Indian Income Tax

What is an Income Tax?
Income Tax is a tax imposed by the Government of India on anybody who earns income in India. This tax is levied on the strength of an Act called the Income tax Act which was passed by the Parliament of India in the year 1961.

The two basic income tax obligations of an individual are:
è Pay the income tax you owe the government, to the Income Tax Department; and
è File your income tax return for the year showing your income, investments, expenses/losses and tax payable or refund due

How much tax to pay?
For the Financial Year 2007-08, if your total income from all sources exceeds Rs.1,10,000 (male individuals), Rs.1,45,000 (female individuals) or Rs.1,95,000 (individuals above the age of 65 years), you are liable to pay tax at the applicable rates. To avoid taxes fully or partially, you can invest in various tax-saving and tax-exempt schemes. You also need to file your tax return giving a complete picture of your financial activity during the year.

How and where can I file my return?
You can either file your return traditionally, filling up a hard copy of the ITR Form applicable to you, visit the tax office in your city/town and file the return. It can get quite tedious. The quicker, safer and simpler way is to file online (e-file). You simply type your data, generate your return and upload it onto the government website. Just submit 2 copies of the receipt as proof of having e-filed, and get the acknowledged copy back and you're done for the year.