As I believe, learning about the Income Tax Act basic is as much important as science and mathematics and languages subjects. It doesn't mean  everyone should learn every Sections, subsections, rule and provision of the act. But it is better to have the basic concept of Income tax within their jurisdictions. Here I am going to give bird view of Indian Income tax.

What is income tax? Why should I pay income tax? Where should I pay? When should I pay? Everyone gets these type of question at least once. We are going to answer these questions  in a simple way.

Income tax is type of direct tax imposed by the government to individual or corporate entities. It is the one of the sources of income to the government. Basically everybody who earns income is liable to file income tax return and pay the tax to government. You have to submit your income and tax details to income tax department within due date in respective online portal, this is called as Income tax filing or income tax return.

1. Assessment year and Previous year:

Previous year or financial year means on which period you are going to pay the tax. In India Financial year begins from 1st April and ends with  31st March.

Assessment year is in which year you pay tax for the financial year. Example, if you earn the income from April 2020 to March 2021 (Financial year 2020-21) for the same you will pay the tax in Assessment year 2021-22. In simple term, income earned during the financial year or previous year is assessed to tax in next financial year that is assessment year.

2. Income:

Your earning are called incomes. Broadly those incomes are categorized in 5 heads;

a. Income from salary: (Salary, perquisites, allowance) in simple all the money or monitory value you received while rendering in employment.

b. Income from house property: Rent received for residential or commercial property.

c. Income from business or profession: Profit or loss carrying on business or profession

d. Income from capital gain: Profit or loss on selling of capital asset

e. Other income: Any other which is not fit to above heads.

Sum of all the heads of income will be treated as gross income.

3. Deductions:

Deductions reduce your gross income those are amount subject to maximum limits with respective sections (Sec 80C to Sec 80U). Income tax department allows to you to reduce your income and pay less tax.

After reducing the deduction with your Gross income, that amount will be called taxable income.

4. Tax deduction at source (TDS):

Means tax will be deduct from your income and pay the same to income tax department. While filing your income tax return you can claim the same as benefit. In term of employment, employer or company will, estimated your total tax after considering your total income, deduct the same from your payroll and make the payment to department.

5. Calculation of tax:

On your taxable income Tax will be calculated with respective percentage (Income Tax slab and tax percentage for each slab will change in every financial year). While filing income tax return, you need to make balance payment if any after considering the Tax deducted at source.

6. Filing of Income tax / Income tax return:

Return ofincome tax is like declaring your income and tax liability with the income tax department. Once the tax is calculated, you need to clear your liability of Tax by making payment or adjusting the TDS. After filing income tax department will assess the return.

Hope this will help you know the basic concept. Income tax act is a big ocean. Learning and updating of Laws and Acts are never ending process.