Income-tax is levied on the annual income of an individual or an entity. The period under Income Tax Act starts from 1st April and ending on 31st March of the next calendar year. The Income-tax Law classifies the year as (i) Previous year, and (ii) Assessment year.
Income tax on companies is called a corporate tax which is normally levied at a fixed rate. Whilst, a non-corporate assessee other than the firm has to pay income tax based on the slab rate.
Taxes are collected by the Government through three means:
- Voluntary payment by taxpayers into various designated Banks. For example, Advance Tax and Self-Assessment Tax paid by the taxpayers,
- Taxes deducted at source [TDS] from the income of the receiver,
- Taxes collected at source [TCS].
Every year, Finance Act prescribes the income tax rates and TDS/TCS rates effective for the relevant assessment year to the previous year. Further, CBDT is empowered to issue notification and circulars to clarify and notify the rates and their changes.
According to the current income tax laws in India, we have summarized and tabularized all the income tax rates for FY 2020–21 (AY 2021–22) for your easy reference.
Part 1: Income Tax for FY 2020–21
- What is to be included for computing total income?
As per Section 5 of the Income Tax Act, 1961 the following income is included in total income:
- Income received or is deemed to be received in India by or on behalf of such person; or
- Income accrued or arise or is deemed to accrued or arise in India; or
- Income accrued or arise outside India during such year.
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