Decoding Income Tax for Beginners

Introduction

Filing income tax for the first time may feel confusing, but it’s actually quite simple when broken down. Income tax is the share of your income you contribute to the government, which is used for development, public services, and welfare programs.

This guide is perfect for salaried individuals, freelancers, professionals, and MSME owners who want a basic understanding of India’s income tax for the financial year 2024-25 (AY 2025-26).

Who Needs to Pay Income Tax?

Anyone whose total income crosses the basic exemption limit must file and pay income tax, including:

• Salaried employees

• Self-employed individuals

• Freelancers and gig workers

• Business owners

• Senior citizens (with slightly higher exemptions)

Income Tax Slabs 2025: New vs Old Regime (Simplified)

In 2025, taxpayers can choose between New Regime (simpler, fewer deductions) or Old Regime (more deductions, slightly higher tax).

New Regime (Default)

• Up to ₹3,00,000 – Nil

• ₹3,00,001 to ₹15,00,000 – 5% to 20% (progressive)

• Above ₹15,00,000 – 30%

Old Regime

• Up to ₹2,50,000 – Nil

• ₹2,50,001 to ₹10,00,000 – 5% to 20%

• Above ₹10,00,000 – 30%

• Allows deductions: 80C, 80D, HRA, Home Loan Interest

Tip: Compare both regimes before filing to choose the best option.

Steps to File Income Tax Return (ITR)

1. Collect income proofs (Form 16, bank statements, investment proofs).
2. Log into the official e-filing portal: incometax.gov.in.
3. Choose the correct ITR form.
4. Enter income, claim deductions, and verify tax credits.
5. Submit and e-verify your return.
6. Due Date: 31st July 2025

Penalties for Late Filing

• Late fee up to ₹5,000

• Interest on unpaid tax

• Difficulties in getting loans or visas

• Possible notices from IT department

Common Mistakes to Avoid

• Forgetting to report all income sources

• Missing eligible deductions

• Filing incorrect bank account details

• Not e-verifying after filing

How Prokorp Management Consultants Can Help

Prokorp Management Consultants, Chennai provides:

• Personalized tax planning

• Tax regime selection assistance

• Hassle-free ITR filing

• Compliance support for individuals, professionals, and MSMEs