Income tax payment
As the income of an individual increases the incidence of tax burden also rises. If the income of an individual is below the taxable limit, then it is exempted from taxation. The tax collected from the public acts as revenue to the government. The tax is accumulated for the purpose of public welfare. In order to develop infrastructure facilities, technology, irrigational facilities and fulfill other basic needs of the citizens, the government raises from the public. Income tax is termed as direct tax because it is directly levied upon the income of an individual. Taxes such as sales tax, custom duties, and excise duties are termed as indirect taxes because they are levied upon the commodities.
At the end of the assessment year an individual files his returns for income tax. There are many types of assesses who file income tax returns such as individuals, HUF and firms. The exemption limit differ from assesses to assesses. Currently according to the U.S. tax laws, there are 6 tax brackets ranging from 10% to 35%. An individual whose income tax is
There are generally four heads of income and they are:
1) Income from salary
2) Income from House property
3) Income from business
4) Income from other sources and capital gains. The total taxable income is computed and the total income from all the sources is first calculated and correspondingly tax is deducted.
The income tax rates in U.S. have been fluctuating since years because of the changing trade cycles. In 1913, the income tax rate was just 1% of the total income but during the Great Depression Period it rose to 94% in 1939. During the period there were 15 brackets of income. After tax reforms took place in 1986 the tax rate was dropped to 28%. Therefore the burden of tax depends upon the economic status in a nation. Usually developing and underdeveloped nations have greater burden of taxation.
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