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.

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.

If you start tax planning as soon as the year starts, then you can save a lot of tax. Sometimes the tax on your salary can also be zero. For this, you can use the deductions and exemptions available under the Income Tax Act. Along with this, you will also have to get your salary structure done in such a way that you can get the benefit of maximum reimbursement. If you use every investment and reimbursement to the maximum extent, then it is possible that you can get tax exemption even on salary up to Rs. 12 lakh, that is, there will be zero tax on your salary (Zero tax on rs. 12 lakh salary).

First work on your salary structure

During the beginning of the year, there is often an option to change the salary structure. You can decide by yourself how much money you need as reimbursement and how much money as taxable salary. In reimbursement, options like conveyance, LTA, food-coupon or entertainment, internet or phone bill and petrol are available. HRA plays an important role in saving tax. Let us know how you can save your tax with the help of all these.

First understand how much HRA can be benefited

When you are claiming HRA, you have to extract 3 types of figures. Whichever figure is the lowest among them, you get tax exemption on it.

• The HRA given by the company in the salary can be claimed.
• HRA can be claimed up to 50% of basic salary in metro cities and 40% of basic salary in non-metro cities.
• After deducting 10% of the basic salary from your total rent, you can claim that much HRA.

If you live in a metro city, then it is common to have a house rent of 15-20 thousand rupees in today’s time. Let us assume that your house rent is Rs 20,000, which is about 20% of your monthly salary. Whereas the basic salary is about 50% of your CTC, so let’s assume that your basic salary is around Rs 6 lakh. In such a situation, in the above mentioned 3 situations, your HRA will be something like this.

• Usually about 40 percent of the basic salary is received from the company as HRA. That is, you will get HRA of about Rs 2.4 lakh.
• Due to living in a metro city, you can take HRA up to 50% i.e. Rs 3 lakh.
• According to 20 thousand rupees, your annual rent is about 2.4 lakh rupees. From this, after deducting 10% of basic salary i.e. 60 thousand rupees, your amount comes to 1.8 lakh rupees.

Now if seen, Rs 1.8 lakh is the lowest among these three figures, so on this much money you can get exemption under HRA.

Leave travel allowance 

You can take advantage of this twice in 4 years. Under this, you can go somewhere and you can get the benefit of Leave Travel Allowance on the fare for commuting. Generally, about 10 percent of the basic salary is given by the companies as leave travel allowance. Now if you have a basic salary of Rs 6 lakh, then you will get a leave travel allowance of about Rs 60 thousand.

If you calculate the average on an annual basis, then you will get a tax exemption of about Rs 30,000. If leave travel allowance is not included in your salary, then get it included so that you can take advantage of it. Keep in mind, if you fall in the 30 per cent slab, you can save a lot of money with the help of LTA. It would not be wrong to say that with the help of LTA you will get 30 percent cheaper in a way.

Must get reimbursement

Many things are given to the employees by all the companies as reimbursement. Let’s know about each one by one and understand how much money you can save.

Conveyance Reimbursement: Under this, you can usually get a reimbursement of up to Rs 1-1.5 lakh from the company. Let us assume that your company gives you conveyance reimbursement of Rs 1.5 lakh, then this amount will become non-taxable to you.

Internet Bill:In today’s time, almost every business needs internet broadband. You can get good speed internet broadband for Rs 700-1000 per month. In such a situation, the company gives almost the same amount in reimbursement. If you do not have this component in your salary, then include it in your salary and get tax exemption. Let’s assume that under this you can make non-taxable up to Rs 1000 per month i.e. Rs 12000 annually.

Food or Entertainment Reimbursement: Earlier this reimbursement was in the form of food coupons, which can now be redeemed by showing your food bill. Under this, the company usually gives around 2000 rupees per month i.e. 24 thousand rupees easily annually.

Uniform, Fuel, Books & Others: Different companies also give some reimbursement in the name of uniform, fuel, books, magazine, paper etc. Talk to the HR of your company once and ask if these facilities are there. If you get these reimbursements, you will be able to save tax on some more money. Generally, by combining all these, you can get a reimbursement of up to Rs.1000-2000. Let us assume that you get reimbursement of only Rs.1000 per month, even then you will get the benefit of not paying tax on Rs.12,000 annually.

You also get many deductions

Under the Income Tax Act, you also get some deductions which prove to be helpful in reducing your taxable salary.

1- First of all, 50 thousand rupees will be given to every employed person.standard deduction Get. That means, whatever your salary, close your eyes and reduce 50 thousand rupees just like that.

2- Second largest deduction is available 80C of, under which you can get tax exemption on investment up to Rs 1.5 lakh. This includes PPF, Sukanya Samriddhi Yojana, NPS, child’s tuition fees, life insurance premium etc. Let us assume that you utilize this entire limit and claim a deduction of up to Rs 1.5 lakh.

3- After this 80CCD(1B) Under this, you get the benefit of investing an additional Rs 50,000 in NPS. So you can save some additional tax while securing your future.

4- In today’s time everyone takes health insurance. Section 80D Under this, you can save tax up to Rs 25,000 by taking health insurance for yourself. Also, by taking health insurance for parents, you will be able to save tax on Rs 25,000. That is, under this, your total deduction can be up to 50 thousand rupees. If your parents are above the age of 65, then you will get a deduction of Rs 50,000 for them. In this case, you will be able to save tax up to Rs 75,000. For the time being, assume that you will be able to save tax on a total of Rs 50,000 under 80D.

Now understand the calculation

There are total 4 parts of this calculation. The first is HRA, under which you will get tax exemption up to Rs 1.80 lakh. The second part is reimbursement. If you add all the reimbursements mentioned above, then you can get a total reimbursement of Rs. 1.98 lakhs. And the third part is the deduction. If you add the deduction available under all the sections, then you will get a total deduction of Rs 3 lakh. Apart from this, the fourth part is Leave Travel Allowance, on which you can take advantage only twice in 4 years. So if you calculate the average on an annual basis, then you will get a tax exemption of about Rs 30,000. That means, out of your salary, Rs 7.08 lakh will not be directly taxed.

Your annual salary was Rs 12 lakh, out of which Rs 7.13 lakh will not be taxed. In this case, your taxable salary is saved by Rs 4.92 lakh. Your taxable salary is less than Rs 5 lakh, so you will also get rebate under 87A on this. Explain that no one has to pay tax on salary up to Rs 2.5 lakh, while 5% tax is levied on salary ranging from Rs 2.5 to Rs 5 lakh, but if your total taxable salary is Rs 5 lakh or less, then the government will give you Gives rebate up to Rs 2.5 lakh, which means you don’t have to pay tax up to Rs 12,500. In this way all your tax becomes zero. Now your taxable salary has become Rs 4.92 lakh, which is less than Rs 5 lakh, so you will also get the benefit of this rebate and your tax liability will be zero (0).

The post No tax will be charged on salary up to ₹ 12 lakh – Know How ? first appeared on Rightsofemployees.com.

No tax up to Rs 7,00,000

Explaining the provision, the Finance Ministry said that under the new tax regime, if a taxpayer has an annual income of Rs 7,00,000, he does not have to pay any tax, but if the income is Rs 7,00,100, then 25,010 Have to pay tax of Rs. Due to this additional income of Rs 100, the taxpayers have to pay tax of Rs 25,010. Therefore, a marginal relief has been proposed, so that the tax payable by the person should not exceed the increased income from the tax free income of Rs.7,00,000. In the above case, the income in excess of Rs.7,00,000 is Rs.100, so the same amount should be charged to tax.

Finance Bill amended to provide relief to taxpayers

Sandeep Jhunjhunwala, partner at Nangia Andersen LLP, said the amendment in the Finance Bill has been made to provide some relief to individual taxpayers whose income is marginally higher than the tax free income. In the budget for the financial year 2023-24, it was announced that the taxpayers adopting the new tax regime, whose annual income is up to Rs 7,00,000, will not have to pay tax. Experts believe that this step was taken to motivate the salaried class taxpayers to adopt the new tax regime. No exemption is given on investment in the new tax regime.

Who will get relief

Now the government has made up its mind to give some more relief to these taxpayers through amendment in the Finance Bill. However, the government has not mentioned to what extent taxpayers having income above Rs 7,00,000 would be eligible for this relief. Tax experts have calculated that individual taxpayers whose income is up to Rs 7,27,777 can get the benefit of this provision.

The post Big Relief to taxpayers earning more than Rs 7,00,000 in the new tax regime first appeared on Rightsofemployees.com.

However, in the last several years, a lot of strictness has been shown by the Ministry of Finance in this regard. On asking questions on non-imposition of tax exemption from the Finance Minister, the answer kept getting that not imposing new tax is also tax exemption. However, with the last full budget before the elections this year, experts are also hopeful about tax exemptions.

He says that due to the increase in inflation, the government can give tax exemption as a relief to the common people. This will put additional spendable amount in the hands of common people. Tax matters expert Devendra Kumar Mishra believes that the government will definitely give relief to the common people this time.

No tax will be charged up to Rs 6 lakh

Income of common people up to Rs 5 lakh can be further increased to Rs 6 lakh tax free. The biggest relief can be found in the head of income of Rs 15 lakh without tax exemption, which is kept in the range of 20 percent. This can be increased up to Rs 17 lakh.

Standard deduction limit will also increase

Apart from this, the government can also increase the standard deduction limit for the salaried class. It can be increased from Rs 50 thousand to Rs one lakh. Also, tax exemption on interest can be 25 thousand.

The post New slab in Income Tax. No tax up to 6 lakhs. Rs 1 lakh more will be able to claim tax free first appeared on Rightsofemployees.com.