There are basically two types of taxes in India, they are Direct Tax and Indirect Tax. Income Tax is a direct tax, as it is paid directly paid by the taxpayer to the Government of India. The Indirect Tax is paid to the Government Indirectly, Goods and Services Tax is an Indirect Tax.
This is how the whole process of Income Tax in India works: -
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Firstly, you will have to know the Dates, which are important when we talk about Income Tax in India.
· 31st January
It is the last date to submit your investment proofs.
· 31st March
It is the last date to make investments under Section 80C.
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· 31st July
It is the last date to file Income Tax Return.
· The duration between October-November
It is the time, when you are supposed to verify your Income Tax Return.
Any one who has some kind of earning in India is supposed to pay Income Tax to the Government of India. Your income could be salary, pension or could be from a savings account that’s quietly accumulating a 4% interest. Even, winners of any reality T.V show will have to pay tax on their prize money.
Here’s how you can divide your Income under these 5 heads: -
· Income from Salary
Under this head, income from taxpayer’s salary is covered.
· Income from other sources
Under this head, income from savings bank account interest, fixed deposits etc is covered.
· Income from House Property
Under this head, generally your rental income is covered.
· Income from Capital Gains
Income from sale of a capital asset such as mutual funds, shares, house property
· Income from Business and Profession
Under this head, income from businesses and other freelancing jobs is covered.