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Taxmann Students Guide to Income Tax PDF Download | Getting Started with Income Taxes for Newbies 



Students Guide to Income Tax

Milestones are marked on a person’s life as they grow older. Many people look forward to these milestones in their lives. In addition to these, the first time we pay our income tax is a significant milestone for most of us. When the deadline for submitting one’s tax return approaches, many people become anxious because they perceive it to be a complex undertaking. You may even think it’s impossible if you’re a first-time taxpayer.

As a result, to assist those taxpayers who are preparing to file their first tax return, we have compiled a brief overview of income taxation fundamentals as a students’ guide to income tax. With our comprehensive introduction to income tax for beginners, you’ll learn everything you need to know about income tax, from the basics to the ins and outs of the Indian tax system.

What is the Income Tax Act of 1938?

The central government levies taxes on revenue produced by people and corporations during a fiscal year. The government gets money via taxes. The government uses this money for enhancing the infrastructure, providing healthcare, education, subsidies for farmers/agriculture, and other government welfare programs. Direct and indirect taxes are the two primary forms of taxes. A direct tax is a tax that is levied directly on the amount of money a person makes. This year’s tax rate is based on the applicable income slab rates.

Direct taxes can be divided into three categories. It is the responsibility of every individual taxpayer, even Hindu Undivided Families, and individuals who do not work for corporations, to pay a portion of their earnings in income tax. The legislation specifies the tax rate that applies to this type of income.

Corporate tax is the tax that corporations pay on their earnings from operations. Again, the income tax laws of India have set a specific corporation tax rate.

Who is Responsible for Paying Federal and State Income Taxes? – Differentiating between Taxpayers

To apply different tax rates to different types of taxpayers, the Income Tax Act has categorized the various sorts of taxpayers.

Taxpayers fall under one of the following categories:

  • Individuals
  • The Hindu Undivided Family (HUF)
  • Association of Persons (AOP)
  • Body of Individuals (BOI)
  • Firms
  • Companies

In addition, people are divided into two major categories: residents and non-residents.

Individuals in India are obligated to pay tax on all of their worldwide income, including money generated domestically and internationally. Taxes on income generated or accrued outside of India are exempt from Non-residents. A person who is a permanent resident in India must be assessed for tax reasons based on the length of their stay in India for each financial year.

For tax purposes, residents are further subdivided into the following categories:

  • People under the age of 60
  • People who are 60 or older but not yet 80 years old.
  • Over-80-year-old individuals

Getting Started with Income Taxes for Newbies | Taxmann Students Guide to Income Tax PDF Download

Are you seeking a job after graduating from college? Is it possible that you’ve already found work and are about to file your first tax returns? To make your financial life easier, we want to make your tax filing process as simple as possible. Anyone can fill out Income tax returns which makes a profit. Today, we’re going to teach you the fundamentals of Income Tax so that you may confidently begin your new career.

Defining ‘Previous year.’

The 12 months beginning on April 1 and concluding on March 31 of the following year is known as the previous year, the financial year, or your tax year in the United States. Your tax year ends on March 31, regardless of when you begin working, and a new tax year starts on April 1. You should therefore arrange your taxes for the upcoming fiscal year in advance.

Assessment Year

When it comes to taxes, this is a term you’re likely to hear a lot of. You must do so in the following financial year to file your tax return, which is called the “assesses and filing period.” As a result, the assessment year for the prior year, 2018-19, is 2019-20. Tax returns are filed during the assessment year, the calendar year in which the preceding tax year ended. For example, if you begin working on January 1, 2021, your tax year will end on March 31, that same year. AY 2021-22 is your prior year, and AY 2020-21 is your current year. The deadline for submitting your tax return is July 31, 2021.

Knowing How Much You Earn

As soon as you begin work, contact your company’s payroll or HR department and request a copy of your pay stub or tax statement. Here, you’ll learn about the primary components of your wage and how much tax you’ll have to pay based on them.

For example, many firms offer House Rent Allowance (HRA), which is tax-deductible if you live in a rented residence.

Five Heads of Income – What are they?

Income tax is levied on everyone in India who earns or receives money. In other words, it doesn’t matter if you live in India or not. To make things easier for taxpayers, the Internal Revenue Service divides revenue into five primary categories:

  • Additional Resources for Financial Security: Taxable sources of income under this heading include interest on savings bank accounts, fixed deposits, and winnings from lottery games.
  • Income from a Property: As a result, rental property income is taxed under this income category.
  • Gains on Investments: Profits made by selling an asset such as a stock or a home are taxed under this income section.
  • Entrepreneurial and Professional Earnings: Self-employed individuals, businesses, freelancers, contractors, and professionals with their practices, including life insurance agents, chartered accountants, doctors, lawyers, and tuition teachers, all have their earnings subject to this tax.
  • Salary Income: Under this category, you must report your salary and pension income if you receive any.

What is the Purpose of PAN?

It stands for Permanent Account Number or PAN. This 10-digit alphanumeric code is provided to Indian taxpayers by the Income Tax Department. All tax-related transactions and information are logged using a person’s unique permanent account number.

For a person to pay taxes, they must provide a PAN number. Also, the places where a person offers his PAN to organizations like banks and mutual fund firms are essential considerations. PANs transmit financial data from these organizations to the tax authorities.  In this way, the taxman may link all tax-related activity to the department. A permanent account number identifies all of your financial transactions to the taxman.

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Payment of Income Taxes

Tax Deducted at Source (TDS)

For certain payments, the payer deducts tax at the time of charge to the recipient. An individual’s tax bill can be reduced by the amount of tax deducted at the source (TDS).

Advance Tax

An estimated tax burden for the year that exceeds Rs 10,000 must be paid in advance by the taxpayer. The government has set deadlines for the payment of tax payments in advance.

Self-Assessment Tax

The taxpayer must pay the amount of tax on the amount of income they have been deemed to have earned. The total income tax is reduced by the advance tax and TDS to calculate the self-assessment tax.

e-Payment of Taxes

The NSDL website offers online payment options for taxpayers who need to make advance or self-assessment payments. On the other hand, taxpayers must have access to an authorized bank’s online banking service.

FAQs on Students Guide to Income Tax PDF

1. What’s the difference between taxable and nontaxable income?

Income that is exempt from taxation is not included in determining taxable income under the provisions of the Internal Revenue Code. Example: Interest from a PPF. While taxable income, such as wages, real estate, and capital gains, is subject to taxation.

2. Shouldn’t everyone with a PAN file an ITR?

As stated in the Income Tax Act, only those with income that qualifies as taxable are required to submit an ITR.

3. What is the meaning of TAN?

For individuals required to deduct TDS, the Income Tax Department issues a 10-digit alphanumeric number known as a TAN. Format JPRD00214F TAN. Alphabetic first four digits, followed by five numeric digits, and the final four digits of alphabetic alphabets.

4. Who is an assessee?

An assessee is defined in the Income Tax Act as “a person by whom any tax or any other quantity of money is payable.” You are an assessee if you are responsible for paying taxes, have taxable income, or must otherwise file an ITR. The Income Tax Act of 1961 divides taxpayers into a variety of groups, including

5. Even if my taxable income falls below the threshold, can I still file a tax return?

Yes, you can file a voluntary income tax return even if your income is less than the basic exemption amount.


It’s a good idea to read this article if you recently graduated from college with a good job offer. Income tax is a critical responsibility that all good citizens of the nation are expected to fulfill. We’ve gone through nearly all there is to know about income tax. Thank you for stopping by. Stay in touch with our site to have the latest updates on the Top ways to make money online with Google.

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