Income tax: When do you have to pay taxes? Income below which there is no need to pay tax? Check details here

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Are you worried about income tax? When do you have to pay tax on your income? What is the income ceiling below which there is no need to pay tax, among other things, these are some of the questions you should know the answer to as soon as you start earning money.

Section 14 of the Income Tax Act has classified a taxpayer’s income under five different heads of income, namely wages, income from immovable property, business or occupation, capital gains and income from other sources. ​.

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You may note that income taxes can only be finalized at the end of the previous year. However, to allow a smooth flow of funds and to facilitate the process of collecting taxes, the Income Tax Act provides for the payment of taxes in advance during the year of gain itself or before the end of the previous year. It is also known as the Pay as Your Gain concept.

Taxes are collected by the government through the following means:

1. Voluntary payment by taxpayers in various designated banks such as withholding tax, self-assessment tax, etc.

2. Taxes withheld at source

3. Taxes collected at source

4. Equalization levy​

At this time, i.e. for the financial year 2021-22, individuals, HUF, AOP and BOI with income below Rs 2,50,000 do not need to pay tax on income.

With respect to resident persons aged 60 and above but under 80 years of age, the basic exemption limit is Rs 3,00,000 and with respect to resident persons aged 80 and above, the limit is of Rs 5,00,000.

For other categories of persons such as cooperatives, businesses, corporations and local authorities, there is no basic exemption ceiling and therefore they have to pay tax on all their taxable income.

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