is applicable to: Individuals (Salaried employees, self-employed, freelancers, professionals) Hindu Undivided Families (HUFs) Companies & Firms Partnerships & LLPs Trusts & NGOs (if applicable) Types of Income Tax Direct Tax → Paid directly by individuals or businesses to the government (e.g., Income Tax, Corporate Tax). Indirect Tax → Levied on goods and services (e.g., GST, Customs Duty). Income tax is a direct tax , meaning it is paid directly by the taxpayer to the government. Sources of Taxable Income (As per Income Tax Act, 1961 - Section 14) Tax is levied on income from the following 5 he...

What is TDS ? TDS stands for Tax Deducted at Source , a mechanism under the Indian Income Tax Act, 1961. It is a system where the payer deducts tax at the time of making certain payments (like salaries, interest, rent, or professional fees) and deposits it directly with the government. The remaining amount is then paid to the payee. Key Features of TDS: Purpose : TDS ensures timely collection of taxes and reduces tax evasion by collecting taxes at the source of income. Who deducts TDS? Any individual or entity making specified payments (e.g., an employer, bank, or company) is required to deduct TDS if the payment exceeds a certain threshold. Payments covered under TDS : Salaries Rent Professional/technical fees Interest from fixed deposits Commission Dividends Sale of immovable property, etc. Rates of TDS : TDS is deducted at rates specified by the government, which vary based on the type of payment and the recipient's status (resident or non-resident...

What is Advance Tax ? Advance Tax is the tax that individuals and businesses must pay in installments throughout the financial year, instead of paying the entire amount at the end of the year. It is also known as the " pay-as-you-earn tax " and applies to taxpayers whose estimated tax liability exceeds a specified threshold.       Advance tax is the payment of income tax in installments instead of a lump sum at the end of the financial year. It is applicable when the total tax liability exceeds a specified threshold. Here are the key rules for advance tax in India (as per the Income Tax Act, 1961): Who Needs to Pay Advance Tax? Salaried Individuals : If they have additional income (such as rent, capital gains, business income, or interest income). Self-Employed Individuals : Freelancers, consultants, and business owners with taxable income. Companies & Businesses : Corporations and firms with taxable income. 1. Individuals, HUFs, and Businesses If the total ta...