Income Tax is a kind of tax that is levied by government on the income generated from different sources. It is a direct tax, that is paid directly by the taxpayer to the Government of India. Income Tax is one of the major sources of income for the Government, which is thereafter used to fund public services, payment of government obligations and provide goods and services to citizens. Income Tax is imposed on individuals and entities that varies with the income or profits of the taxpayers. Hence, every individual must e-file income tax return during the financial year.
Income Tax is calculated as the product of tax rate times the taxable income of the taxpayer wherein the tax rate may increase as the taxable income increases. The tax rate can vary as per the type of taxpayer as well depending on their age and income. However, the government has different provisions wherein credits are provided to taxpayers in the form of refund when they file their Income Tax Return in order to reduce the burden of tax.
What is the reason for tax imposition?
Following are the reasons for tax imposition: –
- To raise money for govt. expenditures
- To redistribute income among the people
- Social development
- Demand management
- To correct market failures
Why we, as taxpayers, need to pay Income Tax?
- Income Tax return e-filing is one of the major taxes in our country that every earning individual and company needs to pay.
- The constitution of India gives its government to collect taxes in order to provide services and goods to its citizens, to borrow money in times of need or to prepare for war in case the need arises.
- Furthermore, since Income Tax is one of the major taxes in our country, it helps to fund most of the big projects such as meeting the defense needs of a nation and development of the country.
What is Income Tax calculator?
Income Tax calculator provides assessee to calculate their tax liability. It will provide you with an accurate insight to your income tax obligations.
How income tax is calculated?
In present, the income tax slabs and exemption limits has been divided on the basis of age and residential status. There are three major components of income tax calculator they are gross taxable income, HRA exemption, and transport allowance.