Frequently Asked Questions

Income Tax is a tax levied by the Government of India on the income earned by individuals, businesses, and other entities during a financial year. It is calculated based on the applicable income tax slab rates prescribed under the Income Tax Act, 1961. The tax collected funds public services and infrastructure development.

Any individual or entity whose gross total income exceeds the basic exemption limit during a financial year must file an ITR. Additionally, filing is mandatory if you have assets abroad, have claimed a refund, or have incurred a loss that you wish to carry forward. The current basic exemption limit is Rs. 2.5 lakh for individuals below 60 years.

The due date for filing Income Tax Returns for individuals and businesses varies. For individuals not requiring an audit, the deadline is typically July 31 of the assessment year. For businesses requiring a tax audit, the deadline is October 31. A belated return can be filed by December 31 with additional fees.

Key documents include Form 16 from your employer, bank statements, Form 26AS (tax credit statement), interest certificates, investment proofs for deductions under Section 80C to 80U, home loan statements, capital gains details, and Aadhaar/PAN card. Having all documents ready ensures accurate and hassle-free filing.

Income tax is calculated by applying the applicable slab rates to your net taxable income (gross income minus deductions). India offers two regimes: the Old Regime with multiple deductions and the New Regime with lower rates but fewer exemptions. The tax liability is computed after claiming eligible deductions under various sections of the Income Tax Act.

Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax levied on the supply of goods and services across India. It replaced multiple cascading taxes like VAT, Service Tax, Excise Duty, and more. GST is categorized into CGST (Central), SGST (State), and IGST (Inter-state) components.

Businesses with an annual aggregate turnover exceeding Rs. 40 lakh (Rs. 20 lakh for special category states) for goods, or Rs. 20 lakh for services, must register for GST. Certain businesses like inter-state suppliers, e-commerce operators, and casual taxable persons must register regardless of turnover. Voluntary registration is also permitted.

GSTR-1 (outward supplies) is due by the 11th of the following month. GSTR-3B (summary return) is due by the 20th of the following month. For the quarterly filing scheme (QRMP), GSTR-1 is due by the 13th of the month following the quarter, and GSTR-3B with payment by the 24th. Annual return GSTR-9 is due by December 31 of the following financial year.

Late filing of GST returns attracts a late fee of Rs. 50 per day (Rs. 25 each for CGST and SGST) for regular returns, subject to a maximum of Rs. 5,000. For nil returns, the late fee is Rs. 20 per day (Rs. 10 each for CGST and SGST). Additionally, interest at 18% per annum is payable on the outstanding tax amount.

Tax Deducted at Source (TDS) is a mechanism of collecting income tax at the source of income. Under this system, the payer deducts a certain percentage of tax before making payments such as salary, interest, rent, professional fees, or contract payments. The deducted amount is deposited with the government and credited to the recipient's Form 26AS.

Form 16 is a certificate issued by an employer to employees certifying the TDS deducted from salary during the financial year. It contains details of salary paid, deductions claimed, and tax deducted. Form 16 is an essential document for filing ITR, as it serves as proof of tax deducted and deposited with the government on your behalf.

A tax audit is an examination of a taxpayer's financial records by a Chartered Accountant, mandated under Section 44AB of the Income Tax Act. It is compulsory for businesses with turnover exceeding Rs. 10 crore (or Rs. 5 crore in certain cases) and for professionals with gross receipts over Rs. 50 lakh. The auditor verifies compliance with tax laws and submits a report in Form 3CA/3CB and 3CD.

Section 80C offers deductions up to Rs. 1.5 lakh per year on investments in specified instruments including Public Provident Fund (PPF), Employee Provident Fund (EPF), Equity Linked Savings Scheme (ELSS), National Savings Certificate (NSC), tax-saving Fixed Deposits (5-year), Senior Citizens Savings Scheme, Sukanya Samriddhi Yojana, and life insurance premiums.

Equity Linked Savings Scheme (ELSS) is a type of diversified equity mutual fund that offers tax benefits under Section 80C of the Income Tax Act. It has the shortest lock-in period of just 3 years among all 80C investments. ELSS offers potential for higher returns through equity market exposure while simultaneously providing tax savings up to Rs. 1.5 lakh annually.

Systematic Investment Plan (SIP) involves investing a fixed amount at regular intervals (monthly/quarterly), which averages out market volatility and instills financial discipline. Lump sum investment involves investing a large amount at once. SIP is ideal for salaried individuals looking for disciplined wealth creation, while lump sum suits those with surplus funds and lumpsum windfalls like bonuses or inheritances.

Yes, you can file a revised return if you discover any omission or incorrect statement in your original ITR. Under Section 139(5), a revised return can be filed before the end of the relevant assessment year or before the completion of assessment, whichever is earlier. You can revise your return multiple times within the permitted timeframe.

Yes, a registered taxpayer can claim Input Tax Credit (ITC) on GST paid on purchases used for business purposes. The supplier must have filed GST returns, the invoice must be reflected in GSTR-2B, and the goods/services must be received. ITC cannot be claimed for personal use, exempt supplies, or goods lost, stolen, or destroyed.