Income tax refers to the tax levied by the government for the purpose of financing its various operations. There are two types of taxes, direct and indirect. While Income Tax is a direct tax, VAT, service tax, excise and the latest one to subsume all these taxes Goods and Services Tax (GST) are all indirect taxes. Apart from funding the activities of the government, taxes also act as a fiscal stabiliser that aid in distributing wealth evenly among the population. Furthermore, taxes are instrumental in cushioning the effects of economic cycles. The payment of Income Tax in India is made according to the provisions made under the Income Tax Act.
We can divide Income Tax into three categories depending upon who pays it and when itís paid.
TDS-Any Income Tax deducted and paid on behalf of the taxpayer by any other person (who is a source of income for the taxpayer) liable to do so as per the I-T laws is called TDS. It is a measure by the Income Tax Department for ensuring timely payment of Income Tax.
Advance Tax -Businessmen and professionals need to pay Income Tax on their own in four instalments throughout the financial year in which they earn income.
Self-assessment Tax-Self-assessment Tax means any balance tax paid by the taxpayer on the assessed income after taking Advance Tax and TDS into account.
Sources of Income
According to the Indian Income Tax laws, income from the following sources is deemed taxable:
Income from house property
Profits and gains of business or profession
Income from other sources
The sum of income from all the sources above is calculated according to the provisions of Income Tax Act. The tax rates in India vary according to the earnings of an individual and are referred to as Income Tax slab rates. These Income Tax rates are revised every year during the budget. Income tax in India is calculated on an annual basis. It is levied on the income earned in the previous year which is also known as the Assessment Year. In the eyes of the law, the Financial Year begins on the 1st of April in a given year and ends on the 31st of March of the following year.
Easiest way for the salaried taxpayers to claim tax deduction is through declaring their investments & expenses to the employer. You need to inform your employer about your planned investments at the beginning of the financial year to save taxes. Then you need to submit proofs of investment 2-3 months before the end of the financial year. You can ask your employer for the exact time period for submitting proofs.
Under section 80c, you will find several tax saving investment options. Each investment comes with a different tax impact, ROI, lock-in period etc. Hence, you must choose the investment plan which best suits your financial goals based on above mentioned factors.
Other than section 80C, there are various other tax saving opportunities. By buying medical insurance and making charitable donations, you can easily save taxes. You also get tax deduction on education loan and home loan repayment.
Saving taxes and e-filing income tax return accurately becomes very easy when you have professional help. This is where we come into the picture. You can either use our intuitive tax filing platform to easily file your tax return or let our tax experts file it for you. We have a team of in-house tax experts who can file your income tax returns accurately while giving you maximum tax benefits