Incidence of Taxation -Impact and Shifting of Tax

  Types of Income Tax Deductions Income tax paid by citizens constitutes a major chunk of the government’s revenue. It is imperative to pay taxes for the smooth functioning of the economy. Often a tedious expense, taxation also has perks to it. Income tax deductions are a relief offered by tax authorities that help individuals lower their taxable income and ultimately reduce their tax outgo in any given financial year. These deductions are in the form of expenses or investments made by the taxpayer during the year. Deductions also inculcate a healthy savings routine. But, what types of deductions under  Income Tax  are most suitable for you? The most popular provisions of income tax deductions include investments made under Section 80C of the Income Tax Act, 1961. These are typically made in  Equity Linked Savings Scheme (ELSS)  funds, Public Provident Fund (PPF), National Pension Scheme (NPS), etc. With these types of deductions, you not only save tax but also ...

The House Rent Allowance (HRA) is an important component of the salary that is paid by employers for meeting the accommodation requirements of employees. Even self-employed individuals can claim   tax  benefits for this. What is HRA? HRA, or House Rent Allowance, is a wage given by employers to staff members to cover housing costs associated with leasing a home. The HRA is a crucial part of a person's pay. Both salaried and self-employed people are covered by HRA. According to rule 2A of the  Income Tax Rules , HRA for salaried individuals is accounted for under section 10 (13A) of the Income Tax Act. Similar to this, self-employed people are not taken into account for HRA exemption under this provision but may still be eligible for tax benefits under  section 80GG of the Income Tax Act .  If you have opted for the new tax regime then you cannot avail tax exemption of house rent allowance. HRA is available only under the old tax regime.  HRA Exemption/Deduc...

  TDS or Tax Deducted at Source is income tax reduced from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making such payments.  Usually, the person receiving income is liable to pay income tax. But the government with the help of Tax Deducted at Source provisions makes sure that income tax is deducted in advance from the payments being made by you. The recipient of income receives the net amount (after reducing TDS). The recipient will add the gross amount to his income and the amount of TDS is adjusted against his final tax liability. The recipient takes credit for the amount already deducted and paid on his behalf. Example of TDS   Shine Pvt Ltd make a payment for office rent of Rs 80,000 per month to the owner of the property. TDS is required to be deducted at 10%. Shine Pvt ltd must deduct TDS of Rs 8000 and pay the balance of Rs 72,000 to the owner of the property. Thus, the r...

  Advance Tax in INDIA Advanced tax is paid by individuals on a second income. The source can be leasing, a lottery win, fixed deposits, referral works, capital gains from equities, or freelancing. The tax will be payable if the total amount exceeds ₹10,000 in a fiscal year. This is as per Section 208 of the Income Tax Act, 1961. This scheme was introduced by ex-finance minister Arun Jaitley in Budget 2016-17 after demonetization came into effect. Who Should Pay Advance Tax? Taxpayers pay only a share or portion of their tax liability before the end of a year. This is often known as tax EMI due to the installment flexibility. Ticking off these eligibility criteria makes you liable for advance tax. Tax liability of more than ₹10,000. A self-employed or salaried person. Have earnings from rents and investments. The advance tax schedule falls under section 44AD. Read on to know how to pay. Steps for Online Advance Tax Payment This can be paid instant from the comfort of your home or o...