INCOME TAX BASICS FOR YOUNG PROFESSIONALS
After you’ve graduated from college and taken up your first job only recently, income tax can give you a tough time. Young professionals find it troublesome to get the hang of income tax and the finances that come along.
Sometimes you can get this information from websites or social media profiles of renowned business consultants in Dubai, UAE and USA, however mostly you’re left to figure out your own way through income taxes.
It is for young professionals like you that we have created this comprehensive guide to income tax basics and explained everything… in Plain English. Read on.
What do the terms ‘Tax Year’ mean?
Tax Year is also known as Previous Year or Financial Year. It refers to the 12-month period that starts on April 1st and ends on March 31st of the next year. Tax Year starts and ends on these exact dates irrespective of when you start your job. Tax Year is the duration for which income taxes are withheld for earnings or the year for which income tax return is being filed.
What is the amount of income on which tax is paid?
Income tax has to be paid on all of your sources of income. Your total income is the sum total of all the following major income sources:
- Income from Salary
- Income from House Property
- Income from Gain or Loss obtained from selling a capital asset
- Income from Business
- Income from saving bank accounts, fixed deposits, family pensions, cash gifts, etc.
The amount of tax to be paid also depends on your age and gender as there are different income slabs for men, women, and senior citizens.
What are the documents required for filing income tax?
Filing income tax can be a daunting tax for first-timers. We recommend taking the help of an experienced chartered accountant. However, you will need to provide/submit the following documents:
- Form 16 – provided by the company you’re employed at. This gives the details of the deductions made from your salary marking that you have paid the income tax on your salary
- Form 16A – given by the bank or a financial institution where you have invested in term deposits. This form contains the details of deductions made on your term deposits
- Bank Statement Summary – a detailed preview of the transactions made by you all through the financial year
- Property details – details of any property bought or sold by you in the previous financial year have to be clearly shown during the filing
- Interest Certificate – this document can help you save on taxes by showing that you’re paying back your house loan through monthly installments
Income taxes may seem daunting but they are an essential duty of all earning citizens also obliged upon them by the law. The collected amount helps in further development of the nation, and in an indirect way, is invested back on the citizens themselves.
Author Bio: Brenda Cagara
Brenda has been writing for websites, articles and blogs for five years now. She has written for a variety of niches but her main focus is business, tax, and finance. Currently, She is working with Riz & Mona Consultancy which offers company formation and branch office Dubai services. Other services are products registration, visa processing, bank account opening, trade license, trade mark, local sponsors and many more.