Introduction
In India, the person who has an income that is exceeding the minimum income as applicable under the specific income tax slab have to pay the income tax. The income tax has to be calculated based on the total income earned by a person from all sources.
What is Taxable Income?
Taxable income means the income which is chargeable to income tax, and it is calculated to decide how much tax an individual or a company owes to the government in a particular tax year. It is generally described as the gross total income or total income. To arrive at the total income, you have to consider any deductions or exemptions allowed in that tax year.
Taxable income includes salaries, pensions, capital gains, rental income, business income, investment income, and unearned income.
Who is eligible to pay?
Income tax is to be paid by every person based on the taxable income earned by him during a financial year.
According to the Income Tax Act, the term 'person' includes both natural and artificial persons. A person can be an individual, Hindu Undivided Families (HUF), association of persons (AOP), body of individuals (BOI), firms, LLPs, companies, local authority, and any artificial juridical person (AJP) not covered under any of the above categories.
From the definition of the term 'person', it can be observed that, apart from a natural person, an artificial entity is also liable to pay income tax.
A detailed breakdown of the procedure for filling the tax
The taxable income in India is different as per the status of the person. If such person is an individual, the age of that individual will decide the taxable income.
The taxable income is one of the essential particulars to be filled by the person while filing their return of income.
The person has to follow the below steps to file his income tax return: 1. A person has to compute income from all of his sources. 2. The sum of all incomes will be termed as gross total income. 3. Now, he can claim any deductions or exemptions as per the Income Tax Act if any. 4. After reducing the deductions/exemptions from the total income, he will get the total income. 5. The person has to pay tax if his total income exceeds the slabs specified in the act. 6. After completion of tax payment, he should submit the income details in the prescribed format to the tax authorities.
