Income Tax

Government imposes tax on the incomes that are earned by individuals and organizations. It is although not collected on the entire income and we have something called taxable income on which the government levies tax. Also, the nature of tax system in India is progressive tax system which means people earning more pays more. This is different from the flat tax system that is present in few countries where everyone irrespective of their incomes pay exact same percentage as tax. In India with the progressive tax regime we have different tax slabs for different ranges of income.

Income tax is a direct tax that is collected directly on the income earned on an annual basis. It is levied on the income earned in the previous year called assessment year. There is a lower limit on the income and if the persons income is less than the limit, he or she is exempted from paying tax. The slab is different for senior (people aged between 60 to 80) and super senior citizens (people aged above 80). Currently the limit is 2.5l for men/women and 3l for senior citizens and 5l for super senior citizens.