We all need to fill up our income tax against the income. This tax that is implied by the government on every citizen is mostly filed annually.
An income tax, as the name suggests, is levied on the income that a working individual earns successfully. Most of the present governments impose taxes on financial income generated by everyone within their jurisdiction. And this fund happens to be elementary as a source of funds for the government, which it can use to finance all its activities. Therefore, it is essential that all businesses and individuals must file an income tax return at the end of each year. This is important to determine whether they owe any taxes to the government or are eligible for a refund. If you are thinking that calculating a year’s income tax of an individual is tough, then you should know that it isn’t much hard to do that. Besides, with a wide range of premium income tax return calculator that you will see all over the internet, you wouldn’t have much to do by yourself.
What does an income tax depend on?
The income tax levied on every Indian citizen that you will ultimately pay depends on a set of parameters. Among these parameters, we can consider the type of income, the total sum of income, age, and all investments that come under tax deduction. The income tax deductions are usually done by the employer. Here, if you plan to apply for an income tax return, then you can also be eligible for refunds on several occasions. This stands in sharp contrast to the ones who apply for it late and ultimately ends up paying more.
How to Calculate Income Tax?
Before filing your taxes it is important to know about incomes in details. Once you are done with it, then comes the process of filling it easily. And to ease the process, you need to have a complete and comprehensive understanding of how to calculate the income tax.
The income tax, as it is calculated, combines income from every other source. These sources include your salary, house property, capital gain, and other sources to derive the Gross Total Income. Once all the sources are identified and the income derived from them are clubbed together, then comes the investments and expenses. These are allowed as deductions and exemptions and thus, they need to be deducted from the Gross Total Income that you calculate. This is done to deduce the Taxable Income.
Once you are over with all the steps, then, you can calculate the tax according to the income tax slab that you are entitled to. If your income is mostly driven by business and profession, the income tax is calculated separately as the individual tax slab is not applicable for it.
In the End
Calculating your taxes and paying it to the government is what every man and woman should do to make a benefit for the government and conversely to help themselves.