Where can I find information on tax slabs, tax exemption and IT returns laws in India in simple means?

Question

I am new to tax system in India … can any one guides me with basic tax laws in India please.

Answer 1

Indian taxation overview: Sense of duty.

India has embarked on a series of tax reforms since early 1990s. The focus of reforms has been on rationalization of the tax rates and simplification of procedures.

In India tax is levied by central, state and local government bodies. Principal taxes including corporate tax, custom duties, central excise duty and services tax are levied by the central government. On the other hand states levy principal taxes like state excise duties, sales tax and stamp duties. Local government bodies levy octroi duties and other taxes of local nature like water tax and property taxes. .

India has embarked on a series of tax reforms since early 1990s. The focus of reforms has been on rationalization of the tax rates and simplification of procedures.


Mukesh raj & ComanyDirect Tax

Income earned in a financial year is liable to tax as per the rates prescribed for that year. A financial year runs from 1 April to 31 March of the following year. India follows a residence based taxation system. Broadly, taxpayers may be classified as residents or non-residents. Individual taxpayers may also be classified as 'residents but not ordinary residents'.

An Indian company is always an Indian resident. Additionally, any other company whose affairs are wholly controlled and managed from India is also a resident. Any other company would be a non-resident.


SEND ENQUIRY
Residential Status
An individual is resident in India if he is in India in the tax year for:

* 182 days or more; or
* 60 days or more (the period of 60 days stands changed to 182 days or more for Indian citizens or persons of Indian origins on a visit to India; and also for citizens of India who leave India for employment abroad as member of a crew of an Indian ship) during the tax year, and an aggregate of 365 days or more during the four years preceding the tax year.
* An individual who does not satisfy the above conditions is a non-resident.
* A resident is "not ordinarily resident" in India in any tax year if he:
* has been "non-resident" in India in nine out of the 10 previous years preceding that year: or
* has during the previous seven years, preceding that year, been in India for a total period of 729 days or less.

Taxability based on status

Residential Status Indian Sourced Income Foreign Sourced Income
Resident Taxable in India Taxable in India
Resident but not ordinarily resident Taxable in India Not taxable in India
Non-resident Taxable in India Not taxable in India


Heads of Income
The income is categorized under five broad heads or classes of income. The taxable component of the income is ascertained according to the rules for a particular head/class of income and then aggregated to determine the total taxable income. However, losses under certain heads cannot be aggregated with income earned under other heads.

Salaries cover those that are received for services rendered and include wages, pension, fees, commission and the taxable value of perquisites. For this purpose, valuation rules for certain standard perquisites, typically provided by employers in India, have been issued. Standard deduction is available from the salary income. The amount of deduction depends upon the amount of salary earned.

Income from house property includes income arising from use of residential and commercial property. Only two prescribed deductions are permitted while computing the income.

Profits and gains from business or profession covers income earned from business or profession net of permissible deductions, against the revenue earned. In addition, general non-specified revenue expenses, incurred for the business are also deductible.

Capital gains cover gains arising from transfer of capital assets. The period of holding determines the classification of the asset, which then determines the manner of taxation. Capital assets held for less than 36 months (12 months in case of shares/securities) are treated as short-term assets. Other capital assets are categorized as long-term capital assets. Long-term capital gains enjoy a lower rate of tax. This may further be reduced by making prescribed investments.

Sale of certain specified investments are subject to gross basis of taxation, under which tax is levied on value of transaction. Gain arising from transactions subject to gross basis of taxation is entitled to concessional tax treatment under income tax.

Income from other sources is the residuary head/class of income and covers any income not specifically dealt with under the other heads. A deduction in respect of expenses incurred for earning the income, is available.


Individuals
Individuals are liable to tax in India at different rates of tax as under:

Taxable income slabs (In Rupees) Rates of Tax
0 - 100000* Nil
100001 - 150000 10.2 per cent
150001 - 250000 20.4 per cent
250001 - 1000000 30.6 per cent
1000000 and above 33.66 per cent

* Basic exemption limit in case of women is INR 135, 000 and in case of senior citizen INR 185, 000
* Special rates/ exemptions apply in case of long-term/ short-term capital assets. Individuals are also liable to surcharge as discussed subsequently.
* Non-resident individuals may also be liable to tax in India on a gross basis depending upon the type of income received.

Foreign Nationals
Indian tax law provides for exemption of income earned by foreign nationals for services rendered in India, subject to prescribed conditions. For example

* Remuneration from a foreign enterprise not conducting any business in India provided, the individual's stay in India does not exceed 90 days and the payment made is not deducted in computing the income of the employer;
* Remuneration received by a person employed on a foreign ship provided his stay in India does not exceed 90 days;
* Remuneration of foreign diplomats, consular staff, trade officials and their staff and family; and
* Income of an employee or consultant of a government approved foreign charitable institutions.

Companies

Resident Companies
Indian resident companies are liable to tax at 33.66 per cent on net basis. Additionally, companies are also liable to dividend distribution tax (DDT) at 14.025 per cent on the amount of profits distributed to shareholders.

Non-resident Companies
Non-resident companies are typically liable to tax at 41.82 per cent on net basis. Non-resident companies may be taxed on a gross basis or on a presumptive basis in certain cases. However, income from long-term capital gains is taxable at the rate of 20.91 per cent.

Kinds of Taxes

Annual Tax
An annual tax is levied on income earned, for a financial year, on the various taxpayers listed above as per the rates declared by the annual budget. The rates for the financial year 2005-06 are as stated in the section dealing with "Taxation of different taxpayers". The rates would vary with each budget. The annual tax is payable in advance by way of quarterly installments during the financial year. The quarters would vary depending on the taxpayer involved e.g. in the case of companies the payment for the first quarter would fall on 15 June of the financial year involved.

Minimum Alternate Tax (MAT)
The domestic tax law also requires companies to pay MAT in lieu of the regular corporate tax, in a case where the regular corporate tax is lower than the MAT. MAT is computed on the book profits; subject to certain prescribed adjustments at the rate of 8.415 per cent in the case of domestic companies and 7.841 per cent in case of non-resident companies; MAT paid in any year is now available as credit in any subsequent year.

Dividend Distribution Tax (DDT)
Dividends are currently exempt from taxes in India. However the company paying the dividends is required to pay DDT on the amount of dividends declared, at the rate of 14.025 per cent. DDT is a tax payable on the dividend declared, distributed or paid.

for the continuation
http://www.mukeshraj.com/direct-tax.html

Answer 2

Apply for Permanent Account Number.
Assess your total income during last financial year from all sources. Deduct eligible investments / payments etc.
Calculate tax, sucharge etc. Deposit tax in treasury. Use proper challan form.
Prepare return of income. Submit to ITO of your ward. Relax.
or contact Tax Consultant.

Answer 3

Just visit the Income Tax official web site.

Answer 4

you can refer to income tax ready reckoner which is published every year it gives slab rates exemptions &all other infirmation

Answer 5

http://in.rediff.com/money/2007/feb/08tax.htm