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Tips on Using an Income Tax Calculator
In life only two things are certain – death and taxes, goes the saying! Since paying taxes is such a certainty, and civic duty, it is good to make sure that you calculate and pay them correctly. In India, the Income Tax department is responsible for all activities related to tax process. It is under the supervision of the Central Board of Direct Taxes (CBDT) which is in turn under the Ministry of Finance. The provisions governing income tax law are based on the Income Tax Act of 1961.
Who pays income tax in India?
Simply put, every person or business entity who earns an income above a certain minimum amount is legally obliged to pay tax. Those who need to pay tax include but not limited to: individuals, Hindu Undivided Families (HUFs), Association of Persons (AOPs), Body of Individuals (BOIs), Firms, LLPs, Companies, and local authorities.
What is the period for calculating tax in India?
Taxes are calculated on the annual income of a person. As per Income Tax laws, the annual cycle (year) starts on the 1st of April and ends on the 31st of March of the next calendar year. The year in which income is earned is called the previous year and the year in which it is charged to tax and paid is called the assessment year.
For example: Income earned between April 1st 2016 and March 31st 2017 is called the income of the previous year. It will be charged to tax in the next year that starts on April 1 2017 and is called the assessment year.
What kind of income is taxable?
Income tax is calculated based on your annual income. This could be income earned from various sources including your monthly salary, income from rent, profits from business, gains from selling capital assets like property, and interest/dividend/commission income. There are various slabs of income tax rates based on earnings and the interest rates get gradually higher for those with higher incomes.
How to Use an Income Tax Calculator:
Doing your taxes for the year can seem like a complex and unnerving task that requires possibly multiple physical visits to an accountant / tax professional and dealing with a mountain of paperwork that can seem unending. Instead, you can opt to use an online Income Tax Calculator like CreditMantri’s free Income Tax Calculator to estimate your tax payment for the year. It is simple, user-friendly, accurate and can be used by anyone attempting to calculate the amount of tax they need to pay.
You can also use the online Income Tax Calculator tool offered by the Income Tax Department of the Government of India. While using the calculator, all you need to do is enter your income details, investment details, details under which deductions can be claimed and your tax liability will be calculated.
Filing an income tax return is an annual ritual for millions of responsible and civic-minded Indians who fall under taxable income bracket. Make sure you file yours on time!