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ITR Filing: You should know this rule, everyone’s income up to ₹ 12 lakh will not be tax free, heavy tax will be levied despite low income

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ITR Filing: In the budget, the government has made the income of people with taxable income up to Rs 12 lakh completely tax free with tax rebate under the new income tax system. This sounds very good, but not everyone will get this benefit. It is possible that your total taxable income is less than Rs 12 lakh, yet you will have to pay tax. Let us know what is the condition behind this.

First understand when you will get the benefit

Many people are confused about the fact that this time while filing ITR, they will not have to pay tax on income up to Rs 12 lakh. Let us tell you that this is not the case at all. Under the new income tax system, tax exemption of income up to Rs 12 lakh is applicable from the financial year 2025-26, whereas the ITRs that will be filed now are for the financial year 2024-25.

Now know who will not get the benefit

If you invest money in the stock market or buy and sell property and earn some money from it, then you will not get the benefit of tax free income up to Rs 12 lakh on that income. In such a situation, the income from capital gains will not be counted in the calculation of taxable income.

Let’s understand with an example

Let’s assume that your total income in a year is Rs 12 lakh. Out of this, Rs 8 lakh is your salary income, but the remaining Rs 4 lakh is earned by you from capital gains. In such a situation, you will get tax benefit on Rs 8 lakh, but you will have to pay capital gains tax on Rs 4 lakh. So in this condition, your income of Rs 12 lakh will not be tax free.

What is capital gain?

A salaried person can earn capital gains in two ways. First is from the stock market and second is from buying and selling a house or land. If you sell a share in the stock market after keeping it with you for more than 1 year, then the income earned from it is called long term capital gain. Whereas if you sell it before 1 year, then it is called short term capital gain.

What is the rule in case of property

If we look at the case of house or land, the definition of short and long term is slightly different. If you sell the house or land after 2 years, then the profit you make will be called long term capital gain. On the other hand, if you sell it before 2 years, the profit you make will be called short term capital gain.

How much is capital gains tax?

Talking in the context of the stock market, you will have to pay 20 percent tax on short term capital gain. Earlier this tax was 15 percent. On the other hand, you will have to pay 12.5 percent tax on long term capital gain, which was 10 percent earlier. However, if you have a long term capital gain, then you will get tax exemption on a gain of up to Rs 1.25 lakh.

How will tax be levied on income from house or land

If you have made long term capital gains by selling a house or land, then its calculation will be slightly different. 12.5 percent tax will have to be paid on a house bought before July 23, 2024 without including the effect of inflation (indexation). At the same time, you will also have the option of paying 20 percent tax with indexation benefit under the old scheme. You can pay whichever of the two options results in less tax.

LTCG holders will get special benefit from this year

Have you also got long term capital gain up to Rs 1.25 lakh in the financial year 2024-25? If yes, then the Income Tax Department has given a special facility for you. Due to this, it will now be even easier for you to file ITR. Recently, ITR-1 form has been issued by the Income Tax Department, in which special measures have been taken regarding long term capital gain up to Rs 1.25 lakh.

There has been a big change in the ITR form

This year, a major change has been made in the ITR form. This change is that ITR-1 (Sahaj) can be filed to deposit long term capital gain (LTCG) under section 112A. However, the condition is that the LTCG should not exceed Rs 1.25 lakh and the taxpayer does not have any loss to carry forward or set off under the capital gain category.

This facility has been started this year

If you are in this category, then this time it has become easier for you to file income tax return. Let us tell you that earlier there was no provision for reporting capital gains tax in ITR-1 form. This special facility has been started from this year.

Those with short term capital gains will not get the benefit

ITR-1 form cannot be used by those taxpayers who have made short term capital gains from selling house property or from listed equity and equity mutual funds.

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