THE very mention of the word tax, may leave you feeling a tad depressed.

But here's a snippet from an old Morgan Stanley advertisement to cheer you up: You must pay taxes. But there's no law that says you gotta leave a tip!

So, even though tax is a fact of life, why pay more than what's due?

Some of you may even be wondering why you need to pay tax at all and what happens if you don't pay it.

Let's play '22 Questions' and get tax-savvy.

What is income tax?

In all there are five heads for income as follows:

• Salary
• Property rental income
• Income from business/profession: This applies for entrepreneurs and small business people who don't get a regular salary income. Some examples are doctors, lawyers, etc
• Capital gains such as profit from sale of house, land, gold, etc
• Income from other sources such as interest received on bank deposits, winnings from lotteries or game shows, etc.
  

Why should I pay income tax?
When your income exceeds the limit set by the income tax department (scroll down for more details), you will have to pay tax on the excess income you earn. It is calculated for the period from April 1 to March 31. This period is referred to as a financial or previous year. The tax money garnered is used for the country's development.

Why should I file income tax returns?
If you have earned income, which is more than the minimum exempt slab during the year then you must pay tax. For men the minimum exempt slab is Rs 150,000 and Rs 180,000 for women.

What is the period for which my income is calculated?
Income earned during the financial year i.e. from April 1 to March 31 is taken into account while calculating tax. Financial year is known as previous year under Income Tax Act.

What is assessment year? What is the difference between assessment and previous year?
In simple terms, assessment year means the current year and previous year means the last or financial year. For example, if you are filing your tax now, year 2007-08 will be considered as previous year and 2008-09 will be considered as assessment year.

Read: File tax returns, online, in 20 minutes

Calculate: Your tax liabilities

Photograph: Christopher Furlong/Getty

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