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Basics of taxation
What are the basics of taxation
What are the basics of taxation?
A significant moment in every citizen’s life is the first time they pay income taxes. If you are a novice, initially, the procedure could appear overly difficult and time-consuming, and some of the terminologies used might be difficult to comprehend. This may not necessarily be the case, though.
Here is a list of the fundamentals of income tax that will assist you in comprehending the tax implications of your income (depending on your income source).
Basics of taxation: Are you currently seeking employment after finishing college? Or perhaps you already have a job and will soon file your first income tax return? In general, anybody with a source of income is required to file income tax. If the specifics of income tax and investments are confusing to you, there are various websites that can help you understand the basics of taxation.
Assessment Year: This is called the assessment year because this is when you assess your finances and taxes thereafter for the previous year. Let’s say the assessment year is 2020-21. This means it’s being done for the previous year 2019-20 when you file your tax for the current year.
Previous year: The 12-month period that starts on April 1 and ends on March 31 of the following year is known as the previous year or the financial year or your tax year. Regardless of when you begin your job, your tax year ends on March 31 and a new one begins on April 1.
Gross income and deductions: Your gross income is reduced by deductions. These are the dollar amounts that the Income Tax Department permits you to deduct from your income to lower your tax obligation. Taxable income is when you deduct gross income from deductions.
