Calculate Expatriate Income Tax in India
Posted: Jan 23, 2018
Any sort of money that is deducted from the salary of an individual on a regular basis to be paid to the central government is considered as a tax. For any individual who is earning money and is under the employer-employee relationship is liable to pay taxes to the government provided the salary amount of the individual is higher than the amount exempted from income tax.
There is not only one type of income tax that a person has to pay, but there are also several types of income taxes that are paid by an individual directly or indirectly. However, all the taxes are given to the central government of India for the money to be circulated and to be used in the economic growth of India.
Types of Taxes
Before individuals actually get to the part of the calculation of income tax, it is important to understand the different types of income taxes that are levied on a person. The tax that is taken from the salary of a person is only applicable to those individuals whose salary is above the tax exemption. For example, if the minimum amount required for individuals to pay tax is Rs10,000 and if an individual earns Rs15,000, then the amount of tax they have to pay is only on the remaining Rs5,000.
There are indirect taxes that are taken from the salary of an individual. These may come in the form of tax for buying goods like the Liquor tax or any sort of taxes that are levied on services like VAT(value added tax). There are also other taxes that are taken in the form of inheritance tax, agriculture tax, and others.
Through knowing the different types of taxes that can possibly be levied on an individual, people can save money through calculation of income tax and deduction in tax wherever possible.
Calculate Expatriate Income Tax
Depending on the residential status and the salary of an individual, tax is levied on them. Those who do not work are exempted from direct taxes to the government. However, indirect still is paid, unconsciously through the buying of certain products. According to the acts in the constitution of India, a financial year starts in April. This means that individuals need to full out their tax forms by the end of March and April. These tax forms are a compilation of receipts and bills that are received through the year and which act as evidence that the individual has paid so-and-so amount in the form of tax. The year in which income is earned is the assessment year while the year in which the income is taxable is known as the assessment year.
Those individuals who are non-residents of India but who work in India reliable to this form of expatriate income tax. These are primarily levied on the salary of a person and other forms of salary that they receive like allowance money etc.
Calculating of Income Tax
As mentioned earlier, calculation of income tax is dependent on the salary that the individual receives. The income tax is calculated on the gross salary that an individual receives at the end of a financial year. The gross salary is the addition of the salary received throughout the year, along with special allowances and bonuses also. However, income tax is only applied to those individuals who earn more than the cut-off limit that is liable for taxation.
The income tax is calculated for a financial year. The financial year is the year that an individual earns the money throughout the year. Then, at the end of the financial year which is around the month of March and April, individuals need to fill in their tax forms and claims so that their taxes are correctly paid to the government, and they can save more.
Calculating income tax helps in making an individual aware of the deductions that can be possible legally. It also makes them aware of the way they can invest their salary wisely in order to save more on their salary and exempt overpaying taxes. Tax is filed at the end of a financial year and given to the employer in order to not get into the loophole of reclaiming tax from the government.
Saving Income Tax
Through the calculation of income tax by an individual at the end of a financial year, they become aware of the ways in which they can save in income tax amount. For those individuals who seriously want to save through income tax, they plan out their taxes throughout the course of a financial year and spend wisely.
Tax saving is easy and planning throughout the course of a financial year saves up the difficulty that most individuals face when they have to file out their taxes at the end of the year. Most individuals, who are liable to taxation, keep their taxes on hold till the end of the financial year while savers plan it throughout the year.
Tax deductions are also an easy way for saving on one’s income. The government allows individuals to file for deductions in tax so that they are exempted partially from paying excessive taxes. If individuals feel that they were overtaxed and they have proof of the same then they can always ask for a refund from the tax commissioner.
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Archana Singh is a Finance Advisor and Investment Planner. She Also does like to share finance and insurance related write ups on the web. Follow Archana on her social networking sites to know more about her.