Explore the intricacies of filing income tax returns with our comprehensive guide featured on LXME. Uncover valuable insights, practical tips, and expert advice to navigate the complex landscape of taxation in India. Ready to decode the tax process? Dive into the blog: Decoding Taxation in India. 📊
It’s that time of the year again! Does the thought of filing your Income Tax Returns send you into panic mode?
Don’t worry, it happens to the best of us.
Calculating taxes can often get tedious. However, it is not as bad as you think it is. In fact, if you look into this yourself, you may find it simpler to understand. In this article, we have compiled the basics of taxes especially for you. So let’s get started.
What is Tax?
A tax is a financial charge levied by a government on each of us, to basically raise money for common utilities like roadways, water supply, sanitation, etc.
Why should I pay taxes?
Well, just like your car needs fuel to keep running, taxes are the fuel on which the government runs and provides public services. Some of the benefits of paying taxes are:
- Did you know that you can use your Income Tax Return documents to apply for a Loan or Credit Card??
- Your payment of taxes ensures that the government can provide us with better civic amenities and utilities, which will in turn help in improving your standard of living.
- Your taxes are also utilised for military funding, infrastructure development, ensuring your safety, administrative services, etc.
Types of Taxes
Ok! So there are different types of taxes?? Tell me more!
Taxes are broadly of two types – Direct Taxes and Indirect Taxes.
- Direct Tax
- This is the tax that you pay directly to the government.
- The most common examples of this type of tax in India are Income Tax and Property Tax.
- Indirect Tax
- Indirect taxes are consumption-based taxes, like the Service Tax that you pay at a restaurant.
- Other common examples of indirect tax include sales tax, Goods and Services Tax (GST), Value Added Tax (VAT), etc.
This is the most common and most important tax that an individual pays to the government. In India, our taxes are proportionate to what we earn rather than what we spend!
Well, it simply means that your tax liability increases with an increase in your income. Apart from your income, it also depends on your age. Yes, YOUR AGE MATTERS!
Taxpayers have been classified into three broad groups –
- Individuals below 60 years of age.
- Individuals between 60 and 80 years of age (senior citizens).
- Individuals above 80 years of age (super senior citizens).
How is the Taxable Income Calculated?
So it is not just your income, the government is also taxing you and me in other places, just like the acupuncturist! The income on which we will be paying taxes can be divided into the following:
- Income from Salary – This includes the salary you earn each month, the leave encashment you do annually gleefully and any other cash component that you receive for rendering your services to an organization. So, the TDS and Professional Tax that you see on your payslip is the Tax that you have paid on your salary.
- Income from House Property – Yes! The house that you rent out to create a second source of income is taxable!
- Income from Capital Gains – The profits that you earn from your shares and mutual funds(or any other capital assets)
- Income from Business or Profession – This includes any income that you earn from any secondary business or profession along with your job.
- Income from Other Sources – This includes interest income from the money lying in your savings accounts or interest income from deposits with the bank, gifts, etc.
Now, I know what you’re wondering. After so much tax on your hard-earned money, are you left with anything? Or should you just stop earning if most of it is going to be paid in taxes?
Don’t worry! We will tell you 7 ways to plan your tax and reduce your tax outgo!
Share this blog with your friends and family if you find it insightful!!
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FAQs Around Income Tax Returns
1. What is the last date to file Income Tax Return 2023?
Key Deadline: File your Income Tax Return by the specified due date, generally on or before July 31, 2023.
Avoid Penalties: Filing beyond the deadline may result in penalties, so timely submission is crucial.
LXME Guidance: Explore LXME’s expert insights for a hassle-free ITR filing experience.
Learn more about ITR deadlines on LXME: Decoding Taxation in India.
2. What is Income Tax Return filing?
Legal Requirement: Filing ITR is a mandatory process where individuals declare their income to the tax authorities.
Financial Documentation: Provide a detailed account of earnings, deductions, and taxes paid.
LXME Assistance: Simplify your ITR filing with LXME’s comprehensive guides and expert support.
Unravel the intricacies of Income Tax Return filing on LXME: Decoding Taxation in India.
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