As a business owner or any responsible adult, you’re going to have to learn about your taxes, particularly the practice of tax filing, sooner rather than later.
It doesn’t matter if you plan to hire a chartered accountant to file your taxes or you’re going to do it yourself, it’s still worth it to know what you’re dealing with.
The most important thing is to avoid paying more in taxes than you should and keep in mind that you might be eligible for certain reimbursements on your taxes if you play your cards right.
The two most important things that you need to know about tax filing in order to make the most of this process include tax rebate and tax refund.
These two terms are often utilized interchangeably but they are quite different actually. What you need to know is that they both play a pivotal role in your ability to lower your tax liability.
Read on as we explore these concepts in depth.
What is a Tax Rebate?
It’s possible to reduce your tax burden as a taxpayer during tax filing season. This is done through various tax deductions and exemptions as well as tax rebates.
Basically, tax rebates are reimbursement claims that you can make as a taxpayer on your taxable income.
This can go a long way to reduce your tax liability, particularly if you file for more than one tax rebate, granted that you qualify of course.
What is a Tax Refund?
As the name implies, a tax refund is an amount that you get back from the taxes that you’ve already paid.
This could be due to the fact that you’ve paid more than your total tax liability and are therefore eligible for reimbursement from the government.
It means that you paid additional taxes than you were supposed to either through automatic tax deductions or via your own self-assessment of your taxes during filing season.
In fact, it’s important to go through this process of tax relief during tax filing season so that you can get a refund on your tax funds as well as the cumulative interest attached to them.
Tax Rebates vs. Tax Refunds
Like we said in the beginning, the similarities between a tax refund and a tax rebate can make it difficult sometimes to distinguish between the two. That’s why some people will even go as far as to use these two terms interchangeably.
But, as we’ve learned, a tax rebate is a form of tax relief that you’re allowed to claim and end up with a lower tax burden. Basically, it’s the amount that you’re not really required to pay.
On the other hand, a tax refund is an amount that you get back from the taxes that you’ve already paid, simply because you overpaid your taxes and gone over and above your tax liability.
It’s a refund on your taxes and this practice is most common with self-assessment tax, TDS, or advance tax.