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Income tax India - FAQ

FY 2007 - 2008 AY 2008 - 2009

Income Tax India :

Income tax in India is a Direct tax paid by persons to the Central Government of India.

FY Stands for Financial Year in India (i.e., 1st of April to 31st of March).
We need to Calculate the total income earned and Tax for the Financial Year (i.e., April 1, 2007 to March 31, 2008).

Click here to Calculate Income tax for FY 2007-2008

AY stands for Assessment Year. It is the period of 12 months succeeding the relevant Financial year. During this AY every person files return of income to Income tax department of India for assessment.

Example : For FY 2007 - 2008, the AY is 2008 - 2009 (ie April 1, 2008 to March 31, 2009).

Who is liable to pay the Income tax in India?

Person. Person includes,

  • An Individual

  • a Hindu Undivided Family

  • a Company

  • a Firm

  • an Association of Persons (AOP) or Body of Individuals (BOI)

  • a Local Authority

  • every artificial Juridical person, not falling within any of the above classes

For which Amount I have to pay the Income tax in India?

Pay the Income tax for the Total Income you earn during the period from April 1, 2007 to March 31, 2008.

Should I pay the Income tax for the new income I just start earning from January 26, 2008?

Yes. Pay your Income tax for the total Income you earn during the period from January 26, 2008 to March 31,2008.

How should I compute my 'Total Income'?

Total Income is Sum of Income you earn from,

  • Salaries

  • Income from house property

  • Profits and Gains of business or profession

  • Capital Gains

  • Income from Other sources

What is return of income?

Declaring our Income to the Income Tax Department of India in the format prescribed.

Why we need to file the return of income?

Income tax department cannot compute the total income of each and every person. Hence, a duty has been cast on us to declare our income, by filing the return of income.

Am I liable to pay Income tax for the income earned outside India?

It depends on your Residential status.Your residential status determines the scope of income.

Individuals and HUFs are divided into 3 categories.

  1. R&OR : Resident and Ordinary Resident

  2. RNOR : Resident but Not Ordinarily Resident

  3. NR: Non-Resident

All others like Companies, Firms, AOPs, BOIs etc are divided as,

  • Resident

  • Non-Resident

How to determine the residential status?

Click on the link to know more about Residential status.

Determine Residential Status for Income Tax Calculation.

What is Surcharge? Why including it to Income Tax India?

Surcharge is an additional levy on Income Tax in India made by the Central Government of India. While the Income Tax amount is distributed to the State Governments, the surcharge is wholly held by the Central Government of India.


What is Education Cess?

Education Cess is an additional levy on Indian Income Tax and surcharge made by the Central Government of India. Education Cess is exclusively held by the Central Government for the purpose of providing education, in India.


What is the rate of income tax India or tax amount payable in India?

Rate enacted by Central Act (ie Finance Act) for every Assessment Year. The Finance Act is passed during the Budget Session of the Parliament.

The Income tax India rates applicable to Assessment Year 2008-2009 are as prescribed by "The Finance Act, 2007".

Click here to know the Tax rates in India for AY 2008-2009

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Income Tax Liability | Income tax Return Forms | Income Tax Rates | IT Return Forms AY 2008-09 | Chapter VI-A Deductions


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