Income Tax Liabilities and Tax Calculator
Income tax is a tax levied by government of a particular country on individuals or organizations. Income tax refers to the tax imposed on the financial income of individual. Income tax is calculated on net taxable income.
Net taxable income is calculated after permissible deductions from the gross income of an individual. The permissible deductions involves deductions allowed by the government of a country in which the individual resides and savings of that individual up to a certain permissible limit again decided by the government of that country. Income tax is calculated on a financial year basis. There is a definite date decided by the government up to which an individual is required to pay the Income tax. If Income tax is deducted or paid in excess of what was the actual calculated tax, it is refunded back to the individual. For Salaried employees the employers generally deduct the tax on monthly basis from the salaries of employees so as to avoid the burden of paying the tax at one at the end of financial year. Organizations are required to pay the Income tax that is sometimes also referred to as Corporate Income Tax. Income tax needs to be filed with the government of particular country.
Income Tax Liabilities
Principally there are four basic ways to earn money
Income Tax Liabilities refers to the tax owed by an individual or organization that he/it needs to pay to the government of the country as against the financial income of the individual/organization.
For Individuals the Income Tax liability is calculated by first calculating the gross income of an individual. The gross income may amount to be the sum of income of an individual from salary or interest accrued on his total savings in any of the bank accounts he hold, income from other sources such as property rental, other business etc. Once the gross income is calculated the next step is to identify under which slab of Income tax standard deduction does the individual fall. This slab is decided by seeing that under which slab of income tax under his gross income falls. The standard slabs for income tax is decided by the government and is likely to change over a period of time. After deciding for the appropriate slab of income tax deduction an amount is reached that is known as standard deduction. This amount is subtracted from the gross income of an individual to reach the income of individual that is less then gross income.
After this an individual enjoys other deductions in this income based on his savings done during that particular financial year. This amount also comprises of different categories of tax rebate expenses that individual has incurred during financial year. This amount is again subtracted from income of individual to reach at the Net Taxable Income.
Based on Net taxable income the income tax slab is looked upon which decides how much percentage/amount of his remaining income he is supposed to pay to the government as income tax.
Income Tax Calculator
It is an automated tool to discover how much income tax is required by an individual/organization to pay to the country's government. Income Tax calculator provides an easy way to compute income tax as the entire process of calculating income tax is quite complex and generally requires extensive knowledge and expertise to calculate the same. This calculator computes tax based on the information an individual provides it and it accuracy and authenticity lies on the accuracy and authenticity of the information provided .The general information required by this calculator in case of an individual are as follows
- Income from Salaries. It requires mentioning of varied salary components such as Basic salary, HRA, Conveyance allowance, Personal allowance, LTA, Medical Professional tax.
- Income From property
- Income from other sources such as Bank interest
- Deductions under LIC , Provident funds, Insurance schemes etc
After gathering all this Information the Income Tax Calculator is able to compute the Tax Liabilities. This is the amount that is required to be paid as the Income Tax.
