As we all know that If you are earning you are liable to pay certain percentage of your earning as “Income Tax” to the government. The amount of income tax is totally based on the income you made during a fiscal year. There are some exemptions / deductible facilities which helps you to reduce the amount of income tax.
There are various factors that are affecting you income tax. So, the calculation of income tax is quite a tough work. You can check the amount of income tax paid by you with the help of the Income tax calculator by going through the link below:
Income Tax Calculator – Income Tax You paid in FY2080-81
When we are talking about the various factors affecting the calculation of income tax, it is related to your annual income, your contribution in retirement funds, insurance, marital status, gender, geographical region you are serving, etc. There are some parameter set for each of the factors which are discussed in detail below.
Factors affecting Income Tax
Annual Income
The first factor is your annual income. Without the income there is no income tax. More your annual income is more liability to pay income tax to the government. Both monetary and non monetary income are considered while calculating the tax.
Monetary income consists of Salary and Grades, Bonuses, OT payments, Various types of allowances, Prizes and gifts, and others whereas non-monetary income comprises of Vechile facilities, Utilities facilities, House facilities, etc.
All mentioned income are added to become the Total Annual Income you made during a fiscal year.
Contributions
Employement provident fund, Citizens Investment Trust, Social Security Fund and other retirement fund are the fund where any employee made contribution as their future savings. Alongwith this the government allow certain portion of these funds to be deducted before the calculation of income tax. To be exact Max NPR 300,000 can be deducted in case of Employment provident fund, Citizens Investment trust and Other retirement funds and NPR 500,000 in case of Social Security Fund in Fiscal Year 2080-81.
Now in Fiscal Year FY2081-82, Government has announced to increase the deduction of all funds to NPR 500,000. While calculating the Taxable Income, the contributions can be deducted from Total Annual Income.
Insurance
Incase of insurance Max NPR 40,000 can be deducted if you have done Life Insurance, Max NPR 20,000 can be deducted for Medical Insurance and Max NPR 5,000 can be deducted for Home Insurance from the Total Annual Income.
Gender
If you are female you will get 10% discount on Taxable Income. For example: If a male paid NPR 100,000 Income tax then only NPR 90,000 will be tax liability for women.
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