FINANCE

Employer's contribution for provident fund, NPS and superannuation worth more than 7.5 lakh a year will be taxable The new income tax rules affects only those in a high salary bracket Those with high salaries might soon have to shell out income tax on employers contribution under employees' provident fund (EPF), National Pension System (NPS) and superannuation fund. In the  Union Budget 2020 , finance minister Nirmala Sitharaman has introduced a cumulative upper ceiling of  ₹ 7.5 lakh for the three investments which give tax benefits. With effect from 1 April, 2021, the combined upper limit of  ₹ 7.5 lakh in respect of employer's contribution in a year to NPS, superannuation fund and recognised  provident fund  and any excess contribution will be taxable. The Budget has also proposed that even interest and dividend earned during the previous year would also be taxable. Interest is treated as perquisite to the extent it relates to the employer’s contributio...

The new tax rates announced in Budget 2020 will be optional The maximum gain is ₹78,000 under the new income tax regime "In order to provide significant relief to the individual taxpayers and to simplify the Income-tax law, I propose to bring a new and simplified personal income tax regime wherein income tax rates will be significantly reduced for the individual taxpayers who forgo certain deductions and exemptions," Finance Minister Nirmala Sitharaman said in her Budget 2020 speech as she proposed new income tax rates and slabs for those forgoing exemptions and deductions The new tax rates will be optional. Instead of actually simplifying, tax experts say that the dual tax rates might create confusion for individuals since they will have to calculate tax under both the regimes to see which is more beneficial. Further, an individual will have an option to switch between the two rates on a year to year basis. But those with business income can only chose to switch once. Th...

Tax experts say that individuals will have to check if they will have greater benefit under the new tax rates Finance Minister Nirmala Sitharaman today announced new income tax rates and slabs But these new tax rates are optional and will be applicable for those foregoing exemptions and deductions Budget 2020, Finance Minister  Nirmala Sitharaman  announced new income tax rates and slabs for those earning up to  ₹ 15 lakh a year. These new tax rates are optional and will be applicable for those foregoing exemptions and deductions. The finance minister also proposed to remove dividend distribution tax on companies. These new income tax related proposals will come into effect from financial year 2020-21. 1) It is to be noted that the new income tax rates and slabs will be applicable for those who forego exemptions and deductions. The deductions include Standard deduction, Section 80C, Section 80D, LTA, HRA, interest on housing loan on self-occupied property among oth...

The Income Tax Act was changed last year to the benefit of the salariat and other steady earners. The past year was also marked as a period when income tax returns peaked. Though the economic engine has been sputtering, do not overlook the changes to the way you are supposed to pay taxes. 1. No tax up to Rs 5 lakh Income tax assessees with less than Rs 5 lakh of taxable income have been exempted from tax liabilities. However, this is only applicable to those who file income tax returns. According to the Income Tax Act, those who earn more than the basic exemptions are bound to pay taxes. In case the income exceeds Rs 5 lakh, the assessee has to pay tax. 2. Exemption for two houses The taxpayer can now claim exemptions on two houses, instead of the previous one, as long-term capital. There are some restrictions though. The capital that can be raised by selling the houses cannot exceed Rs 2 crore if the taxpayer were to avail of this benefit. One taxpayer can only take advantag...

Deductions under Section 80C for Assessment Year 2020-21 (FY 2019-20) Public Provident Fund (PPF)  Employee Provident Fund (EPF) National Saving Certificate (NSC) Sukanya Samriddhi Yojana (SSY) 5-year Tax Saving Fixed Deposit Senior Citizens Savings Scheme (SCSS) Equity Linked Saving Scheme (ELSS) National Pension System (NPS) Life Insurance Premium Unit Linked Insurance Plans (ULIPs) Infrastructure Bond  Repayment towards principal of Home Loan Children Tuition Fees Contribution pension plan by insurers  For taxpayers at the highest tax bracket of 30%, the cumulative tax savings under Section 80C works to Rs 46,800 (including cess) when they utilise the entire Rs 1.5 lakh limit under this section. This is a very attractive way to reduce tax outgo and encourages taxpayers to use this savings route to suit their circumstances and convenience.  Another popular and useful opportunity to save income tax is thr...

Taxpayers are a harried lot. They are inundated with messages, WhatsApp, emails, and calls by overzealous salespersons soliciting their monies to save tax. For the salaried, there is an additional reminder from the office HR office to furnish proof of tax savings. It could be intimidating for even seasoned taxpayers to be baffled by all the attention, especially as thee approach the last few months of the financial year. A tax saving avenue that has gained wide popularity among taxpayers is the possible ways to save tax under Section 80C of the income tax. Such is the popularity of section 80C that it is undoubtedly the first brush with tax-saving that all taxpayers experience. Taxpayers across generations and income tax slabs claim to save their tax liability under this section, which provides a wide choice of avenues to save tax under this Section up to Rs 1.5 lakh in a financial year. The benefit of contributions in instruments that qualify for deductions under this section can be ...

The income tax department now wants to keep a watch on your foreign travel spends and electric bill payments Here are five things to know about changes in ITR forms from assessment year 2020-21 Before filing income tax returns (ITR) from the next financial year, you will need not only details of your income and investments but also other details related to passport, foreign trips and electricity bills as the income tax department has changed  ITR forms  from assessment year 2020-21. The  income tax department  issues seven forms from ITR-1 to ITR-7 for ITR filing each year. This time, well before the beginning of the new new financial year from April, the income tax department has released ITR 1 (Sahaj) and ITR 4 (Sugam) forms. Other forms are expected to be released soon. Changes in ITR forms from AY 2020-21: 1) From next year, ITR-1 form is not valid for those individuals who have deposited more than ₹1 crore in a current bank account or have spent ₹2 lakh on...