Complete Guide to Tax Guidelines in India

India has a complex but well-defined tax system designed to ensure fair contribution from all income earners and businesses. Whether you're an individual, business owner, or professional, understanding these guidelines is crucial for compliance and optimization.

Tax Types in India

1. Income Tax Income tax is levied on income earned by individuals, businesses, and entities. The fiscal year runs from April 1 to March 31. Every individual earning income above the exemption limit must file an Income Tax Return (ITR).

2. Goods and Services Tax (GST) GST is an indirect tax applicable on the supply of goods and services. Implemented in 2017, it has multiple slabs:

• 0% (essential items)
• 5% (most goods and services)
• 12% (some services and goods)
• 18% (most services)
• 28% (luxury items, sin goods)

3. Customs Duty Applicable on imported goods, with rates varying by product category.

Income Tax Slabs (FY 2025-26)

For Indian Residents (Individual):

• Up to ₹2,50,000: No tax
• ₹2,50,001 - ₹5,00,000: 5%
• ₹5,00,001 - ₹10,00,000: 20%
• Above ₹10,00,000: 30%

Senior Citizens (60+ years):

• Up to ₹3,00,000: No tax
• ₹3,00,001 - ₹5,00,000: 5%

Super Senior Citizens (80+ years):

• Up to ₹5,00,000: No tax
• ₹5,00,001 - ₹10,00,000: 20%

Key Tax Deadlines

• June 30: Deadline for salaried individuals to file ITR
• July 31: Extended deadline for most taxpayers
• August 31: Deadline for businesses and professionals
• September 30: Deadline for businesses with significant turnover
• 15th of every month: Quarterly GST return deadline (GSTR-3B)
• 20th of every month: GST payment deadline
• December 31: Deadline for quarterly advance tax payment

Deductions Available Under Section 80C

You can claim deductions up to ₹1,50,000 under various provisions:

• Life Insurance Premium: Deductible under 80C
• Provident Fund Contribution: EPF, VPF, PPF contributions
• Mutual Fund Investments: ELSS funds qualify for deduction
• Fixed Deposits: 5-year FDs at banks and post offices
• Children's Education: Tuition fees for children's education
• Home Loan Principal: Principal repayment portion
• NSC: National Savings Certificates

Other Important Deductions

Section 80D - Health Insurance: Up to ₹50,000 for individual and ₹1,00,000 for families

Section 80E - Education Loan Interest: No limit on deduction of education loan interest

Section 80G - Charitable Donations: 50-100% deduction depending on organization type

Section 80U - Disability: Up to ₹75,000 for individuals with disability

GST Registration Requirements

You must register for GST if:

• Your annual turnover exceeds ₹40 lakhs (₹20 lakhs for special category states)
• You supply goods or services
• You engage in e-commerce
• You are an importer or exporter
• You wish to claim input tax credit even below the threshold

Goods and Services Taxable at Different Rates

0% Rate: Food grains, fruits, vegetables, milk, eggs, salt, honey

5% Rate: Basic food items, spices, edible oil, tea, coffee, coal, medicines, bricks

12% Rate: Most services, GST, air tickets, cement, soap, shampoo

18% Rate: Services like telecommunication, restaurants, hotels (5 star), automobiles

28% Rate: Luxury goods, sin goods (cigarettes, alcohol), high-end motor vehicles, property

Penalties for Non-Compliance

Income Tax Non-Filing:

• Failure to file: ₹1,000 to ₹10,000 in penalties
• Late payment: 1% per month interest

GST Non-Compliance:

• Late filing: ₹200 to ₹500 per day (capped at ₹5,000)
• Short payment: 10-15% penalty on short tax
• Non-filing: Up to 25% of tax liability

TDS (Tax Deducted at Source)

TDS is deducted by employers and businesses on certain payments:

Employment TDS (Section 192): Deducted from salary by employers

Business TDS (Section 194A): 10% on interest payments

Section 194D: 10% on insurance commissions

Section 194I: 5% on rent above ₹50,000 per month

Section 194LA: 5% on purchase of immovable property

E-Filing and Returns

Salaried Individuals: File ITR-1 (Sahaj)

Businesspersons: File ITR-3

Professionals: File ITR-3 or ITR-4

Businesspersons with turnover < ₹2 crores: Can file ITR-4S (simpler form)

How to Minimize Tax Liability

1. Maximize Deductions: Utilize all available deductions under 80C, 80D, 80E, 80G
2. Invest in Tax-Saving Instruments: ELSS, PPF, NSC, life insurance
3. Plan Your Investments: Spread investments across the financial year
4. Maintain Proper Records: Keep all receipts, invoices, and documentation
5. Professional Consultation: Engage with a CA for optimization strategies
6. Business Optimization: For businesses, maintain separate accounts, claim all business expenses
7. HRA Optimization: If applicable, calculate the maximum HRA exemption

Important Dates to Remember

• 31st May: Last date for contribution to most savings schemes for the current FY
• 30th June: Filing deadline for regular taxpayers
• 31st July: Extended filing deadline
• 15th June, 15th Sept, 15th Dec, 15th March: Quarterly advance tax due dates

Changes in Recent Years

• Introduction of New Income Tax Regime: Optional regime with lower rates but fewer deductions (from FY 2020-21)
• Faceless Assessment: To reduce corruption and increase transparency
• Digital Payment Tracking: Cash transactions above ₹10 lakhs face 25% addition to income
• TDS e-Payment: Mandatory digital payment of TDS
• Increased Focus on Compliance: Enhanced scrutiny through data analytics

GST Portal Updates

The GST portal at www.gst.gov.in provides:

• Online registration
• Return filing (GSTR-1, GSTR-2A, GSTR-3B)
• Tax payment
• Communication with GST authorities
• Download of documents and references

Conclusion

Tax compliance in India requires timely filing, accurate record-keeping, and strategic planning. Whether you're an individual or business owner, understanding these guidelines helps you:

• Avoid penalties and legal issues
• Optimize your tax liability
• Maintain audit readiness
• Plan for financial growth

It's advisable to consult with a qualified Chartered Accountant or tax professional to ensure you're complying with all applicable regulations while maximizing available benefits.

Remember: Taxes are the price we pay for a functional society. Paying them honestly and on time contributes to nation-building while keeping you on the right side of the law.