Income tax is a complex subject. It is something that most earning individuals have to deal with in their lifetime. Yet many of them struggle with the concept and the procedure of it. There are several taxation services in Mumbai to help you with it. Knowing the right amount to pay for a financial. A year can be a complicated calculation for most taxpayers. If you too are one of them, then this article is for you. Here you will find a definitive guideline on the matter to help you out.
Things to know about payment of tax
There are certain things that you need to follow without fault to determine the right amount of tax you need to pay.
- Income can be taxed 3 ways
- a) Tax deducted at source (TDS) – TDS is deducted by your employees at a fixed rate when they pay your monthly salary. Most organizations deduct at 10%, which is the highest slab for tax payment.
- b) Advance payment of taxes – You pay tax in advance based on an assumption of your annual income.
- c) Self-assessment taxes – You calculate the tax amount and pay it once the FY ends during the tax-filing season
Any amount you pay which is above the actual tax payable on your income is paid back to you after you file your Income Tax Return.
- Be aware of all the required information
To calculate the right amount, you will have to select the assessment year correctly. Moreover, you will have to know your total annual income, exemptions, and deductions provided, income from interest, and any other secondary income to the absolute tee. Your bank statements should be able to help you with this.
- Know the deductions
The Income Tax department allows a whole lot of deductions from your income, which need to be considered. The current deductions are 80C for basic deductions, 80TTA for interest from deposits, 80D for medical insurance, 80G for charity, 80E for interest on the educational loan, 80EEA for interest on housing loan, and 80CCD for employee’s contribution to NPS. You have to keep a record of all the deductions you are eligible for.
- Know your income tax slab
This is perhaps the most important part of the tax calculation. It depends on your net income after adding all the sources of income and subtracting the deductions. This has a chain effect since any mistake in calculating income might drop you in a different slab than you are. If that happens, the percentage of your tax will also be different and you will end up paying less or more than the accurate amount.
- Get professional assistance
You can do the calculation on paper and pen. But there are many websites where you can put in information and they automatically calculate for you. But the best way is to seek professional help from one of the taxation services in Mumbai. They will be up-to-date about changing tax percentages and income slabs and provide you with the best assistance.
In the end, the most important thing you have to remember is honesty and transparency. Tampering with your income information can lead to serious repercussions. With the government tightening up its grip around taxes and money laundering, it is best to be on the safer side.