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Earnings Tax for Novices

Firstly, are you presupposed to pay Earnings Tax?The reply is determined by the yr. On your earnings for the yr 2011-12 (1st April, 2011 to 31st March, 2012), you’ll have to pay tax if
you’re a resident man with a taxable earnings of greater than Rs. 1,80,00
you’re a resident lady with a taxable earnings of greater than Rs. 1,90,00zero
you’re a resident senior citizen (age 60+) with a taxable earnings of greater than Rs. 2,50,00
you’re a resident very senior citizen (age 80+) with a taxable earnings of greater than Rs. 5,00,000How a lot tax am I presupposed to pay?You could have heard of ‘Earnings Tax Slabs’. For a resident male, the slabs for the yr 2011-12 areIncome Slab – zero to 1,80,00zero

Fee – 0percentIncome Slab – 1,80,001 to five,00,00zero

Fee – 10%Earnings Slab – 5,00,001 to eight,00,00zero

Fee – 20%Earnings Slab – above eight,00,00zero

Fee – 30%Which means in case your earnings is lower than 1,80,00zero you do not have to pay tax.In case your earnings is, say, Rs. 2,30,00zero, you need to pay at 10% on the quantity by which it exceeds Rs. 1,80,00zero. On this case your tax legal responsibility can be (2,30,00zero – 1,80,00zero) *.10

And in case your earnings is, say, Rs. 6,00,00zero, you need to pay tax on Rs. three,20,00zero ( 5,00,00zero – 1,80,00zero ) at 10%, and on Rs. 1,00,00zero ( 6,00,00zero – 5,00,00zero ) at 20%.So, meaning yearly I’ve to go to the Earnings Tax Division and pay it?Likely, no. To make issues easy in your finish, the Division makes your employer do the identical. Your employer will deduct it out of your wage and pay it for you. That is known as TDS – Tax Deducted at Supply.What is that this Kind 16?How have you learnt in case your employer is paying your tax on time? and what’s the quantity?Your employer will provide you with a Kind 16 on the finish of a yr. This way 16 has particulars in regards to the wage he has paid to you, the tax he has deducted on it, and paid to the Earnings Tax Division.What’s Advance Tax / Self-Evaluation Tax?Your employer will deduct tax in your wage earnings and pay it to the Earnings Tax Division, however what you probably have earnings from different sources as properly?Say, you offered a chunk of land and made an honest revenue on it. You now must pay tax on this revenue. Sadly, your employer will not pay it. You’ll have to do it.Take one other case. Your employer didn’t deduct tax in your wage. He’ll face penalties from the Earnings Tax Division, however what about you? You’ll now you need to pay it to the Earnings Tax Division straight. It is a uncommon case.That is known as Advance Tax / Self-Evaluation TaxIs there any distinction between the above two?Sure.Should you pay it through the yr, i.e., between 1st April, 2011 and 31st March, 2012 (for 2011-12) it’s known as Advance Tax.If, whereas getting ready your tax return, you notice that you simply nonetheless must pay tax, and pay it so, it’s known as Self-Evaluation Tax. Thus Self-Evaluation Tax is paid after 31st March, 2012.What are earnings tax deductions?Deductions are sure tax advantages you could be allowed to avail. In case your earnings is Rs. four,00,00zero, and you’re allowed to deductions of Rs. 1,00,00zero, you’ll solely must pay tax on Rs. three,00,00zero on the slab charges.

There are quite a few deductions. Instance:
Premium paid on a Life Insurance coverage Coverage
Housing Mortgage Repaid
Quantity deposited in a PPF (Public Provident Fund) Account
Sure Mutual Funds bought
ULIPs purchasedOk, so my employer pays tax on my behalf. So, my job is finished? I haven’t got to do something, proper?Probably not. You must file an earnings tax return with the Earnings Tax Division. A return is nothing however a type that states the earnings you have got earned all year long, the tax you had been presupposed to pay on, that tax you truly paid, the advantages you availed, and so on…You’ll be able to method an accountant to assist together with your return, or higher nonetheless, do it your self utilizing a personal on-line earnings tax efiling portal.

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