Tax Planning

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Cheat sheet for first time taxpayers

09 Jan, 2017

With the dawn of Generation Y the age of individuals who are independent has reduced to the early 20s. These professionals may have all the skills and exposure needed to be able to do their jobs better but would not be equally interested in dealing with their taxes. Unless it is  a student who has studied taxes the young age professional knows very little about how to make the most of the taxing clause in the constitution.

The government has also made it very simple by introducing technology in the taxing processes which reduces the dependability on professional CAs. We shall be discussing things that you need to know to make your taxing process easy especially if you are a first time taxpayer.

  1. Tax Eligibility - The first step towards tax process is to understand whether you are suppose to pay it or no. It is extremely important that you understand if your income is taxable and if yes than by how much. The government has made tax slabs depending on income and nature of work. An individual with income upto 2 lacs 50,000 is exempted for paying tax. If the income ranges between 2.5 lacs to 5 lacs than a tax of 10% is applicable. Income between 5 lacs to 10 lacs comes under the slab of 20% and above 10 lacs the rate is 30%. 

  2. Tax deductions - If you are salaried than some part of your tax woes are taken care of by your employer. Most companies deduct TDS that is tax deducted at source while crediting the salary into your account. The computation is done as per your package in the organisation. If you do not have any other source of income and most of your work will be done as the Form 16 generated on your company website will be up to date however in case you have other income sources than you may have to pay additional tax as per the income earned. For self employed individuals the government gives you an option of e-filing to pay your taxes.

  1. Deadlines - Tax payments happen as per the fiscal year that is Mar - Apr. You need to submit your income returns by July of the coming fiscal year at the latest for timely returns. Any declarations or investment that needs to be declared should be announced at the start and later related proves need to be submitted. The tax declaration basically means that you inform the government about the investments that you plan to do for the coming year. At the end of the year you need to submit supporting documents. As per the proves submitted the calculation of the tax payable will be done. This declaration is extremely important for salaried individuals as your company will use it to calculate the TDS that gets deducted every month.

The popular notion is also to hire a chartered accountant who does everything and comes back with an amount to be paid. This may be the easy way out. But, there is a lot of information available around taxes that can be used made used of to take care of your taxes all by yourself.

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