Browsing: Individual Tax

Individual tax refers to the tax levied on the income earned by individuals, including salaries, business profits, rental income, and investment gains. Governments impose this tax to generate revenue for public services such as healthcare, education, and infrastructure. In India, individual tax is governed by the Income Tax Act, 1961, and taxpayers are required to file Income Tax Returns (ITR) annually. The tax rates vary based on income slabs, with higher earners paying a greater percentage. Additionally, deductions and exemptions—such as those for health insurance, home loans, and retirement savings—help reduce taxable income and encourage financial planning.

Individual tax can be classified into progressive, proportional, or regressive systems, depending on how the tax burden is distributed. In India, a progressive tax system is followed, meaning higher-income individuals pay a larger share of their earnings in taxes. Taxpayers must ensure compliance with filing deadlines to avoid penalties and interest charges. Governments also offer tax-saving investment options, such as Public Provident Fund (PPF), Equity-Linked Savings Schemes (ELSS), and National Pension System (NPS), to incentivize savings and long-term financial security. As tax laws evolve, individuals must stay informed about changes to optimize their tax liabilities and financial planning.