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.

The post 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 first appeared on Rightsofemployees.com.

Allowance for foreign services

If, you are in a government job and your appointment is outside the country and any allowance is received in lieu of it, then income tax will not be applicable on it. In section 10(7) of Income Tax, it has been provided that the employees working in government service who are rendering their services abroad and are getting allowance in return for them, then they will be tax free.

Income from gratuity

A part of the salary of salaried employees is deducted as gratuity. The company pays gratuity to the employee after working for a specified period. Gratuity income is completely tax free.

Income from voluntary retirement

Income from voluntary retirement up to Rs 5 lakh is tax free. According to Section 2BA of Income Tax, if a person takes voluntary retirement from any company or local authority, then the income from this will get tax exemption of up to Rs 5 lakh.

Income from agriculture

The government does not charge tax on income from agriculture. Income from agriculture is exempted from tax under section 1961 of Income Tax. Tax exemption is available on income from agriculture. Taxpayer can get tax exemption by showing income from agriculture in his return.

Income from savings account

If the interest earned from the savings account is less than Rs 10,000, then there is no tax to be paid on it. This exemption is also available on interest earned from more than one account. If, you have more than one bank account and they get interest of Rs 10000 and Rs 5000 respectively, then your taxable income will be Rs 5000.

Share of partnership firm

If, you are a partner in a partnership firm and you own its shares, then as per section 10(2) of the Income Tax, the partner is not liable to pay income tax for the income earned in the firm. Apart from shares, if you take remuneration or other benefits, then this income will come under the purview of taxable income.

Long term capital gain

Tax exemption is available on long-term capital gains made on investments made in equity or mutual funds. According to section 10(36) of Income Tax, if capital gains are made by selling shares or mutual funds for a period of more than one year, then it is eligible for income tax exemption. However, this is not applicable to debt mutual funds and the income generated from it is taxable.

Scholarship or award

There is no income tax on any kind of scholarship or award. Income tax is not charged on the amount received under the scholarship or award under the Income Tax Act 1961. The amount of the scholarship or award has not been fixed.

Senior Citizen Saving Scheme

If you are a senior citizen and you have invested in Senior Citizen Saving Scheme (SSSS), then your principal amount will not be taxed. However, you may have to pay tax on its interest income. Also, keep in mind that you have to mention this in your income tax return as well.

Provident fund income

According to section 10 (11, 12, 13) of Income Tax, income tax is not to be paid on such income which comes from PPF, PF or retirement fund.

The post Income Tax Big Alert: Here are your 10 incomes on which income tax is not to be paid, see the complete list first appeared on Rightsofemployees.com.

The post ITR Alert: Know Here are your 10 incomes on which income tax is not to be paid, see the complete list first appeared on Rightsofemployees.com.

It is most important that the taxpayer fills the correct ITR form for filing Income Tax Return. It depends on the residential status of the taxpayer, income received from different sources in a financial year. Most of the salaried taxpayers are required to file Income Tax Return through ITR Form No-1. But many taxpayers have to file Income Tax Return by filling ITR-2.

Who can use ITR-2 Form 
Taxpayers who do not receive income from any business or profession can file returns through ITR-2 form. Let us have a look at how many ways taxpayers earning income will have to file income tax return through ITR-2 form.

1. Salary Income
2. House Property Income (if there is more than one house property)
3. Capital Gains
4. Income from other sources like lottery, casino, horse racing is included.
5. Income from foreign assets
6. TDS has been deducted for cash payment.
7. Income Tax Deferred on Employee Stock Option Plan
8. Agricultural Income is more than Rs.5,000
9. If the taxpayer has invested in an unlisted company or is a director

How to File Return
Taxpayers have to fill ITR-2 form online. All the information is pre-filled in ITR Form-2. In which personal information, salary income details, capital gains, dividend income, interest income are included.

The post ITR Filing Latest News: How to file ITR form 2 with salary income capital gain income for (FY) 2021 22, know details here first appeared on Rightsofemployees.com.