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Income Tax Consultancy Services: A Beginner’s Guide to Income Tax Law in India
SECTIONS
- Essence of Income tax law
- Heads of Income
- Assessment Year & Previous Year
- Income Tax Slab Rate – Old Vs New Regime
- Taxation of Businesses and Corporates
- Income tax Deductions, Exemptions & Rebates
- Income Tax Returns Filing
- Income Tax Payment – TDS, Advance Tax, Self-Assessment Tax & E-Payment of Taxes
- Residents and Non-Residents
- Response to Income tax Notices and Resolving Tax Disputes
- Important Income Tax Dates – Calendar for AY 2025-26
- How Income tax consultancy works?
Nearly 72% of taxpayers in India – 5.27 crore out of 7.28 crore returns – opted the new tax regime in 2024-25. When it comes to making income tax decisions, every choice involves cautious care of your business or profession’s unique factors.
But what if your income tax return and tax decisions didn’t have to be feel like a battle of paperwork? Instead of pulling your hair out over income tax deductions, exemptions, tax brackets and income tax regime, imagine having a strategic partner who knows the ins and outs of the system and can help you make the most of your hard-earned money.
Income tax consultancy services help you to cut through confusion to provide clarity. By the end of this blog, you’ll have a solid understanding of the fundamentals of income tax law and you’ll discover how expert income tax consultancy services can support you throughout this journey – whether it’s in income tax compliance, income tax advisory or tax savings – which results in a stress-free financial future.
What is the essence of Income tax law?
- Scope and Applicability: It applies to all taxpayers (assessee) in India, including individuals, Hindu Undivided Families (HUFs), companies, partnership firms, LLPs, AOP/BOI, sole proprietorships, charitable trusts/societies and any other person.
- Progressive Taxation: he taxation system is designed in a way where the tax rate increases as your income level rises.
- Taxable Income: Your taxable income is the income after various deductions, exemptions and rebates.
- ITR Filing: The assessee has the duty to disclose their income and file Income Tax Return (ITR) with transparency.
Under which head of income does your income fall?
There 5 heads of income under income tax law in India, each with its own rules for taxation:
A. Income from Salary: This includes wages, bonuses, perquisites, allowances and other income provided by an employer, as defined in Section 15 to 17 of the Act.
B. Income from House Property: Income generated from owning or renting property is taxable under Section 22 to 27 of the Act, with 30% standard deduction, allowances for property taxes and home loan interest.
C. Income from Business or Profession: This includes profits from self-employment or business activities, governed by Section 28 to 44DB of the Act.
D. Capital Gains: Profit from the sale (transfer) of assets like property or stocks (capital assets) is taxed under Section 45 to 55A.
E. Income from Other Sources: Income from sources like interest, dividends and winnings, under Section 56 to 59 of the Act.
Confused Between Assessment Year & Previous Year
Previous Year (PY):
The Previous Year is the year in which the income is earned by a taxpayer.
Assessment Year (AY):
The Assessment Year is the year following the Previous Year, when income is assessed and taxed by the tax authorities.
For example: for income earned between April 1st, 2024 and March 31st, 2025, the Assessment Year would be 2025-26 and Previous Year is 2024-25.
Income Tax Slab Rate – Old Vs New Regime
In India, the income tax system follows a tiered structure – where a specific tax rate is applicable up to certain income level for individuals and HUFs.
Let’s understand with the below comparison chart of the tax slabs for individual under the age of 60 years for FY 2024-25 under both the old and new regimes:
| Feature | Old Tax Regime | New Tax Regime |
| Income Tax Slabs | Up to ₹ 2.5 lakh: Nil | Up to ₹ 3 lakh: Nil |
| ₹ 2,50,001 – ₹ 5 lakh: 5% | ₹ 3,00,001 – ₹ 7 lakh: 5% | |
| ₹ 5,00,001 – ₹ 10 lakh: 20% | ₹ 7,50,001 – ₹ 10 lakh: 10% | |
| > ₹ 10 lakh: 30% | ₹ 10,00,001 – ₹ 12 lakh: 15% | |
| ₹ 12,00,001 – ₹ 15 lakh: 20% | ||
| > ₹ 15 lakh: 30% | ||
| Availability of Deductions & Exemptions | Yes (80C, 80D, HRA, etc.) | No |
| Rebate under Section 87A | <= ₹ 12,500 for income up to ₹ 5 lakh | <= ₹ 25,000 for income up to ₹ 7 lakh |
| Simplicity | Detailed reporting for deductions & exemptions | Simpler Report |
| Who Should Choose | Taxpayers with deductions and exemptions | Taxpayers with fewer deductions |
There are different rates for senior (60-80 Years) and super senior citizen (80 Years).
In the Old Tax Regime, senior citizens (60-80 years) start paying tax from ₹3 lakh, and super senior citizens (80+ years) from ₹5 lakh, whereas the New Tax Regime applies the same tax slabs to all, regardless of age.
How Businesses are taxed in India?
Businesses in India are taxed based on their structure. Sole proprietorships follow normal tax slab rates whereas business structures like partnership and companies have different rate and considerations:
A. Transfer Pricing: MNCs and associate entity must comply with transfer pricing regulations like transfer pricing documentation for fair pricing in international and specified domestic transactions.
B. Minimum Alternate Tax (MAT): Companies with lower tax liabilities than a percentage of book profits must pay 15% on book profits. Exempt for foreign companies without a permanent establishment or those under presumptive taxation (Sections 44B, 44BB, 44BBA, 44BBB).
C. ITR: Businesses must file ITR by 31st July for non-tax audit cases and 31st October for tax audit cases for the relevant AY.
D. Tax Credits, Exemptions and Deductions: Businesses can claim deductions for expenses like:
- Section 80JJAA (Employment Generation)Section 37 for ordinary business expenses like rent, office supplies and employee wages that are necessary for running the business.
- Section 32 (Depreciation)
Tax rates for domestic and foreign companies are summarized for AY 2025-26 in the tables below.
| DOMESTIC COMPANY | |
| Category | Tax Rate (AY 2025-26) |
| Turnover/Gross Receipts (PY 2022-23 ≤ ₹ 400 crore) | 25% |
| Section 115BA (Manufacturing) opted | 25% |
| Section 115BAA (New Manufacturing) opted | 22% |
| Section 115BAB (New Manufacturing) | 15% |
| Other Domestic Companies | 30% |
| FOREIGN COMPANY | |
| Category | `Tax Rate (AY 2025-26) |
| Royalties from Government/Indian organization | 50% |
| Other income | 35% |
| PARTNERSHIP | |
| Category | `Tax Rate (AY 2025-26) |
| ALL | 30% |
4% Health and Education Cess is also levied in all cases. After crossing certain thresholds in all the above cases surcharge is also applicable.
Which Income tax Deductions, Exemptions & Rebates should you avail?
1. Deductions
These reduce your taxable income, lowering the amount on which tax is calculated.
| Section | Description | Maximum Deduction |
| 80C | Investments in PPF, EPF, Life Insurance, etc. | ₹ 1.5 lakh |
| 80CCD (1) & (2) | Contribution to Pension Schemes | ₹1.5 lakh (combined with 80C), ₹50,000 (additional under 80CCD(1B)) |
| 80D | Health insurance premiums | Upto ₹ 25,000 for self spouse or dependent children (₹ 50,000 for senior citizens) & Upto ₹ 25,000 for parents (₹ 50,000 for senior citizens) |
| 80E | Interest on education loans | Full interest paid |
2. Exemptions
Certain incomes are excluded from taxable income.
| Section | Description | Exemption |
| 10(1) | Income from agriculture | Fully Exempt |
| 10(10D) | Life insurance policy payout | Exempt if premium ≤ 10% of sum assured (Conditions apply) |
| 10(14) | House Rent Allowance (HRA) | Exempt (Conditions apply like state) |
| 10(5) | Leave Travel Allowance (LTA) | Exempt for travel within India (Conditions apply) |
3. Rebates under Section 87A
Rebate is applied after exemptions & deductions to reduce tax payable, As described in old and new tax regime slabs comparison chart, this differs in both of the cases.
How to File Income Tax Returns?
An ITR is filed by taxpayers to report income, calculate tax and submit details to the Income Tax Department, ensuring the correct tax liability is assessed. It must be filed annually by the due date.
| Form | Who Should File | Description |
| ITR-1 (Sahaj) | Resident individuals with income up to ₹ 50 lakh. | Income from salary, one house property other sources and agricultural income up to ₹ 5,000 |
| ITR-2 | Individuals/HUFs with income above ₹50 lakh. | Not having business/profession income |
| ITR-3 | Individuals/HUFs with business/profession income. | business/profession or as a partner in a firm |
| ITR-4 (Sugam) | Residents under presumptive taxation (Sections 44AD/44ADA/44AE). | For specified businesses and professionals as per these sections |
| ITR-5 | Firms, LLPs, AOPs, BOIs (excluding companies) | For non-company entities like firms and partnerships. |
| ITR-6 | Companies (excluding those claiming Section 11 exemption) | For companies other than charitable/religious ones. |
| ITR-7 | Trusts, political parties and other specified entities |
How to Pay Income Tax in India?
These are some of the ways in which income tax is paid:
1. Tax Deducted at Source (TDS)/ Tax Collected at Source (TCS): Tax is deducted at the source of income (e.g., salary, commission) by the person making the payment (deductor). The deductor remits the tax to the government and provides Form 16/Form 16A to the recipient. In TCS like in Section 206C(1H), the seller collects tax from the buyer and remits it to the government.
2. Advance Tax: It is paid in installments throughout the year (15th June, 15th September, 15th December and 15th March) by individuals/entities with a tax liability over ₹10,000, based on estimated income
3. Self-Assessment Tax: It is the tax paid by taxpayers at the time of filing their ITR. It is the balance tax amount payable after all income tax deductions and credits like TDS, advance tax.
4. E-Payment of Taxes: Taxes are paid online using – the Income Tax e-filing portal or the NSDL portal, through net banking, debit/credit cards or QR code or by generating a challan.
Resident & Non-Resident Taxpayer
Under Indian Income Tax Law, the classification of a taxpayer as a resident or non-resident plays a fundamental role in determining their tax liabilities.
1. Resident: An individual is a resident if they spend 182 days or more in India during the previous year or 60 days in the year and 365 days in the last 4 years. Companies are residents if incorporated in India or if controlled in India.
2. Non-Resident (NRI): Individuals/entities not meeting the resident criteria are taxed only on income earned in India. with DTAA and international tax laws applying.
3. Resident but Not Ordinarily Resident (RNOR): A resident who has stayed less than 730 days in the last 7 years or 2 out of the last 10 years. They are taxed only on income generated or received in India.
Response to Income tax Notices and Resolving Disputes
The Income Tax Department (ITD) holds the power to summon any information and individuals involved in cases of incorrect or missing information in ITRs, concealment, search & seizure and other related matters.
The assessee must respond to notices like Section 148 notices served by the ITD in order to avoid heavy penalties which may exceed the original tax amount. If the matter is not resolved, appeals and writ petitions can be filed with the help of expert income tax consultants by proper legal representation to seek redressal.
Important Income Tax Due Dates AY 2024-25
| Income Tax Dates to Remember | |
| Date | What to do? |
| 7th of every month | TDS/TCS Deposit |
| 14th of every month | Issue TDS Certificates |
| 30th day from the end of every quarter | TCS CertificateTDS Return Filing |
| 15th March 2025 | Advance Tax (4th Installment) AY 2025-26Advance Tax Payment for Presumptive Scheme Assessees (Sections 44AD / 44ADA) |
| 31st March 2025 | Form 3CEAD – Country-by-Country ReportUpdated ITR for the AY 2022-23Form 67 – Foreign Tax Credit |
| 31st May 2025 | SFT Submission (Form 61A)Quarterly TDS/TCS Return |
| 31st July 2025 | ITR Filing (Individuals/ Non-Tax Audit Assessees) AY 2025-26 |
| 30th Sept 2025 | Tax Audit Report Filing (Form 3CA-CD/3CB-CD) |
| 31st Oct 2025 | ITR Filing (Tax Audit Assessees) AY 2025-26Form 3CEB (Transfer Pricing Audit Report) AY 2025-26 |
| 30th Nov 2025 | ITR Filing (Transfer Pricing Assessees) AY 2025-26 |
| 31st Dec 2025 | Belated/Revised ITR AY 2025-26 |
How Income tax consultancy works?
A single article is not suffix to explain the gigantic concepts of Income tax law. It is essential to keep yourself updated with tax amendments happening every now and then. Income tax consultancy in India is a one-stop solution for all the hurdles related to this law and compliance.
How Master Brains Can Help You:
- TDS & TCS Compliance: Ensuring compliance with Tax Deducted and Collected at Source regulations.
- Tax Advisory & Corporate Taxation: Optimize your tax structure and tax liabilities. Get transaction advisory with a deep-dive research and opinion on taxation of newly introduced matters like taxation of virtual digital assets.
- Representation Before Tax Authorities: We represent you during assessments, appeals, waiver schemes etc. with complete income tax litigation solution.
- Tax Returns & Review Services: Filing and reviewing accurate ITRs and maximize deductions.
- Consultancy for Charitable Institutions: Specialized advice for trusts and charitable organizations on tax exemptions and compliance.
- Health-check for Tax Compliances: Review compliance to spot potential issues, offer guidance on tax applicability and recommend solutions to avoid future penalties.
- Support in Search, Seizure & Survey: Assist with post-search proceedings, including representation, recovery of seized items and support in Settlement Commission cases.
- Opinions: Offering detailed tax opinions to help you understand complex taxation matters and ensure well-informed decision-making.
We hope this article helped to meet your curiosity about income tax law. With Master Brains tax advisory and tax consulting services, you can exercise full control over your tax compliance, litigation matters and day-in day-out income tax advisory and build effective tax strategies for yourself and your business.
Need help with your taxes? Contact us today for a consultation!
Team Master Brains
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