PLANNING YOUR TAXES
FOR FY 22-23
Tax Planning for Individuals
TAX PLANNING FOR FY 2022-23
CONTAINS 5 PARTS
PART I : HIGHLIGHTS OF CHANGES IN TAX RULES FOR FY 2022-223 : READ THIS PART BELOW
PART 2 : TAX RATES / SLABS FOR FY 2022-23 CLICK HERE
PART 3 : TAX REBATES FOR FY 22-23 CLICK HERE
PART 4: INCOME TAX CALCULATOR FOR FY 2022-23 CLICK HERE
PART 5 : TAX ON RETIREMENT BENEFITS CLICK HERE
FOR LATEST INCOME TAX NEWS CLICK HERE
HOW TO PAY INCOME TAX ONLINE ? CLICK HERE
READ OUR ARTICLE " TDS ON SALARY , PENSION AND PERQUISITES "
Read our article " CRYPTOCURRENCY TAXES IN INDIA " by clicking Here
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BUDGET HIGHLIGHTS FOR 2022-23 ,CLICK HERE
LAST MINUTE TAX PLANNING IN 5 SIMPLE STEPS :
Dated 26.03.2023 : As the financial year is coming to an end in next 5 days , you have to act now to save maximum on your income tax liability . To help you in this task , you may take these simple steps to maximize tax savings :
1. Calculate your total income in this year from all the sources .
2. Check what tax rebates you are already eligible for . There are tax rebates available without you having done any investment during the year . For example standard deduction , health insurance payment , bank interest for senior citizens . You would also have invested in some tax saving instruments like PPF , Insurance premium etc .
3. Now with this information , check whether old tax regime with rebates is beneficial or the new simplified tax regime is beneficial to you . Calculate tax payable both ways by using Tax calculator .
4. If new simplified tax regime is beneficial , no more action is needed
5. If old tax regime is beneficial , think of ways to avail further tax rebates available to you to maximize rebates and minimize your tax liability by checking on the tax saving instruments available to you . Buy them .
Dated 26.03.2023 : As the financial year is coming to an end in next 5 days , you have to act now to save maximum on your income tax liability . To help you in this task , you may take these simple steps to maximize tax savings :
1. Calculate your total income in this year from all the sources .
2. Check what tax rebates you are already eligible for . There are tax rebates available without you having done any investment during the year . For example standard deduction , health insurance payment , bank interest for senior citizens . You would also have invested in some tax saving instruments like PPF , Insurance premium etc .
3. Now with this information , check whether old tax regime with rebates is beneficial or the new simplified tax regime is beneficial to you . Calculate tax payable both ways by using Tax calculator .
4. If new simplified tax regime is beneficial , no more action is needed
5. If old tax regime is beneficial , think of ways to avail further tax rebates available to you to maximize rebates and minimize your tax liability by checking on the tax saving instruments available to you . Buy them .
NEW TAX REGIME AND SENIOR CITIZENS
In our blog article , we have explored what the new IT regime means to senior citizens and what extent senior citizens / retirees / pensioners are gaining / losing from the new regime .As the new regime is optional , one can take studied decisions before opting either of the new or old scheme .
In our blog article , we have explored what the new IT regime means to senior citizens and what extent senior citizens / retirees / pensioners are gaining / losing from the new regime .As the new regime is optional , one can take studied decisions before opting either of the new or old scheme .
Have you submitted Form 15G / 15 H if you are eligible ?
Go to Section " All about TDS and Form 15G / 15 H and find out whether you are eligible to submit the forms to avoid Tax Deduction at source. If you are eligible Download the forms and submit to your bank immediately.As year end is approaching , Banks will deduct tax on their interest payment before the year end if you have not submitted the forms . Act earliest to avoid TDS .
KEEP YOUR FINANCIAL RECORDS PROPERLY
Keep the records of all your financial transactions . Money borrowed from friends , Jewelry inherited / purchased ,Gifts received , wedding expenditures cash remitted to your account etc can be questioned by IT officers and can be taxed up to 83 % of the value if IT Officer is not satisfied about your explanation . As per amended section 115BBE , an assessing officer can invoke 60 % tax , 15 % surcharge , 3 % cess with an added penalty of 10 % . To avoid such hefty payment of tax , keep records of your transactions to enable yourself to explain sources of funds .
Go to Section " All about TDS and Form 15G / 15 H and find out whether you are eligible to submit the forms to avoid Tax Deduction at source. If you are eligible Download the forms and submit to your bank immediately.As year end is approaching , Banks will deduct tax on their interest payment before the year end if you have not submitted the forms . Act earliest to avoid TDS .
KEEP YOUR FINANCIAL RECORDS PROPERLY
Keep the records of all your financial transactions . Money borrowed from friends , Jewelry inherited / purchased ,Gifts received , wedding expenditures cash remitted to your account etc can be questioned by IT officers and can be taxed up to 83 % of the value if IT Officer is not satisfied about your explanation . As per amended section 115BBE , an assessing officer can invoke 60 % tax , 15 % surcharge , 3 % cess with an added penalty of 10 % . To avoid such hefty payment of tax , keep records of your transactions to enable yourself to explain sources of funds .
FOR LATEST INCOME TAX NEWS CLICK HERE
Finance Minister Ms Nirmala Sitharaman has announced following changes / measures in the matters concerning Income tax for the Financial year 2022-23 ( AY 2023-24 ) in her budget speech :
1. UPDATED RETURNS ON PAYMENT OF ADDITIONAL TAX :
"some taxpayers may realize that they have committed omissions or mistakes in correctly estimating their income for tax payment. To provide an opportunity to correct such errors, I am proposing a new provision 22 permitting taxpayers to file an Updated Return on payment of additional tax. This updated return can be filed within two years from the end of the relevant assessment year. "
2. Reduced Alternate minimum tax rate and Surcharge for Cooperatives
" Currently, cooperative societies are required to pay Alternate Minimum Tax at the rate of eighteen and one half per cent. However, companies pay the same at the rate of fifteen per cent. To provide a level playing field between co-operative societies and companies, I, propose to reduce this rate for the cooperative societies also to fifteen per cent.
I also propose to reduce the surcharge on co-operative societies from present 12 per cent to 7 per cent for those having total income of more than ` 1 crore and up to ` 10 crores. "
3. Tax relief to persons with disability .
The parent or guardian of a differently abled person can take an insurance scheme for such person. The present law provides for deduction to the parent or guardian only if the lump sum payment or annuity is available to the differently abled person on the death of the subscriber i.e. parent or guardian. There could be situations where differently abled dependents may need payment of annuity or lump sum amount even during the lifetime of their parents/guardians. I propose to thus allow the payment of annuity and lump sum amount to the differently abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardians attaining the age of sixty years
4. Parity between employees of State and Central government
" At present, the Central Government contributes 14 per cent of the salary of its employee to the National Pension System (NPS) Tier-I. This is allowed as a deduction in computing the income of the employee. However, such deduction is allowed only to the extent of 10 per cent of the salary in case of employees of the State government. To provide equal treatment to both Central and State government employees, I propose to increase the tax deduction limit from 10 per cent to 14 per cent on employer’s contribution to the NPS account of State Government employees as well. "
5. Scheme for taxation of virtual digital assets .
There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime. Accordingly, for the taxation of virtual digital assets,
1. I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent.
2. No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition.
3. Further, loss from transfer of virtual digital asset cannot be set off against any other income.
4. Further, in order to capture the transaction details, I also propose to provide for TDS on payment made in relation to transfer of virtual digital asset at the rate of 1 per cent of such consideration above a monetary threshold.
5. Gift of virtual digital asset is also proposed to be taxed in the hands of the recipient.
6. Rationalization of Surcharge : TO BE CAPPED AT 15 % for LTCG
In the globalized business world, there are several works contracts whose terms and conditions mandatorily require formation of a consortium. The members in the consortium are generally companies. In such cases, the income of these AOPs has to suffer a graded surcharge upto 37 per cent, which is a lot more than the surcharge on the individual companies. Accordingly, I propose to cap the Surcharge of these AOP’s at 15 per cent. Further, the long-term capital gains on listed equity shares, units etc. are liable to maximum surcharge of 15 per cent, while the other long term capital gains are subjected to a graded surcharge which goes up to 37 per cent. I propose to cap the surcharge on long term capital gains arising on transfer of any type of assets at 15 per cent. This step will give a boost to the start up community and along with my 25 proposal on extending tax benefits to manufacturing companies and start ups re affirms our commitment to Atma Nirbhar Bharat.
INCOME TAX SLABS / RATES FOR FY 2022-23
There is no change proposed in tax SLABS / RATES for the year fy 2022-23 . The Rates / slabs which are already prevalent in year 2021-22 can be used to reduce the taxable income for the financial year 2022-23 also .
1. UPDATED RETURNS ON PAYMENT OF ADDITIONAL TAX :
"some taxpayers may realize that they have committed omissions or mistakes in correctly estimating their income for tax payment. To provide an opportunity to correct such errors, I am proposing a new provision 22 permitting taxpayers to file an Updated Return on payment of additional tax. This updated return can be filed within two years from the end of the relevant assessment year. "
2. Reduced Alternate minimum tax rate and Surcharge for Cooperatives
" Currently, cooperative societies are required to pay Alternate Minimum Tax at the rate of eighteen and one half per cent. However, companies pay the same at the rate of fifteen per cent. To provide a level playing field between co-operative societies and companies, I, propose to reduce this rate for the cooperative societies also to fifteen per cent.
I also propose to reduce the surcharge on co-operative societies from present 12 per cent to 7 per cent for those having total income of more than ` 1 crore and up to ` 10 crores. "
3. Tax relief to persons with disability .
The parent or guardian of a differently abled person can take an insurance scheme for such person. The present law provides for deduction to the parent or guardian only if the lump sum payment or annuity is available to the differently abled person on the death of the subscriber i.e. parent or guardian. There could be situations where differently abled dependents may need payment of annuity or lump sum amount even during the lifetime of their parents/guardians. I propose to thus allow the payment of annuity and lump sum amount to the differently abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardians attaining the age of sixty years
4. Parity between employees of State and Central government
" At present, the Central Government contributes 14 per cent of the salary of its employee to the National Pension System (NPS) Tier-I. This is allowed as a deduction in computing the income of the employee. However, such deduction is allowed only to the extent of 10 per cent of the salary in case of employees of the State government. To provide equal treatment to both Central and State government employees, I propose to increase the tax deduction limit from 10 per cent to 14 per cent on employer’s contribution to the NPS account of State Government employees as well. "
5. Scheme for taxation of virtual digital assets .
There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime. Accordingly, for the taxation of virtual digital assets,
1. I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent.
2. No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition.
3. Further, loss from transfer of virtual digital asset cannot be set off against any other income.
4. Further, in order to capture the transaction details, I also propose to provide for TDS on payment made in relation to transfer of virtual digital asset at the rate of 1 per cent of such consideration above a monetary threshold.
5. Gift of virtual digital asset is also proposed to be taxed in the hands of the recipient.
6. Rationalization of Surcharge : TO BE CAPPED AT 15 % for LTCG
In the globalized business world, there are several works contracts whose terms and conditions mandatorily require formation of a consortium. The members in the consortium are generally companies. In such cases, the income of these AOPs has to suffer a graded surcharge upto 37 per cent, which is a lot more than the surcharge on the individual companies. Accordingly, I propose to cap the Surcharge of these AOP’s at 15 per cent. Further, the long-term capital gains on listed equity shares, units etc. are liable to maximum surcharge of 15 per cent, while the other long term capital gains are subjected to a graded surcharge which goes up to 37 per cent. I propose to cap the surcharge on long term capital gains arising on transfer of any type of assets at 15 per cent. This step will give a boost to the start up community and along with my 25 proposal on extending tax benefits to manufacturing companies and start ups re affirms our commitment to Atma Nirbhar Bharat.
INCOME TAX SLABS / RATES FOR FY 2022-23
There is no change proposed in tax SLABS / RATES for the year fy 2022-23 . The Rates / slabs which are already prevalent in year 2021-22 can be used to reduce the taxable income for the financial year 2022-23 also .
INCOME TAX RULES CHANGES IN EARLIER YEARS
INCOME TAX RULES CHANGES IN FY 2021-22 :
1. INTEREST ON HOUSING LOANS : In the July 2019 Budget, an additional deduction of interest, amounting to Rs 1.5 lakh, for loan taken to purchase an affordable house was allowed which is up to 31.03.2021 . Now it is proposed to extend the eligibility of this deduction by one more year, to 31st March 2022. The additional deduction of Rs 1.5 lakh shall therefore be available for loans taken up till 31st March 2022, for the purchase of an affordable house
2. FOR SENIOR CITIZENS : Exemption from filing income tax returns for the senior citizens who are 75 years of age and above. and who only have pension and interest income . The paying bank will deduct the necessary tax on their income .
3. PRE-FILLING OF IT RETURNS : in order to ease compliance for the taxpayer, details of salary income, tax payments, TDS, etc. already come pre-filled in income tax returns. To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled.
4. RE-OPENING OF IT RETURNS : Reduce the time-limit for re-opening of assessment of Income Tax returns to 3 years from the present 6 years. In serious tax evasion cases too, only where there is evidence of concealment of income of `50 lakh or more in a year, can the assessment be re-opened up to 10 years. Even this reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income Tax Department.
5. DISPUTE RESOLUTION COMMITTEE : Constitute a Dispute Resolution Committee for small tax payers in the cases of litigation , which will be faceless to ensure efficiency, transparency and accountability. Anyone with a taxable income up to `50 lakh and disputed income up to `10 lakh shall be eligible to approach the Committee. For the purpose Government to establish a National Faceless Income Tax Appellate Tribunal Centre. All communication between the Tribunal and the appellant shall be electronic. Where personal hearing is needed, it shall be done through video-conferencing.
6 . TAX AUDIT : Currently, if turnover exceeds Rs 1 crore, one to get your accounts audited. In the February 2020 Budget, the limit for tax audit was increased to Rs 5 crore for those who carry out 95% of their transactions digitally. To further incentivise digital transactions and reduce compliance burden, now the FM plans to increase this limit for tax audit for such persons from Rs 5 crore toRs 10 crore.
7. ADVANCE TAX PAYMENT ON DIVIDENDS : Dividend is taxable in the hands of shareholders from the FY 20-21 . Now it is proposed to make investors pay the the advance tax liability on dividend income only after the declaration/payment of dividend . for Foreign Portfolio Investors, deduction of tax on dividend income will be at at lower treaty rates .
8. TAX ON ULIP : It is proposed to allow tax exemption for maturity proceed of the ULIP having annual premium up to ` 2.5 lakh. However, the amount received on death shall continue to remain exempt without any limit on the annual premium. The cap of ` 2.5 lakh on the annual premium of ULIP shall be applicable only for the policies taken on or after 01.02.2021. Further, in order to provide parity, the nonexempt ULIP shall be provided same concessional capital gains taxation regime as available to the mutual fund.
9. TAX ON PF CONTRIBUTION : It was proposed in the budget to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs 2.5 lakh. This restriction shall be applicable only for the contribution made on or after 01.04.2021. Subsequently This restriction limit was extended to Rs 5.00 lakhs , in certain special cases . The enhanced limit of Rs 5.00 lakhs will only be applicable where there the employer's contribution does not exceed statutory limit of 12 % of the basic pay in the total PF contribution . The bill shall be applicable only for the contribution made on or after 01.04.2021.
10. NON-FILING OF IT RETURNS : For the persons in whose case TDS/TCS of Rs 50,000 or more has been made for the past two years and who has not filed return of income, the rate of TDS/TCS shall be at the double of the specified rate or 5%, whichever is higher. This provision shall not be applicable for the transactions where full amount of tax is required to be deducted e.g. salary income, payment to non-resident, lottery, etc.
11. TDS ON PURCHASE OF GOODS : It is proposed to levy a TDS of 0.1% on a purchase transaction exceeding Rs 50 lakh in a year. In
order to reduce the compliance burden, it is also proposed to provide that the responsibility of deduction shall lie only on the persons whose turnover exceeds Rs 10 crore.
12. TAX EXEMPTION ON LTC CASH SCHEME FOR SALARIED EMPLOYEES : In order to provide relief to employees, it is proposed to provide tax exemption to the amount given to an employee in lieu of LTC subject to incurring of specified expenditure.
NOTE ; We find that more clarity is needed in case on Tax on PF Contribution . We hope IT Department may clarify on how interest will be segregated between investment before APRIL 2021 and after .
But most of the changes in Income tax rules were made for the FY 2020-21 which are continued for FY 21-22and FY 22-23 . One may go through those changes below :
1. INTEREST ON HOUSING LOANS : In the July 2019 Budget, an additional deduction of interest, amounting to Rs 1.5 lakh, for loan taken to purchase an affordable house was allowed which is up to 31.03.2021 . Now it is proposed to extend the eligibility of this deduction by one more year, to 31st March 2022. The additional deduction of Rs 1.5 lakh shall therefore be available for loans taken up till 31st March 2022, for the purchase of an affordable house
2. FOR SENIOR CITIZENS : Exemption from filing income tax returns for the senior citizens who are 75 years of age and above. and who only have pension and interest income . The paying bank will deduct the necessary tax on their income .
3. PRE-FILLING OF IT RETURNS : in order to ease compliance for the taxpayer, details of salary income, tax payments, TDS, etc. already come pre-filled in income tax returns. To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also be pre-filled.
4. RE-OPENING OF IT RETURNS : Reduce the time-limit for re-opening of assessment of Income Tax returns to 3 years from the present 6 years. In serious tax evasion cases too, only where there is evidence of concealment of income of `50 lakh or more in a year, can the assessment be re-opened up to 10 years. Even this reopening can be done only after the approval of the Principal Chief Commissioner, the highest level of the Income Tax Department.
5. DISPUTE RESOLUTION COMMITTEE : Constitute a Dispute Resolution Committee for small tax payers in the cases of litigation , which will be faceless to ensure efficiency, transparency and accountability. Anyone with a taxable income up to `50 lakh and disputed income up to `10 lakh shall be eligible to approach the Committee. For the purpose Government to establish a National Faceless Income Tax Appellate Tribunal Centre. All communication between the Tribunal and the appellant shall be electronic. Where personal hearing is needed, it shall be done through video-conferencing.
6 . TAX AUDIT : Currently, if turnover exceeds Rs 1 crore, one to get your accounts audited. In the February 2020 Budget, the limit for tax audit was increased to Rs 5 crore for those who carry out 95% of their transactions digitally. To further incentivise digital transactions and reduce compliance burden, now the FM plans to increase this limit for tax audit for such persons from Rs 5 crore toRs 10 crore.
7. ADVANCE TAX PAYMENT ON DIVIDENDS : Dividend is taxable in the hands of shareholders from the FY 20-21 . Now it is proposed to make investors pay the the advance tax liability on dividend income only after the declaration/payment of dividend . for Foreign Portfolio Investors, deduction of tax on dividend income will be at at lower treaty rates .
8. TAX ON ULIP : It is proposed to allow tax exemption for maturity proceed of the ULIP having annual premium up to ` 2.5 lakh. However, the amount received on death shall continue to remain exempt without any limit on the annual premium. The cap of ` 2.5 lakh on the annual premium of ULIP shall be applicable only for the policies taken on or after 01.02.2021. Further, in order to provide parity, the nonexempt ULIP shall be provided same concessional capital gains taxation regime as available to the mutual fund.
9. TAX ON PF CONTRIBUTION : It was proposed in the budget to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs 2.5 lakh. This restriction shall be applicable only for the contribution made on or after 01.04.2021. Subsequently This restriction limit was extended to Rs 5.00 lakhs , in certain special cases . The enhanced limit of Rs 5.00 lakhs will only be applicable where there the employer's contribution does not exceed statutory limit of 12 % of the basic pay in the total PF contribution . The bill shall be applicable only for the contribution made on or after 01.04.2021.
10. NON-FILING OF IT RETURNS : For the persons in whose case TDS/TCS of Rs 50,000 or more has been made for the past two years and who has not filed return of income, the rate of TDS/TCS shall be at the double of the specified rate or 5%, whichever is higher. This provision shall not be applicable for the transactions where full amount of tax is required to be deducted e.g. salary income, payment to non-resident, lottery, etc.
11. TDS ON PURCHASE OF GOODS : It is proposed to levy a TDS of 0.1% on a purchase transaction exceeding Rs 50 lakh in a year. In
order to reduce the compliance burden, it is also proposed to provide that the responsibility of deduction shall lie only on the persons whose turnover exceeds Rs 10 crore.
12. TAX EXEMPTION ON LTC CASH SCHEME FOR SALARIED EMPLOYEES : In order to provide relief to employees, it is proposed to provide tax exemption to the amount given to an employee in lieu of LTC subject to incurring of specified expenditure.
NOTE ; We find that more clarity is needed in case on Tax on PF Contribution . We hope IT Department may clarify on how interest will be segregated between investment before APRIL 2021 and after .
But most of the changes in Income tax rules were made for the FY 2020-21 which are continued for FY 21-22and FY 22-23 . One may go through those changes below :
HIGHLIGHTS OF CHANGES IN INCOME TAX RULES FROM FY 2019-2O TO FY 20-21
TCS ON FOREIGN EXCHANGE REMITTANCE / OVERSEAS TOUR PACKAGE
The following provisions will be applied for the transactions done from 1st , October 2020 onward towards Foreign tour or Foreign Remittance :
If you buy foreign tour package , the seller of the package will collect additional amount of 5 % along with the tour package cost as an Advance Income Tax ( TCS - Tax Collected at Source ) ) from you . If you remit more than Rs 7 lakhs under Liberalised Remittance Scheme of the Reserve Bank of India ( the scheme under which many parents remit funds to their children studying abroad ) , the Authorized Dealer through whom you remit will collect additional amount of 5 % for the amount in excess of Rs 7 lakhs along with the exchange cost as Income Tax . Further if you do not furnish PAN / Aadhaar number during the transaction , the percentage of such income tax collection will increase to 10 % instead of 5 % . But if you remit out of education loan taken for studies abroad , the authorised dealer will collect only 0.5 % in excess of seven lakh rupees remitted by you in a financial year .
The TCS collected by you is only advance income tax collected and you can adjust the collected amount at the time of submitting your IT Returns for the year FY 2020-21 . If you are not liable for any tax , you may claim refund while submitting IT returns . If one does not file IT Return , the amount collected under TCS will lie with the government .
The above rules are made following amendment made to Sec 206C of Income tax Act .
If you buy foreign tour package , the seller of the package will collect additional amount of 5 % along with the tour package cost as an Advance Income Tax ( TCS - Tax Collected at Source ) ) from you . If you remit more than Rs 7 lakhs under Liberalised Remittance Scheme of the Reserve Bank of India ( the scheme under which many parents remit funds to their children studying abroad ) , the Authorized Dealer through whom you remit will collect additional amount of 5 % for the amount in excess of Rs 7 lakhs along with the exchange cost as Income Tax . Further if you do not furnish PAN / Aadhaar number during the transaction , the percentage of such income tax collection will increase to 10 % instead of 5 % . But if you remit out of education loan taken for studies abroad , the authorised dealer will collect only 0.5 % in excess of seven lakh rupees remitted by you in a financial year .
The TCS collected by you is only advance income tax collected and you can adjust the collected amount at the time of submitting your IT Returns for the year FY 2020-21 . If you are not liable for any tax , you may claim refund while submitting IT returns . If one does not file IT Return , the amount collected under TCS will lie with the government .
The above rules are made following amendment made to Sec 206C of Income tax Act .
1. Simplified optional Individual tax regime is introduced with lower income tax rates for the persons who are ready to forgo many tax rebates .
a. REBATES TO BE FORGONE :
1. Standard Deduction of Rs 50,000 allowed for salaried persons / pensioners .
2. Cumulative deduction of Rs 1.5 lakhs allowed under Section 80C, 80CCC, and Section 80 CCD for savings/investments, premium for annuity / pension fund
3. Deductions allowed for Rs 50,000 / 1,50,000 under Section 80 EE / 80 EEA for the Interest on Housing loans with certain conditions
4. Deduction allowed under 80 E for interest on education loan taken for pursuing Higher Education .
5. Deductions allowed for Rs 2.00 lakhs under Section 24 for the Interest on Housing loans
6. Deductions allowed for Rs 1,50,000 under Section 80 EEB for the Interest on loans taken for purchase of electric vehicles .
7. Interest on savings bank accounts allowed up to Rs 10,000 under Section 80TTA and for senior citizens only if they have not claimed under section 80TTB
8. Interest received by a senior citizen on deposits with banks / co-operative societies / post office up to Rs 50,000 under section 80 TTB .
9. Deduction allowed for Health insurance Policies under 80 D up to Rs. 50,000/- for senior citizens and up to Rs. 25,000/- for others .
b. REBATES THAT CAN BE USED IN NEW TAX REGIME ALSO
1. CONVEYANCE ALLOWANCE , LFC , TRANSFER
Dated 29.06.2020 : Income Tax department has amended rules now and permitted conveyance allowance , travel allowance , LFC / LTC and transfer allowance etc to be to be under exemption category of newly 115BAC as per Gazette notification dated 26.06.2020 . Accordingly following allowances are also exempted under the new tax regime :
a) any allowance granted to meet the cost of travel on tour or on transfer;
(b) any allowance, whether, granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty;
(c) any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit
To view Gazette Notification , CLICK HERE
C. TAX STRUCTURE UNDER NEW SIMPLIFIED TAX REGIME
a . No tax up to Rs 2,50,000
b. Income tax at 5 % from Rs 2,51,000 to Rs 5 .00 Lakhs
c. Income tax at 10 % from Rs 5,00,001 to Rs 7.5 Lakhs
d. Income tax at 15 % from Rs 7,50,001 to RS 10 .00 Lakhs
e. Income tax at 20 % from Rs 10,00,001 to Rs 12 .50 Lakhs
f. Income tax at 25 % from Rs 12,50,001 to Rs 15 .00 Lakhs
g. Income tax at 30 % above Rs 15 .00 Lakhs
2. EMPLOYEE / PENSIONER CAN OPT TCS / TDS EITHER FOR NEW REGIME OR OLD REGIME
An employee, having income other than the income under the head "profit and gains of business or profession" and intending to opt for the concessional rate under section 115 BAC of the Act, may intimate his employer, of such intention for each previous year and upon such intimation, the employer has to compute his total income, and make TDS thereon in accordance with the provisions of section 115 BAC of the Act.
2. If such intimation is not made by the employee, the employer shall make
TDS without considering the provision of section 115 BAC of the Act.
3. intimation so made by the employee will be only for the purposes of TDS during the previous year and cannot be modified during that year.
4. However, the intimation would not amount to exercising option in terms of sub-section (S) of section 115 BAC of the Act . Thus, option at the time of filing of return of income could be different from the intimation made by such employee to the employer for that previous year.
5. However if you have income under the head "profit and gains of business or profession" also, the option for taxation under section 115 BAC of the Act once exercised for a previous year at the time of filing of return of income under cannot be changed for subsequent previous years except in certain circumstances. To read Ministry of Finance circular dated 13.04.2020 in this regard , CLICK HERE
6. For those who opt to be in old tax regime , there is no change in Tax rates . It will continue as per slabs of FY 2019-20
7. Dividend Distribution Tax removed , but dividends to be added to individual incomes
The Tax articles for earlier years :
FY 2021 -22 CLICK HERE FY 2020-21 CLICK HERE
FY 2019-20 , CLICK HERE FOR FY 2018-19 CLICK HERE
FOR FY 2017-18 CLICK HERE FOR FY 2016-17 , CLICK HERE
FOR FY 2015-16 , CLICK HERE FOR FY 2014-15 , CLICK HERE
FY 2021 -22 CLICK HERE FY 2020-21 CLICK HERE
FY 2019-20 , CLICK HERE FOR FY 2018-19 CLICK HERE
FOR FY 2017-18 CLICK HERE FOR FY 2016-17 , CLICK HERE
FOR FY 2015-16 , CLICK HERE FOR FY 2014-15 , CLICK HERE
If you have earned from stock market or from sale of properties to know tax liability Read the NEW ARTICLE ON
CAPITAL GAIN AND TAX
CLICK HERE TO READ
CAPITAL GAIN AND TAX
CLICK HERE TO READ
ALL ABOUT TDS AND FORMS 15G AND 15H
When Banks will deduct TDS for interest paid ?
The bank will deduct tax at source once the amount of interest to be credited in respect of all the fixed deposits taken together exceeds Rs. 40,000 in a financial year.
The bank will deduct tax at source once the amount of interest to be credited in respect of all the fixed deposits taken together exceeds Rs. 40,000 in a financial year.
WHAT IS A 15G FORM AND FORM 15H ?
FORM 15G is the declaration that a Bank Deposit holder can submit to the banker if he/ she want exemption from Tax Deduction at Source ( TDS ) on the interest paid on the deposits .
A resident senior citizen who is above sixty years of age or completes sixty years during the financial year can submit form No. 15H , in lieu of FORM 15G .
A resident senior citizen who is above sixty years of age or completes sixty years during the financial year can submit form No. 15H , in lieu of FORM 15G .
WHO ARE ELIGIBLE TO SUBMIT FORM 15G / FORM 15H ?
Who is eligible to submit Form 15G
A resident person or HUF , whose tax on the estimated income for the year is nil and the amount of interest income from all the sources does not exceed the minimum exemption limit ( presently Rs 2,50,000/- ), can submit the Form.15G . Please note that both conditions are to be fulfilled to become eligible to submit the form 15G.
Who can submit form No. 15H?
A resident senior citizen who is above sixty years of age or completes sixty years during the financial year can submit form No. 15H provided his estimated tax liability is nil for the financial year though the total amount of interest from all sources may exceed Rs. 2.50 lacs, the minimum amount liable for tax.
Caution : Any wrong or false / wrong declaration attracts penalty under section 277 . A person can be prosecuted and can be liable for 3 months to 7 years of imprisonment for such false declarations . Hence please check your eligibility before submitting the forms .
DOWNLOAD FORM15H DOWNLOAD FORM 15G
Employers will issue Form 16 ,( Certificate under section 203 of the Income-tax Act, 1961 for tax deducted at source from income chargeable under the head “Salaries” )
for all the tax deducted at source while disbursing salaries . The certificate can be used for computing actual income and tax deducted at source . Format of Form 16 can be downloaded here DOWNLOAD FORM 16
You have gone through PART 1 OF The Article which contains 5 PARTS . Remaining parts are
PART 2 : TAX RATES / SLABS FOR FY 2022-23 CLICK HERE
PART 3 : TAX REBATES FOR FY 2022-23 AND POPULAR TAX SAVING SCHEMES CLICK HERE
PART 4 : INCOME TAX CALCULATOR FOR FY 2022-23 CLICK HERE
PART 5 : TAX ON RETIREMENT BENEFITS CLICK HERE
PART 2 : TAX RATES / SLABS FOR FY 2022-23 CLICK HERE
PART 3 : TAX REBATES FOR FY 2022-23 AND POPULAR TAX SAVING SCHEMES CLICK HERE
PART 4 : INCOME TAX CALCULATOR FOR FY 2022-23 CLICK HERE
PART 5 : TAX ON RETIREMENT BENEFITS CLICK HERE
FOR NEWS ON DEMONETIZATION AND NEW CURRENCY FEATURES CLICK HERE
FOR BANKING TIPS , CLICK HERE FOR INCOME TAX NEWS , CLICK HERE FOR SAFE BANKING TIPS , CLICK HERE
FOR INCOME TAX RETURN FORMS AND INFORMATION , CLICK HERE
FOR BANKING TIPS , CLICK HERE FOR INCOME TAX NEWS , CLICK HERE FOR SAFE BANKING TIPS , CLICK HERE
FOR INCOME TAX RETURN FORMS AND INFORMATION , CLICK HERE
FOR DETAILS ON AAYKAR SETHU , NEW MOBILE APPLICATION FROM INCOME TAX DEPT , CLICK HERE
NEW ARTICLES ON
SMALL FINANCE BANKS PAYMENT BANKS
UNIFIED PAYMENT INTERFACE BHARAT BILL PAYMENT SYSTEM
BHIM APP AADHAR
e-INSURANCE Account ( eIA )
NEW ARTICLES ON
SMALL FINANCE BANKS PAYMENT BANKS
UNIFIED PAYMENT INTERFACE BHARAT BILL PAYMENT SYSTEM
BHIM APP AADHAR
e-INSURANCE Account ( eIA )
FOR INFORMATION ON BITCOINS , NEW AGE DIGITAL CURRENCY , CLICK HERE
