From FY 2020-21, an individual can continue with the old tax regime and avail common deductions such as section 80C, section 80D etc. of the Income-tax Act, 1961. Else, she/he can opt for the new, concessional tax regime without any commonly availed deductions and tax exemptions.
If a taxpayer has exhausted the limit of Rs 1.5 lakh under Section 80C of the Income-tax Act,1961 then additional tax can be saved by investing Rs 50,000 in NPS. The deduction claimed will be over and above Section 80C deduction of Rs 1.5 lakh.
In the case between S Kumars Nationwide and Chief Commissioner of Income Tax, the NCLAT ruled the liquidator is not required to prepare a balance sheet and profit & loss account and get it audited during the liquidation process.
“The cap is not applicable on PPF because there is already a limit of ₹1.5 lakh contribution in a year to PPF,” the official said. The government has proposed changing taxation rules for provident funds by levying income-tax on the interest earned on contributions exceeding ₹2.5 lakh in a financial year.
Finance minister Nirmala Sitharaman had announced in the Budget presented on Monday that employee contributions to EPF over ₹2.5 lakh a year would be taxable from April 1. The move is set to impact people with high incomes and high contributions to EPF, but the government has argued that it will affect less than 1% of contributors.
On the plain reading of the budget documents, it appears that tax will apply to the interest earned on contributions made to Employees' Provident Fund (EPF), Voluntary Provident Fund (VPF) as well as Public Provident Fund (PPF).
In order to encourage first time homebuyers, deduction on account of home loan interest up to Rs 1.5 lakh which was available on loans taken up to March 31, 2021, has now been extended by one year to March 31, 2022.
Gifts from specified relatives or those received on certain occasions like marriage; interest from PPF account is also tax-free. Your salary includes income from employer, including value of perks and allowances. Here are other sources of income.
If you have not opted for the new ‘simplified’ personal income tax regime and your basic salary is over Rs 1 lakh a month, your 80C limit will be used up by provident fund contributions alone. Want to save more? Read to know how.
When securities (listed other than a unit/equity oriented MF/zero coupon bonds) are held for up to a year, the gain is treated as Short Term Capital Gain (STCG). For all other type of capital assets, holding up to 24/36 months will qualify as STCG.
Finance minister Nirmala Sitharaman on Monday announced the Union Budget for 2021-22. While the government has kept the tax slabs unchanged, taxpayers will have some relief in dealing with their personal finances.
For those who have been eyeing a home for years, 2021 may be a good year to jump in. Home loan rates are down, as are property prices. States such as Maharashtra and Karnataka have also slashed stamp duties. The bonus is that you get tax breaks.
Taxpayers will not be required to estimate their dividend income while making advance tax payments. Advance tax will now be payable only when dividend is declared or paid by the company. This will save payment of interest by taxpayer due to underestimation while paying advance taxes.
You can intimate your employer if you want to opt for the new regime and the employer will deduct tax accordingly. The only bar is that once intimated to the employer, the option cannot be modified during the year.
The silver lining of being a gig worker is that you can claim various expenses. Against capital expenditure incurred on purchase of assets such as furniture, computer, or laptops you can deduct depreciation from your income – in short, the deduction for impairment in asset value is spread over a number of years at the prescribed rates.
The time-limit for belated or revised returns (to correct any errors) is shorter, and these can now be filed three months before the end of the relevant assessment year, or before the completion of the tax assessment, whichever is earlier. Let us look at a case study.
Budget 2021 stopped short of granting much sought after income tax breaks, specially for higher expenses of the salaried on account of working from home. However, taxpayers aged above 75 with only pension and interest income won’t have to file their tax returns.
With this amendment, return on investment up to Rs 2.5 lakh in PF will remain tax-free while the return on the portion exceeding that amount will be treated as income in the investor's hand. This portion will be taxed at the rate at which the investor’s income is taxed, said Sonu Iyer of Ernst and Young.
The tax on PF interest comes after the last budget had capped the tax exemption on employers’ contribution to PF, NPS and superannuation fund to Rs 7.5 lakh. That impacted only employees with very high salaries. This year’s proposal has a wider impact.
Disappointment was writ large on the face of the common man on the street after the Union Budget was presented by Union finance minister Nirmala Sitharaman with many saying that it had nothing much for the middle class.
Effectively this means that if an individual files ITR for FY 2019-20 by July 31, 2020, then the income tax department has time till March 31, 2022 to process and send the intimation notice to the taxpayer as per current laws. However, as per the budget proposals, the tax department will now be required to process such ITR by December 31, 2021.
This proposal may be bad news for those who are otherwise not mandatorily required to file income tax return under the tax laws but have total income comprising of interest income, dividend income, annuity received from insurance companies etc.
The FM's budget proposal will bring payment of dividend tax on par with capital gain tax in terms of compliance which is paid only after realisation of the gain in the hands of the taxpayer. This will also save the unnecessary late fee and interest which taxpayers would have incurred thanks to late payment of advance tax due to failure to estimate dividend income.
With no change in the basic exemption limit, income tax slabs and rates, an individual tax payer will continue to pay the tax at the same rates applicable in FY 2020-21. Effective from April 1, 2020, a salaried individual was supposed to choose between the new and old tax regime.
A big reduction in taxable income is possible if he pays rent to parents and claims exemption for the HRA. That will shave off Rs 2.4 lakh from his taxable income and bring him close to the Rs 5 lakh threshold.
A possible reform is to raise the tax-exempt limit of Rs 1.5 lakh on savings schemes for individuals, unchanged since 2014-15, to let taxpayers (mostly the salaried) diversify their financial savings to more rewarding instruments.
Check tax benefits in terms of tax-deductible allowances offered. If the taxable component of your salary is higher than in the previous job, it could lead to a higher tax outgo. Here's how to protect your finances and cover the risks when you move to a new job.
ET Wealth assessed 10 popular tax-saving instruments on eight key parameters. We have also explained the pros and cons of each tax-saving option to help readers invest in the one that suits them best. Find out how the different options scored this year.
As per income tax laws, exemption from capital gains tax on sale of equity shares, being long term in nature, is available in Sec 54F if the sale proceeds are utilised for the purchase or construction of a new residential property.
Vishwesh Jalan should start by asking for a higher telephone allowance. The work-from-home arrangement has pushed up this expense for the average employee. He should also ask for a newspaper allowance and food coupons. Here are other ways he can save tax.
If you take any gift from your son, the amount is not treated as income itself and there is no column in which such amount can be reported and you may need to explain the same during any assessment by the tax authorities.
To bring ease to the taxpayers, the income tax department has sent an email containing the link of the tax calendar for 2021. If you have not received the link, here is a link for you to bookmark the important income tax dates for 2021.
Income tax is a tax levied directly by the central government on the incomes earned by the individuals and other non-individual entities such as Hindu Undivided Family (HUF), partnership firm and so on during a financial year. These various sources of income include salary, pension, capital gains, sale of financial investments, interest income, other incomes and so on.
Unlike the Goods and Services Tax (GST) Council where the Union Finance Minister and State Finance Ministers decide the rates, the income tax rates are announced by the Finance Minister during the year’s Union Budget.
The rate at which your total income earned during the year will be taxed depends on the slab in which your income falls. Over and above the income tax, a cess and surcharge is levied. The cess is payable by all taxpayers. For those earning more than Rs 50 lakh a year, a surcharge is levied between 10 percent and 37 percent.
The total income earned by a taxpayer during a financial year has to be reported to the government in the assessment year by filing income tax return (ITR filing).
Financial year is the year in which income is earned by a taxpayer; a financial year is between April 1 and March 31. Assessment year is the year immediately following the financial year for which the return is to be filed.
Income earned from various sources such as salary, pension, interest from fixed deposits (FDs), savings account, capital gains from sale of house, equity mutual funds, debt mutual funds and so on have to be reported in ITR.
1. What is the basic exemption limit for individuals aged below 60 years? According to income tax laws, it is mandatory to file ITR if your income exceeds the basic exemption level. The basic exemption level depends on the age of the individual during the financial year.
Currently, for individuals below 60 years of age, the maximum income exempt from tax is Rs 2.5 lakh in a financial year. This can change depending on the announcements made in the Union Budget.
2. What are the tax rates at which income is charged? The income tax slab rates are 5 percent, 20 percent, and 30 percent.
Also Read:Latest income tax slabs
3. How to file income tax return An individual can file income tax return by registering himself on the incometaxindiaefiling.gov.in or via private e-filing websites.
4. What is the difference between gross total income and net total income? Gross total income refers to the total income earned by the taxpayer. Income tax laws allow an individual to claim certain tax-exemptions (such as house rent allowance) and deductions under various sections such as section 80C for investments made in Public Provident Fund, equity mutual funds etc. of up to Rs 1.5 lakh.
Gross total income minus tax-exemptions and deductions would result in net total income. The tax liability of the person will be calculated on the net total income.
5. What is the last date to file income tax return? The last date to file income tax return for individuals is July 31, unless extended by the government.