MISS MANAGE
Now Reading:

6 Income Tax Questions That You’re Embarrassed To Ask

6 Income Tax Questions That You’re Embarrassed To Ask

Knowing the basics of income tax is very important especially if you’ve just started working.  You don’t need to be a tax expert to understand Income Tax you just need to know the basics. There are two types of taxes that we pay to the government: One on goods and services we buy (known as indirect taxes like the GST) and the other on the income we earn (known as direct taxes like income tax).

#1. What is Income Tax?

The tax imposed by the government on all our income from wages, salaries, commissions to dividends, interest, rents. 

#2. Who has to pay income tax?

Paying income tax in India depends mainly on your residential status.  If you are a Resident in India (according to Income-tax Act) you have to pay tax on your whole income (whether earned in India or outside India) and if you are a non-resident you have to pay tax on income earned in India only.

Any Indian citizen aged below 60 years has to pay income tax if their income exceeds 2.5 lakhs. If the individual is above 60 years of age and earns more than Rs.3 lakhs, he/she will also have to pay income tax.

#3. What are the sources of income that are taxed?

Before filing Income Tax Returns you must know how much tax you need to pay. To do this you have to calculate how much income you make in a year from all the sources of income listed below. Once this is done deduct any investments (such as PPF, FD, ELSS) you’ve made under section 80 (consult a CA to help you with these) and check which tax slab you fall under.

  1. Income from salary: The money you receive from your employer
  2. Income from house property: The money you get from rent on any of your properties.
  3. Income from business or profession: The money or profit you make as an entrepreneur, This is not to be confused with corporate tax which is taxes paid and filed on profits generated by a business. 
  4. Income from capital gains: Capital gains are those made on selling an asset such as shares, profits, property etc. Capital gains could be short-term (made on selling an asset within 1 year) or long-term(made on selling an asset after 1 year of buying them). Depending on this and the type of asset the tax payable will differ.
  5. Income from other sources: The money you earn from any other sources like interest, lotteries, dividends etc. that don’t fall under the above 4 sources will come under this head.

#4. What are the Income Tax Slabs?

Tax slabs are the tax rates that apply to your income.

This is the rate card for 2018-2019, which means the income earned from April 1st 2018-31st March 2019 will be taxed with the following rates:

#5. What are tax deductions?

These are the amounts the Income Tax department allows you to deduct from your income so that you can legally bring down your taxable income. Deductions are given by the tax department to help taxpayers lower their taxable income under section 80 and a maximum tax deduction of Rs.1.5 lakh can be claimed for a particular financial year. 

#6. What is the procedure to file your income tax returns? 

Income Tax Return is a document you file with the Internal Revenue Service or the State Tax Board reporting your income, profits, losses on your business and other deductions as well as details about your tax refund or tax liability. If you’re entitled to a tax refund, filing your return will help you get it back and if you have taxes due you can pay them. 

Following are the steps by which one can file an Income tax return.

Step 1: Login into your account on the Income Tax website, your user ID is your PAN number. Click on upload Form 16 which is in PDF format.

Step 2: Enter personal details-Name, DOB, bank details.

Step 3: Enter your salary details and also TDS.

Step 4: Enter deduction details. (Enter investment details under section 80C).

Step 5: Add details of taxes paid.

Step 6: E-file your return-  if you see “no tax due” or “refund” and proceed for E-Filing. You will also get an acknowledgement number on the next screen.

Step 7: Once the return is filed, E-verify your income tax return.

That was the basic guide for every beginner who has questions about Income Tax in India. If you have any more questions related to income tax comment and let us know.

Share This Article
Written by

Girls helping girls get smart about money

Leave a Reply

Your email address will not be published. Required fields are marked *

Newsletter