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 tax rules first appeared on Rightsofemployees.com.

This year the last date for filing income tax return is 31st July. If you are also preparing to file your return then it is important for you to know which income is taxed and which is not. By knowing this, you will not only be able to file your return correctly but will also save tax. Today we are telling you about those 10 incomes on which you do not have to pay income tax. Let us know about them.

1. Agricultural Income: Income from agriculture in India is completely exempt from income tax. This exemption is not only on the sale of crops, but it also includes rent received from agricultural land or buildings and profit earned from buying or selling agricultural land.
2. Interest income from NRE accounts: NRE accounts offer benefits such as tax-free interest on NRE deposits. NRIs can also transfer funds to their native place through NRE accounts.
3. Gratuity: In the private sector, employees who receive gratuity amount up to Rs 20 lakh on retirement are not required to pay income tax. 

Also Read: Why should the Finance Minister increase the 80C limit in Budget 2024?

1. Capital gains: Some capital gains are also tax-free. Individuals who receive compensation for urban agricultural land do not have to pay income tax.
2. Profit from Partnership Firm: Under the Income Tax Act, the income of a partnership firm is taxed at the entity level. Partners working for the firm do not pay income tax as they get a share of the profit after paying taxes. 
3. Scholarship: Students who receive scholarships from government and private institutions for their studies are exempted from income tax.
4. Provident Fund: Provident funds, mandatory savings schemes for companies registered under the Companies Act, 1956 in India, grow with age and become tax-free upon your retirement from the job. Employee Provident Fund offers tax-free returns, provided the employee has actively contributed for more than 5 years, even if they have changed employers during this period.
5. Tax-free pension: Pensions from certain organisations, such as the UNO, are exempt from tax. Family pensions received by dependents of employees are also tax-free.
6. Voluntary retirement: The amount received on voluntary retirement before retirement is exempt from tax up to Rs 5 lakh. Gifts received from relatives or on the occasion of marriage are also exempt from tax. 
7. Allowances or any compensation: Certain allowances are exempt from tax for any individual in India. For example, the foreign allowance provided by the Government of India to its employees working abroad is tax-free. Additionally, compensation received from Public Sector Undertaking (PSU) companies on voluntary or retirement is also exempt from tax. 

The post Non Taxable Income: There is no income tax on these 10 incomes, know this before filing the return first appeared on Rightsofemployees.com.

If you earn money in other ways besides salary, then this news is useful for you. This is because generally income tax is levied on every income. This not only includes salary, but apart from salary, it also includes many other things like interest from savings, income from home, side business, capital gains etc. But there are some income sources on which not even a single rupee is taxed. Today we are going to tell you about 10 such incomes, where not even a single rupee is taxed.

There is no tax on this income

Earning from EPF

Income tax exemption is available under Section 80C of the Income Tax Act on the amount deposited by you in the PF account. Tax exemption is also available on the amount deposited by the employer in your EPF account. The condition in this is that this amount should not be more than 12% of your basic salary. If the amount is more than this then you will have to pay income tax on the remaining amount.

Returns up to Rs 1 lakh from share or equity mutual funds

If you have invested in Shares or Equity Mutual Fund, then the return of up to Rs 1 lakh on selling them after one year is tax free. This return is calculated under LTCG. In last year’s budget, LTCG tax has been imposed on returns of more than Rs 1 lakh received from investment in shares or equity mutual funds.

Wedding gifts

If a gift is received from friends or relatives at a wedding, then there is no need to pay tax on it. The condition in this is that you should have received the gift around your wedding. If your wedding is on March 16 and the gift is given after six months, then there will be no income tax exemption on it. Along with this, the value of the gift should not exceed Rs 50,000.

interest on savings account

If you get interest of up to Rs 10,000 in a year from your bank’s savings account, then you get exemption from income tax on it under Section 80TTA of the Income Tax Act. If the interest on savings account is more than Rs 10,000 annually, then you will have to pay income tax on the additional amount.

Profit received from partnership firm

If you are a partner in a firm, then the amount you receive as Share of Profit is free from income tax liability. In fact, your partnership firm already pays tax on it. Income tax exemption is only on the profits of the firm, not on the salary you receive.

Amount received on life insurance claim or maturity

If you have purchased a life insurance policy, then the amount received by you at the time of claiming it or on its maturity is completely free from Income Tax. The condition in this is that the annual premium of your life insurance policy should not exceed 10% of its sum assured.

If the premium in a life insurance policy is more than this, you will have to pay income tax on the additional amount. If you have taken a life insurance policy for someone in your family who is disabled or suffering from a serious illness, then the premium amount can be up to 15% of the sum assured.

Amount received in VRS

Many people take voluntary retirement (VRS) from job. If you have also taken VRS, then the amount received up to Rs 5 lakh is free from Income Tax. This facility is only for employees working in government or PSU (public sector companies), not for people working in the private sector.

inherited property

If you have also inherited property, jewelery or cash from your parents, then you do not have to pay income tax on it. Even if someone had made a will in your name and you have received property or cash from him, you do not have to pay income tax on it. You will have to pay tax on future income or interest income from such property as per your tax slab.

Agricultural income

If you have agricultural land and you are earning from farming or related activities, then you do not have to pay any income tax on that income. Agricultural income also includes its produce, amount received as rent etc. If you do farming by building an agricultural farm, then the income from it is also free from Income Tax.

On feeding and feeding in business

If you are a businessman then you have to meet many types of people during your business. This includes customers, vendors and other employees. The cost of feeding them is also included in the process of business. You should keep a bill for such expenses and present them as business expenses. If you adopt this process then you can save income tax on this amount.

The post Tax Free Income! 10 types of income on which there is no tax, important things to know before filing return first appeared on Rightsofemployees.com.

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 Tax Free Income: No tax is imposed on these 5 types of income, Know the tax rules first appeared on Rightsofemployees.com.

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.