Overview of Income Tax in India
In India, different entities including Individuals are required to pay income tax on their taxable income to the Government of India.
The tax is levied on the taxable income of the following entities:
- Hindu Undivided Families (HUFs)
- Companies and Firms
- Cooperative Societies
- Any other artificial persons
The tax law is governed by the Income Tax (IT) act, 1961.
Every year, the Government decides on the tax slabs for different income groups, and also decides on the different saving schemes and instruments that can help you save on income tax. These tax-saving instruments are designed to encourage savings by everyone.
For the purpose of calculating the taxable income, income from different sources such as salary, property, capital gains, and other sources is combined.
For the purpose of calculating tax, the financial calendar followed is from April 1, to March 31. In general, everyone is required to pay their taxes in the year succeeding the year in which the income was earned. So, your income for the year 2011-2012 (April 1, 2011 to, March 31, 2012) will be assed for tax in the year 2012-13, and you will be expected to file your taxes sometime before June. The year 2011-2012 will be called the Financial Year, and 2012-13 will be called the assessment year.
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