Tax on income other than farming

If there is income from other business or job apart from farming, then the rules change. Tax is calculated by adding income outside farming to the total income. This is called partial integration of agricultural income. That means income outside farming can be taxed.

Different rules apply to professional farming.

If a person does contract farming or big corporate farming and his earnings are treated as business income, then tax will be levied. This happens when the farming activities are less and processing is more. In such cases, the income is considered as business income.

No tax on subsidy or grant received for farming

The subsidy received from the government or state government is completely tax free. It is exempted under section 10(1) of the Income Tax Act. Subsidy received on farming equipment or seeds is also included in this. This benefit is given to reduce the cost of farmers.

If the land is leased, then the rules will be different.

If the farmer earns by giving his land on rent, then this income will be considered as rental income, not agricultural income. In such a situation, it will come under the purview of income tax. That is, if you do not do farming, you will not get the benefit of exemption.

Rules are different on gardening and forest products.

Income is earned by selling wood or plant products from the forest. If it is earned naturally, then it will not be considered as agricultural income. Tax may have to be paid on this income. Only the income from gardening done through farming is exempted.

There is no tax on the income from agriculture.

The income from agriculture is exempted from income tax. This means that there is no tax on the income from agriculture. This exemption applies to the income earned by selling the produce of the farm. This provision has been made to provide financial relief to the farmers.

When is there a need to file ITR?

If the non-agricultural income is more than the basic exemption limit, then it may be mandatory for such a farmer to file ITR. Tax will be calculated by adding agricultural income. However, there is no tax on farming income.

It is important to keep documents and proofs.

Keep farm details and sales bills to show agricultural income. If the Income Tax Department asks for proof, these will come in handy. Especially when the farmer has income from other sources as well. Keeping the right documents can help avoid tax disputes.

The post Agricultural income Tax: Not all income from farming is tax free, know when you may have to pay tax first appeared on Rightsofemployees.com.

There are many types of income in India on which income tax is not levied. No tax has to be paid on such income. The government has kept these incomes in the tax free category. Know here what are these 10 incomes.

Agricultural Income – Income from agriculture is completely tax free under Section 10(1) of the Income Tax Act.

Money received from insurance policy – ​​The maturity or bonus amount of a life insurance policy is tax free subject to certain conditions.

Interest and total amount received from Public Provident Fund (PPF): The interest received on the amount deposited in the PPF account and the amount received on maturity are completely tax free.

Scholarships and Government Awards – The amount of scholarships received from the government or recognized institutions and state or national awards like Bharat Ratna, Arjuna Award etc. are tax free.

Gifts received from relatives: Gifts received from close relatives are tax-free under certain conditions. Gifts received at the time of marriage are also tax-free.

Receipt received from HUF – The amount received by the member from HUF is tax free.

Retirement benefits: Gratuity up to certain limits, holiday cash (for government employees) and certain categories of pension are tax free.

Medical insurance, certain allowances received from office – such as medical insurance premium, meal coupons, office telephone, internet bills etc. are tax free up to certain limits.

PF, NPS, Senior Citizen Savings Scheme – The interest or maturity amount received from these investments is tax free subject to certain conditions.

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The post 10 Types Of Income Which Are Tax Free – Key Details inside first appeared on Rightsofemployees.com.

How will income of Rs 14.65 lakh be tax free

Now suppose your annual salary is Rs 14.65 lakh. Out of this, half the money i.e. 50 percent goes in the basic salary. Whereas, the remaining 50 percent comes in the form of other items and allowances. We will further calculate the tax deduction according to the amount of basic salary.

Complete calculation of tax exemption

If the company contributes 12% of the basic salary to the Employees Provident Fund, then tax deduction can be claimed on it. This will be Rs 87,900. At the same time, tax exemption is also available on the company’s contribution to the National Pension System (NPS). This contribution will be 14% of the basic salary i.e. Rs 1,02,550. Also, you get a standard deduction of Rs 75,000 in the new tax regime. That is, this amount will be directly reduced from your taxable income.

After taking advantage of all these exemptions, your net taxable income will be Rs 11,99,550 lakh. The government has made income up to Rs 12 lakh tax free, so this means that you will not have to pay a single rupee tax. But, you have to keep in mind that this system will come into effect from the next financial year i.e. 2025-26.

How much tax will be saved in total

If the government did not make income up to Rs 12 lakh tax free and did not give the benefit of tax deduction on EPS and NPS, then an annual income of Rs 14.65 lakh would have to pay heavy tax. According to the new tax regime, 5 percent tax (Rs 20 thousand) will be levied on income of Rs 4 to 8 lakh.

While 10% tax (Rs 40,000) will be levied on income between Rs 8 lakh and Rs 12 lakh, 15% tax will be levied on income between Rs 12 lakh and Rs 14.65 lakh. If the standard deduction of Rs 75,000 is removed, then 15% tax i.e. Rs 28,500 will be levied on Rs 1.90 lakh. In this way, the total tax liability will be Rs 88,500, which you can easily save.

The role of EPS and NPS is important

Tax exemption is available on Employee Pension Scheme (EPS) under section 80CCD(1) of Income Tax and on contribution to NPS under section 80CCD(2). However, in the new tax regime, this exemption is available only on the company’s contribution, as it is considered as your direct income. Therefore, you are allowed to claim tax exemption on it.

NPS i.e. National Payment System is a retirement plan. Those who join this government scheme get pension after retirement. In this, the contribution is invested in the market and the return received from it is given as pension. NPS was started in 2004. It was opened for the general public in 2009.

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The post Income of Rs 14.65 lakh will be tax free in the new tax regime; complete calculation first appeared on Rightsofemployees.com.

But there are some sources from which the income does not come under the purview of tax. Apart from income from farming, there are many other incomes which are kept out of the tax purview. According to tax experts, section 10 of the Income Tax Act mentions such tax-exempt income. There are some incomes on which you do not have to pay any tax. Let us tell you about such income on which you can save tax.

The post Non-taxable Income: 10 Types Of Income Which Are Tax Free – Key Details inside first appeared on Rightsofemployees.com.

The change in tax slabs in Budget 2025 is expected to give the middle class a major relief. This step can not only improve the financial condition of the people but also give new energy to the sluggish economy. The government is considering making changes in income tax slabs, which can benefit salaried taxpayers earning up to Rs 20 lakh annually.

According to a report in Business Standard, the government is currently considering two major options. First, making annual income up to Rs 10 lakh completely tax-free. Second, introducing a new tax slab of 25% on income between Rs 15 and 20 lakh. Currently, income above Rs 15 lakh is taxed at 30%. If the budget allows, both options can be implemented. For this, the government is ready to bear a revenue loss of Rs 50,000 crore to Rs 1 lakh crore.

The concession was incomplete in the previous budget

. In 2023, the Finance Minister had increased the exemption under Section 87A and made income up to Rs 7 lakh tax-free, but for this, most of the deductions had to be given up. Now under the new tax regime, the tax exemption limit can be increased to make income up to Rs 10 lakh tax-free. Currently, people with income up to Rs 7.75 lakh do not have to pay tax with a standard deduction of Rs 75,000.

The economy will get a boost

if the government expands the scope of tax exemptions or introduces a new slab, which could help boost urban consumption, especially at a time when the country’s GDP growth rate is slowing. The GDP growth rate in the second quarter of FY25 was 5.4%, the lowest in seven quarters. Tax concessions will increase the spending capacity of the people, which will increase demand in the market and strengthen the economy.

PwC consultant and former CBDT member Akhilesh Ranjan believes that a 25% tax slab should be introduced for those with incomes between Rs 15 lakh and Rs 20 lakh. This will leave more money with the middle class, which will increase the purchase of consumer durables (like refrigerators, TVs). IASCC professor Anil K Sood says that a 30% tax on incomes slightly above Rs 15 lakh is unfair. He suggested that the government should provide relief to the salaried class, but without changing the existing incentives.

Focus on fiscal deficit

Professor Sood said that the government is more focused on fiscal deficit. He also said that budget is made for capital expenditure but there is a shortage in spending it. For example, the National Highway Authority of India (NHAI) has sufficient funds, but they are being used to repay loans.

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The post New tax slab: Income up to Rs 10 lakh will be tax-free, new tax slab of 25% may be announced: Report first appeared on Rightsofemployees.com.

However, if the government decides to make the annual income of Rs 8 lakh tax free, then this figure can be crossed very easily. A report has claimed that the demand for giving this exemption has started being raised. In such a situation, the government can give this relief to senior citizens between 60 and 80 years.

Around 2 crore more ITRs are expected to be filed this year

According to this research report of the Economic Department of State Bank of India (SBI), if the government has to increase the number of ITRs rapidly in the assessment year 2024-25, then it will not hesitate to take such steps. If this exemption is given to senior citizens, then the number of return filers will increase tremendously. According to the SBI report, about 2 crore more ITRs are expected to be filed this year. In such a situation, by the end of the financial year, the number of ITRs will cross 9 crores. Next year this figure can easily cross 10 crores.

Government should also make changes in TDS deduction and certificate

The report said that a total of 7.3 crore ITRs were filed in Assessment Year 2022. In Assessment Year 2024, this figure was 8.6 crores. However, the number of people filing ITR after the due date is decreasing rapidly. In such a situation, it is understood that now the discipline of filling ITR on time is increasing among the people. The Income Tax Department has also made it easier to fill ITR by simplifying the process and form. The report said that the government should improve the scope of TDS deduction. Also, changes should be made in the TDS certificate.

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The post Income Tax: Income up to Rs 8 lakh can be tax free, check details here first appeared on Rightsofemployees.com.

These bonds are traded on BSE and NSE. Some tax-free bonds are trading well. Their yield is also attractive. Investing in them is quite safe and gives regular income. These bonds are especially attractive for taxpayers falling in higher tax slabs of income tax.

Bonds of these companies are available for investment

A total of 14 government infrastructure companies, including NHAI, IRFC and Power Finance Corporation (PFC), have issued tax-free bonds, which are traded on NSE and BSE. These bonds were issued between 2012 and 2016. They were issued for 10 years, 15 years and 20 years. Their interest is paid every year. Most of these bonds have the highest rating of ‘AAA’.

Trading takes place on NSE and BSE

There is no tax on the interest earned on tax-free bonds. Since these bonds are issued by government companies, they are guaranteed by the Indian Government. Therefore, investing in them is completely safe. Therefore, these bonds are suitable for those investors who want regular income along with the safety of their capital. Out of a total of 193 series of tax-free bonds, 92 series have matured. The rest are traded on NSE and BSE.

Also Read: Gold Import Limit: How much gold can you bring from abroad, know what the rules say

Keep these things in mind while investing

If you want to invest in these tax-free bonds, then you should invest in bonds with high liquidity and yield to maturity (YTM). YTM means the annual return that the investor is expected to get if he maintains his investment till maturity. According to data from HDFC Securities, most of the bonds in this series have low liquidity. But there are 20 such series whose YTM is high and liquidity is also good.

Attractive for investors falling in higher tax slab

According to HDFC Securities, there are 15 series of tax-free bonds that trade at a relatively stable YTM of 5.5 to 5.9 per cent. This return is comparable to the returns on corporate bonds and bank fixed deposits. However, interest on corporate bonds and bank FDs is taxable. This reduces the post-tax returns for investors in the 30 per cent tax slab to around 5.1 per cent and 4.3 per cent, respectively. Hence, investing in tax-free bonds is beneficial for investors in higher tax slabs.

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The post Tax free Bonds: You can invest in tax-free bonds in BSE and NSE, know its benefits first appeared on Rightsofemployees.com.

But do you know that you may have to pay tax on such gifts (Gift Tax in India)? Yes, the government has made some changes in the rules of gift tax, which is going to directly affect your pocket.

This will affect those people more who often give or receive expensive gifts. If you are going to give or receive a gift, then you should know about the Income Tax Rules. So let’s know…

Provide information about income from gifts while filing ITR

Under the gift tax rules, you will have to pay tax on certain gifts. In India, gifts are considered income from other sources and can be taxed under the Income Tax Act, 1961. However, taxpayers have to disclose all these gifts while filing returns (ITR).

Gifts up to Rs 50,000 are tax-free

According to the rules, gifts up to Rs 50,000 are tax-free. This means that if you receive a gift of more than Rs 50,000 from any one person in a year, then you will have to pay tax on the amount that exceeds Rs 50,000.

Which gifts will be taxed?

• If you receive a gift of more than Rs 50,000 from any one person in a year, you will have to pay tax on the amount that exceeds Rs 50,000.
• If you receive a gift from a distant relative or friend, it will be considered taxable.
• If you receive any gift for advertising or promotion, its value will be included in your income and will be taxed.

Which gifts will not be taxed?

• There is no tax on gifts received from family relations such as spouse, parents, siblings, grandparents and children, irrespective of their value.
• Gifts received on special occasions like marriage or religious ceremonies are eligible for a discount of up to Rs 3 lakh.
• Gifts honoured by the President, Vice President, Governor or the Government are also tax-free.

The post Gift Tax in India: Do you have to pay tax on gifts received on birthday or marriage? Know these important rules first appeared on Rightsofemployees.com.

The amount that investors can withdraw through the Systematic Withdrawal Facility is the same amount which till now could be withdrawn in lump sum as 60 per cent. If you are also planning for Systematic Withdrawal Facility (SWF), then it is important for you to know about it.

This money is tax free

Here it is important for you to know that when you select the Systematic Withdrawal Plan, you cannot invest further in NPS. Returns will keep coming on the money deposited in your account but you will not be able to invest much. If you understand in simple language, it means that you will not be able to claim any kind of tax deduction on investment in NPS. Till now, 60 percent of the money received at the time of retirement is tax free. But it is not clear whether this system (tax free money) will be applicable on Systematic Withdrawal Facility (SWF) or not.

Do this work to get the benefit of compounding

Investors who select the systematic withdrawal option can opt for immediate annuity or can fix it till the age of 75 years. In case of fixing, your money will be frozen for the period decided by you. Later you will be able to remove it systematically. According to experts, any investor should fix his annuity till the age of 75 years. With this you will get the benefit of compounding and its effect will be visible in pension also.

The new change will allow retired people to invest in NPS for a longer period. Government employees have been expressing their displeasure regarding NPS for years. They believe that they will not get adequate pension from this pension scheme. For the pension received from NPS, both the employee and the government have to deposit money.

In this scheme, employees get pension after the age of 60 years. Let us tell you that in the old pension scheme, after 25 years of service, pension was 50% of the last salary at the time of retirement. At the same time, in NPS, the employee gets a pension of 60% of his average salary for 30 years of his service.

The amount of pension received in NPS depends on the market situation. Due to the resentment of government employees, many state governments have recently announced the restoration of the old pension scheme. The states which have implemented the old pension include Chhattisgarh, Rajasthan, Punjab, Himachal Pradesh and Jharkhand.

The central government is trying to remove the dissatisfaction of the employees regarding NPS. A committee has been formed by the government for this. It is believed that under NPS, the government can guarantee 40 to 45 percent of the final salary as pension.

The post Pension: How will the new NPS plan work? first appeared on Rightsofemployees.com.

During Budget 2023, the government had made some changes under two savings schemes of the post office. Along with this, a new scheme was introduced, which is for women. Finance Minister Nirmala Sitharaman has made special changes in the Senior Citizen Savings Scheme and the Post Office Monthly Income Scheme. Let’s know what were the changes

Senior Citizen Saving Scheme

During Budget 2023, Senior Citizen Savings Scheme investors can now invest twice as much as before. Earlier this amount was Rs 15 lakh, which has been increased to Rs 30 lakh. This scheme was started in 2004, so that benefits can be given to senior citizens on retirement. The interest rate under this scheme is 8 percent and a minimum of Rs 1000 can be deposited. The interest under this scheme is not tax free.

Monthly income scheme

During the current budget, the investment limit in MIS has been increased from Rs 4 lakh to Rs 9 lakh. At the same time, under joint accounts, the limit has been increased from Rs 9 lakh to Rs 15 lakh. Under the Monthly Income Scheme, investors will get interest money every month. Right now the annual interest under this scheme is 7.1 percent. This is a five year plan.

Mahila Samman Saving Scheme

During the budget 2023, the central government had announced this scheme. This scheme is starting from 1st April. The government has started this scheme to include more women in the investment scheme. Also, this scheme will give more benefits to poor women in less time. Under this scheme, you can invest 2 lakh rupees for 2 years and in return you will get money at the rate of 7.5 percent.

The post Post office Scheme Rules Change: These three major changes will happen after 2 days under post office schemes first appeared on Rightsofemployees.com.

There are 11 such countries in the world, which do not have to pay a single rupee tax and the entire income of the people comes into their account.

The first name comes from The Bahamas, where citizens do not have to pay a single rupee tax. Although the government imposes charges like VAT and Stamp. It is a famous city in terms of tourism.

In the Central American country of Panama, citizens do not have to pay any tax. There is a big chain of beaches and casinos here. Here no tax has to be paid even on capital gains.

UAE is a country where crude oil is traded and its economic condition rests on this. Here citizens do not have to pay tax. At the same time, Brunei keeps a large reserve of crude oil. This is an Islamic country and the citizens here do not have to pay taxes.

Due to oil and gas reserves in Kuwait and Oman, both these countries earn well, due to which the citizens here do not have to pay tax. At the same time, due to oil reserves in Qatar, no income tax is charged.

Tax is not to be paid even in Maldives and Monaco. Maldives is a beautiful tourist destination. In the smallest island nation Nauru, citizens do not have to pay any tax.

In the African country Somalia also there is no tax system because of the worsening situation. For this reason, tax is not to be paid here.

The post Tax Free Countries in World: In these 11 countries, there is no tax of even a single rupee, the entire earning is saved first appeared on Rightsofemployees.com.

The biggest demand is that the taxable income limit should be increased from 2.5 lakhs to 5 lakhs (taxable income limit). According to media report, the government can give good news on this. Sources told that the government can make changes in the New Tax Regime to make the new tax system attractive. After the presentation of the budget, income up to Rs 5 lakh may become tax free.

Income up to 5 lakh can be exempted (Tax Exemption Limit)

It is reported quoting sources that the government’s focus is on making the new tax system attractive. Under this, it is being considered to give tax exemption on income up to 5 lakhs. At present, no tax has to be paid on income up to Rs 2.5 lakh. At the same time, there is a provision of 5% tax on income between 2.5 lakh to 5 lakh. At the same time, there is no tax on income of 5 lakhs in the old tax system. In such a situation, the government is considering making these changes to make the new tax system more popular.

It is known that the inclusion of exemption on home loan interest in the new tax system is under consideration. Along with this, preparations are being made to include standard deduction exemption in the new tax system. In the new tax system, 30% tax can also be reduced. Even in the old tax system, the tax rate of 5-15 lakhs can be reduced.

The government had optionally introduced a new tax regime in the 2020 budget, in which six new slabs were introduced – 5%, 10%, 15%, 20%, 25%, and 30%. There are three slabs of 5%, 20% and 30% in the old slab, with which all the benefits of tax deduction are available, which are not available in the new tax regime.

At the same time, in the new regime, there is no tax on annual income of 2.5 lakhs. Income up to 2.5-5 lakhs is taxed at 5%. 10% tax on annual income of 5-7.5 lakhs, 15% on income between 7.5 lakhs and 10 lakhs, 20% tax on income between 10 and 12 lakhs, 25% between 12.5 lakhs and 15 lakhs and 15 lakhs Income above 30% is taxed annually.

Government can take big decisions in the last full budget

Modi government is going to present its last full budget this year in Modi 2.0 tenure. In such a situation, it is being speculated that the government can bring a populist budget this time. Lok Sabha elections are going to be held next year, in such a situation only the interim budget has to come next year, so the government can take big decisions only this year. Tax exemption can be a big announcement, so it is expected that this time there can be relief in tax.

The post New Tax Regime Change: Government is going to make big changes in the new tax regime, check details first appeared on Rightsofemployees.com.

At present, income up to Rs 2.5 lakh is tax free, but it can be increased to Rs 3 lakh. Finance Minister Nirmala Sitharaman (FM Nirmala Sitharaman) can give a big gift from the general public to the middle class.

According to media report, the tax free limit can be 3 lakhs , this time the taxpayers can get many big gifts in the budget, but the biggest relief is that this time the government can increase the tax free limit. Is. It is expected that the government can increase it from 2.5 lakh to 3 lakh, which means you will have to pay less tax than before.

The limit was increased 9 years ago.

The last increase in this limit was in the year 2014. At that time, the government had increased this limit from Rs 2 lakh to Rs 2.5 lakh. There has been no change in this limit for the last 9 years. This is the last full budget of the second term of the Modi government, so this time the government can make many big announcements.

The limit is 3 lakh for senior citizens.

Let us tell you that now you do not have to pay tax on salary up to Rs 2.5 lakh and in this budget, the government can increase your relief by Rs 50,000 more. On the other hand, if we talk about senior citizens, then for those people this limit is 3 lakh rupees.

How much is the income tax slab now

>> Rs 2.5 lakh annual income – tax free
>> 2.5 to 5 lakh annual income – 5% tax
>> 5 to 10 lakh annual income – 20% tax
>> 10 Annual income more than lakh – 30% tax

The post Income Tax: Good news! Income tax limit will be increased from 2.5 lakh to 3 lakh, Finance Minister gave information! first appeared on Rightsofemployees.com.

Income up to Rs 2.5 lakh is tax free

Tell me, at present your income up to Rs 2.5 lakh is tax free, but even after all this, you will not have to pay a single tax even on salary up to Rs 10.5 lakh.

Standard deduction of Rs 50,000 is available

if the annual income of any person is Rs 10 lakh 50,000, then you get a straight standard deduction of Rs 50,000. In this situation, your taxable income becomes Rs 10 lakh. According to media reports, the government may increase the standard deduction from Rs 50,000 to Rs 70,000 in this budget.

1.5 lakh exemption will be available in 80C.

Apart from all this, you can take advantage of full tax exemption of up to Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961. It comes with many facilities including LIC, PPF. Accordingly, your taxable income remains only Rs.8,50,000.

You will get a discount of 50,000 here, apart from this, you can also save tax through NPS under Section 80CCD of Income Tax Act 1961. In this, you will get a rebate of up to Rs 50,000, which means your taxable income will now be only Rs 8 lakh.

Here you will get a discount of 2 lakhs.

If you have bought any house or have any home loan in your name, then you also get the benefit of income tax exemption. Under Income Tax Act 24B, you get a full exemption of up to 2 lakhs. So according to this your taxable income will remain only Rs.6 lakh.

You can get a discount of Rs 75,000 by getting insurance done, apart from
this you can claim Rs 75,000 under Section 80D of Income Tax. You can also take insurance for your family. By doing this, your taxable income will be reduced to only Rs 5 lakh 25 thousand.

Apart from all this, if you are associated with any organization, you can also get tax exemption of up to Rs 25,000 through donation . In this you can claim under section 80G of tax. After taking advantage of this exemption, your taxable income remains only Rs 5 lakh, on which you do not have to pay any tax.

The post Income Tax: Finance minister changed the rules! If you earn 87,500 rupees every month, then you will not have to pay income tax first appeared on Rightsofemployees.com.

The amount received as gratuity is tax free and proves to be financially helpful to the employee. The amount you will get as gratuity is decided under a formula. The amount of gratuity is fixed on the basis of the salary of each person, the years of his service etc. If you too have been working in a company for 5 years or more, then here’s how you can calculate your gratuity amount.

Gratuity is decided by this formula

There is a fixed formula to decide the amount of gratuity. With this formula, you can also know how much gratuity you will get. The formula is – (last salary) x (number of years worked in the company) x (15/26). Last salary means the average of your last 10 months salary. Basic salary, dearness allowance and commission are included in this salary. Due to 4 days of Sunday in a month, 26 days are counted and gratuity is calculated on the basis of 15 days.

Suppose you earn 50 thousand

Suppose your last salary is 50 thousand rupees. In this case, the calculation will be based on this formula 50000x10x15/26. Based on this formula, you will get Rs 288461.54 as gratuity. On the other hand, if the average of your last salary is 50 thousand rupees and the duration of the job is 15 years, then according to the 50000x15x15/26 formula, you will get 432692.30 rupees. Although, if the company wishes, it can give more amount than the fixed amount as per its wish, but according to the rules, it should not exceed 20 lakhs.

In this case the calculation is done differently.

When the company or organization is not registered under the Gratuity Act, the employees are not covered under the Gratuity Act. In this case, it is the discretion of the company whether to give gratuity or not. But if the company still wants to give gratuity to an employee, then its formula is different. In this case, the amount of Gratuity will be equal to half a month’s salary for every year. But the number of working days in a month will be considered as 30 days, not 26.

The post Gratuity Update: 50000 salary and 10 years job, how much amount of gratuity will you get? Know the calculation here first appeared on Rightsofemployees.com.

There are very few post office schemes that have both the features and they come under EEE category (ie investment, interest/return and tax exemption on maturity), but none of the post office schemes have only tax-free features. There is no Tax Deduction at Source (TDS) on interest/returns on many post office schemes. In such a situation, investors often think that these are tax-free schemes. However, taxpayers have to provide information from other sources, such as interest earned on schemes, while filing their Income Tax Return (ITR).

Post Office Schemes

Public Provident Fund (PPF)

PPF has both tax-saving and tax-free features and comes under EEE category. The interest and maturity amount received on PPF is also tax free.

Sukanya Samridhi Yojana (SSY)

A parent or legal guardian of a girl child can open a Sukanya Samriddhi Yojana account at the post office and deposit up to Rs 1.5 lakh in a financial year. Like PPF, with tax-free interest and maturity, SSY also has EEE features.

National Pension System (NPS)

Investors can claim deduction up to Rs 50,000 in a financial year under section 80CCD(1B) for voluntary investment in NPS Tier-1 accounts. Returns and lump sum commutation from retirement corpus under NPS are tax-free.

Post office savings account

Deposits in post office savings accounts neither have tax saving benefits nor are interest tax free.

Post office time deposit

Investors get tax saving benefit of up to Rs 1.5 lakh under section 80C on investments made in 5 years Post Office Time Deposit. There is no tax-saving benefit available on short-term investments. Interest is also not free.

Post Office Monthly Income Scheme Account (MIS)

Neither any tax-saving benefit is available on deposits in Post Office MIS accounts, nor the interest earned is tax free.

Senior Citizen Savings Scheme (SCSS)

Senior citizen investors get tax-benefits of up to Rs 1.5 lakh under section 80C in a financial year on investments made in Post Office SCSS.

National Savings Certificate (NCS)

By investing in NCS, investors can get tax-benefits of up to Rs 1.5 lakh in a financial year under section 80C. However, the interest earned on NCS will be taxed.

Kisan Vikas Patra (KVP)

Investors cannot enjoy any tax-benefits on investment in KVP and neither the interest earned is tax free.

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EEE Tax Free

EEE or Exempt-Exempt-Exempt Tax Category makes all investments falling under this category completely tax free. EEE grouped investments are governed by various sections of the Income Tax At of 1961. Here exemption-exempt-exempt means investment amount, interest received and maturity amount all three things remain tax free.

These streams will also be exempted

The most popular sections under which a person is eligible to claim tax exemption include section 80B, section 80C, section 80D, section 80DD, section 80E, section 80EE and section 80GG.

Here, a discount of up to 5 lakhs

If the employer has no contribution in EPF, then high income earners can claim exemption on contribution up to Rs 5 lakh in their EPF. The Central Board of Direct Taxes (CBDT) had incorporated Rule 9 of the Income Tax Rules, 1962 in the financial year 2021-22 to give effect to this declaration.

Know about the taxation system

Experts say that according to this rule, an EPFO ​​subscriber with a contribution of more than Rs 2.5 lakh in a financial year will have two EPF or PF accounts, where PF contribution up to Rs 2.50 lakh will be deposited in one account, while Rs 2.5 lakh will be deposited in one account. The amount exceeding one will be kept in another. Hence, the interest earned in the EPF/PF-1 account will be kept exempt from tax. But the interest earned in PF/EPF-2 account will be taxable only. This means that the excess contribution of the employee will not be taxed.

Understand from these examples

For example if an employee is contributing Rs 2.7 lakh in a financial year and the same amount is being contributed by an employer, then Rs 2.5 lakh is deposited in the first PF account and Rs 20000 in the second PF account are deposited. The interest income from Rs 20,000 will be taxed only on that. The exemption limit on contribution for government employees is up to Rs 5 lakh. In this case also, two separate accounts will exist. The additional contribution and the interest earned thereon will be kept in a separate account with EPFO. Employer’s contribution to PF, National Pension System (NPS) and retirement is tax free up to a total of Rs 7.5 lakh in a year.

Invest more in equity

The EPFO ​​may this month approve a proposal to increase its investment in equities to 20 per cent from the existing 15 per cent limit. The proposal is expected to be considered and approved during the EPFO ​​trustees’ meeting to be held on July 29 and 30.

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