Should you have income, you could have to pay taxes on it. Personal income taxes are based on this fundamental idea. Every person in India pays taxes determined by their own income. Whether your income is taxed as a salaried employee, freelancer, or business owner, knowing this helps you legally save money and better plan. Let’s grasp the fundamentals in an understandable manner.
Personal Income: Definition
Personal income is any individual earnings of money. It can originate from several places:
- Payment or salary
- Income related in business or professional capacity
- Rent from a piece of real estate
- Curiosity about fixed deposits and savings
- Dividends, capital gains, perhaps lottery earnings
To figure your overall personal income, you add all these.
Personal Taxes: Definition
Personal taxes are those income taxes paid on your own income. Your total income determines this tax; all qualified deductions and exemptions are subtracted from that figure. You pay this tax to India’s Income Tax Department.
Income Tax Slabs (Old Regime) for FY 2024–25
| Income Range | Tax Rates |
| Up to ₹2.5 lakh | 0% |
| ₹2.5 lakh – ₹5 lakh | 5% |
| ₹5 lakh – ₹10 lakh | 20% |
| Over ₹10 lakh | 30% |
Notes: Senior and super senior citizens have a higher exemption limit.
How Does One Determine Personal Income Tax?
- List all your income sources.
- Subtract qualified deductions including HRA, 80C, 80D, etc.
- Apply the slab rate on the taxable income.
- If relevant, add surcharge and cess.
- Pay taxes either online using TDS or otherwise.
Deductions You Are Entitled To
Use deductions to lower your own taxes:
- Section 80C: Covers up to ₹1.5 lakh (PPF, ELSS, LIC, etc.)
- Section 80D: Premiums for Health Insurance
- Standard Deduction: ₹50,000 for pensioners and salaried employees
- Section 80G: Donations to a Charity
- Education loan and home loan interests
Pay and File Personal Taxes: How to Do It
- Online payment of taxes is possible at incometax.gov.in.
- Should TDS already be deducted, file your ITR to either adjust or claim a refund.
- Based on their income type, most people use ITR-1 or ITR-2.
- Usually, the last date one files is July 31, every year.
Why File Organization Is Crucially Important
File your return even if your income falls below the taxable limit; it’s beneficial:
- For loan approvals
- Regarding visas
- To ask for a TDS refund
- To maintain a neat financial record
Lastly
Handling your money legally and sensibly depends on knowing personal income taxes. Knowing how your income is taxed will help you save more, whether your income comes from running a company, salary, or stock investment. File your taxes on schedule, assert your deductions, and keep tax-compliant.
