How Income Tax Functions in India?

income tax
income tax

There are two types of tax in India Direct Tax and Indirect Tax, direct tax is paid directly by the taxpayer to the Government of India and Indirect Income Tax goes to the Government of India from the taxpayer via an indirect medium.

Income Tax is a direct tax, as it is directly paid by the taxpayer to the Government of India. Goods and Services Tax that is introduced in India recently, is an indirect tax, as it is paid by the taxpayers to the Indian Government.

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There are the 4 main dates, when we talk about Income Tax in India: –

  • 31st January, it is the last date to submit your investment proofs.
  • 31st March, it is the last date to make investments under section 80C.
  • 31st July, it is the last date to file your Income Taxs Return.
  • October-November, these are the months by which you are supposed to verify your Income Taxs Return.

Anyone who has an Income in India is supposed to pay Income Tax and File Income Tax Return.

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Here are the various heads of Income: –

Income from Salary: Income from salary and pension are covered under this head.

Income from House Property: Mostly the income from house rent is considered under this head.

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Income from other sources: Any income from savings bank account interest, fixed deposit, rewards etc are considered under this head.

Income from Capital Gains: Income from the sale of a Capital Asset like House Property, Shares, Mutual Funds is considered under this head.

Income from Business and Profession: Your income will fall under this head when you are self-employed, work as a freelancer or contractor, or you run a business. Life insurance agents, chartered accountants, doctors and lawyers who have their own practice, tuition teachers, all come under this head.

How can you calculate your Income Taxes?

In order to calculate your Income Tax Return, you will require your salary slips. The government provides plenty of tax benefits and credits that taxpayers can use to lower their tax liability. You can calculate liable Income Tax by using our Income Taxes Calculator.

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