what is the best way to understand income tax easily?

income tax Ranjeet Kunwar is a Fellow Chartered Accountant who has great amount of experience in teaching Taxation to CA/CMA/CS students both at Final as well as Intermediate level. Known for his distinct teaching style especially colored key words and summary charts which makes it easier to handle the subjects which most of the students are afraid of- Taxation.

Income Tax is a form of donation paid by the citizens to generate income for politicians and government officials. It’s a contribution made by the common people so that the rulers can live a luxurious life.

In some countries, it also acts as an indirect donation for people living below the poverty line so that they can afford things at subsidized rates. Whosoever has paid Income Tax has indirectly done social service as well.

It is a lecture providing a brief introduction to income tax in simplified approach, useful for all students of CA, CMA, CS, B.com.

Income tax is a type of direct tax that the national government imposes on its wage-earning residents. There are numerous slabs, and the income tax rate varies depending on the slab. For instance, you won’t have to pay income tax if your salary is less than 5 lacs. If you earn $7 lacs, you won’t be required to pay tax on the first $5 lacs and a portion of the remaining $2 lacs because that amount is in the following tax bracket.

For working males, women, and senior citizens, there are multiple tax brackets and rates within each bracket, which the government is constantly updating to reflect inflation.

A LIST OF 3 DIFFERENT KINDS OF INCOME TAXES IS PROVIDED BELOW:

1. Wealth Tax

Start with the wealth tax if you wish to learn about the various income tax categories. It is a form of direct tax that all property owners must pay, regardless of whether their property generates any sort of income. Individuals, businesses, and HUFs (Hindu Undivided Families) are all subject to the wealth tax, and the amount of the tax depends on their residential status.

2. Corporate Tax

Company tax must be paid by both domestic and foreign corporate organizations, according to the IT Act of 1961. Domestic businesses that are independent legal persons from their stockholders are subject to this tax. Even overseas businesses that generate income in India or are assumed to do so must pay corporation tax. Other income tax categories including the fringe benefits tax, minimum alternative tax, securities transaction tax, and others are also included in the corporation tax.

3. Capital Gains Tax

Capital gains tax is another sort of income tax in India. Any income obtained from the sale of investments or assets is subject to this tax. This includes real estate, vehicles, equipment, companies, works of art, bonds, and stock. Both businesses and individual taxpayers are included. You will be required to pay either short-term capital gains (STCG) tax or long-term capital gains (LTCG) tax, depending on how long you held the investment or asset.

WHEN TAXES ARE PAID, NATIONS ARE MADE:

The government uses the direct or income taxes it collects for national development. Therefore, it is imperative that every taxpayer pay the necessary taxes each year. To prevent any confusion and guarantee that your taxes are paid correctly and on time, thoroughly understand the various ITR and income tax types. If payment is not made, there may be harsh penalties and legal action.

Read also: How to become a tax consultant earlier?

For better understanding join with us : CA Ranjeet Kunwar is a qualified CA and has hands on experience in Income tax matters.

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