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The Article on " TAX PLANNING FOR FY 2020-21 CONTAINS 5 PARTS
PART I : MAJOR CHANGES IN TAX RULES FOR FY 2020-21 CLICK HERE
PART 2 : TAX SLABS /RATES FOR FY 2020-21 READ THIS PART BELOW
PART 3 : TAX REBATES ,POPULAR TAX SAVING PLANS FOR FY 20-21 CLICK HERE
PART 4 : INCOME TAX CALCULATOR FOR FY 2020-21 CLICK HERE
PART 5 : TAX ON RETIREMENT BENEFITS CLICK HERE
PART I : MAJOR CHANGES IN TAX RULES FOR FY 2020-21 CLICK HERE
PART 2 : TAX SLABS /RATES FOR FY 2020-21 READ THIS PART BELOW
PART 3 : TAX REBATES ,POPULAR TAX SAVING PLANS FOR FY 20-21 CLICK HERE
PART 4 : INCOME TAX CALCULATOR FOR FY 2020-21 CLICK HERE
PART 5 : TAX ON RETIREMENT BENEFITS CLICK HERE
FOR INCOME TAX NEWS CLICK HERE
IT RETURNS FOR FY 2019-20 Already Released
For Details CLICK HERE
Finance Minister Ms Nirmala Sitharaman will present her second budget for FY 2020-21 ON 01.01.2020 at 11.00 am .
To watch it live and to view highlights
CLICK HERE
To watch it live and to view highlights
CLICK HERE
TDS RATES FOR FY 2020-21
TYPE OF PAYMENT |
TDS RATE FROM 01.04.2020 TO 14.05.2020 |
TDS RATE FROM 15.05.2020 TO 31.03.2021 |
INTEREST / DIVIDEND |
10% |
7.5 % |
LIFE INSURANCE |
5% |
3.75% |
NSC |
10% |
7.5% |
RENT ON PROPERTY |
10% |
7.5% |
DIVIDEND ON MF |
10% |
7.5% |
COMMISSION / BROKERAGE |
5% |
3.75% |
TRANSACTIONS WITHOUT PAN / AADHAAR |
20% |
20% |
For various other types of TDS , CLICK HERE
TDS ON SALARY / PENSION FOR FY 2020-21
CLARIFICATIONS ISSUED ON TDS ON SALARIES / PENSION
Dated 14.04 .2020 : FM Ms Nirmala Sitharaman had announced in her budget speech . a new optional tax regime which allows lower taxes if the assessee opts to forgo Rebates and exemptions . Accordingly section 115 BAC was introduced in the Income tax act . The concessional rate provided under section 115 BAC of the Act is subject to the condition that the total income shall be computed without specified exemption or deduction, setoff of loss and additional depreciation.
The Finance Ministry has now come out with clarification with regard to TDS modalities to be followed in case one wants to opt tax regime under Section 115 ABC . Accordingly ,
1. 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
Dated 14.04 .2020 : FM Ms Nirmala Sitharaman had announced in her budget speech . a new optional tax regime which allows lower taxes if the assessee opts to forgo Rebates and exemptions . Accordingly section 115 BAC was introduced in the Income tax act . The concessional rate provided under section 115 BAC of the Act is subject to the condition that the total income shall be computed without specified exemption or deduction, setoff of loss and additional depreciation.
The Finance Ministry has now come out with clarification with regard to TDS modalities to be followed in case one wants to opt tax regime under Section 115 ABC . Accordingly ,
1. 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
INCOME TAX ON SALARY ARREARS - RELIEF UNDER SECTION 89 (1)
In case you receive ant salary arrears , gratuity , family pension or any other arrears pertaining to earlier years than FY 1920-21 , you may claim relief under section 89 (1 ) of IT Act . To claim such a relief , one has to submit Form 10E before submitting the IT Return for the year in which arrears are received . ( CLICK HERE TO PRINT FORM 10E ) You may also get the form in Income Tax department's e-filing website by logging in to your account .
The Tax relief will be calculated as per Rule 21A of the Income Tax Act
HOW TO CALCULATE RELIEF ON TAX ARREARS UNDER SECTION 89 (1 ) :
Let us assume that you have received arrears in Financial year 2020-21 . The arrears pertain to salaries of FY 17-18, 18-19 , 19-20 , 20-21 Then
1. Calculate Income tax on salary with arrears for the fy 2020-21 Say the income tax is A
2. Calculate Income tax on salary for the year fy 20-21 after reducing the arrears pertaining to fy 17-18,18-19 & 19-20 for the fy 2020-21 Say the income tax is B
3. The difference is extra tax payable by you for fy 2020-21 is C = A - B
4. Now note down the income tax already paid for earlier years with your income without arrears . Say you have paid Income tax D for fy 2017-18 , E for FY 18-19 & F for FY 19-20 . Total Tax paid earlier is D+ E+ F = H
5. Add the income arrears pertaining to each earlier years to your income reported and calculate taxes for each year and say the new tax payable is I for FY 2017-18 , J for fy 18-19 & K for FY 19-20 . Total tax payable now for earlier years is I+ J+ K = L
6. The additional tax payable on account of arrears for previous years is M = L- H
Now under rule 21A , you can chose either C or M whichever is beneficial to you . That means either you can pay total tax of A or
B+ M whichever is beneficial .
For calculating the Income tax for various years , you may go to our page INCOME TAX CALCULATOR FOR FY 20-21
To calculate the Tax relief , you can use the tool provided by IT Department by CLICKING HERE
The Tax relief will be calculated as per Rule 21A of the Income Tax Act
HOW TO CALCULATE RELIEF ON TAX ARREARS UNDER SECTION 89 (1 ) :
Let us assume that you have received arrears in Financial year 2020-21 . The arrears pertain to salaries of FY 17-18, 18-19 , 19-20 , 20-21 Then
1. Calculate Income tax on salary with arrears for the fy 2020-21 Say the income tax is A
2. Calculate Income tax on salary for the year fy 20-21 after reducing the arrears pertaining to fy 17-18,18-19 & 19-20 for the fy 2020-21 Say the income tax is B
3. The difference is extra tax payable by you for fy 2020-21 is C = A - B
4. Now note down the income tax already paid for earlier years with your income without arrears . Say you have paid Income tax D for fy 2017-18 , E for FY 18-19 & F for FY 19-20 . Total Tax paid earlier is D+ E+ F = H
5. Add the income arrears pertaining to each earlier years to your income reported and calculate taxes for each year and say the new tax payable is I for FY 2017-18 , J for fy 18-19 & K for FY 19-20 . Total tax payable now for earlier years is I+ J+ K = L
6. The additional tax payable on account of arrears for previous years is M = L- H
Now under rule 21A , you can chose either C or M whichever is beneficial to you . That means either you can pay total tax of A or
B+ M whichever is beneficial .
For calculating the Income tax for various years , you may go to our page INCOME TAX CALCULATOR FOR FY 20-21
To calculate the Tax relief , you can use the tool provided by IT Department by CLICKING HERE
TAX RELIEF ON GRATUITY ARREARS
One can get Income tax relief under section 89 (1 ) of Income tax for arrears one get on the Gratuity paid by the employer .
Method of Calculation of TAX RELIEF for Gratuity Arrears :
( In case total service completed is more than 15 years )
1 Calculate Income tax on salary with gratuity arrears for the fy 2020-21 Say the income tax is A
2. Calculate the average rate of tax for the year Fy 2020-21n (TotalTax/Total Income)multiplied by 100 ) say P
3. Calculate tax on gratuity amount received on the basis of the average rate ( P ) of the tax that is computed in step 2. Say amount is Q
4. Add 1/3 of Gratuity amount each to the incomes of Fy 17-18 , fy 18-19 & Fy 19-20
.5 Calculate the tax for each year after adding 1/3 each of gratuity received and calculate the tax rate for each of the three years . Sa y income tax rates are R, S ,& T for the years Fy 17-18 , fy 18-19 & Fy 19-20 respectively .
6. Calculate average of R, S & T ie R+S+T / 3 = U
7. Calculate tax on gratuity amount received on the basis of the average rate ( U ) of the tax . Say amount is V
8 Tax relief you can claim on Gratuity is Q- V = W
If completed service is between 5 years to 15 years , average of two preceding years only to be taken and less than 5 years , no relief is available .
To calculate the Tax relief , you can use the tool provided by IT Department by CLICKING HERE
Method of Calculation of TAX RELIEF for Gratuity Arrears :
( In case total service completed is more than 15 years )
1 Calculate Income tax on salary with gratuity arrears for the fy 2020-21 Say the income tax is A
2. Calculate the average rate of tax for the year Fy 2020-21n (TotalTax/Total Income)multiplied by 100 ) say P
3. Calculate tax on gratuity amount received on the basis of the average rate ( P ) of the tax that is computed in step 2. Say amount is Q
4. Add 1/3 of Gratuity amount each to the incomes of Fy 17-18 , fy 18-19 & Fy 19-20
.5 Calculate the tax for each year after adding 1/3 each of gratuity received and calculate the tax rate for each of the three years . Sa y income tax rates are R, S ,& T for the years Fy 17-18 , fy 18-19 & Fy 19-20 respectively .
6. Calculate average of R, S & T ie R+S+T / 3 = U
7. Calculate tax on gratuity amount received on the basis of the average rate ( U ) of the tax . Say amount is V
8 Tax relief you can claim on Gratuity is Q- V = W
If completed service is between 5 years to 15 years , average of two preceding years only to be taken and less than 5 years , no relief is available .
To calculate the Tax relief , you can use the tool provided by IT Department by CLICKING HERE
HOW TO SUBMIT FORM 10 ( E ) TO IT DEPARTMENT ON-LINE ?
How to submit Form 10E online ?
1. Go to New Income Tax e-Filing website
2. Login using your PAN Number and PASSWORD .
3. Go to E-file and click on Income tax Forms
4. In the next screen , click on " File Income Tax Forms "
5. Select Form 10E
6. Choose the Assessment Year as 2021-22 and Continue
7. Next screen , click on " Let's get started "
8.Click on the relevant arrears you have received during the year .
9. After filling in the details in each section where you have received arrears , click " Preview "
10 . On completion of preview , click on " Proceed to e-verify "
11. After successful e-verification , your screen will show " success "
Only on successful filing of 10E , you may file IT RETURNS AND YOU CAN CLAIM REBATES UNDER SECTION 89 OF INCOME TAX ACT FOR SALARY / GRATUITY ARREARS YOU HAVE RECEIVED
How to submit Form 10E online ?
1. Go to New Income Tax e-Filing website
2. Login using your PAN Number and PASSWORD .
3. Go to E-file and click on Income tax Forms
4. In the next screen , click on " File Income Tax Forms "
5. Select Form 10E
6. Choose the Assessment Year as 2021-22 and Continue
7. Next screen , click on " Let's get started "
8.Click on the relevant arrears you have received during the year .
9. After filling in the details in each section where you have received arrears , click " Preview "
10 . On completion of preview , click on " Proceed to e-verify "
11. After successful e-verification , your screen will show " success "
Only on successful filing of 10E , you may file IT RETURNS AND YOU CAN CLAIM REBATES UNDER SECTION 89 OF INCOME TAX ACT FOR SALARY / GRATUITY ARREARS YOU HAVE RECEIVED
TAX COLLECTED AT SOURCE ( TCS )
TCS FOR OVERSEAS TOUR PACKAGE
If you buy foreign tour package , the seller of the package will have to collect additional amount of 5 % along with the tour package cost as an Advance Income Tax ( TCS - Tax Collected at Source ) ) from you .
TCS ON OUTWARD REMITTANCE UNDER LRS SCHEME OF RBI
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 % 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 % . If the amount being remitted out is a loan obtained from any financial institution for the purpose of pursuing any education, TCS collected will be 0.5 % over the limit of Rs 7 lakhs
The TCS collected from 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 .
To read amended section 206c of IT Act under which TCS will be collected , CLICK HERE
If you buy foreign tour package , the seller of the package will have to collect additional amount of 5 % along with the tour package cost as an Advance Income Tax ( TCS - Tax Collected at Source ) ) from you .
TCS ON OUTWARD REMITTANCE UNDER LRS SCHEME OF RBI
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 % 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 % . If the amount being remitted out is a loan obtained from any financial institution for the purpose of pursuing any education, TCS collected will be 0.5 % over the limit of Rs 7 lakhs
The TCS collected from 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 .
To read amended section 206c of IT Act under which TCS will be collected , CLICK HERE
TDS ON CASH WITHDRAWAL UNDER SECTION 194N OF IT ACT
If you have not submitted your IT returns for the last three years and if you withdraw cash from a bank , post office or co-operative society , following TDS ( Tax deducted at source ) will be collected from you :
1. If you withdraw more than Rs 2 lakhs and up to Rs 1 crore in a year , 2 % of cash drawn will be collected as TDS
2. If the cash drawn exceeds Rs 1 crore in a year , 5 % of cash drawn will be collected as TDS
If IT Returns have been submitted , a lower rate of 2 % will be collected only if the cash withdrawal amount exceeds Rs 1 crore in the year .
The amount so collected can be claimed by you as Advance tax paid while submitting the returns .
In order to help banks with the information of the customers with regard to status of filing of IT Returns , The Department has now released a new functionality “ITR Filing Compliance Check” which will be available to Scheduled Commercial Banks (SCBs) to check the IT Return filing status of PANs in bulk mode. The Principal Director General of Income-tax (Systems) has notified the procedure and format for providing notified information to the Scheduled Commercial Banks.
1. If you withdraw more than Rs 2 lakhs and up to Rs 1 crore in a year , 2 % of cash drawn will be collected as TDS
2. If the cash drawn exceeds Rs 1 crore in a year , 5 % of cash drawn will be collected as TDS
If IT Returns have been submitted , a lower rate of 2 % will be collected only if the cash withdrawal amount exceeds Rs 1 crore in the year .
The amount so collected can be claimed by you as Advance tax paid while submitting the returns .
In order to help banks with the information of the customers with regard to status of filing of IT Returns , The Department has now released a new functionality “ITR Filing Compliance Check” which will be available to Scheduled Commercial Banks (SCBs) to check the IT Return filing status of PANs in bulk mode. The Principal Director General of Income-tax (Systems) has notified the procedure and format for providing notified information to the Scheduled Commercial Banks.
INCOME TAX SLABS AND RATES FOR FY 2020-21
Income tax payers have now two options to pay income tax for the Financial year 2020-21 with the introduction of Simplified optional Individual tax regime with lower income tax rates for the persons who are ready to forgo many tax rebates . The new optional section under ITAct is 115BAC . If you opt for section 115 BAC , THE INCOME TAX RATES ARE AS FOLLOWS :
INCOME RANGE |
INCOME TAX |
Up to Rs 2,50,000 |
NIL |
Rs 2,50,001 to Rs 5,00,000 |
5 % |
Rs 5,00,001 to Rs 7,50,000 |
10 % |
Rs 7,50,001 to Rs 10,00,000 |
15 % |
Rs 10,00,001 to Rs 12,50,000 |
20 % |
Rs 12,50,001 to Rs 15,00,000 |
25 % |
Above Rs 15,00,000 |
30 % |
If you do not opt for new simplified tax regime and want to retain old tax structure and avail tax rebates prevalent in FY 2029-20 , The tax structure / slab will continue as below :
INCOME TAX RATES / SLABS UNDER OLD REGIME
Income Range |
General Citizens |
Persons above 60 years and below 80 years |
Persons above 80 years |
Up to Rs 2,50,000 |
NIL |
NIL |
NIL |
Rs 2,50,001 to Rs 3,00,000 |
5% |
NIL |
NIL |
Rs 3,00,001 to Rs 5,00,000 |
5% |
5% |
NIL |
Rs 5,00,001 to Rs 10,00,000 |
20% |
20% |
20% |
Above Rs 10,00,000 |
30% |
30% |
30% |
1. Surcharge of 10 % for income between Rs 50,00,000 to Rs 1 Crore and surcharge of 15% on income above Rs 1 .00 crore .Surcharge at the rate of 25% of such tax,where total income exceeds Rs 2 crores to Rs 5 crores rupee . A surcharge at the rate of 37% of tax, where total income exceeds Rs 5 crores.(Since FM has announced that enhanced cess on income over Rs 2 crores will not be applicable for capital gains out of sale of Equities,MF etc)
2. Education cess of 4% on Tax+ Surcharge
3. Tax rebate under Section 87A of IT Act up to Rs 12,500 for Resident individuals with income less than Rs.5 lakhs.
2. Education cess of 4% on Tax+ Surcharge
3. Tax rebate under Section 87A of IT Act up to Rs 12,500 for Resident individuals with income less than Rs.5 lakhs.
TAX ON INTEREST INCOME
1.Savings Bank Accounts : Tax free up to Rs 10,000 per year under old regime only
2.Tax on Fixed Deposits : Fully taxable
3.Recurring Deposits : Fully taxable
4.Tax Saving FDs : Fully taxable
5.National savings Certificates : Fully taxable
6.Kisan Vikas Patra : Fully taxable
7.Senior Citizens savings Scheme : Fully taxable
8.Public Provident Fund : Tax Free under old regime only
9.Tax Free Bonds : Tax Free
10.Sukanya Samruddhi Yojana : Tax Free under old regime only
Note : Tax exemption limit is enhanced to Rs 50,000 for interest on bank deposits / postal deposits for senior citizens who opt for old Tax Regime .
2.Tax on Fixed Deposits : Fully taxable
3.Recurring Deposits : Fully taxable
4.Tax Saving FDs : Fully taxable
5.National savings Certificates : Fully taxable
6.Kisan Vikas Patra : Fully taxable
7.Senior Citizens savings Scheme : Fully taxable
8.Public Provident Fund : Tax Free under old regime only
9.Tax Free Bonds : Tax Free
10.Sukanya Samruddhi Yojana : Tax Free under old regime only
Note : Tax exemption limit is enhanced to Rs 50,000 for interest on bank deposits / postal deposits for senior citizens who opt for old Tax Regime .
TAX ON STOCK MARKET TRANSACTIONS
1. Profits made out of short term stock holding (for less than a year )to be added to the Income for tax purposes .
2. Short term loss on one stock can be offset by short term gain on another stock
3. Stocks held for more than 12 months are eligible for Long Term Capital Gain and hence profits are tax free up to Rs 1.00 lakh only Long Term Capital Gain ( LTCG ) is taxed at 10 % beyond Rs 1.00 lakh .
Long Term Capital Gain Tax on sale of equity shares and equity oriented mutual funds is introduced at 10 % ,flat and uniform rate for gains more than Rs 10,000 in the financial year .Further no indexation is allowed for calculating the gain . However gains earned up to January 31,2018 will be allowed to grandfathered.Grandfathering is allowing of existing benefits for the previous period . Hence Long Term Profits earned after February 1, 2018 will only be taxed id profits are booked in the financial year 2018-19 i.e from 01.04.2018 to 31.03.2019 .The higher of the purchase price of share or mutual fund or the price as on 31.01.2018 for equity and NAV as on 31.01.2018 for mutual fund will be taken as investment cost for arriving the long term gain .
4. Dividend Distribution Tax is abolished for the Financial Year 2020-21 . However Dividend income is to be added to his / her personal income by the receiver of the dividend .
5. Short term losses can be carried forward for 8 years only if you declare the same in your Income Tax returns before due date .
6. Trading in derivatives attract Business tax .
7. Losses made out of stocks held for more than 12 months cannot be offset for Short term gains .
2. Short term loss on one stock can be offset by short term gain on another stock
3. Stocks held for more than 12 months are eligible for Long Term Capital Gain and hence profits are tax free up to Rs 1.00 lakh only Long Term Capital Gain ( LTCG ) is taxed at 10 % beyond Rs 1.00 lakh .
Long Term Capital Gain Tax on sale of equity shares and equity oriented mutual funds is introduced at 10 % ,flat and uniform rate for gains more than Rs 10,000 in the financial year .Further no indexation is allowed for calculating the gain . However gains earned up to January 31,2018 will be allowed to grandfathered.Grandfathering is allowing of existing benefits for the previous period . Hence Long Term Profits earned after February 1, 2018 will only be taxed id profits are booked in the financial year 2018-19 i.e from 01.04.2018 to 31.03.2019 .The higher of the purchase price of share or mutual fund or the price as on 31.01.2018 for equity and NAV as on 31.01.2018 for mutual fund will be taken as investment cost for arriving the long term gain .
4. Dividend Distribution Tax is abolished for the Financial Year 2020-21 . However Dividend income is to be added to his / her personal income by the receiver of the dividend .
5. Short term losses can be carried forward for 8 years only if you declare the same in your Income Tax returns before due date .
6. Trading in derivatives attract Business tax .
7. Losses made out of stocks held for more than 12 months cannot be offset for Short term gains .
TAX ON MUTUAL FUNDS
1. For Tax purpose , a Mutual fund that invests more than 65% in equities is classified as Equity Funds .
2. Diversified funds and arbitrage funds are also considered Equity Funds .
3. Profits on Equity funds held less than 12 months is considered as Short term Capital Gain and to be included in the taxable income.Short Term Capital Gain attracts a tax of 15 %
4. Profits on Equity Funds held for more than 12 months is considered as Long term Capital Gain and is exempted from tax up to Rs 1.00 lakh only . Long Term Capital Gain ( LTCG ) is taxed at 10 % beyond Rs 1.00 lakh .
5. Profit on Debt Funds are considered Long Term , if held for more than 3 years .
6. Tax on Long Term Capital gain on debt Funds is 20% . However investors can get the benefit of indexation,which allows the original investment to be adjusted for inflation .
7. Short Term Debt Funds for debt funds sold within 3 years is to be added to the taxable income and will be taxed according to slab 8. Dividends on Mutual funds are tax free ,as Mutual Fund Houses would have paid Dividend Distribution Tax ,currently at 28.84%
2. Diversified funds and arbitrage funds are also considered Equity Funds .
3. Profits on Equity funds held less than 12 months is considered as Short term Capital Gain and to be included in the taxable income.Short Term Capital Gain attracts a tax of 15 %
4. Profits on Equity Funds held for more than 12 months is considered as Long term Capital Gain and is exempted from tax up to Rs 1.00 lakh only . Long Term Capital Gain ( LTCG ) is taxed at 10 % beyond Rs 1.00 lakh .
5. Profit on Debt Funds are considered Long Term , if held for more than 3 years .
6. Tax on Long Term Capital gain on debt Funds is 20% . However investors can get the benefit of indexation,which allows the original investment to be adjusted for inflation .
7. Short Term Debt Funds for debt funds sold within 3 years is to be added to the taxable income and will be taxed according to slab 8. Dividends on Mutual funds are tax free ,as Mutual Fund Houses would have paid Dividend Distribution Tax ,currently at 28.84%
TAX ON INSURANCE POLICIES
Under 80 C of Income tax Act , life insurance premia paid on life indurance policies is one of the eligible instruments for total tax exemption up to Rs 1,50,000 only . However be cautious and confirm with policy issuers whether the contribution made to the particular policy is eligible for such exemption . The reason is there are riders for contributions made to be eligible for exemption .
As per Income tax law ,
Quote ; "
Life Insurance premium is part of gross qualifying amount for the purpose of deduction under section 80 C.Payment of premium which is in excess of 10 percent (if policy is issued on or after 1-4-2013 , 15 % in case of insurance on life of person with disability referred to in section 80U or suffering from disease or ailment specified in section 80 DDB/ rule 11DD)of actual capital sum assured shall not be included in gross qualifying amount .The value of any premiums agreed to be returned or of any benefit by way of bonus or otherwise,over the sum actually assured , which is to be or may be received under the policy by any person ,shall not be taken in to account for the purpose of calculating the actual capital sum assured .The limit of 10 per cent will be applicable only in the case of policies issued on or after 1-4-2012. In respect of policies issued prior to 1-4-2012, the old limit of 20 per cent of actual sum assured will be applicable.
With effect from 1-4-2013, 'actual capital sum assured' in relation to a life insurance policy shall mean the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into acc ount--
(i) the value of any premium agreed to be returned; or
(ii) any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person. "unquote"
For full page of Income tax website relevant to the above rule , CLICK HERE
Hence premiere paid one time premium policies may not be eligible to qualify for exemption as the insured amount may not be ten times the premium .Further amount received under those policies may be treated as Taxable Income and tax calculated. Hence double check with insurance companies before purchasing as selling agents may not reveal you correctly .
As per Income tax law ,
Quote ; "
Life Insurance premium is part of gross qualifying amount for the purpose of deduction under section 80 C.Payment of premium which is in excess of 10 percent (if policy is issued on or after 1-4-2013 , 15 % in case of insurance on life of person with disability referred to in section 80U or suffering from disease or ailment specified in section 80 DDB/ rule 11DD)of actual capital sum assured shall not be included in gross qualifying amount .The value of any premiums agreed to be returned or of any benefit by way of bonus or otherwise,over the sum actually assured , which is to be or may be received under the policy by any person ,shall not be taken in to account for the purpose of calculating the actual capital sum assured .The limit of 10 per cent will be applicable only in the case of policies issued on or after 1-4-2012. In respect of policies issued prior to 1-4-2012, the old limit of 20 per cent of actual sum assured will be applicable.
With effect from 1-4-2013, 'actual capital sum assured' in relation to a life insurance policy shall mean the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into acc ount--
(i) the value of any premium agreed to be returned; or
(ii) any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person. "unquote"
For full page of Income tax website relevant to the above rule , CLICK HERE
Hence premiere paid one time premium policies may not be eligible to qualify for exemption as the insured amount may not be ten times the premium .Further amount received under those policies may be treated as Taxable Income and tax calculated. Hence double check with insurance companies before purchasing as selling agents may not reveal you correctly .
ADVANCE TAX
Under Section 208 of Income-tax Act, every assesses is required to pay advance tax if the tax liability for the previous year exceeds ten thousand rupees.The Tax payable during the financial year itself is called Advance Tax. For individuals with salary as sole source of income,TDS is to deducted by the employer during disbursal of salary and hence question of paying advance tax separately may not arise.
ADVANCE TAX CALENDAR / DUE DATE SCHEDULE FOR BOTH INDIVIDUALS AND CORPORATE
ADVANCE TAX CALENDAR / DUE DATE SCHEDULE FOR BOTH INDIVIDUALS AND CORPORATE
DUE DATE |
ADVANCE TAX PAYABLE |
Before 15th June 2020 |
15% of advance tax |
Before 15th Sept 2020 |
45% of advance tax |
Before 15th Dec 2020 |
75% of advance tax |
Before 15th March 2021 |
100 % of advance tax |
A Resident senior Citizen is exempted for paying advance tax ,if he has no income from business or profession . . He can discharge his tax liability by paying self assessment tax .
For calculating Advance tax Payable , CLICK HERE
For calculating Advance tax Payable , CLICK HERE
For Tax on Retirement Benefits CLICK HERE
The Article on " TAX PLANNING FOR FY 2020-21 CONTAINS 5 PARTS
PART I: MAJOR CHANGES IN TAX RULES FOR FY 2020-21 CLICK HERE
PART 2: TAX RATES/SLABS FOR FY 2020-21 READ THE ABOVE PART
PART 3: TAX REBATES AND POPULAR TAX SAVING SCHEMES CLICK HERE
PART 4: INCOME TAX CALCULATOR FOR FY 2020-21 CLICK HERE
:
PART 5: TAX ON RETIREMENT BENEFITS CLICK HERE
PART I: MAJOR CHANGES IN TAX RULES FOR FY 2020-21 CLICK HERE
PART 2: TAX RATES/SLABS FOR FY 2020-21 READ THE ABOVE PART
PART 3: TAX REBATES AND POPULAR TAX SAVING SCHEMES CLICK HERE
PART 4: INCOME TAX CALCULATOR FOR FY 2020-21 CLICK HERE
:
PART 5: TAX ON RETIREMENT BENEFITS 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 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 )
FOR AUTHENTIC INFORMATION AND TIPS ON INCOME TAX MATTERS
Income tax dept of Govt of India has a very useful portal which churns out valuable guidance for tax payers .One can go through and understand the basics .
Link to the portal is http://india.gov.in/spotlight/filing-income-tax-returns#itr2
Further there are practical tips for computing tax which can be read and used .For example, the link how to compute other income. One can make use of the portal in understanding law, making payment and also to file returns .
Link to the portal is http://india.gov.in/spotlight/filing-income-tax-returns#itr2
Further there are practical tips for computing tax which can be read and used .For example, the link how to compute other income. One can make use of the portal in understanding law, making payment and also to file returns .