Income Tax Law Introduction
Income tax law is a government rule that requires individuals to pay a portion of their earnings as tax. This tax helps the government raise money to fund various public services such as schools, hospitals, and roads.
Income tax law dictates that every year, individuals must pay a portion of their income to the government. People keep track of their earnings and then inform the government how much money they have earned. Subsequently, the government collects tax from them based on their income.
Income tax law consists of various rules and sections that determine how much tax individuals need to pay on their earnings. Some people are required to pay taxes, while others are not, such as those with very low incomes or those engaged in charitable work.
Income tax law and practice
Tax laws and practices include the rules and procedures established by the government for paying personal income tax. These laws determine how much people are taxed based on their income and provide guidelines for filing taxes each year. Individuals must report income, deductions, and credits correctly to comply with taxes.
- Income Tax Law: Income tax law outlines the rules and regulations that determine how much tax individuals owe based on their income. It specifies the rates at which tax is calculated and the deductions or exemptions that individuals may qualify for.
- Filing Taxes: Every year, individuals are required to report their income to the government through a process called filing taxes. They provide details about their earnings, deductions, and credits they’re eligible for.
- Tax Returns: The document individuals submit to the government detailing their income, deductions, and taxes owed or refunded is called a tax return.
- Tax Deductions and Credits: Tax deductions reduce the amount of income that is subject to tax, while tax credits directly reduce the amount of tax owed.
- Compliance: It’s important for individuals to comply with income tax laws by accurately reporting their income and paying the correct amount of tax. Non-compliance can result in penalties or legal consequences.
Income tax case laws
Income tax law refers to legal decisions made by courts or tax tribunals in matters relating to income tax. These judgments lay down precedents or guidelines for the interpretation and application of income tax rules in specific situations. For example, if there is a dispute between a taxpayer and a tax authority regarding certain income or deductions, the court’s
decision on the matter serves as a reference for future similar disputes. Judicial Income Tax Law provides clarity and guidance to taxpayers, tax practitioners, and tax authorities on how to interpret and apply income tax laws.
Income tax law and accounts
- Income Tax Act: Income Tax Act is a government law that determines what taxpayers or businesses must pay based on their income or earnings. These laws specify tax rates and deductions or exemptions for taxpayers. They also explain the procedures for collecting taxes and complying with tax laws.
- Accounts: Accounts, in simple terms, are records or statements that track the financial transactions of individuals or businesses. They include details of income, expenses, assets, and liabilities. Accountants use different types of accounts, such as income statements, balance sheets, and cash flow statements, to organize and summarize financial information.
- Connection: Income tax law and accounts are interconnected because income tax calculations are based on the financial information recorded in accounts. Taxpayers need accurate accounting records to calculate their taxable income and determine their tax liability. Accountants play a crucial role in ensuring that financial records are maintained correctly and in accordance with tax laws
- Compliance: Complying with income tax laws requires individuals and businesses to keep accurate records and report income accurately. Accountants help taxpayers identify tax liabilities and prepare and submit tax returns in accordance with the law.
Income tax laws and rules
- Laws: Income tax laws are official rules created by the government that outline how taxes should be calculated and collected from people who earn money. These laws are like the big rules everyone has to follow.
- Rules: Within these laws, there are specific instructions called rules. These rules tell us things like how much money we can earn before we have to start paying taxes, what kinds of expenses we can deduct from our income, and how to fill out tax forms.
- Purpose: The purpose of income tax laws and rules is to make sure everyone pays their fair share of taxes based on how much money they make. This money collected as taxes helps the government pay for things like schools, hospitals, roads, and other public services.
Question and Answer
Question:1 What is the rule 7 of Income Tax Act?
Answer: Rule 7 provides for the division of income from the distribution, partly agricultural and partly non-agricultural, of the “market value” of a crop of agricultural products, acquired by the owner or tenant and used as raw materials in trade with him. , cut.
Question:2 What are the rules for income tax?
Answer:
| Income Range | tax rate | Tax to be paid |
| Up to Rs.2,50,000 | 0 | no tax |
| Rs 2.5 lakhs – Rs 5 lakhs | 5% | 5% of your taxable income |
| Rs 5 lakhs – Rs 10 lakhs | 20% | Rs 12,500+20% on income above Rs 5 lakh |
| Above 10 lakhs | 30% | Rs 1,12,500+30% on income above Rs 10 lakh |
Question:3 What is Rule 29 in income tax?
Answer: Rule – 29, Certificate of no deduction of tax or deduction at lower rates from dividends.
Question:4 What is Section 139 of the Income Tax Act?
Answer:
- Mandatory Filing: Section 139 mandates certain categories of taxpayers to file their income tax returns within the stipulated timelines.
- Different Categories: It specifies different categories of taxpayers such as individuals, Hindu Undivided Families (HUFs), companies, firms, and other entities, and outlines the requirements for each category.
- Due Dates: The section specifies the due dates by which taxpayers must file their returns. These due dates may vary based on the category of taxpayers and the nature of income earned.
- Consequences of Non-Filing: It also delineates the consequences of not filing income tax returns within the prescribed timelines, which may include penalties, interest, and other legal consequences.
Question:5 How much income is tax-free?
Answer: Under the new income tax regime, income between 0 to Rs 3 lakh is exempted from tax. Hence, no tax will be payable on this income
Question:6 What is the limit for ITR?
Answer: It is mandatory for individuals to file ITR if their total income during the financial year is more than Rs.3,00,000 (including standard deduction). The limit is Rs 3,00,000 for senior citizens and Rs 5,00,000 for senior citizens.
Question:7 What is Rule 12 in income-tax?
Answer: Accounts are required to be audited under section 44AB of the Act
Question:8 What is Section 87A?
Answer:
- Tax Rebate: Section 87A offers a rebate from the total income tax payable by eligible individual taxpayers.
- Eligibility Criteria: To qualify for the rebate under Section 87A, the individual must be a resident individual (including resident senior citizens) and their total income before claiming deductions should not exceed the threshold limit specified under the section.
- Threshold Limit: The threshold limit is subject to change and is determined by the government in the annual budget. For the assessment year 2022-23, the threshold limit for availing the rebate under Section 87A is ₹5,00,000.
- Amount of Rebate: The amount of rebate under Section 87A is the lower of:
- 100% of income tax payable, or
- ₹12,500
- Calculation: If the total income of an eligible individual is equal to or less than the threshold limit, the rebate amount is determined by applying the applicable tax rates and then deducting the rebate amount from the calculated tax liability.
Question:9 What is income tax rule 69?
Answer: As per section 69, where in a year the taxpayer has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and he offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing
Question:10 What is Rule 111 of Income Tax Act?
Answer: Section 111 of the Income Tax Act, 1961 as amended by the Income Tax Act and the Income Tax Act 2022 prescribes the effect of tax for accumulated balance on the amount of contribution recognized depending on whether it is included in the gross income of the employee or is due in the future.