Finance

Income Tax Basics For Young Professionals

So you have only started getting and are on the path of self-discovery especially with regards to your financial life, right? And one of the vital aspects to that would be – fees. Understanding taxes is challenging, but quite definitely necessary. So, let us take it one step at a right time – we are going to specifically look at – Income Tax.

Here are a few of the normal confusions and relevant explanations encircling the whole process. What is income tax? Income tax is the taxes you pay to the government. It is based on the income you earn, i.e. when your income exceeds a certain slab, then you need to pay tax on the excess amount earned.

Why should I pay taxes on my cash flow? The collected sum is used for further development of the country. How much should I pay? The amount of tax you will need to pay is solely influenced by which income slab your salary falls in. Similarly, if the income is between 500,000 and 800,000, then your taxable income is a set amount plus 20% of the total amount that exceeds 500,000 and so forth.

How often should I pay? Income Tax is paid on a yearly basis. The period considered here is between April 1st to March 31st of the next calendar year. This era is also known as a financial year or ‘previous year’. How exactly to file tax? You have the service of filing tax online or offline also. What exactly are the documents necessary for filing tax?

1. Form 16 – is given to you by the ongoing company you work for. It consists details of the tax that was deducted from your salary. That is the main sign you have paid tax. 2. Form 16A – is given to you by the bank or lender where you have invested in term deposits. This means that the various tax deductions at source for your account.

3. Bank or investment company Statement Summary – shows the transactions performed by you throughout the financial season. This includes everything from savings, investments, expenses, loans, and income earned as well. 4. Property details – any property sold or bought by you in the previous financial calendar year should be documented and duly posted at the time of filing tax returns. 6. Investment details – if you haven’t already announced it in the proper execution 16, then do it here.

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Details of your investments in tax-saving tools such as public provident fund and so on. 7. Receipt of advance taxes (if any) – to show that you have paid advance taxes. Maybe, the salary I receive the only form of income? 5. Incomes from bank debris, cash gifts, and so on. Double check the PAN number you have given. Original TDS certificates and receipts to be produced during processing. Avoid delay payment of tax as it attracts a fine.

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