Income tax is a direct tax — it's levied directly on the income of individuals and businesses, unlike GST which is an indirect tax on consumption. Every country has its own income tax system, but the core concepts are universal: taxable income, deductions, slabs, and filing.
Under the Indian Income Tax Act, all income is classified under five heads:
Income from employment — basic salary, allowances, perquisites, pension
Examples: Basic pay, HRA, DA, bonus, leave encashment
Income from property owned — rental income or deemed rental for vacant property
Examples: Rent received, annual value of self-occupied property
Profits from business or professional practice
Examples: Trading profit, freelance income, consulting fees
Profit from selling capital assets — shares, property, gold, mutual funds
Examples: Share sale profit (STCG/LTCG), property sale gain
Income that doesn't fit other heads — interest, dividends, gifts
Examples: FD interest, savings interest, lottery winnings, dividends
| Income Slab | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
+ 4% Health & Education Cess on tax amount
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
+ Deductions: 80C (₹1.5L), 80D, HRA, LTA, etc.
EPF, PPF, ELSS, Life Insurance, NSC, Tuition Fees, Home Loan Principal
Health Insurance — Self ₹25K + Parents ₹25K (₹50K if senior citizen)
Home Loan Interest for self-occupied property
Education Loan Interest (for 8 years from start of repayment)
Donations to approved charities and funds
Interest on savings bank account
| Country | Top Rate | Tax-Free Threshold | Filing Deadline |
|---|---|---|---|
| India | 30% | ₹4L (New) / ₹2.5L (Old) | July 31 |
| Australia | 45% | A$18,200 | October 31 |
| Ireland | 40% | €18,000 (single) | October 31 (Nov 15 online) |
| UK | 45% | £12,570 | January 31 (online) |
| USA | 37% | $14,600 (single) | April 15 |
Income tax is a direct tax on earnings — individuals and businesses pay based on progressive slab rates
India has five heads of income: Salary, House Property, Business/Profession, Capital Gains, Other Sources
New Regime (default from FY 2023-24) has lower rates but fewer deductions; Old Regime allows 80C, 80D, HRA etc.
File ITR by July 31 (individuals). Pay advance tax quarterly if annual tax exceeds ₹10,000
TDS is prepaid income tax — deducted at source and credited to your account in Form 26AS