Income earning individuals in India are subject to various types of taxes by the government. The type of tax applicable will vary depending upon the source of income of an individual. Taxes collected by the government are used for various purposes such as the development of infrastructure facilities in the country, providing better amenities to citizens etc. Income earning individuals, companies are obligated to pay tax as per the laws set by Indian income tax. Non-compliance with the same will lead to tax liability in your portfolio.

What is Tax Liability?

Tax liability is the amount of money in the form of tax debt you owe to tax authorities. It is the total amount of tax you are liable to pay to the government. Taxes are applicable to the income you earn in a service or business, interest income of various investment avenues, capital gains on stocks, income from other sources such as winning a lottery, horse race etc. house rent and more. The Indian Income tax act of 1961 has set laws in relation to the amount of tax to be charged, exemption limit etc.

Tax liability doesn’t just include liabilities of the current financial year. It factors all the years and all the types of taxes you are due to pay to the income tax authorities.

To ensure that you do not miss out on paying taxes. Check out the below income tax slab rates as laid down by the government. If you belong to the below income category, you are obligated to pay taxes in order to avoid liability.
Income Tax Slab Tax Rate for HUF & Individual Below the Age Of 60 Years
Up to ₹2,50,000* Nil
₹2,50,001 to ₹5,00,000 5% of net total income exceeding ₹2,50,000
₹5,00,001 to ₹10,00,000 20% of net total income exceeding ₹5,00,000 + ₹12,500
Above ₹10,00,000 30% of net total income exceeding ₹10,00,000 + ₹1,12,500
The above tax slabs are for individual taxpayers as well as HUF. Similarly, there are limits in place for all categories of income-earning groups and individuals. Adhering to the same is mandatory.

Corporate tax liability

Companies in India are liable to pay taxes under the corporate tax law. If a company has operations in multiple countries but is an Indian company, then it is obligated to pay tax in India. To avoid the complication of double taxation, section 90 and 91 of the Income-tax Act has laid down rules to ease the process.

Companies liable to pay corporate tax need to get their accounts audited and submit an audit report to the income tax department. It is mandatory for companies to submit the audit report.

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DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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