Certain Types of Income you need not to Pay Tax On
Moving to the end of financial year, last 3 months demand a great attention of every business professional to utilize them for planning a good strategy to save some part of their hard earned money.
Most of you may think “What is a Good plan to save tax?”
And the answer is “Working on the safe side and considering all the major loop holes available” But what are these “loopholes” ? Or we say “legal holes” Legal holes in the sense, best utilizing the exemptions and deductions available in Law.
If you have started your ITR planning and feeling that a major part your income would be paid as tax! Then Don’t Worry! Here we have addressed some common exemptions to certain income sources that may relief down your tax amount.
Maturity return of a life insurance policy:
Other than major deductions in the section 80 family certain other exemptions are provided by government for investment in LIPs. As per Section 10(10D) any amount received under an LIP (Life insurance policy), including sum allocated by way of bonus on such policy is wholly exempted from Income tax.
Cut short: Amount received on maturity of LIP term is tax free provided that the premium paid to actual capital sum assured does not exceed the prescribed amount/rate given in Income Tax act.
Part of Commuted Pension: For a government employee a sum of amount taken from receivable pension is fully exempted from Income tax while for a private employee if gratuity is received equivalent to 1/3 amount of total pension then such amount is exempted otherwise commuted value of half of the pension amount is exempted.
Bank Saving Tax Saving:
Even a Saving account can earn you a deduction in Income Tax .As per Section 80TTA in IT Act interest earned from any saving bank account up to Rs 10,000/- is a “tax free income“. This is emphasized by the government to increase individual savings and to ensure good financial support to the banks.
Allowances and Perquisites by Government:
Any payment whether in cash or kind received as a reward, award or perquisite by Central or State govt. or any approved body of Central Government is exempted from Income tax as per Section 10(17A).
Share in Profits of a partner in a firm (Tax Free Profit):
This means relax ,the firm will pay tax on your share of profits .i.e. profits received by partner of a firm (including LLP) is tax free in the hands of recipient.
Agricultural Income: Untouched by income tax
In India the biggest potential to give a boost to the economy lies in the hands of farmers.
Focusing on the deep rooted development of the agriculture government deploys more and more incentives to the farmers and the same effort is shown in the Income Tax Act in relation to agricultural income i.e.,- any income earned which falls under definition of agricultural income of act is fully exempted from Income tax obligation .
Hope you have a gain some good knowledge by this article