By Rohit Singhal – Commercial Account Services, Paonta Sahib
Understanding income tax is essential — whether you’re a salaried employee, self-employed professional, or a business owner. Yet many Indians file their tax returns in a rush without fully understanding how income tax works, who it applies to, and which regime to choose.
Here’s a simple, step-by-step guide for first-time and regular taxpayers, answering your most common income tax questions in the context of FY 2024–25 (AY 2025–26).
📘 What is Income Tax?
Income Tax is a direct tax levied by the Central Government on your income earned during a financial year. The tax is collected as per slabs defined under the Income Tax Act, 1961.
You’re required to file an Income Tax Return (ITR) if your income exceeds the exemption limit. Based on your income type and amount, you may qualify for various deductions and rebates.
👥 Types of Taxpayers in India
The Indian tax system recognizes different categories of taxpayers. Each has different ITR forms, deductions, and compliance requirements.
✅ 1. Individual
- Most common: Salaried employees, freelancers, consultants
- Taxed as per income slabs
- Eligible for deductions like 80C, 80D, HRA, etc.
✅ 2. HUF (Hindu Undivided Family)
- Joint family structure recognized for tax purposes
- Separate PAN and ITR
- Useful for family businesses and tax planning
✅ 3. Firms & Partnerships (including LLPs)
- Taxed at flat 30% + surcharge & cess
- No slab benefit
- Can claim business expenses
✅ 4. Companies (Private or Public Limited)
- Flat corporate tax rates (22% or 25% depending on turnover)
- Dividend taxation applies
- Need audited financials
✅ 5. Trusts, AOPs, BOIs, and Local Authorities
- Special taxation rules apply
- Often used for NGOs, charitable institutions
📊 Old vs New Tax Regime (FY 2024–25)
From FY 2020–21, taxpayers have the option to choose between two tax regimes:
🏛️ Old Tax Regime
- Allows standard deductions and section-wise benefits (80C, 80D, HRA, etc.)
- Suitable if you have many deductions/investments
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2.5L | NIL |
| ₹2.5L – ₹5L | 5% |
| ₹5L – ₹10L | 20% |
| Above ₹10L | 30% |
Note: Senior citizens get higher basic exemption limits.
🆕 New Tax Regime (Default from FY 2023–24 onwards)
- Lower tax rates but no deductions allowed (except NPS, employer contribution, etc.)
- Best for those without major deductions or investments
| Income Slab | Tax Rate |
|---|---|
| Up to ₹3L | NIL |
| ₹3L – ₹6L | 5% |
| ₹6L – ₹9L | 10% |
| ₹9L – ₹12L | 15% |
| ₹12L – ₹15L | 20% |
| Above ₹15L | 30% |
🤔 Old vs New Regime – Which One Should You Choose?
Let’s understand with a simple example:
Ravi earns ₹9,00,000 annually and invests ₹1.5L in PPF, pays ₹25,000 health insurance premium, and claims HRA.
| Regime | Taxable Income | Tax Payable (approx.) |
|---|---|---|
| Old Regime | ₹6,75,000 | ₹33,800 (after rebates) |
| New Regime | ₹9,00,000 | ₹44,200 (no deductions) |
✅ Better choice: Old Regime — because Ravi has multiple deductions.
✔️ Quick Tips to Decide:
| Situation | Suggested Regime |
|---|---|
| Salaried with housing loan, LIC, PPF, 80D | Old Regime |
| No investments or deductions | New Regime |
| Want simple compliance | New Regime |
| Self-employed with business deductions | Old Regime |
📋 Final Words
Whether you’re a first-time filer or a seasoned professional, choosing the right tax regime can save you thousands of rupees every year. Don’t leave it for the last moment — understand your income, evaluate your deductions, and file your ITR wisely.
Need help making the right choice? We’re just a call away.
📍 Contact Rohit Singhal – Income Tax Consultant, Paonta Sahib
Rohit Singhal
📌 Commercial Account Services
🏢 Mahadev Complex, Near Electricity Office, Taruwala,
Badripur, Paonta Sahib, Distt. Sirmour (H.P.)
📞 +91 98172 06937
📧 rohitpaonta@gmail.com
🌐 Trusted Solutions for Income Tax, GST, Accounting & Property Advisory
#IncomeTaxIndia #NewVsOldTaxRegime #RohitSinghalServices #ITRGuideIndia #TaxConsultantHP #PaontaTaxFiling #FinancialPlanning #IncomeTaxHimachal #CommercialAccountServices
Discover more from Commercial Account Services
Subscribe to get the latest posts sent to your email.
