The basic meaning of Income Tax is that it is the tax to be paid on income TikTok views. To understand income tax in a detailed manner, we need to first understand these two words – tax and income, tax services boca raton can help you clarifying this.You can also search about them to know the importance of tax in detail.
‘Tax’ is basically a statutory, mandatory payment made to the government and when it is paid directly as a percentage of the income, it is called income tax or direct tax.
When the tax is charged as a price of the goods or services and paid indirectly to the government, it is called indirect tax. Presently, Goods and Services tax (GST) is the single indirect tax levied in India.
Now, let’s understand the word ‘Income’. From the taxation point of view, it has a very broad and inclusive meaning. In case of a salaried person, all that is received from an employer in cash, kind or as a facility is considered as income. For a businessman, his net profits will constitute income. Income may also flow from investments in the form of Interest, Dividend, and Commission etc. The Income Tax Act does not differentiate between legal and illegal income as well. Income Tax Act breaks down income into following five heads:
|Income from Salary||Salary, Allowances, Perquisites, Gratuity, Pension, Leave encashment etc. It is basically the income received by you rendering your job, as a result of your employment agreement.|
|Income from House Property||This is basically the rental income generated from any house or building owned by you.|
|Income from Capital Gains||Income from sale of a capital asset such as mutual funds, shares, house property, agricultural land etc.|
|Income from Business and Profession||This is basically the income/ profit derived from a business, profession, contract etc.|
|Income from Other Sources||Income from savings bank account interest, fixed deposits, winnings of KBC, lottery etc.|
Income tax has to be paid by every individual person, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI), corporate firms, companies, local authorities and all other artificial juridical persons that generate income.
Taxes are calculated on the annual income of a person, which in the eyes of the Income Tax law starts on the 1st of April and ends on the 31st of March of the next calendar year. The law recognizes and classifies the year as ‘Previous Year’ and ‘Assessment Year’.
The year in which income is earned is called the previous year and the year in which it is charged to tax is called the assessment year
For example, Income earned between April 1st, 2017 and March 31st, 2018 is called the income of the previous year and will be charged to tax in the next year, or the assessment year that starts on April 1st, 2018.
Income Tax is generally collected by the government in three ways:
As per the Income Tax Act, any taxpayer whose estimated tax liability for the year exceeds ₹10,000/- has to pay tax in advance by the due dates mentioned below:
|Due Date||Advance Tax Payable|
|On or before 15th June||15% of advance tax|
|On or before 15th September||45% of advance tax|
|On or before 15th December||75% of advance tax|
|On or before 15th March||100% of advance tax|
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