It was a bright sunny Sunday of the month and Mr. Gupta decided to complete all his income tax files when his son entered and asked him-
Son: Dad, what are you doing?
Father: Son, I am completing my documents for filing income tax to the government.
Son: What is this income tax, Dad?
Father: Son, income tax is actually a type of direct tax that is paid by an individual or a business jurisdiction to the government on the income raised by him or by the business. Taxation rates may vary depending on the type or characteristics of the taxpayer
Son: But father how it is important?
Father: It is important because this same money is used to raised funds for the welfare, development, and defense of the country.
Son: How can we pay taxes?
Father: A taxpayer can pay tax offline or online. For the offline method, an individual is required to visit the bank branch and pay the tax due along with a duly filled challan. Another way is paying taxes online using Net banking facility of any of the authorized banks and for online submission and there are few steps to follow-
Son: Oh! Like that. But Dad, does the slab of income tax continue to be equivalent always or does it change with time to time?
Father: The income tax slab is renewed every financial year by the government.
The Basic tax exemption limit for an individual depends on their age and residential status.
According to age, resident individual taxpayers are divided into three categories:
1.Resident individuals below the age of 60 years.
2.Resident senior citizens of age between 60 years and above but below 80years.
3.Resident super senior citizens above the age of 80years.
As per the Budget 2019 announcement, no changes in the income tax slabs and rates have been proposed. A rebate of Rs 12,500 will be available for all taxpayers with taxable income up to Rs 5 lakh. This rebate will be available under Section 87A of the Income Tax Act. Furthermore, the standard deduction for the financial year 2019-20 would be Rs 50,000.
Son: And, how is the tax liability calculated?
Father: The Tax liability is calculated on the income which is calculated after availing all the deductions and other tax- exemptions available to the individual.
Son: How to calculate total income?
Father: To calculate your total income, you must add the income received from various sources such as salary, pension, interest received from the fixed deposit, recurring deposit, savings account and so on.
Son: How will I know my tax payment details?
Father: Once the tax is deposited by you or any other individual has deducted tax and deposited with the government on your behalf, then total amount of tax deposited against your PAN will be reflected in Form 26AS. You can download the statement from your account on the income tax e-filing website.
Son: Okay Dad. Also, please tell is there any exemptions made by the Government on income tax?
Father: There are various sections in the IT act that allow for a tax deduction when a person has contributed to the national pension scheme (NPS) and Atal Pension Yojna (APY). Sec 80C, Sec 80CCC and Sec 80CCD allow for tax deduction of upto Rs.1,50,000.
Around 4 years back, a new subsection called 80CCD(1B) was also introduced that allowed for an additional deduction of upto Rs.50,000. You can read an interesting blog by the Sqrrl app also to get detailed information on blogs:
Son: Thanks Dad! This was all very helpful. And you know what, I just found this really cool app called Sqrrl which is an AxeTax feature to help to make proper investments. You can also use it by CLICKING HERE.