Income tax is a government levy on an individual's earnings. The employee's annual income of Rs. 7,80,000 falls under the 20% tax bracket, making their income tax Rs. 46,000. Remember, this is an estimate without considering deductions or exemptions. Consulting a tax advisor is recommended for personalized advice.
Question 1 and 2: What is income tax?
Income tax is a levy imposed by the government on an individual's income.
It is a way for the government to generate revenue to fund public services and infrastructure.
The specific rate of income tax an individual pays depends on their annual income bracket.
Question 3: What is the total annual income of the employee?
The employee's monthly salary is Rs. 65,000. To calculate the annual income, we multiply the monthly salary by 12 months:
Annual income = Rs. 65,000/month * 12 months = Rs. 7,80,000
Question 4 and 5: How much income tax should he pay in a year?
The income tax brackets and rates are provided in the image.
Since the employee's annual income falls under the bracket of Rs. 5,50,001 - Rs. 7,50,000, the applicable tax rate is 20%.
To calculate the income tax, we can use the following formula:
Income tax = (Annual income - Lower limit of income bracket) * Tax rate
Income tax = (Rs. 7,80,000 - Rs. 5,50,000) * 20%
Income tax = Rs. 2,30,000 * 20% = Rs. 46,000
Therefore, the employee would have to pay Rs. 46,000 in income tax for the year.
Additional notes:
The image mentions "Study the tax rates and answer the questions below."
However, it doesn't specify whether the employee is eligible for any deductions or exemptions that could affect their taxable income.
Therefore, the calculation above provides an estimate based on the given information.
Income tax laws and regulations can be complex and vary depending on the country and individual circumstances.
It is always recommended to consult with a tax advisor for personalized advice.