Income tax is levied on your entire income. It is not just about celery. In addition to salary, there are many other things like interest on savings, earnings from home, side business, capital gains. But there are also some sources from which income does not come under the tax net. The income from saying that is a lot of such income is kept out of income tax. According to tax experts, Section 10 of the Income Tax Act refers to this type of income with tax exemption. There are some incomes on which you do not have to pay any tax. So let us tell you the income on which you can save tax.
Amount deposited in EPF
The amount deposited by you in the PF account is exempt from income under Section 80C of the Income Tax Act. You also get tax exemption on the amount deposited by the employer in the EPF account. Provided that this amount does not exceed 12% of your Basic Salary. If the amount is more than that, you have to pay Income Tax on the remaining amount.
Return of up to Rs. 1 lakh from share or equity mutual fund
If you have invested in Shares or Equity Mutual Fund, you are tax free on returns up to Rs. These returns are calculated under LTCG. In last year’s budget, LTCG tax was levied on over one lakh shares or equity mutual funds.
If you do not have to pay tax on gifts received from friends and relatives. The condition is that you have received a gift around your wedding. If the gift is given six months after your marriage took place on March 16, the income tax is waived. Also, the value of the gift should not exceed Rs. 50,000.
Profit from a partnership firm
If you are a partner of a firm, the amount received as Share Of Profit is tax deductible. In fact, your partnership firm has already paid taxes on it. Exemption in income tax is only on the benefit of the firm, not on the salary you get.
Amount to be received on life insurance slab or maturity
If you have purchased an insurance policy, the amount received from you at the time of claiming it or on maturity is completely tax free. Provided that the annual premium of your life insurance policy does not exceed 10% of its sum assured. If the premium in a life insurance policy is higher than this, you will have to pay income tax on the higher amount. If you have a life insurance policy for a person with a disability or serious illness in your family, the premium amount is up to 15% of the sum assured.
Found in VRS
Many people take voluntary retirement (VRC) in the job. If you have also taken VRS, the amount you get up to Rs 5 lakh is tax free. This facility is only for employees working in government or PSUs (public sector companies), not for private sector workers.
Property inherited or bequeathed
You do not have to pay income tax if you have received property, jewelery or case from your parents. If an asset has been made in your name and these assets and cases are being received, you do not have to pay income tax on it. In that case you will have to pay tax according to the Tax Slab on future earnings or interest income on the property.
If you have agricultural land and you are earning from farming or related activities, you do not have to pay any tax. Agricultural income includes the yield from it, the amount to be received in the form of rent, etc. If you build an agricultural farm, the income from it is tax free.
If you are an executive then you have to meet some kind of people during the business and this includes customers, vendors and other employees. And the cost of feeding-meals. So such expenses should be billed and presented as business expenses. Income Tax can be saved if you follow this procedure.