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INCOME TAX for Individual

A New Option for Taxpayers

Current Tax Slab

New optional Tax Slab

in lakh (Rs.)
in (%)
  in lakh (rs.)
in (%)
Up to 2,50000
NIL
Up to 2,50,000
NIL 
2,50,000 to 5,00,000
5
2,50,000 to 5,00,000
5 (Tax Rebate of Rs 12,500 available under section 87A) 
5,00,000 to 20,00,000
20
5,00,000 to 7,50,000
10
Above 10,00,000
30
7,50,000 to 10,00,000
15


10,00,000 to 12,50,000
20


12,50,000 to 15,00,000 25


15,00,000 and above
30

 

.....SAVINGS 80C

Income-Tax Act allows exemption of Investment or spending from Income-tax.

Those with taxable income at 30% can save Rs. 45,000 by claiming Rs. 1,50,000 as a deduction under Section 80C and not opting for new 'simplified' personal income tax regime


  Some Investments and Spending you can make

Your provident fund (PF) contribution.


Principal component of your housing loan for prescribed institutions..

You can invest Rs.500 to Rs.1,50,000 every year in a public provident fund (PPF) account.

 


Tuition fees of your 2 children.


Your investments in National Saving Certificate (NSC) schemes (through post offices).

If you make a 5-year term deposit with a bank under a notified scheme or a post office.

        


Life insurance premiums for yourself, spouse and kids.


Your contribution to unit-linked insurance plan (ULIP) for self, spouse and child.

If you invest up to Rs.1,50,000 a year in Sukanya Samriddhi account in the name of your daughter (limited to two).






 

 

.....And Savings Beyond 80C

If you have not opted for the new 'simplified' personal income tax regime and your basic salary is over Rs.1,00,000 a month, your 80C limit will be used up by provident fund contributions alone. Want to save more? You can save up to Rs.82,500 a year in taxes over and above the Rs. 1,50,000 limit allowed under 80C if you invest Rs.50,000 in NPS, pay Rs.25,000 for medical insurance, and also repay the interest of Rs. 2,00,000 on housing loan for a self-occupied property. 


A few more deductions are also available :

  • Up to  Rs.10,000 as interest earned on saving account with a bank or post office. If you are above 60,  Rs.50,000. Interest from Fixed Deposit is also exempted for senior citizens.  

  • Interest on education loan. No limit, but for maximum of eight years.

  • Rs.75,000 (Rs.  1,25,000 in case of severe disability) as disability-related tax benefits for self, dependent spouse, child, parent or even sibling.  

  • Up to`40000(up to  `100000 for patients who are 60 year or more) as treatment for certain diseases such as AIDS or malignant cancers for self and dependents.  

  • Donation: 100% or 50% of the amount donated (subject to conditions)

  • Invest in NPS : Employee’s contribution to NPS up to 10% of salary or self-employed individual’s contribution up to 20% of gross total income is deductible subject to overall cap of Rs. 1,50,000 (which includes investments under Section 80C).An additional deduction of Rs. 50,000 is also available. This deduction is not available under the new ‘simplified’ personal income tax regime. Employer’s contribution is exempt up to 10% of salary (with an overall cap of Rs.7.5 Lakh, which includes employer’s contribution to PF and superannuation fund) . You may claim this deduction even if you opt for the new ‘simplified’ personal income tax regime.

  • Medical Insurance : An Individual can claim deduction up to `25000( `50000 if a senior citizen is covered) under Section 80D for medical insurance paid for the person and his/her family. If the person insures his/her parents, there is an additional deduction of `25000( `50000 if they are above 60) that is available. No such deduction is allowed for parents-in-law. If premium has been paid on the policy providing cover for more than a year, the deduction shall be allowed on a proportionate basis, subject to the specified monetary limit. This deduction is not available if you opt for the new ‘simplified’ personal income tax regime

 

Know All About Capital Gains

Long-Term and Short Term Capital Gains

Long-Term Capital Gains (LTCG )

Capital gain on sale of listed securities, of a unit of UTI/ equity-oriented fund, or a zero-coupon bond held for more than 12 months is treated as LTCG. Unlisted share of a company and immovable property (land/building) have to be held 24 months to qualify for LTCG.. In all other types of capital assets, sale after 36 months will qualify as LTCG.

Short-Term Capital Gains (STCG)

Capital gain on sale of listed securities, ofr a unit of UTI/ equity-oriented fund, or a zero-coupon bond held for more than 12 months is treated as LTCG. Unlisted share of a company and immovable property (land/building) have to be held 24 months to qualify for LTCG. In all other types of capital assets, sale after 36 months will qualify as LTCG.

Set-off Provisions for Capital Losses are rather restrictive

* Loss from transfer of a long-term capital asset can set off against gain from transfer of any other long-term capital asset in the same year.

* Loss from transfer of a short-term capital asset can be set off against gain from transfer of any other capital asset in the same year.

* Any unutillsed capital loss after absorption in the same year can be further carried forward to next eight years and be utilised under the same conditions as above.

Tax implication...

...of income

Long-Term Capital Gains (... of sale)

Short-Term Capital Gains (...of sale)

EQUITY SHARES

Dividends are taxable at slab rates

Gains up to Rs. 1,00,000 are exempt. Balance taxable at 10% without indexation *

15% **

EQUITY MUTUAL FUNDS

Dividends are taxable at slab rates

Gains up to Rs. 1,00,000 are exempt. Balance taxable at 10% without indexation *

15% ***

DEBT MUTUAL FUNDS

Dividends are taxable at slab rates



20% with indexation

Tax at slab rate

LISTED TAX-FREE BONDS

Interest from notified tax-free bonds is exempt from tax



10% without indexation

Tax at slab rate

LISTED DEBENTURES


Taxable, unless notified


10% without indexation

Tax at slab rate
* Exemption available if securities transaction tax paid on sale and STT also paid on purchase, in case of equity shares acquired on or after Oct 1, 2004 (subject to certain exceptions notified.
** If STT of 0.1% each is paid by seller and buyer in both cases
*** If STT of 0.001% each is paid by seller STT rates mentioned above are delivery-based transactions only


Awaken the force for more money in the pocket 

Various tax sops, be it for your salary perks or investments that you make, help reduce your tax outgo.

YOUR INCOME

SALARY

HOUSE PROPERTY

BUSINESS

CAPITAL GAINS

OTHERS

Is from 5 Broad Sources

Income from employer, including perks and allowances
Income from rent
Net profit from business or profession
Profit or loss from sale of assets, investments, jewellery, property etc.
Miscellaneous income, like dividend, bank interest and lottery earnings.

Deductions /Exemptions available

Standard deduction (Rs. 50,000), HRA, LTC, etc, if you don't opt for the new 'simplified' personal income tax regime.
Standard deduction (30% of income post house tax); interest paid on home loans and losses from previous years
Business related expenditure incurred and brought forwarded losses (subject to conditions).
Depends on holding period pf asset, availability of indexation benefit and investments in eligible options and brought forward losses
Specified gifts from relatives or those received on certain occasions like wedding are tax-free. Interest for PPF is also tax-free.

Note : Clubbing will add to your Income

(In Certain cases, the income of the spouses or child is clubbed with that of the taxpayers who has to bear the tax for instance)

a) Income from investments in the name of child (below 18 years). In this case, the minor's income is clubbed with that of the parent who earns more.

b) Income from investments made from the taxpayer's funds in the spouse's name.

 

Faceless Tax Troopers to Keep you Earn

Be ready for an all-electronic audit of your tax return, paradigm shift from the current procedure.   

Here are the key points that you need to know about faceless assessments :

  • All notices will be issued only in electronic mode in your e-filling account on the income –tax department’s portal. You may also receive intimation on your registered email ID.Do keep personal details like email id and mobile number updated on the income tax department’s portal for timely receipt of such notices.

  • Keep login credentials of your account on income tax portal handy to check on such notices and for filling timely responses.

  • The response to notices and all the documents are to be filled electronically on the income tax department’s portal within 15 days of issuance of the notice.

  • You should keep handy Form 16 and Form12BA (annual withholding tax certificate) issued by the employer, monthly salary slips and proof of all expenses reimbursed by your employer.

  • In addition, do ensure that documents for all deductions and exemptions claimed by you in the tax return form are readily available. These could include evidence of investments, including purchase of immovable property, copy of rent agreement, receipt of   municipal tax(if you have let out your house on rent),interest certificate for home loan ,details of loans/gifts taken or received, copy of bank statements and demat account statements.

  • Under the new scheme, there is no face-to face interaction between the tax officer and the individual. The individual would not know details of tax officer who would be conducting the audit of his /her return.

  • There is no requirement to visit the tax office. In rare cases when personal interaction is required, hearing will be conducted only through video conferencing.