Income tax in India is charged on taxable income, which is total income after the deductions and exemptions the law allows. The rates and rules are set by the government and updated through the annual Finance Act.
Income is grouped under heads: salary, income from house property, profits from business or profession, capital gains, and income from other sources. Each head has its own rules for what can be deducted before the amounts are added together.
Tax rates apply in slabs. Only the portion of income that falls within a slab is taxed at that slab's rate, so moving into a higher slab does not mean all income is taxed at the higher rate. The slab limits and rates change from time to time, which is why this site does not quote them. The Income Tax Department publishes the current ones.
Deductions and exemptions reduce taxable income. House Rent Allowance (HRA) is one example: a salaried person who pays rent may be able to claim an exemption, subject to conditions. Taxpayers have generally been able to choose between a regime with more deductions and one with fewer deductions and different rates, and what each allows is set out each year.
Tax is often collected before the return is filed. Employers deduct TDS (tax deducted at source) from salary, banks may deduct it on interest, and some taxpayers pay advance tax. When the return is filed, the tax already paid is set against the tax due: any shortfall is paid, and any excess can be claimed as a refund.
The HRA Exemption Calculator on this site shows an illustrative figure. This is general information, not tax advice. A qualified tax professional can advise on your own situation.
Key points
- Tax is charged on taxable income, after allowed deductions and exemptions
- Income is grouped under heads, each with its own rules
- Slabs tax each portion of income at that band's rate, not all income at the top rate
- Tax is often deducted at source (TDS) or paid in advance before filing
- Current slabs and rules come from the Income Tax Department, not this site
General information only — not financial, legal or tax advice. Dhimson Cover does not sell, arrange, compare or recommend any product. Rules, terms and conditions differ between providers and change over time, so always read the provider's own documents or the official source.