If you are repeatedly spending from your card and taking money from friends, then these transactions can be seen as income. Especially when the amount is big or the transactions are happening repeatedly, then the Income Tax Department can inquire why this money came and whether it is your income.

Example: Suppose Rahul bought a laptop worth ₹ 75,000 online for his friend Ajay using his credit card. Ajay transferred ₹ 75,000 to Rahul via UPI the next day. Now if this happens once or twice then there is no problem. But if Rahul repeatedly spends from his card for Ajay or other friends and then they receive money via UPI or bank transfer, then the Income Tax Department may feel that Rahul is receiving this money as income.

What do the rules say?
If a credit card expenditure of ₹ 10 lakh or more is made in a financial year , then the bank has to give this information to the Income Tax Department. Paying credit card bills above ₹ 1 lakh in cash is also a cause of suspicion for the department. If you take money in cash from friends or transfer it without any documents, then you may also be charged a penalty. Therefore, it is important that every transaction is done through banking channels like UPI, NEFT or IMPS.

Tax experts say that occasional favor usually does not have any tax implication. But if it becomes a habit or the amount is large, then the income tax department can take it seriously.

How to protect yourself?

• Keep banking records of every transaction
• Avoid cash transactions, do only UPI or bank transfer
• Do not do this repeatedly, otherwise it can be considered a business activity
• If the amount is large, make a written consent or agreement

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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.

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In Budget 2025, many big announcements were made to provide relief to the middle class, which included changes in tax slabs, TDS, tax rebate and other things. At the same time, a new Income Tax Bill was proposed in place of the old Income Tax Act 1961. All these changes are going to come into effect from April 1, 2025, for which only a few days are left now. This amendment by the government is to simplify the tax structure, increase consumption and give economic boost.

New Tax Slab

Under the new system, individuals earning up to Rs 12 lakh annually will be exempted from paying tax. Apart from this, salaried employees will be eligible for a standard deduction of Rs 75,000. This means that salary income up to Rs 12.75 lakh can now be exempted from tax. However, this exemption applies only to those who choose the new tax option. On the other hand, if it is more than this, tax will have to be paid as per the new tax slab. Which is as follows… 

• Nil up to ₹4 lakh
• ₹4 Lakh – ₹8 Lakh 5%
• ₹8 Lakh – ₹12 Lakh 10%
• ₹12 lakh – ₹16 lakh 15%
• ₹16 lakh – ₹20 lakh 20%
• ₹20 lakh – ₹24 lakh 25%
• Above ₹24 lakh 30%

Tax rebate under section 87A

The biggest change is that the exemption under section 87A for taxpayers opting for the new tax regime has been increased from Rs 25,000 to Rs 60,000 earlier. This increase in tax rebate means that individuals earning up to Rs 12 lakh will have no tax liability under this regime, thereby increasing the limit of tax-free income. 

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This creates confusion among investors regarding tax. AMFI, an organization representing the mutual fund industry, has advised the government to eliminate the difference in tax rules. This will bring transparency in investing in mutual funds and will increase investors’ interest in investing.

There is a need to simplify the tax structure

Consultancy firm Deloitte has also advised to remove the shortcomings related to tax. It believes that there is a need to simplify the rules of GST. Currently, many medium and small businesses have to face problems in the case of GST. Deloitte says that if the government simplifies the GST framework, then compliance will increase. Increase in compliance means that the government’s revenue will increase.

The tax burden on SMEs needs to be reduced

Deloitte also says that currently the tax burden on SMEs is high. High taxes reduce the growth potential of SMEs. The government should make such tax rules for SMEs that taxes are low and they get full opportunity to expand their business. If the government provides a favorable environment to SMEs, then their investment in renewable energy and technology will increase. This will increase their productivity.

AMFI advised to simplify the tax rules for mutual funds

AMFI also says that there is a need to make major changes in India’s tax structure. Tax rules will have to be made according to international rules. This will boost economic growth. Experts say that to attract foreign investors, it is necessary to make the tax structure simple and transparent. This will also reduce cases of tax evasion. This will also increase the government’s income. Experts are of the opinion that foreign investors invest only when they see stability in tax rules.

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Roads are the lifeline of development of any country. Roads and highways are the property of any country. Therefore their maintenance is also very important. Just as we take care of other assets of the country, we also take care of roads and highways. But for the maintenance of the highways and roads of the country, we have to invest more and more assets in it.

Roads also become important because through these roads people can easily move from one city to another or from one city to another. Whenever you go by road, you definitely have to stop at the toll tax on the way. Permission to proceed is given only after paying toll tax. Now what are these toll taxes, why are they charged and how are their rates decided?

Why is toll tax taken?

Toll tax is used for maintenance and construction of roads etc. Through this fee the government plans the construction and maintenance of highways and expressways.

Is road tax and toll tax the same?

If this question also comes to your mind, then know that road tax and toll tax are different. Road tax is charged by RTO when you use different roads in the same state. Whereas toll tax is charged for using inter state highways.

NHAI has also provided the facility to pay toll tax easily and quickly using technology. Its name is FASTag, it is installed on the inside side of the glass of the vehicle. With this, the toll amount is taken directly from the account of the vehicle owner and he is allowed to cross the toll without waiting.

How is the toll tax rate decided?

Toll tax rate depends on many things. This includes the purchase price of the vehicle, engine capacity, seating capacity of people, etc. Apart from this, the rate of toll tax collected also changes if the distance of the highway is about 60 km or more or less. In the month of April this year, the government had increased the prices of toll tax. According to this, the toll tax of light vehicles was increased by Rs 10 and the toll tax of heavy vehicles was increased by Rs 65.

Which 25 people do not have to pay toll tax?

Toll tax or toll is the fee that motorists have to pay while crossing certain interstate expressways, tunnels, bridges and other national and state highways. These roads are called toll roads and are under the control of the National Highway Authority of India (NHAI).

Toll taxes are used to fund road construction and maintenance. Therefore, it covers the cost of newly constructed toll roads by levying toll taxes. The Government of India has introduced Fastag which uses RFID (Radio Frequency Identification) technology for cashless toll tax payment.

However, according to the National Informatics Center (NIC), there is a list of people and vehicles exempted from payment of toll tax as per Rule 11 of the National Highway Fee (Determination of Rates and Collection) Rules, 2008. .

– President of India

– Vice President of India

– prime minister of India

– Governor of a state

-Chief Justice of India

– Speaker of the Lok Sabha

-Union Cabinet Minister

– Chief Minister of a state

– Supreme Court Judge

– Union Minister of State

– Lieutenant Governor of a Union Territory

– Chief of Staff who holds the rank of full general or equivalent rank

– Chairman of the Legislative Council of a state

– Speaker of the Legislative Assembly of a state

-Chief Justice of the High Court

– High Court Judge

– Member of Parliament

– Army Commander of the Chief of Army Staff and equivalent in other services
– Chief Secretary of a State Government within the concerned State

– Secretary, Government of India

– Secretary of the Council of States
– Secretary, Lok Sabha

– Foreign dignitaries on state visit

A member of the Legislative Assembly of a State and a member of the Legislative Council of a State within his or her respective State, if he or she presents his or her identity card issued by the respective Legislature of the State.

A person awarded the Param Vir Chakra, Ashok Chakra, Mahavir Chakra, Kirti Chakra, Vir Chakra, and Shaurya Chakra, if the recipient of such award produces his/her photo identity card duly certified by the appropriate or competent authority for such award.

However, there are other categories which are exempted from toll tax. In which central and state armed forces are in uniform. This includes paramilitary forces and police, an executive magistrate, fire department or organization, use as ambulance, use as funeral van, mechanical vehicles which are specially designed and manufactured for the use of a person suffering from physical disability .

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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.

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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