How do I know how much income tax I should pay?
The various income tax slabs are mentioned here. You can also visit the website of the Income Tax Department, www.incometaxindia.gov.in., to know more about your income tax liability.
What should be kept in mind when filling up the ITR form or challan?
The details should be clearly mentioned in challan are Amount of tax, Mode of payment of tax, Head of payment, Assessment year, PAN, Type of payment.
What is the difference between taxable income and exempt income?
Taxable income is that which is chargeable for tax. Exempt income is income which is granted exemption from tax by the Income Tax Department.
Should a record of all earnings made be maintained?
You are required to maintain records and proof of earning for all the income earned by you as prescribed by the Income Tax Act. In case there are no records prescribed, then you should maintain any kind of reasonable record that can support your income claims.
What is the meaning of ‘Profession’ as defined under the Income Tax Act?
Profession refers to vocation or the use of one’s technical knowledge and skills on an independent basis. Some examples of professional fields are Engineering, Medical, Legal, Accountancy, Architecture, Interior decoration, Technical consultancy, Writers and Artists.
For how long should the books of accounts of a business be maintained?
From the end of the relevant year, the books of accounts should be maintained for a maximum of 7 financial years or a minimum of 6 years from the end of the Assessment Year.
What is the difference between assessment year and financial year?
The year in which you earn an income is the assessment year. The year following the assessment year, in which the income is evaluated, is called the financial year.
What are the different ways in which income tax returns can be filed?
There are basically four different ways in which you can file your income tax returns. They are Electronic transmission of data under the electronic verification code and afterwards submission of verification in Return Form ITR-V, Paper form and Electronic returns with digital signature.
How are excess taxes refunded?
To claim refunds on excess taxes paid, you will first have to file your income tax returns. They will be credited to your bank account through the Electronic Clearing System (ECS) facility.
What are the different heads under which taxpayers are taxed?
Income tax payers are taxed on 5 heads under Section 14 of theIncome Tax Act, 1961. They are Income from salary, profits and gains of profession or business, house property, capital gains, other sources.
What differentiates gross total income from total taxable income?
Gross total income is basically the sum of your income from salary, income from capital gains, profits or gains from profession or business, income from house property and income from other sources. It is the amount of money you have earned totally from all your sources of income. Your total income is basically your gross total income minus deductions under Section 80C to Section 80U.
How much income should I earn to pay tax?
Individuals who are under 60 years of age will be subject to income tax if they earn an income in excess of Rs.2.5 lakh. Indian residents who are above 60 years of age but under 80 will be taxed if they earn more than Rs.3 lakh per annum, while those who are above 80 years of age will have to pay tax if they earn in excess of Rs.5 lakh per year.
How do I calculate my taxes?
To calculate your tax liability, you will have to add your income from salary, income from capital gains, profits or gains from profession or business, income from house property and income from other sources, which will give you your gross total income. Then, you will have to take into account your deductions under Section 80C to Section 80U, which will give you your total income. From your total income, allow for rebate under Section 87A and subtract it to arrive at your tax liability after rebate. Then, add surcharge, which will give you your tax liability after surcharge. Then, add the applicable cess. You will then know your tax liability.