Income Tax: When do you have to pay tax? Income below which there is no need to pay tax? Check details here

Worried about income tax? When you have to pay tax on your income? What is the limit of income below which there is no need to pay tax among others is few of the questions whose answer one should know as soon as he/she starts earning.

S​ection 14​ of the Income-tax Act has classified the income of a taxpayer under five different heads of income that is salaries, income from house property, profits and gains of business or profession, capital gains and income from other sources​​​.

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You can note that ​​​​the taxes on income can be finalized only on the completion of the previous year. However, to enable a regular flow of funds and for easing the process of collection of taxes, Income-tax Act has provisions for payment of taxes in advance during the year of earning itself or before completion of previous year. It is also known as Pay as your earn concept.

Taxes are collected by the government through the following means:

1. Voluntary payment by taxpayers into various designated Banks such as Advance tax, Self-Assessment tax, etc.

2. Taxes deducted at source

3. Taxes collected at source ​​

4. Equalisation Levy​

​​​At this moment that is for the financial year 2021-22​, individual, HUF, AOP, and BOI having income below Rs 2,50,000 need not pay any Income-tax.

In respect of resident individuals of the age of 60 years and above but below 80 years, the basic exemption limit is Rs 3,00,000 and in respect of resident individuals of 80 years ​and above, the limit is Rs 5,00,000.

For other categories of persons such as co-operative societies, firms, companies and local authorities, no basic exemption limit exists and, hence, they have to pay taxes on their entire income chargeable to tax.