The benefit under Income tax differ among to class of person under the Income Tax Act.
In Interim Budget 2019 has proposed rebated under income tax U/s 87A of full tax liability up to the net income Rs. 5,00,000/-, ( After deduction u/s 80C). This rebate gives to all middlemen person who has income up 5 lacs.
How to calculate your income under income tax act
First Gross total income from all sources (Salary, House Property, Capital Gain, Business/ Profession, and any other sources) then all deduction 80C, 80G, etc. and other exempted allowance (HRA, LTA, etc.). if your Net income is up to 5 lacs then you will get 100 % rebate against income tax liabilities.
Consequences, if your gross total income is in range of 6 lacs then you can plan as per income tax law for certain deduction/ allowance which is mention below
Here we are categories deduction and allowances within 5 head in which income is taxable
- SALARY INCOME
Exemption of House Rent Allowance
b. Standard Deduction
c. Leave Travel Allowances
d. Mobile Reimbursement (Reimbursement Basis)
e. Books & Periodicals (Reimbursement Basis)
f. Foods Coupon (Exempt up to 50 per meal)
g. Professional Tax2. HOUSE PROPERTY INCOME2.1 Self-occupied house property
- Prior to FY 2019-20, if more than one self-occupied house property is owned by the taxpayer, only one is considered and treated as a self-occupied property and the remaining are assumed to be let out. The choice of which property to settle on as self-occupied is up to the taxpayer.
b. For the FY 2019-20 and onwards, the benefit of considering the houses as self-occupied has been extended to 2 houses. Now, a home-owner can claim his 2 properties as self-occupied and remaining house as let out for tax purposes.
2.2 Let out House Property
- House property which is available for rent for part or whole year which considers let out house property under the income tax act.BENEFIT UNDER HOUSE PROPERTY1. Reduce home loan interest up to 2 lacs
2. Loss under House property only in case of self-occupied the house that loss can be adjusted against income from other heads.
3. Tax Deduction for First-Time Homeowners: Section 80EE Tax benefit up 50000
4. Tax Deduction for First-Time Homeowners: Section 80EEA Tax benefit over above 1.5 lacs i.e. over and above 2 lacs i.e., total 3.5 lacs
5. HRA and Deduction on Home Loan it depends on the case to case benefit, most of the situation both (HRA & Deduction) can be availed by assessee.3. INCOME FROM CAPITAL GAIN
How this income drive, Sale of property, securities, Mutual funds, Debenture, etc
How to Avoid Tax on Capital Gain, the following are the deduction under you can reduce/save tax on the capital gain.
Section 54F – Income arise from the sale of capital assets besides a residential housing property.
Section 54 – Income arise through the sale of a residential housing property
Section 54EC – Income arise through the sale of a long-term capital asset is exempted when reinvested in specified long-term assets.
Section 54 E, 54EA, 54EB – Income arise through investment in certain securities
Section 54EE – Income arise through a transfer of investments.
4. INCOME FROM BUSINESS AND PROFESSION
As this topic is very vast, but here we are excluding Mandatory Auditing cases
It is covered u/s 44AD of the income tax act, any business which income has less than 2 crores can opt presumptively taxation and declare their profit 8% for cash transaction and 6% other than cash transaction, further not applicable to the following business
a. Life insurance agents.
b. Commission of any kind.
c. Running businesses of plying, hiring, or leasing goods carriages.
B. BENEFITS OF PRESUMPTIVE TAXATION
Prime Minister’s National Relief Fund.
In presumptive taxation under Section 44AD, your net is taken into account as 8% of your turnover and you’ll pay tax thereon income.
If your receipts are in the digital (non-cash) form then only 6% of your receipts is your net income and you will pay tax on that income.
You don’t have to maintain accounting records.
You don’t need to get your accounting records audited.
You have to pay advance tax – but rather than estimating income and paying tax each quarter, you’ll pay all of your advance tax before March 31. Advance tax, for taxpayers having opted for the presumptive scheme, is to be paid by 15th March of the relevant fiscal year if you expect that your tax liability will exceed Rs.10,000 in the financial year.
PROFESSIONS FOR THE PURPOSE OF INDIAN TAX LAWS
Following a profession in which gross receipt has less than 50 lacs can opt presumptive taxation and declare their profit 50% or more of gross receipt transaction.
INCOME FORM OTHER SOURSES
- Deduction on interest on saving bank accounts U/s 80TTA
- Interest on Fixed Deposit Exemption upto 50000 only for senior Citizen
- Avoid TDS if you have total income is below maximum chartable to tax.
- Exempt income like PPF interest, and amount withdraw after maturity form PPF EPF.
- Family pension (Deduction 15000 or 1/3 of facility pension whichever is lower.
FOLLOWING COMMON DEDUCTION AVAILABLE ALL TYPES OF INCOME.
Section 80C, 80CCC and 80CCD(1)
- Section 80C is the most commonly used option for saving income tax. Here, a Individual or a HUF (Hindu Undivided Families) who invests or spends on stipulated tax-saving avenues can claim deduction up to Rs. 1.5 lakh for a tax deduction. The government too supports a few as the tax-saving instruments (PPF, NPS, etc.) to encourage individuals to save and invest in retirement. Expenditures/investment u/s 80C isn’t allowed as a deduction from income arising thanks to capital gains. It means if the income of a private comprises of capital gains alone, then Section 80C can’t be used for saving tax. Some of such investments are given below which are eligible for an exemption under Section 80C, 80CCC and 80CCD(1) up to a maximum of Rs 1.5 lakh.
Life insurance premium
Equity Linked Savings Scheme (ELSS)
Employee Provident Fund (EPF)
Annuity/ Pension Schemes
Principal payment on home loans
Tuition fees for children
Contribution to PPF Account
Sukanya Samriddhi Account
NSC (National Saving Certificate)
Fixed Deposit (Tax Savings)
Post office time deposits
National Pension Scheme
- Medical Insurance Deduction (Section 80D)
- Interest on Home Loan (Section 80C and Section 24)
- Deduction for Loan for Higher Studies (Section 80E)
- Deduction for Donations (Section 80G)
6. Deduction on Savings Account Interest (Section 80TTA)