Are you aware of income tax? Do you know how important it is?
There are two types of taxes?
1) Direct and
Direct tax is a tax that you pay from your earnings (income) directly to the government. Indirect tax is a tax that you pay indirectly to the government, i.e. if you go to a restaurant or if you buy a product from a store, it happens to pay a service charge. This service charge is considered to be an indirect tax.
Who are eligible for income tax?
Persons who are earning are eligible for income tax subject to terms and conditions. Based upon tax slabs, the percentage of tax that need to be paid varies.
Let me explain in detail:
Starting from the tax department, there are five types:
1st category: Income from Salary
2nd category: Income from Other Sources
3rd category: Income from House Property
4th category: Income from Capital Gains
5th category: Income from Business and Profession
Salaries and pensions come under 1st category. Incomes from saving bank account interest, winning cash amounts, etc comes under 2nd category. Income from rents comes under 3th category. Income from sales of a capital asset such as mutual funds, shares, house property, etc comes under 4th category. Income from Self-employed, businessman, chartered accountants, doctors and lawyers, tuition teachers come under 5th category.
Income tax slab are different for different category of taxpayers.
Do you know it is essential to file ITR? What is ITR?
ITR is abbreviated as Income tax returns. Filing ITR will result in refunding, if you have paid excess taxes. ITR includes tax liability, details of tax paid, and other refunds that are eligible to receive from the government.
You can claim your refund from the tax department by filing the ITR. After your claim is submitted, you need to track your refund status and see to that you receive your refund in time.
Late filing of ITR may result in penalty, so always try to fill the income tax return within the schedule period of time.
If you have a busy working schedule, or if you are not clear about the tax procedure, it is always good to meet a chartered accountant personally so that he/she will guide you towards tax planning.