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Showing posts with label Income Tax Saving. Show all posts

Budget 2019 effect: How you can earn tax-free Rs 10 lakh per annum

February 01, 2019 Budget , Income Tax Saving

The rebate under Section 87A of the Income Tax Act, has been enhanced to Rs 12,500 from Rs 2,500 earlier DOPCoreSolutions

In a move to give relief to the middle class, Finance Minister Piyush Goyal announced in the Budget 2019 that individual taxpayers will get a full tax rebate for income earned up to Rs 5 lakh.

Previously, the income threshold on which rebate was given was Rs 3.5 lakh. Individuals will now get a benefit of Rs 12,500, up from Rs 2,500 earlier. This will benefit taxpayers only to the extent of an annual income of Rs 5 lakh. The basic exemption limit and tax-slabs remain the same.

Additionally, Piyush Goyal also announced an increase in standard deduction to Rs 50,000, up from Rs 40,000 earlier.

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To be sure, this is a rebate for those whose taxable incomes are up to Rs 5 lakh. The basic exemption limit of Rs 2.5 lakh - that is, no tax to be paid for those who earn an income of up to Rs 2.5 lakh - continues.

All the tax slabs also continue. In other words, if your taxable income is higher than Rs 5 lakh, you still pay tax at the existing income tax slabs.

But did you know that you can still get a salary of up to Rs 10 lakh and still get the benefit of this rebate? Here's how.

In the above example, existing deductions under Income Tax Act under section 80C along with contribution to NPS (Section 80CCD1B), interest paid on home loan (Section 24) and health insurance premium paid (Section 80D; for both yourself and your senior citizen parents) has helped the individual to bring down his taxable income to Rs 5 lakh, according to Mrin Agarwal, founder of Finsafe.

This will ensure that his income tax liability is reduced to zero if he files his income tax returns.

Source: Moneycontrol.com

How to pay less tax this year and beyond

February 03, 2017 Income Tax , Income Tax Saving

HIGHLIGHTS

It is said that nothing in this world is certain except for death and taxes. With this nifty Times of India-EY Guide, however, you can soften the blow from the latter, legally of course. Read on for many happy returns.

1. With a decrease in tax rate from 10% to 5%+ for total income between Rs 2.5 lakh and Rs 5 lakh, there is tax saving+ of up to Rs 12,500 per year and 14,806 (including surcharge and cess) for those with income above Rs 1 crore.

2. Tax rebate is reduced to Rs 2,500 from Rs 5,000 per year for taxpayers with income up to Rs 3.5 lakh (earlier Rs 5 lakh). Due to the combined effect of change in tax rate and rebate, an individual with taxable income of Rs 3.5 lakh will now pay tax of Rs 2,575 instead of Rs 5,150 earlier.

3. Surcharge@10% of tax levied on rich taxpayers, with income between Rs 50 lakh and 1 crore. The rate of surcharge for the super rich, with income above Rs 1 crore, will remain 15%.

4. Holding period for immovable property to be considered "long term" reduced to 2 years from 3. This will ensure immovable property held beyond 2 years is taxed at reduced rate of 20% and eligible for various exemptions on reinvestment.

5. Long term capital gains tax will result in a lower payout owing to beneficial amendments. The base year for indexation of cost (adjustment of inflation) has been shifted to April 1, 2001 from April 1, 1981. This means lower profits on sale.

6. Further, tax exemption will be available on reinvestment of capital gains in notified redeemable bonds (in addition to investment in NHAI and REC bonds).

7. A simple one-page tax return form is to be introduced for individuals with taxable income up to Rs 5 lakh (excluding business income). Those filing returns for the first time in this category will generally not be subject to scrutiny.

8. Delay in filing tax return for 2017-18 will attract penalty of Rs 5,000 if filed by December 31, 2018 and Rs 10,000 if filed later. Such fee will be restricted to Rs 1,000 for small taxpayers with income up to Rs 5 lakh.

9. Deduction for first-time investors in listed equity shares or listed units of equity-oriented fund under the Rajiv Gandhi Equity Savings Scheme is withdrawn from 2017-18. If an individual has already claimed deduction under this scheme before April 1, 2017, he/she shall be allowed to avail a deduction for the next two years.

10. Time period for revision of tax return cut to one year (from 2 years) from the end of the relevant financial year or before completion of assessment, whichever is earlier.