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Paying income tax is the duty of every earning individual of the country, whose income falls in the tax slab.However, all the rules and regulations regarding taxation can get confusing at times. These FAQs can help you understand it better.
You first have to ask yourself ‘‘what is income tax’’ before you can learn about anything related to it. It is the tax imposed by the Government of India on the earning citizens of the country. The Income Tax Act,1961 dictates the taxation system of India.
The period from April 1 to March 31 of the next year is considered as the ‘financial year’. Your income during this period is calculated for tax purposes.
The Income Tax Act categorizes the taxable income tax deduction different sections:
For the financial year 2018-19, the basic exemption limits are:
The double taxation relief is offered to individuals who are charged taxes on the same source of income in India and a foreign country. This is allowed under Section 91 of the Income Tax Act, 1961. The relief is also offered if the foreign country in question has a ‘Double Taxation Avoidance Agreement’ with India.
The Institute of Chartered Accountants of India has set many guidelines that the Indian companies need to follow. Under the Companies Act, the books of accounts are arranged for the organizations. For individuals, the book of account and related documents are required so the Assessing Officer can determine the total income of every individual.
The Permanent Account Number (PAN) is a ten-digit number issued by the Income Tax Department. The number is unique to every taxpaying individual.
The PAN is mandatory to pay taxes and for other financial transactions like buying high-end products, availing of financial credit, opening a bank account, and trading in securities among others. It is also accepted as a valid identity card.
As a developing country, India has a very high number of citizens who earn less than the minimum income tax slab of INR 2.5 lakh. Hence, they do not pay any income tax. Also, India is an agricultural country and income from agricultural sources are tax exempted.
There are different ways to save taxes in India:
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