The Government taxes us in two ways. One way is through different service taxes and value added taxes (VAT) charged on the products and services that we buy and use. This has been replaced by a more unified system called GST, which came to effect in July this year.
The other way is to tax the capital that is generated through our jobs, assets and bank interest.
Income Tax is basically a tax collected on the amount of money an individual or organisation makes in earnings. The earnings could be of different kinds; like – income from property, gains through debt or equity funds, working class salaries, or even interest on money held in savings accounts.
The Government of India has a defined set of Income Tax slabs for persons/bodies with Total Annular Income clubbed into four categories:
The Government provides many incentives for tax payers which are covered under the Section 80 of the Income Tax Act. They are categorised as under:
- Property Rent or Lease
- Medical/Health Insurances
- Savings Funds
GOI has granted the above avenues to allow you to save up to 1.5 lac from your total income tax returns. Statistics show that only about 30% of (online) income tax payers take full advantage of these government provided incentive schemes. A straightforward way to know how much you can save on your taxes is to go through the Investment Declaration System between the December-February periods during which it remains open.
It is important to pay Income Tax and file your returns in a timely discipline. The tax paid is used by the government to up the general health and wealth of a country. It is also as important to keep a track of the updates on yearly budget.
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