In India, income tax must be paid by every person whose total income exceeds the basic exemption limit specified under the Income Tax Act, 1961, during a financial year (1st April to 31st March). The term "person" is broadly defined and includes the following entities:

1. Individuals

• Resident Individuals:
  • Tax is levied on their global income (income earned in India and abroad).
• Non-Resident Individuals (NRI):
  • Tax is levied only on income earned or accrued in India.
• Basic Exemption Limit (as per FY 2023-24):
  • For individuals below 60 years: ₹2,50,000.
  • For senior citizens (60–80 years): ₹3,00,000.
  • For super senior citizens (80+ years): ₹5,00,000.

2. Hindu Undivided Families (HUFs)

• A family consisting of common ancestors and their descendants.
• Income earned by the HUF (from business, property, or investments) is taxed as a single entity.

3. Companies

• Includes domestic companies and foreign companies operating in India.
• Corporate tax is levied on the profits of the company at prescribed rates.

4. Firms

• Includes partnership firms and Limited Liability Partnerships (LLPs).
• Tax is levied on the firm's income at a flat rate (currently 30%).

5. Association of Persons (AOP) or Body of Individuals (BOI)

• A group of people who come together for a specific purpose and earn income jointly.
• Income is taxed either at individual slab rates or as a single entity, depending on the case.

6. Local Authorities

• Includes municipal corporations, panchayats, and other local government bodies.
• Taxed on income earned from sources like property, fees, and other activities.

7. Artificial Juridical Persons

• Includes entities that are not natural persons but are recognized by law, such as:
  • Religious institutions
  • Universities
  • Charitable trusts
  • Corporations not falling under other categories.
• Tax is levied at the rates prescribed for these entities.

Types of Income Taxable

Income is categorized into five heads, and tax is levied on all types of income falling under these heads:

1. Income from Salary: Earnings from employment.
2. Income from House Property: Rental income or deemed rent.
3. Income from Business or Profession: Profits earned by businesses or professionals.
4. Income from Capital Gains: Gains from the sale of assets like property, shares, or investments.
5. Income from Other Sources: Interest, dividends, lottery winnings, etc.

Who Should Pay Tax Despite Low Income?

Some individuals must file returns even if their income is below the exemption limit:

1. If they have foreign income/assets.
2. If their gross total income (before deductions) exceeds the exemption limit.
3. If they receive income subject to tax deduction at source (TDS) but want a refund.

How Is Income Tax Paid?

• Self-Assessment Tax: Calculated by the taxpayer on income earned.
• Advance Tax: Paid by individuals and entities whose tax liability exceeds ₹10,000 in a year.
• TDS (Tax Deducted at Source): Deducted by employers or other payers before payment is made.

Taxes can be paid online or offline using Challan 280.

Conclusion

Anyone earning taxable income in India (whether an individual, company, or other entity) must pay income tax. If unsure about your tax liability, consult with a tax professional or use the tools available on the Income Tax Department's website for calculation and filing.

Filing income tax in India requires various documents depending on the type of income you earn, deductions you claim, and investments you have made. Here is a comprehensive list of documents required for filing an Income Tax Return (ITR) in India:

1. General Documents (Applicable to All Taxpayers)

• PAN Card (Permanent Account Number): Mandatory for identification.
• Aadhaar Card: Mandatory for linking with PAN.
• Bank Account Details:
  • Bank passbook or statements for interest income or refund credits.
  • Bank account number, IFSC code, and branch details for refunds.
• Form 26AS: A consolidated tax credit statement that summarizes TDS deducted and tax payments made against your PAN.
• Login Credentials for Income Tax Portal: To file ITR online.

2. For Salaried Individuals

• Form 16: Issued by the employer, summarizing your salary income, TDS deductions, and tax payable.
• Salary Slips: To verify salary components and allowances.
• Tax Saving Investment Proofs: Documents for deductions under Section 80C, 80D, etc. Examples:
  • Provident Fund (PF) contributions.
  • Life Insurance Premium Receipts.
  • ELSS mutual funds, NSC, PPF, or Sukanya Samriddhi investments.

3. For Self-Employed or Business Owners

• Profit and Loss Account and Balance Sheet: For determining business income and expenses.
• Bank Statements: For business transactions.
• GST Returns (if registered under GST).
• Invoices and Bills: Supporting income and expenses.
• Tax Audit Report (if applicable): Required if turnover exceeds prescribed limits.

4. For Income from House Property

• Rental Agreement or Rent Receipts: For rental income.
• Home Loan Interest Certificate: For claiming deduction on home loan interest (under Section 24).
• Property Tax Receipts: To calculate net income from house property.

5. For Income from Capital Gains

• Purchase and Sale Deeds: For sale of property, shares, or other assets.
• Brokerage Statements: For share and stock transactions.
• Capital Gain Statements: Issued by brokers for equity-related transactions.
• Details of Cost of Acquisition and Improvement: For calculating indexed cost and capital gains.

6. For Income from Other Sources

• Interest Certificates: Issued by banks for savings or fixed deposit interest.
• Dividend Statements: For dividend income from shares.
• TDS Certificates (Form 16A): For interest, commission, or other income.
• Lottery Winnings or Gifts: Documents for prizes, winnings, or gift income.

7. Documents for Deductions and Exemptions

• Section 80C:
  • LIC Premium Receipts.
  • PPF Passbook.
  • Tuition Fee Receipts for children.
  • Fixed Deposit Receipts (5-year tax-saving FD).
• Section 80D:
  • Health Insurance Premium Receipts.
  • Medical bills (for senior citizens without insurance).
• Section 80E:
  • Education Loan Interest Certificate.
• Section 80G:
  • Donation Receipts (with PAN of the organization).
• Section 80TTA/80TTB:
  • Interest Income Statement for claiming exemptions.

8. For NRIs (Non-Resident Indians)

• NRO/NRE Account Statements: For income earned in India.
• TDS Certificates: For tax deducted at source on Indian income.
• Documents for Claiming DTAA (Double Tax Avoidance Agreement) benefits:
  • Proof of residency in a foreign country.
  • Tax Residency Certificate (TRC).

9. Additional Documents

• Advance Tax Payment Challans: If advance tax is paid during the year.
• Challan 280: For self-assessment tax payments.
• Old ITR Copies: For reference or rectification of past issues.

Steps to Organize These Documents

1. Verify TDS Deductions: Cross-check Form 16, Form 26AS, and TDS certificates.
2. Reconcile Investments: Match your claimed deductions with receipts.
3. Digitize Documents: Scan or save soft copies for easy uploading on the e-filing portal.
4. Ensure Accuracy: Mistakes in PAN, Aadhaar, or bank details can delay filing or refunds.