What is Tax?
Tax is a charge offered by the government to the individual or organization at some percentage. Tax is mainly used for the expenses of public welfare by the government. Tax is of different types.
What is Income Tax?
Income tax is a kind of tax which is levied on the income of an individual or an organization. This tax is directly levied by the government. Income tax is the main source of the revenue of the government. Based on the different income rate slabs, income tax is collected.
Income tax slabs provides the percentage of income tax. The tax payer can find their particular slab by calculating the gross income deducting the expenses. By the slab rate he can pay tax. These income tax slab rates are revised year by year during or after the budget announcement. Every slab show different range of income levels. Income rate slabs are categorized for the individuals, HUFs (Hindu Undivided Family), LLPs, firms, companies and others. There will be tax exemption limit in each category. This will be Rs. 2.5 lakh to Rs. 3 lakh depending on the category. After certain limit of income there will be fixed tax percent and surcharges. The cess is also calculated for all categories. The income slab rates are assessed in the assessment year but it will be given the current financial year. The assessment year will be the upcoming year next to the financial year. For example we shall see the slab rate individual below 60 years of for the financial year 2017-18 with the assessment year 2018- 19. It is applied for both men and women. If the income range is below Rs. 2.5 lakh there will be no tax that this is the no tax limit of this category. And if the tax payer income is between Rs. 2.5 lakh and Rs. 5 lakh, 5% will be collected as tax. For the income range between Rs. 5 lakh to Rs. 10 lakh, 20% is levied as tax. For the income level above Rs. 10 lakh, 30% will be taken as tax.
Some Facts About Income Tax
In India, taxes are levied by both the central government and the state government. As per the income tax act taxes have been levied to those who have taxable income. There are two types of taxes namely direct tax and indirect tax. Under the new tax system, all the indirect taxes are aggregated into a single tax which is known as GST. Information related to the income tax, important notifications and other circulars are distributed by a body called CBDT which is the short form of Central Board of Direct Taxes. Under this board income tax department will come which is a segment of the revenue department of India. Income tax comes under direct tax category. Tax is collected in the basis of the residential status. The main use of the income tax is providing fund for the public schemes and for the public welfare. People involved in agricultural activities are exempted from taxation. Income gained by the agricultural activity is termed as agricultural income. Income from the land which used for agriculture and income acquired from nurseries by raising saplings are not taken for taxation. But income received from some agricultural occupations like tea, coffee are under partly agricultural and partly business income. There is tax by considering the business income alone in these cases. When calculating income tax, the individual have to subtract the deductions from the overall income. The allowed deductions are the insurance premium, home loan principal payments and PPF. Persons who pay 30% as income tax are taken as upper class, persons under tax exemption are taken as lower class and those who come in the middle are considered as middle class.