In India, taxes are broadly classified into two categories: direct taxes and indirect taxes. Direct taxes include
income tax and corporate tax, while indirect taxes include Goods and Services Tax (GST), customs duty, excise duty,
and service tax.
Any individual whose total income exceeds the basic exemption limit, companies, firms, Hindu Undivided Families
(HUFs), and other specified entities are required to file an income tax return. Additionally, individuals who own
foreign assets or earn income from abroad must also file a return.
The basic exemption limit varies based on the age and residency status of the taxpayer. As of the current financial
year, the limit is:
For individuals below 60 years: ₹2.5 lakhs
For senior citizens (60-80 years): ₹3 lakhs
For super senior citizens (above 80 years): ₹5 lakhs
Income Tax
The deadline for filing income tax returns for individuals and non-audit cases is typically July 31st
of the assessment year. For companies and individuals requiring an audit, the deadline is usually September
30th of the assessment year.
Penalties for late filing of income tax returns can range from ₹1,000 to ₹10,000, depending on the date of
filing and the total income of the taxpayer. Additionally, interest may be charged on any outstanding tax liability.
TDS is a system where the payer deducts tax at the source of income and remits it to the government.
This mechanism ensures that tax is collected in advance and reduces the chance of tax evasion. TDS is
applicable on various payments like salaries, interest, rent, and professional fees.
Goods and Services Tax (GST)
GST is a comprehensive indirect tax levied on the manufacture, sale, and consumption of goods and services across India.
It subsumes multiple indirect taxes like VAT, service tax, and excise duty into a single tax, simplifying the tax structure.
GST is a destination-based tax, meaning it is collected at the point of consumption.
Any business with an annual turnover exceeding ₹20 lakhs (₹10 lakhs for special category states) must register for GST.
Additionally, certain businesses, regardless of turnover, such as those involved in interstate supply or e-commerce, are
required to register.
The frequency of GST return filing depends on the type of taxpayer. Regular taxpayers need to file monthly returns
(GSTR-1 and GSTR-3B) and an annual return (GSTR-9). Composition scheme taxpayers file quarterly returns (CMP-08) and
an annual return (GSTR-4).
Corporate Tax
The corporate tax rate in India varies based on the type and income of the company. For domestic companies, the base
rate is 22% (plus applicable surcharge and cess) if they do not avail any exemptions or incentives. New manufacturing
companies can opt for a 15% rate. Foreign companies are taxed at 40% (plus applicable surcharge and cess).
Companies can avail various deductions and exemptions such as:
Depreciation on assets
Deductions for research and development expenditure
Exemptions for Special Economic Zones (SEZs)
Deductions under Section 80IA for infrastructure development
Tax Disputes and Litigation
Taxpayers can resolve disputes through the following mechanisms:
Filing an appeal with the Commissioner of Income Tax (Appeals)
Approaching the Income Tax Appellate Tribunal (ITAT)
Moving to higher courts (High Court and Supreme Court) for significant legal issues
Opting for alternative dispute resolution methods like the Advance Pricing Agreement (APA) and mutual agreement
procedures under tax treaties
An Advance Ruling is a written decision by tax authorities on specific questions or issues related to tax liability,
provided at the request of the taxpayer. This helps in providing clarity and certainty on complex tax matters,
reducing the scope for disputes.
International Taxation
DTAA is an agreement between two countries to avoid the double taxation of income earned by residents of either
country. India has DTAAs with several countries, which provide relief from double taxation through tax credits,
exemptions, or reduced tax rates on certain incomes.
Residents of India are taxed on their global income, including foreign income. However, relief can be claimed
under DTAA provisions to avoid double taxation. Non-residents are taxed only on income earned or received in India.
For any specific queries or personalized assistance, please contact us. We are here to help
you navigate the complexities of Indian tax law with ease.