Income Tax

Income Tax – Income tax is a tax imposed by the government on the income earned by individuals, firms, and corporations. It is calculated based on various sources of income, including salaries, business profits, capital gains, rental income, and other earnings. The tax collected is used to fund public services, infrastructure, and government operations. In India, income earned during a Financial Year (FY) is assessed and taxed in the corresponding Assessment Year (AY), which immediately follows the Financial Year. Taxpayers are required to file Income Tax Returns (ITR) and pay the applicable tax during the Assessment Year.

Example: Income earned from 1 April 2022 to 31 March 2023 (FY 2022–23) is assessed and taxed in AY 2023–24. Taxpayers report all earnings for this period in their ITR and pay taxes accordingly.