Earning and Taxes

Earning your own money is exciting! As a teenager, you might earn income in several ways:

• Part-Time Jobs: Working a few hours a week at a local shop, cafe, or library.
• Freelancing: Using your skills to do projects for people – like graphic design, writing, coding, social media help, or tutoring younger students. This is becoming very common!
• Internships: Gaining work experience, often during holidays. The money you receive from an internship is usually called a stipend, not a salary, but it's still income!
• Pocket Money/Allowances: Regular money from parents for chores or just as an allowance.
• Selling Things: Making crafts, art, or selling old items you don't need anymore.

Remember, money you borrow isn't income (you have to pay it back!), and money you receive as a gift (like for your birthday from parents) is usually treated differently from money you earn through work or services.

When you start earning, you might hear about taxes. Taxes are money people and businesses pay to the government. But does all your income get taxed?

Generally, money you earn through work is considered taxable income. This includes:

• Salary from a job.
• Stipend from an internship.
• Money earned from freelancing (yes, even if it's online!).
• Profits made from selling things for more than you bought them (like investments).

However, some money might not be taxable, especially for smaller amounts or specific types:

• Gifts: Money received as a gift from close relatives (like parents) is often not considered taxable income up to certain limits.
• Pocket Money: Usually not considered taxable income.

Tax rules can be complex and depend on how much you earn overall in a financial year (April 1st to March 31st in India). If you start earning significantly, it's good to learn more or ask a trusted adult.

Paying taxes might seem like a drag, but it's super important! The money collected through taxes is used by the government to pay for things that benefit everyone in the country. Think about:

• Roads & Bridges: Building and maintaining the roads we travel on.
• Schools & Hospitals: Funding public education and healthcare services.
• Defence: Keeping the country safe.
• Police & Fire Services: Public safety and emergency services.
• Parks & Public Spaces: Maintaining places everyone can enjoy.
• Government Operations: Running the country smoothly.

Without taxes, the government wouldn't have the money to provide these essential public services.

You might hear different names for taxes in India. Here are a few key ones:

• Income Tax: This is a tax paid on the income you earn (like salary, freelance earnings, profits) above a certain basic exemption limit set by the government each year. If you earn below that limit, you might not have to pay income tax.
• TDS (Tax Deducted at Source): Sometimes, when a company pays you a salary or a stipend, they might deduct a portion of the tax before giving you the money and pay it directly to the government on your behalf. This is TDS. It helps ensure taxes are paid regularly.
• GST (Goods and Services Tax): This is a tax you pay when you buy most goods and services – like clothes, electronics, movie tickets, or restaurant meals. The price you see often includes GST. It's collected by the seller and paid to the government. It's not a tax directly on your income, but on your spending.

Two important things to know about taxes in India:

• PAN Card (Permanent Account Number): This is a unique 10-character code given to every taxpayer. It's essential for almost all financial transactions once you start earning significantly, especially for tracking income and paying taxes. It's wise to apply for a PAN card once you are eligible (usually 18, but sometimes minors can get one with parental help if they have income). You'll need it for opening certain bank accounts, investing, and filing taxes. It's NOT needed just for simple shopping or using an ATM!
• Income Tax Department: This is the main government agency in India responsible for collecting income tax, monitoring payments, and dealing with tax-related matters, including preventing tax evasion (people trying to avoid paying the taxes they owe).

Understanding these basics helps you navigate the world of earning and taxes responsibly as you grow older!