Agricultural Income

The most famous category of tax-free income is income from agriculture. Income earned from agricultural activities is free from income tax under Section 10(1) of the Income Tax Act, 1961. The logic behind this exemption is to support and promote the agriculture sector, which plays an important role in the country’s economy. Tax-free agricultural earnings encourage farmers to invest in their farms and improve agricultural methods.

Gifts and Heritage

Gifts received by individuals in India are generally tax-free, provided they satisfy certain conditions laid down in section 56(2) of the Income Tax Act. Similarly, inherited property is not subject to income tax. This exemption has been given because imposing tax on gifts and inheritances will not increase family financial support and will hinder the transfer of money between generations.

Interest on PPF and EPF

Interest earned on investments in Public Provident Fund (PPF) and Employees Provident Fund (EPF) is tax-free. These investments are encouraged because they promote long-term savings and financial security for individuals. The government encourages citizens to contribute to these plans by providing tax exemption on the interest earned.

Profit on long-term investment

Long-term capital gains (LTCG) arising from the sale of certain assets like equity shares and mutual funds are tax-free if they meet certain criteria. The government aims to encourage long-term investment in the capital market by providing this exemption. However, tax has to be paid on short-term capital gains.

HRA (House Rent Allowance)

House Rent Allowance (HRA) is a component of salary that can be tax-free. If the taxpayer fulfills certain conditions given in section 10(13A). The purpose behind this exemption is to reduce the financial burden on people living in rented houses.

It is noteworthy that it is important for taxpayers to understand the categories of tax-free income to customize their financial plan. These rebates are designed to support specific sectors, encourage long-term savings and provide relief in certain circumstances.

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Agricultural Income

The most famous category of tax-free income is income from agriculture. Income earned from agricultural activities is free from income tax under Section 10(1) of the Income Tax Act, 1961. The logic behind this exemption is to support and promote the agriculture sector, which plays an important role in the country’s economy. Tax-free agricultural earnings encourage farmers to invest in their farms and improve agricultural methods.

Gifts and Heritage

Gifts received by individuals in India are generally tax-free, provided they satisfy certain conditions laid down in section 56(2) of the Income Tax Act. Similarly, inherited property is not subject to income tax. This exemption has been given because imposing tax on gifts and inheritances will not increase family financial support and will hinder the transfer of money between generations.

Interest on PPF and EPF

Interest earned on investments in Public Provident Fund (PPF) and Employees Provident Fund (EPF) is tax-free. These investments are encouraged because they promote long-term savings and financial security for individuals. The government encourages citizens to contribute to these plans by providing tax exemption on the interest earned.

Profit on long-term investment

Long-term capital gains (LTCG) arising from the sale of certain assets like equity shares and mutual funds are tax-free if they meet certain criteria. The government aims to encourage long-term investment in the capital market by providing this exemption. However, tax has to be paid on short-term capital gains.

HRA (House Rent Allowance)

House Rent Allowance (HRA) is a component of salary that can be tax-free. If the taxpayer fulfills certain conditions given in section 10(13A). The purpose behind this exemption is to reduce the financial burden on people living in rented houses.

It is noteworthy that it is important for taxpayers to understand the categories of tax-free income to customize their financial plan. These rebates are designed to support specific sectors, encourage long-term savings and provide relief in certain circumstances.

The post Non Taxable income: No tax is imposed on these 5 types of income, Know the tax rules first appeared on Rightsofemployees.com.

Which form to fill

First of all, let us tell you that people below 60 years of age have to fill 15G form, which has a condition that no income tax should be made on you. Second, your total income should be less than 2.5 lakh.

How senior citizens can save tax

Above 60 years i.e. for senior citizens, 15H form will have to be filled. The condition of 15H is that no tax should be made on your income. There is no condition of basic exemption limit in this. If the interest is going above the basic exemption limit, but you will not be taxed if you do not have any other income. In this condition, you can go to the bank and fill 15H form, in which case the bank will not deduct your TDS and all your interest will come to your account.

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Every taxpayer has to pay tax on the income derived from his business or employment. This tax is levied on a percentage of his income limit. But income tax also has provisions for non-taxable income. They are excluded from the ambit of income tax.

Under the Income Tax Act, 1961, income derived from agriculture is excluded from the ambit of income tax. Hindu undivided family income, income from immovable property or income from ancestral property are not taxed.

As per Section 56(ii) of the Income Tax Act, gifts including property, jewellery, money etc. given by a relative are exempt from tax. However, gift received from a person other than a relative is exempted only upto Rs.50 thousand.

The amount of gratuity received after the death or retirement of a government employee is completely tax free. Similarly, private sector employees get exemption on gratuity amount up to Rs 10 lakh received on account of retirement or disability. As per the Income Tax Act, tax relief on gratuity also depends on other factors.

Under Income Tax Act 10(15) certain interest on certain income is exempt from tax. This includes the interest earned on the Suvarna Vaoda Yojana, Local Authority and Infrastructure Bonds and the interest earned under the Sukanya Samriddhi Yojana. No tax is levied on it.

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In a tweet on Thursday, the Finance Ministry told about its budget promise that senior citizens above 75 years of age, who have only bank pension account and interest on bank account as their only source of income, now need to file ITR. No need. For this, a new section Section 194P has been added in the Income Tax Act, 1961. This section is applicable from April, 2021. Some rules have been amended regarding this and banks have been informed about it.

According to the information released by the Central Board of Direct Taxes, this section has been operationalized. For this, a notification has been issued regarding the related forms and conditions. Along with this, necessary amendments have also been made in Rule 31, Rule 31A, Form 16 and 24Q.

Relief for Senior Citizens!

Section 194P inserted in IT Act, 1961 exempting senior citizens above 75 years of age, having only pension & interest income, from filing ITR. Specified banks & relevant forms notified.#PromisesDelivered pic.twitter.com/KHQOIyQabr

— Ministry of Finance (@FinMinIndia) January 5, 2023

Finance Minister Nirmala Sitharaman had announced this in her budget address saying that “Now that we are in the 75th year of Independence Day of our country, we will continue our journey with more enthusiasm. We are more than 75 years old in the country.” Will reduce the burden of tax compliance on senior citizens of India. For such senior citizens whose income is from pension and interest, we propose to exempt them from filing income tax returns. The bank in which they have an account, that bank The amount of tax that will be made on the income, he will deduct the tax.”

In fact, this rule has already been implemented that senior citizens above 75 years of age receiving pension and interest income on the same bank account are exempted from not filing ITR. If his income is taxable, then the bank can deduct tax from his account. Regarding this, it has been said that section 194P is now operationalized and banks have been notified about the changes in their declaration form and other related forms.

Please tell here that there will be no change in the rules of common taxpayer and their ITR form.

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