Income tax is a direct tax which is a very important source of revenue of the government. It is very important for the governmentto maintain the law and order in a country and for that the government needs money.
Safeguards and security of the country from foreign powers are provided and also government promote the welfare of the people from this money.
To fulfil all the needs of the people it requires mobilization of funds from various sources, all the sources may be direct or indirect and there are deducted by several legal ways that a person must know for using a tax calculator.
So, now we are aware of income tax let’s look into its history.
History of income tax
Income tax was introduced in 1860 by Sir James Wilsonand after that several amendments word made from time to time. income tax was introduced in order to move the losses by the government on the account of military mutiny. Every person who is taxable income for the previous financial year exceeds the minimum taxable limit is liable to pay the central government income tax during the current financial year and that person is known as a taxpayer.
Now, we are aware of income tax and its history but there is one more important term that every citizen of a country must know and that is income tax calculator, it is very important for a person to calculate the Income-Tax that he or she is paying and from where a person can deduct the income tax.
There are many principles that are applied on the basis of the charge of income and they are as follows:
- The income tax rate is fixed by the annual finance act.
- Income-Tax is an annual tax on the income on in the previous financial year.
- The tax is charged on the total income of every person.
- Income tax of the previous year is taxable into the next assessment year.
- Income tax is to be deducted on the sources in advance.
This was all about the basis of charges of income tax now let us know what deductions are allowed in income tax.
According to income tax act, there are five sources of income and they are income from salary,income from house property, capital gains , profits of business or profession and income from another tour so And from all the sources of income there are some deductions that are allowed which are as follows:
- 80 C –here, the limit is 1,50,000 and it includes ( provident fund, Life insurance corporation fund, money invested in public provident fund, fixed deposit, housing loan principal, ELSS, investment of national saving certificate)
- 80 CCD – here the limit is 50,000 if you subscribe the national pension scheme.
- 80 D – here you get the medical claim or health insurancefor the deduction.
- 80 G- here you get the deduction if you donate the amount in NGO’s which are notified by the government.
- 80 TTA- hear the saving bank interest is deductedby 10.000 rupees.
Now we know why income tax is very important for a country and what are the deductions of income tax, tax return calculator is also used to see how you are incomes and deductions impact on your tax return balance.