Category – 1:-  As per Indian Income Tax Act every person is liable to pay income tax whose income exceeds the basic exemption limit during any financial year. Theses persons includes the following for income tax purpose:-

  1. Individuals (Including non-residents)
  2. Hindu Undivided Family (HUF)
  3. Association of Persons/Bodies of Individuals (Where the individual shares of the members are known.
  4. Association of Persons/Bodies of Individuals (Where share of the members are indeterminate or unknown.
  5. Artificial Juridical persons, such as deities of temples
  6. Societies and charitable or religious trusts.

Clarification: Please note that if the income of any individual or Hindu Undivided Family is more than exempt limit but after allowing permission deduction under Chapter VI-A,  the income comes below exempt limit even then that person has to file the income tax return though his/her income is below exempt limit and no tax is to be paid.

Examples:

  • Mr. A has got total income of Rs.240000/= during financial year 2016-17 and he is 45 years old. His income shall not be taxable in any case since the basic exemption limit for other individuals is Rs.250000/=.
  • Gross income of Mrs. B is R.270000/= during financial year 2016-17 and she is 55 years old. She deposited Rs.50000/= Public Provident Fund Account on 12.10.16. Her Total Income is Rs.220000/= after claiming the deduction of Rs.50000/= under Chapter VI-A .She is not liable to pay any tax because basic exemption limit for women below 60 years is Rs.250000/= but she is supposed to file the income tax return.
  • Taxable income of Mrs. C is Rs.280000/= during financial year 2016-17 and she is 62 years old. Her income will not be taxed since she is senior citizen and basic exemption for senior citizen is Rs.300000/=
  • Taxable income Mr. D is Rs.480000/= during financial year 2016-17 and he is 81 years old. His income will not be taxable since he is very senior citizen and basic exemption for very senior citizen is Rs.500000/=.

Category -2:- Under this category following persons are liable to pay income tax irrespective their income.

  • All partnership firms
  • Co-operative Societies.
  • Companies (Private Limited Companies and Public Limited Companies)
  • Local Authorities.
  • AOP/BOI where shares of the members are indeterminate or unknown.

For example, if a partnership firm is having total income of Rs.3000/= during financial year 2016-17. It has to pay the income tax on Rs.3000/=. Same happens with companies etc.

Clarifications:-

  1. Taxable income here means only the incomes which are taxable under income tax act.  While calculating the taxable income, exempted or tax free incomes are not added.
  2. Senior resident means who completes the age of 60 years on any day of financial year for which the income is being calculated or who is below 80 years. For example: the 60th date of birth of  Mr. X falls on 10.03.17 and he is calculating his taxable income for financial year 2016-17 then he will we treated as senior citizen.
  3. Very Senior resident means who completes the age of 80 years on any day of financial year for which the income is being calculated or who is above 80 years. For example: the 80th date of birth of  Mr. Y falls on 10.08.16 and he is calculating his taxable income for financial year 2016-17 then he will we treated as very senior citizen.

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