Income Tax

Section 80TTB of Income Tax Act, 1961 was introduced in the Budget 2018. This provision is concerned with the deductions applicable to the interest that senior citizens earn on their savings deposits. To enjoy the deductions made available under this provision, senior citizens Section 80TTB is a provision under the Indian Income Tax Act that offers tax benefits to senior citizens on their interest income. Introduced in the Union Budget of 2018, this section aims to provide relief to senior citizens who depend on interest earned from their savings. Old age often comes with physical and mental health concerns that affect the individual’s finances. Section 80TTB of the Income Tax Act simplifies taxes for senior citizens and provides them tax relief on their post-retirement earnings. What is Section 80TTB? Section 80TTB is a section that deals with the interest deduction for senior citizens. Under this section, senior citizens can claim a deduction of upto Rs.50,000 interest on income earned from various types of deposits. This section bestows the right to senior citizens to claim a deduction of Rs 50,000 on the interest income earned on deposits (saving or fixed). It is designed to help the senior citizens to maintain a decent lifestyle after the retirement phase, many of whom depend on their interest income for these expenses. Section 80TTB has certain limits and eligibility criteria that should be followed in order to gain the benefits from the same. However, there are certain limits and eligibility criteria that need to be followed to avail of section 80TTB deduction. Who Can Claim Deductions Under Section 80TTB? The tax provision of Section 80TTB states that only resident individuals who are either 60 years or more of age can claim deductions on their interest earnings. Notably, senior citizens with a deposit account like a fixed deposit account, recurring deposit accounts, and savings account can claim a deduction of the interest they accrue on their deposits in a fiscal year.  Deduction available through Section 80TTB Interest on bank deposits; either savings, recurring, or fixed deposits. Interest on deposits at the post office. Interest on the deposits held in co-operative society mainly engaged in the business of banking. This may include a co-operative land mortgage bank or a co-operative land development bank. One must note that the interest earned on savings accounts and fixed or recurring deposits held with the above three entities will be considered for the purpose of deduction. Moreover, there are also other interests earned with other types of offices. These include Senior Citizen Savings Scheme accounts, post office time deposits, five-year recurring deposits, and Post Office Monthly Income Schemes. These will also be eligible for deduction. Documents Needed Bank statements, inclusive of passbook and account statement PAN Form 16 What are the Exceptions Under Section 80TTB? These following entities are exempted from claiming tax deductions under Section 80TTB of Income Tax Act – Residential individuals and HUFs other than senior citizens. Non-resident Indians. The income generated on savings accounts that are held by entities like – Associate of Persons, a body of individuals or firms. Nonetheless, one must remember that senior citizens cannot claim deductions on interest accrued on types of deposits. Ideally, interest accrued on savings account held with a banking institution, a post office or a cooperative society can be claimed as tax deduction under this section of Income Tax Act.  In other words, the benefits extended under Section 80TTB will not be available on earnings generated through company fixed deposits, NCDs, or bonds.  Furthermore, if any senior citizen decides to choose the Alternative Tax Regime that comes under the purview of Section 115BAC, deductions under Sec 80TTB is unavailable from FY 2022-23.  Difference Between 80TTA and 80TTB Parameters Section 80TTA Section 80TTB Introduced on  It is in effect from the assessment year of 2013-14. It is in effect from the assessment year of 2019-20. Beneficiary  HUFs and individuals can avail the deductions allowed under Section 80TTA. Only senior citizens can avail the deductions made available under 80TTB. Qualified sources  Only interest on savings accounts qualifies for a deduction under this section. Deposit accounts like – savings accounts, fixed deposits and recurring deposits qualify for the deductions under this account. Exemption limit Annually the exemption limit is a maximum of Rs. 10000.  In a fiscal year, the maximum exemption limit is up to Rs. 50000.   Eligibility  NRI and NRO accounts are eligible for the deductions under Section 80TTA of ITA.  The deductions under Sec 80TTB do not apply to NRI accounts.  Claim process   Eligible entities can avail the deductions under Section 80TTA by filing income tax returns. One can claim deductions under this tax provision by filing  FAQs What is Section 80TTB of the Income Tax Act? Section 80TTB of the Income Tax Act provides tax relief to senior citizens on interest income earned from banks, post offices, and cooperative banks. It allows them to claim a deduction of up to ₹50,000 on the interest income, which is not available to other taxpayers. Who is eligible for the benefit under Section 80TTB? The benefit under Section 80TTB is available to resident senior citizens (aged 60 years or above) in India. This includes individuals who earn interest income from fixed deposits, savings accounts, recurring deposits, and similar financial instruments.

A new Section 115 BAC of the Income Tax Act has been added by the Finance Act of 2020, giving individuals the opportunity to choose between the old regular tax rates and new concessional tax rates without taking into account the legal requirements for exemptions or deductions. According to Section 115BAC of the Income Tax Act, individuals or Hindu undivided families (HUFs) with income other than from a profession or business can choose to be taxed under the new tax regime with reduced tax slab rates. This regime was introduced in the financial year 2020-21 and became the default tax regime from the financial year 2023-24. While opting for the new regime offers lower tax rates, it comes with the trade-off of losing various deductions and exemptions available under the old tax regime. Taxpayers can still opt for the old tax regime by filing Form 10-IEA before the due date of filing their income tax return. What is Section 115BAC A person, whether an individual or an undivided Hindu family (HUF), who has income other than income from a profession or business, may exercise the option regarding a prior year to be taxed under Section 115 BAC along with his or her return of income to be furnished under Section 139(1) of the Income-tax Act for each year, according to the new Section 115BAC of the Income-tax Act, 1961. The requirement that the total income is computed without any specific exemption or deduction set off of a loss and additional depreciation applies to the concessional rate offered under Section 115BAC of the Income Tax Act. What are the Income Tax Slab Rates Under Section 115BAC? Income Bracket (₹) FY 2024-25 Tax Rate FY 2023-24 Tax Rate 0-3 lakh 0% 0% 3-6 lakh 5% 5% 6-7 lakh 5% 10% 7-9 lakh 10% 10% 9-10 lakh 10% 15% 10-12 lakh 15% 15% 12-15 lakh 20% 20% 15 lakh+ 30% 30% Who is Eligible for Section 115BAC The declared income should not cover any of the business income. The calculation of it is done without any deductions or exemptions given under the following: Chapter VI-A except those under section 80CCD/ 80JJAA Section 24b Clause (5)/(13A)/(14)/(17)/(32) of Section 10/10AA/16 Section 32(1)/ 32AD/ 33AB/ 33ABA Section 35/ 35AD/ 35CCC Clause (iia) of Section 57 The calculation is done without taking into account losses from past AYs caused by the aforementioned deductions or from real estate owned by the homeowner. It is determined without making any exemptions or deductions for any perks or allowances. Without claiming any depreciation under clause (iia) of Section 32, the calculation is completed. Deductions that are Not Claimable Under Section 115BAC The standard deduction under section 80TTB/80TTA. Entertainment allowance and professional tax on salaries. Leave Travel Allowance (LTA). House Rent Allowance (HRA). Helper allowance Minor child income allowance. Special allowances under section 10(14). Children’s education allowance. Interest on housing loan on the self-occupied property or vacant property. Chapter VI-A deductions (except Section 80CCD(2) and Section 80JJAA). Exemption and deduction for allowances and other perquisites, including food allowance of Rs.50 per meal to a maximum of 2 meals a day. Donations are made to a trust or a political party. Employee’s own contribution to NPS. No deduction for family pension income is allowed from FY 2023-24 onwards. A standard deduction of Rs.50,000 upto FY 22-23 is allowed as a deduction. Which Deductions Are Allowed Under the New Tax Regime? Transport allowance is provided to specially-abled persons. A conveyance allowance was received as compensation for the expenditure incurred as a part of the employment. Allowance is received to meet the expenses of tour, transfer, or travel. Daily allowance received in order to meet the ordinary expenses due to his absence from the place of duty. Perquisites received for official purposes. Exemption on voluntary retirement under section 10(10C), leave encashment u/s 10(10AA) and gratuity under section 10(10). Interest on a home loan on the let-out property (section 24). Gifts received upto Rs.50,000. Deduction for employer’s contribution to NPS account under section 80CCD(2). Deduction for additional employee cost. The standard deduction is Rs.50,000 under the new regime, applicable from FY 23-24. Deduction for family pension scheme under section 57(iia). Deduction of the amount deposited or paid in the Agniveer Corpus Fund under section 80CCH(2). FAQs What is the basic exemption limit of income tax under the new regime? The new tax regime currently sets the basic exemption limit at Rs. 3 lakh. This was raised in last year’s budget from Rs. 2.5 lakh by Rs. 50,000. The income tax slabs applicable under the new tax regime are given above. Is PPF included in the new tax regime? Tax is not levied on maturity proceeds from investments in the Public Provident Fund (PPF) and Sukanya Samriddhi Yojana. However, in the new regime, investments in these accounts do not qualify for the section 80C deductions up to Rs 1.5 lakh offered by the old regime.

Income Tax is levied on a person who was in India for 182 days during the previous tax year or the person who was in India for at least 60 days during the previous tax year and for at least 365 days during the preceding 4 years will be taxed. Section 17 under the Income Tax Act includes the detail of the benefits provided by the employer to the employees. While filing income Tax Return, the most prominent income head is considered salary. Sub-Section (1) of Section 17 covers the explanation of salary What is Salary under Section 17(1)? Salary is a much broader term than what we understood. Salary is used when there is an employer-employee relationship between the payee and the payer. While calculating the income under the head salaries, the total amount of salary, perquisites, and profits provided in place of a salary received in a financial year must be calculated. Salary is used most frequently while filing the income tax return. All salaried individuals with income above the exemption limit must file the ITR. Incomes Classified as “Salary” Under Section 17(1) are:- Wages- Wages refer to the payment or remuneration given to an employee in exchange for their work or services rendered. It is typically paid hourly for blue-collar jobs, such as factory workers, mechanics, or construction workers. It is fully taxable under Section 15 if received during the relevant previous year. Annuity or pension- An annuity or pension is amount received by an individual that provides a fixed stream of payments over a certain period, typically after retirement. It is designed to provide a steady income to help individuals meet their financial needs in retirement. Annuity received from a present employer is taxed as ‘Salary while the Annuity received from a previous employer is taxed as ‘Profits in lieu of Salary’. Advance of salary- An advance of salary is a payment made by an employer to an employee before the employee’s regular salary payment date. This payment is usually made in anticipation of an employee’s financial need or emergency.It is fully taxable under Section 15. Gratuity- Gratuity is a lump-sum payment made by an employer to an employee as a token of appreciation for the employee’s long and meritorious service. It is a type of retirement benefit and is usually paid when an employee completes a certain period of service with the employer, such as 5 or 10 years. Taxed as per Section 10(10) and is exempted up to certain limits. Fees, commissions, perquisites- Fees, commissions, and perquisites are types of income that an individual may receive as part of their employment or business activities. An amount received as fees to the employee from the employer for the services rendered is included in the definition of salary. Any amount of commissions given to the employee for the services provided shall form part of the salary. If the employee receives a fixed commission as a percentage of the sales or profits, it shall be considered a salary. Perquisites, also known as perks, are benefits or privileges provided to an employee in addition to their regular salary or wages. This is explained more under Section 17 (2). Profits in lieu of salary- Profits in lieu of salary refer to any payment or benefit received by an employee in connection with their employment, other than salary or wages. This can include bonuses, commissions, incentives, allowances, or any other form of compensation not classified as salary. This is explained more under Section 17(3). Leave encashment- Leave encashment is a payment made to an employee in lieu of the employee taking their entitled leave. In other words, it is the amount paid to an employee for the unutilized leave days they are entitled to. EPF- EPF stands for Employees’ Provident Fund, a retirement savings scheme for salaried employees in India. The scheme is managed and regulated by the Employees’ Provident Fund Organization (EPFO), a statutory body under the Ministry of Labour and Employment. NPS- A contribution made by the Central Government or any other employer in a financial year in an employee’s account under National Pension Scheme (NPS) will form part of the salary. Transferred PF balance- The taxable portion of the transferred balance from an unrecognized provident fund to a recognized provident fund will be considered salary. New Income Tax Regime Budget 2023 Onwards Slab Rate Tax Rate Upto ₹ 3,00,000 Nil ₹ 3,00,000 – ₹ 6,00,000 5% on income which exceeds ₹.3,00,000 ₹ 6,00,000 – ₹ 9,00,000 ₹ 15,000 + 10% on income more than ₹.6,00,000 ₹ 9,00,000 – ₹ 12,00,000 ₹.45,000 + 15% on income more than ₹.9,00,000 ₹ 12,00,000 – ₹ 15,00,000 ₹.90,000 + 20% on income more than ₹.12,00,000 Above ₹ 15,00,000 ₹.1,50,000 + 30% on income more than ₹.15,00,000 What is the basis of salary income being charged? The salary income is charged on the basis of Section 15 of the Income Tax Act. It is charged on a ‘receipt basis’ or ‘due basis,’ whichever is earlier. A salary received in a particular financial year comprises of:- Any advance amount paid to the employee before it became due or payable. Any salary due to the employee during the year. Arrears of salary paid to the employee during the year and not charged to tax in any earlier years Taxability of Various Salary Components Salary Component Taxability under Income Tax Act Basic salary Taxable Dearness allowance Taxable Advance salary Taxable in the year received Arrears of salary Taxable in the year received, if not taxed on due basis Leave encashment at time of retirement Taxable – Exempt in some scenarios Salary in lieu of notice Taxable on receipt Salary to partner Taxable under the head of “Profits and gains of business or profession” Fees and commission Taxable Bonus Taxable Gratuity Taxable – Exempt in some scenarios Pension Taxable – Exempt in some scenarios Annuity from Employer Taxable Retrenchment compensation Exempt from tax to a certain extent Remuneration for extra work Taxable Salary to Foreign Citizens Taxable – Exempt in some scenarios FAQs How much tax is deducted from salary in india

Section 145 of the Income Tax Act deals with the processes and standards of accounting for business owners and professionals. It allows an assessee to follow one of the following accounting systems — cash system or mercantile system as per ICDS (Income Computation and Disclosure Standards). On April 1 1999, the Government of India introduced Section 145A of the Income Tax Act to bring in a new accounting method for some instances. What is Section 145A of the Income Tax Act? The Finance Act, 2018 replaced earlier sections with Section 145A and Section 145B to bring certainty regarding the applications of ICDS. It substituted the old Section 145A from April 1, 2017. Section 145A determines your taxable income under ‘Profits and gains from business and profession’ and ‘Income from other sources‘. It states that regardless of the provisions of Section 145, valuation of purchase or sale of inventory and goods under income from business/profession will be determined at: A lower cost or NRV (net realisable value), which is calculated as per computation and disclosure rules of Section 145(2)  The valuation of goods/services and inventory would be further adjusted to include any taxes, cess or duty (This consists of any fees paid/incurred to bring goods/services to their location as of the day of valuation.) Valuation of listed or unlisted securities not quoted on recognised stock exchanges is done at the actual costs as per ICDS u/s 145(2).  According to Section 145A of the Income Tax Act, you need to value other securities at a lower actual cost or NRV in accordance with ICDS. Scheduled commercial banks and public financial institutions need to disclose their inventories in accordance with ICDS and RBI guidelines.  Income Computation Standards as per ICDS As per Section 145A of the Income Tax Act, assesses need to follow the Income Computation and Disclosure Standards for valuation of inventory or securities. The Central Government, through its powers u/s 145(2), notifies the applicability of ICDS. ICDS is applicable to all taxpayers who have taxable income from businesses, professions or other sources. They are applicable for taxpayers who follow the mercantile system of accounting and need their accounts audited u/s 44AB. Non-corporate taxpayers computing income under the presumptive taxation scheme must also follow it.  This accounting standard states that taxpayers have to disclose accounting policies as well as the total amount of inventories in financial statements. Moreover, they have to value inventories at actual cost or NRV, whichever is lower. Understanding the Valuation of Inventories under the IT Act Under the Income Tax Act, assessees need to maintain books of accounts. Section 145 of the IT Act states the accounting standards which they need to follow for income from business, profession or other sources. There are two modes of accounting you can follow in recording your income, assets, and liabilities: Cash method: In this, you record the transactions in books of accounts for inflow or outflow of cash. It is a simple method of accounting but has low accuracy and is not recognised by the Companies Act. Mercantile method: In this method, you record transactions when you accrue income or expenses. It does not depend on whether you have received cash on the day of the transaction. This method though more complex is highly accurate and recognised by the Companies Act. What Is Net Realisation Value and Actual Cost of Inventories/Securities? Net Realisation Value (NRV) is the estimated selling price of an asset upon the realisation of its sale. The estimated costs of completion and expenses necessary for this sale are deducted from the selling price.   As per Section 145A of the Income Tax Act, assessees must value inventories and listed securities at NRV or actual price, whichever is lower. Cost of inventories includes expenses for purchases, services, conversion and other costs to bring it to current conditions. The actual cost of inventories also consists of the purchase price, including duties, taxes, freight charges, and other expenses directly contributing to the acquisition.  Note that the Interest and borrowing costs are not included unless for recognition of interest. Furthermore, trade discounts and rebates are reduced to determine the cost of purchase. The following costs are included in the actual cost of securities: Its purchase price Acquisition costs, including tax, duty, cess, brokerage, and other fees When you acquire security in exchange for another security, its fair value price The fair value price of security acquired by exchange of another asset  FAQs What does Section 145A cover? Section 145A provides the method to be followed by taxpayers in determining the value of inventories (goods that a business holds for sale or use) while computing income. This section ensures that indirect taxes, such as excise duty, VAT, and sales tax, are included in the cost of inventory. Key Provisions of Section 145A? Valuation of Inventory: Section 145A specifies that the value of inventory should include excise duty, VAT, and other taxes paid on goods purchased or produced, to the extent applicable. When calculating the closing stock, the amount of taxes (such as excise duty, sales tax, VAT) paid on purchased goods should be added to the cost of goods. For manufactured goods, taxes such as excise duty should be included in the value of the finished goods inventory. Adjustment of Tax Credits: The section also requires that when taxes (such as excise duty or VAT) are charged or recovered, they should be adjusted in the books of account. If excise duty or VAT is paid or recoverable on inventory, it must be treated as part of the value of inventory at year-end. Similarly, any tax credit received or receivable should also be accounted for.

The Income Tax Return, or ITR, is a mechanism that taxpayers use to provide reports to the IRS about their earnings and tax payments. A taxpayer must register his or her ITR on or before the deadline. Before filing an ITR, any taxpayer can assess their tax liability and make payments. For instance, in the event of a failure carryforward and setoff of brought-over losses, you can file an ITR. Check form 26AS for information on TDS and other taxes, such as FD interest, while filing your ITR. You’ll just use your Form 16 to fill out the particulars of your income and tax-saving deduction statements. Importance of filing an ITR If individuals seek to obtain a refund from the Income Tax Department. If individuals intend to apply for a loan or a visa. If individuals have multiple income sources, such as capital gains or house property. If individuals have earned income from foreign assets in the financial year. For companies or firms, regardless of profit or loss. Types of ITR ITR 1 Individuals residing in India with a total income of up to Rs 50 lakh are eligible. ITR-1 may be filed by someone who earns money from a job, a home, or other outlets. An NRI is unable to file an ITR-1. ITRs may be filed using Form 16 by salaried taxpayers. ITR 2 Individuals and HUF for revenue from sources other than their enterprise or occupation. Individuals and NRIs who earn money from a job, a home, capital gains, or other sources may file Form ITR-2. ITR-2 may be filed by salaried people who have made profits or damages from stock purchases and sales. ITR 3 Individuals are required to disclose their earnings from a company or occupation. Salaried people who earn money from the intraday stock exchange or futures and options trading should file Form ITR-3. Individuals may use ITR-3 to record revenue from jobs, real estate, capital gains, company or trade (including presumptive income), and other sources. ITR 4 Individuals, HUFs, and partnership companies are subject to a presumptive taxation system on their earnings. ITR-4 is used to report revenue from a company with a turnover of up to Rs 2 crore that is subject to section 44AD taxation. In addition, ITR-4 is for revenue from an occupation with a turnover of up to Rs 50 lakh that is subject to section 44ADA taxation. ITR-4 may be filed by a freelancer who works in a notified occupation. ITR 5 LLP, AOP, and BOI are both acronyms for alliance companies. LLPs, partnership companies, AOPs, and BOIs will file ITR-5s to disclose profits from their businesses and professions, as well as some other sources of income. ITR 6 It is an income tax return form used by businesses to report revenue from industry or occupation, as well as all other forms of income. ITR 7 It is the federal tax return for businesses, partnerships, and trusts that continue to be excluded from paying income tax. Types of Forms to File ITR Form 16 An employee gets a Form 16 TDS certificate from their boss. The gross pay, as well as exemptions such as HRA and LTA, are listed on Form 16. The form also includes information on the employee’s net taxable pay, all other revenue or loss reported tax-saving deductions and salary TDS. Form 26AS The tax deducted at source (TDS) on different earnings, such as wages, debt, and the selling of immovable property, is detailed on Form 26AS. Details of self-assessment tax, advance tax paid by an individual, and listed financial transactions are also included on the form. Form 15G and Form 15H You will earn income without TDS using Form 15G and Form 15H. If you are under the age of 60 and your gross taxable income is less than the basic exemption cap, you can file a Form 15G. If you are a senior citizen and the tax owed on your net salary is zero, you will file Form 15H. To the individual who pays your taxes, you must apply Form 15G or Form 15H. FAQs Which ITR form to fill for self-employed? For self-employed individuals, one must fill in either ITR-3 or ITR-4 form How many types of ITR are there? There are 7 types of Income tax return forms in India.

Section 54 of the Income Tax Act provides exemption on long term capital gains from the sale of residential property if the proceeds from such sale are reinvested in purchasing or constructing another residential property within a specified time frame. Section 54F exemption is allowed only on long-term capital gains. Budget 2024 Updates Key changes include a reduced tax rate for long-term capital gains in specific scenarios, the removal of indexation benefits (except for certain cases involving land and buildings), and a simplified holding period. Most of these new capital gains provisions will be effective for transfers made on or after 23 July 2024. Capital Gains Category New Tax Rate Key Changes Long-term Capital Gains (LTCG) 12.5% – Applicable to all asset classes. – Indexation benefit withdrawn except for land/building acquired before 23 July by resident individuals or HUF. – Exemption on LTCG increased from ₹1 lakh to ₹1.25 lakhs per annum. Short-term Capital Gains (STCG) 20% – Tax on equity shares, units of business trust, and units of equity-oriented funds listed in India increased from 15% to 20%. – STCG on other non-financial assets will be taxed at applicable slab rates. – Unlisted bonds, debentures, debt mutual funds, and market-linked debentures, regardless of holding period, will be taxed at applicable rates. Change in Holding Period 24 months – Holding period reduced from 36 months to 24 months for units of unlisted business trusts, debt mutual funds (other than Specified Mutual Fund), and gold to qualify as long-term assets. What is Section 54 of the Income Tax Act, 1961? Firstly, let us understand which portion of the income is taxable on sale of the property. Is it the entire amount received on sale of property?The answer is NO.  In simple words, it is only the profit earned by the individual on sale of the property that is taxable. Profit is the difference between the sale price and the cost of the asset.  A sale of a residential house is a sale of a capital asset, and the profit gets taxed as a capital gain.  The definition of capital asset under section 2(14) of the Income Tax Act includes property of any kind movable or immovable, tangible or intangible held by the assessee for any purpose.  As per the income tax act, for the purpose of capital gains, assets are classified into 2 types depending on the holding period of the asset: Short-term capital asset Long-term capital asset What are the Different Types of Capital Assets Under Income Tax? Short-term capital assets- Capital assets that the individual holds for not more than 36 months are called short-term capital assets. The gains from selling these assets are called short-term capital gains. Long-term capital assets- The assets the assessee holds for more than 36 months are called long-term capital assets. The gains from selling these assets are called long-term capital gains. If unlisted shares, land, or other immovable property are held for more than 24 months, it is considered a long-term capital asset. The following assets shall be treated as long-term capital assets if they are held for more than 12 Months: Listed securities Units of Equity oriented fund Zero-coupon bond For Section 54 of the Income Tax Act, the house property should be held for more than 24 months to consider an asset as a long-term capital asset. Who is Eligible to Avail of the Exemption Under Section 54? Only individuals or HUFs are eligible to claim this benefit. The companies cannot reap the benefits of this section. The house property the taxpayer is selling should be a long-term capital asset. The property that is to be sold should be a residential house. Income from this property should be charged under the head income from the house property. The new residential house property should be purchased either one year before the date of transfer or two years after the date of sale or transfer. In the case of constructing a new house, the individual is given an extended time period to construct a house, i.e., within three years of the date of transfer or sale. The house property that is bought should be in India. LTCG and STCG Rates in 2023-24 and 2024-25 – Comparison Budget 2024, announced on 23rd July 2024, brought about certain changes in the long-term and short-term capital gains tax rates and holding periods. Given below is a table showing the comparison between the capital gains tax rates in FY 23-24 and FY 24-25. Taxation for mutual funds Product Before After Period of holding Short Term Long Term Period of holding Short Term Long Term Equity oriented MF units > 12 months 15.00% 10.00% > 12 months 20.00% 12.50% Specified Mutual funds which has more than 65% in debt > 36 months Slab rate Slab rate > 24 months Slab rate Slab rate Equity FoFs > 36 months Slab rate Slab rate > 24 months Slab rate 12.5% Overseas FoF > 36 months Slab rate Slab rate > 24 months Slab rate 12.5% Gold Mutual Funds > 36 months Slab rate Slab rate > 24 months Slab rate 12.5% How to Calculate Capital Gain Exemption Available Under Section 54? Section 54 of the Income Tax Act allows the lower of the two as an exemption amount for a taxpayer: Amount of capital gains on transfer of residential property or The investment made for constructing or purchasing new residential property The balance amount (if any) will be taxable as per the Income Tax Act. With effect from Assessment Year 2024-25, the Finance Act 2023 has restricted the maximum exemption to be allowed under Section 54. In case the cost of the new asset exceeds Rs. 10 crore, the excess amount shall be ignored for computing the exemption under Section 54. For Example, Mr. Anand sells his house property and earns a capital gain of Rs. 35,00,000. With the sale amount, he purchased a new house for Rs 20,00,000. The exemption under Section 54 will be the lower amount of

The income tax rebate under Section 87A provides some relief to the taxpayers who fall under the tax category of 10%. Any individual whose annual net income does not exceed Rs.5 Lakh qualifies to claim tax rebate under Section 87A of the Income Tax Act, 1961. This implies an individual can get a rebate on the tax of up to Rs.2,000. In this way, the deduction will be either Rs.2000 or 100% of the salary of an individual, whichever is smaller. One more noteworthy point of section 87A of income tax is it is offered only to individuals and not the people of Hindu Undivided Families, BOI/ AOP, Company, or any firm. Moreover, the total rebate amount should not exceed the amount of the income tax calculated before the deduction on the total income of the person with which he/she will be charged for the assessment year.  Rebate u/s 87A for FY 2023-24 (AY 2024-25) Budget 2023 proposed several amendments, and the aim was to make the new tax regime more lucrative. For FY 2023-24(AY 2024-25), the rebate limit has been increased to Rs. 7,00,000 under the new tax regime. This means a resident individual with taxable income up to Rs 7,00,000 will receive Rs 25,000 or the amount of tax payable (whichever is lower) as tax relief. However, for the old tax regime, the threshold limit will remain the same, i.e.12,500 for income up to Rs 5,00,000. Please Note:- This is applicable from the financial year FY 2023-24 (AY 2024-25). Financial Year Limit on total taxable Income Amount of rebate allowed u/s 87A 2023-2024 Rs. 5,00,000Rs.7,00,000 Rs. 12,500Rs. 25,000 2022-2023 Rs. 5,00,000 Rs. 12,500 (under the old regime)Rs.12,500 (under the new regime) 2021-22 Rs. 5,00,000 Rs. 12,500 2020-21 Rs. 5,00,000 Rs. 12,500 2019-20 Rs. 5,00,000 Rs. 12,500 2018-19 Rs. 3,50,000 Rs. 2,500 2017-18 Rs. 3,50,000 Rs. 2,500 2016-17 Rs. 5,00,000 Rs. 5,000 2015-16 Rs. 5,00,000 Rs. 2,000 2014-15 Rs. 5,00,000 Rs. 2,000 2013-14 Rs. 5,00,000 Rs. 2,000 Eligibility Criteria for Claiming Tax Rebate Under Section 87A The rebate is meant only for individual taxpayers. If you belong to a HUF or you want it for your firm or company, this rebate cannot be availed. There are no gender-based restrictions for this section, i.e. men and women can both avail the benefits. The net taxable income of an individual should not be more than ₹5,00,000 for the FY 2023- 2024. As per the laws, a maximum rebate of INR 12,500 can be availed under this section. To put it in a nutshell, if the taxes that you are liable to pay are INR 12,500 or less, this rebate can be availed by you. Income Slab (in Rs) Tax payable before cess (in Rs) Rebate u/s 87A (in Rs) Tax Payable + 4% Cess (in Rs) 2,70,000 1000 1000 0 3,60,000 3000 3000 0 4,90,000 12000 12000 0 12,00,000 1,72,500 0 1,79,400 Section 87A Eligibility Criteria for FY 2023-24 and FY 2024-25 An individual can claim a tax rebate us 87A provided he or she meets the following conditions: The individual must be an Indian resident. The total income, deductions under Section 80, has to be less than or equal to Rs. 3,50,000. Note – The rebate that can be claimed in the financial years stated above is limited to Rs. 2,500. This means that if the total payable tax is below Rs 2,500, that amount will be the respective rebate under section 87A.  Let’s understand this in a better way by considering the details in the following tabulated format:  Taxable income Income Tax Applicable Rebate under Section 87A Total Tax Payable Rs. 3 lakhs Rs. 2,500 Rs. 2,500 Nil Rs. 3.1 lakhs Rs. 3,000 Rs. 2,500 Rs. 500 Rs. 3.2 lakhs Rs. 3,500 Rs. 2,500 Rs. 1,000 Rs. 3.3 lakhs Rs. 4,000 Rs. 2,500 Rs. 1,500 Rs. 3.4 lakhs Rs. 4,500 Rs. 2,500 Rs. 2,000 Rs. 3.5 lakhs Rs. 5,000 Rs. 2,500 Rs. 2,500 Rs. 3.6 lakhs Rs. 5,500 Nil Rs. 5,500 Rs. 3.7 lakhs Rs. 6,000 Nil Rs. 6,000 Rs. 3.8 lakhs Rs. 6,500 Nil Rs. 6,500 Rebate u/s 87A was introduced with the motive of providing relief to the taxpayers who fall in the lowest tax bracket. The implementation of this section armed the government by providing direct benefits to the respective section without a reduction in the overall tax rates. The frequently changing limits of 87A are evidence of the same.  How to Claim Rebate u/s 87A? Calculate your Gross Total Income(GTI). Reduce the deductions under sections 80C to 80U. Calculate your Tax Payable as per Income Tax slabs. The amount of rebate is tax calculated or Rs 25000/12500, whichever is lower ( if your total income does not exceed Rs 7 lakhs in the case of the new tax regime and Rs. 5 lakhs in case of the old tax regime.) The taxes payable for the FY 2023-24 (AY 2024-25) under the old regime are as under: Tax Payable Rebate u/s 87A Less than Rs. 12,500 Equal to the tax amount payable Exactly Rs. 12,500 Rs. 12,500 More than Rs. 12,500 NIL Rebate granted under section 87A will depend upon your taxes payable for the FY 2023-24 (AY 2024-25) under the new regime. As under: Tax Payable Rebate u/s 87A Less than Rs. 25,000 Equal to the tax amount payable Exactly Rs. 25,000 Rs. 25,000 More than Rs. 25,000 NIL Let us consider an example to understand the calculations better Suppose the Total Taxable Income of Mr. Virat, who opted for the new regime, isA) Rs. 5 LakhsB) Rs. 7 LakhsC) Rs. 8 Lakhs Calculation of rebate u/s 87A and Tax Payable for the FY 2023-24 (AY 2024-25) Particulars Amount Amount Amount Total Taxable Income 5,00,000 7,00,000 8,00,000 Less: Basic Exemption Limit 300000 300000 300000 Taxable Income after Basic exemption limit 200000 400000 500000 Tax Payable 10000 25000 35000 Less: Rebate under section 87ALower of1) Tax Payable or2) Rs 12,500/25000 10000 25000 NIL* Balance Tax Payable NIL NIL 35000 Add: Health & Education Cess @ 4% – – 1400 Final Tax payable – – 36400

Section 194Q of Income Tax Act, 1961 was introduced on July 1, 2021, by the Central Board of Direct Taxes. This section deals with the Tax Deducted at Source on the purchase of goods. It is predominantly a buyer-specific section that specifies the TDS provisions for buyers who purchase goods from Indian sellers. Under section 194Q, buyers having purchases exceeding 50 lakhs in a previous year will have to pay a TDS at the rate of 0.1%. However, the same is not applicable to purchases made from a seller outside India. Let’s take an example –Mr. A., located in Delhi, bought goods worth 60 lakhs from Mr. B in Rajasthan in the previous year. Since the purchases exceed the threshold of INR 50 lakhs, the TDS will be calculated on (60 lakhs – 50 lakhs), i.e., 10 lakhs @ 0.1%. What is Section 194Q TDS? Section 194Q of the Income Tax Act, introduced in 2021, is a provision for Tax Deducted at Source (TDS) applicable to specific high-value goods purchases. It targets buyers with a certain turnover threshold, requiring them to withhold a portion of the payment as TDS. This mechanism aims to improve tax collection and transparency in financial dealings. Failure to comply with Section 194Q can lead to penalties and disallowance of expenditure. Applicability of TDS deduction under Section 194Q Buyer: The provision applies to a buyer making payments for the purchase of goods to a resident seller (seller based in India). It is not applicable to imported goods. Purchase Value: The total value or cumulative value of goods purchased from the same seller in a financial year exceeds ₹50 lakhs. Buyer’s Turnover: The buyer’s total sales, gross receipts, or turnover from their business in the previous financial year must be more than ₹10 crore. Who does Section 194Q of the Income Tax Act apply to? Any buyer with a total turnover, gross receipts, or sales exceeding 10 crores in the previous financial year. The buyer purchases goods from an Indian seller and is liable to make payment to a resident Indian seller. The payment made should be for the purchase of goods exceeding the aggregate value of 50 lakhs. The introduction of section 194Q helps the government to trace the huge amount of transactions without compliance of various tax provisions and to identify the cases of under disclosure of Income What is the role of GST in Section 194Q? GST is excluded from the calculation of turnover GST is included in the calculation of TDS at the rate of 0.1% When to deduct TDS? Particulars Applicability/ Non-applicability of TDS u/s 194Q TDS is deducted at the time of credit of the amount in the account of the seller; and Agreement/ contract between buyer and seller indicates GST component separately. TDS provisions u/s 194Q will not be applicable to the GST component. When TDS has been deducted on the payment basis (as payment is earlier than credit) TDS provisions u/s 194Q will apply to the GST component (i.e. TDS is deductible on the whole amount) What Happens If You Fail to Comply With Section 194Q of the Income Tax Act? If you fail to comply with the provisions and requirements of section 194Q of the Income Tax Act, it might attract severe penalties and consequences. Given below are the penalties for non-compliance on section 194Q – If the buyer does not deduct TDS, it attracts a penalty under section 40A (IA). As per this section, if the buyer fails to deduct TDS, 30% of the total purchases on which TDS has not been deducted will be disallowed as an expense. Consequently, this 30% will be treated as your income and will be liable to tax. 30% of the total purchases will be clubbed into your net income and taxed along with your total income. Exemptions Available Under Section 194Q of the Income Tax Act If the buyer does not primarily reside in India and the goods purchased are not directly connected with India, the buyer does not have to deduct TDS. The buyer does not need to deduct TDS in the year of incorporation. For example, if your company has been incorporated in the current financial year, you are not required to deduct TDS. If the buyer purchases products from a seller whose income is exempt from tax, then the buyer does not have to deduct TDS. If the tax is deducted under section 206C, excep31str transactions on which 206C(1H) is applicable, Such transaction shall not be taxable under section 194Q. Any purchases made by the central or state government institutions are not required to deduct TDS. If any transaction attracts both section 194Q and section 194O, tax shall be deducted under section 194O by the e-commerce platform provider. However, if the e-commerce platform fails to deduct the TDS, the buyer is responsible for the same. If a stock exchange purchases goods or commodities, it is exempted from deducting TDS. Transactions involving renewable energy and electricity are also exempted from deducting TDS. FAQs Which cases do not require the application of section 194Q? Section 194Q does not apply to government institutions and transactions made through recognized stock exchanges. Also, the transactions related to electricity and renewable energy are exempt from deducting TDS. Section 194Q would not apply in cases where the TDS is to be deducted on the transaction of a purchase under any other provision of the ITA. For example, there may be a case where a purchase transaction comes under Section 194O as well as Section 194Q, then TDS would apply as per Section 194O, which relates to TDS on e-commerce transactions What is the last date for depositing TDS? As per section 194Q of the Income Tax Act 1961, TDS should be deposited by the 7th day of the succeeding month in which it was deducted.

The Section 80D of the Income Tax Act allows a taxpayer to claim deductions of up to ₹25,000 for individuals and ₹50,000 for senior citizens. 80D tax deductions include medical insurance premiums for self, parents, dependent children, and spouse. The idea is to encourage people to secure themselves and their families against unexpected medical expenses. Section 80D tax benefit is  is your financial partner designed to help you escape high taxes and an easy method of maintaining good health with money. Unlike intricate tax codes, this section is your one-stop solution, which provides a straightforward approach for securing your insurance premiums. What is Section 80D of the Income Tax Act? Section 80D of the Income Tax Act allows individuals or HUF to claim a deduction for medical insurance premiums paid in a financial year. Section 80D provides a deduction for expenditure on the: Medical insurance premium Contribution to CGHS(Central Govt Health Scheme)/notified scheme Preventive health check-ups, and Medical expenditure (in case of senior citizens). Section 80D offers tax deductions up to Rs. 25,000 for health insurance premiums paid by individuals and HUFs in a financial year. The deduction increases to Rs. 50,000 for senior citizens aged 60 and above. Insured Amount of Deduction (in Rs) Age Below 60 years Age Above 60 years Self, Children, Spouse 25,000 50,000 Parents 25,000 50,000 Max Deduction 50,000 1,00,000 Preventive Healthcare 5,000 5,000 Who is eligible to claim Tax deductions under Section 80D? Individuals or HUF can claim Section 80D deduction for: Self Spouse Parents Dependant Children What is the maximum deduction that can be claimed under Section 80D? Type of Expense Premium Paid Medical insurance premium paid for individuals and families. Rs. 25,000, Rs. 50,000(in case of senior citizen) Medical insurance premium paid for your parents. Rs. 25,000 Rs. 50,000(in case of senior citizen) Expenditure on preventive health check-ups. Rs.5,000 Medical expenditure of senior citizens or super senior citizens. Rs.50,000 Contribution to CGHS/notified scheme. Rs.25,000 Rs.50,000(in case of senior citizen) Maximum amount of deduction (A+ B+C+D+E)Non-senior citizens(Self & family and Parents)Senior Citizens (Self & family and Parents)Self & family (Non-senior citizens)Parents(Senior Citizens) Rs.25000+Rs.25000=Rs.50,000Rs.50000+Rs.50000=Rs.1,00,000Rs.25000+Rs.50000=Rs.75,000 A. Medical Insurance Premium: For Yourself & Your Family The maximum amount of deduction on the policy taken by you for self & for family is Rs. 25,000/-. In case of a senior citizen or any of your family members is a senior citizen(aged 60 years or more), the deduction amount will be Rs. 50,000/-. Note: Under the 80D deduction, Family means your spouse & dependent children. B. Medical Insurance Premium: For Parents In addition to the above, you can claim a deduction of the medical insurance premium paid u/s 80D for your parents as well. The maximum amount of deduction is Rs. 25,000/-. If your parents are senior citizens, the deduction will be Rs.50,000/-. Notes : Parents for 80D include father and mother(whether dependent or not). Father-in-law and mother-in-law are not included. C. Preventive Health Check-Up Preventive Health check-ups identify the illness and work at the initial level through regular health check-ups. It is conducted once or twice yearly by your physician or general practitioner. The government introduced deduction under preventive health checkups to encourage people to be more proactive towards health. It was implemented in the year 2013-14. The cumulative deduction for this check-up is a maximum of Rs. 5,000/- for yourself, your family, and your parents. Even cash payment for this expenditure is eligible for an 80D deduction. D. Deduction of Medical Expenditure on Senior Citizens (aged 60 & above) The expenditure is allowed for the deduction when no medical insurance premium is paid for the senior citizen. The term medical expenditure has not been defined under the income tax act, but generally, it will include medical expenses such as medical consultation fees, medicines, impairment aid, etc. The maximum deduction amount is Rs. 50,000/-. E. Contribution to CGHS/notified scheme Contribution to Central Govt Health Scheme(CGHS) or any other notified scheme is allowed to individuals for themselves and their family for Rs.25,000. Any contribution for parents is not allowed for deduction. Section 80D: Amount of deduction comparative chart for current & previous years *Preventive Health Check up is included in overall limits *Family includes spouse and dependent children Deduction Available Under Section 80D The deduction allowed under Section 80D is Rs 25,000 in a financial year. In the case of senior citizens, the deduction limit allowed is Rs 50,000. The table below captures the amount of deduction available to an individual taxpayer under various scenarios: Policy for? Deduction for  self & family Deduction for parents Preventive Health check-up Maximum Deduction Self & Family (below 60 years) 25,000 – 5,000 25,000 Self & Family + Parents (all of them below 60 years) 25,000 25,000 5,000 50,000 Self & Family (below 60 years)  + Parents (above 60 years) 25,000 50,000 5,000 75,000 Self & Family + Parents (above 60 years) 50,000 50,000 5,000 1,00,000 Members of HUF  (below 60 years) 25,000 25,000 5,000 25,000 Members of HUF  (a member is above 60 years) 50,000 50,000 5,000 50,000 *The deduction for preventive check-up of up to Rs 5,000 will be within the overall limit of Rs 25,000/50,000. Please note that ‘family’ under this section includes only the spouse and dependent children. What is a preventive health check-up under Section 80D? Under Section 80D of the Income Tax Act in India, taxpayers can claim a deduction for medical insurance premiums paid for themselves and their family. In addition to the deduction for health insurance premiums, the section allows a deduction for expenses incurred on preventive health check-ups. Preventive health check-ups involve medical tests and examinations aimed at early detection of illnesses and monitoring an individual’s health status. Such check-ups help identify health risks early on, potentially preventing serious health issues. Tax Deduction: The Income Tax Act provides a tax deduction under Section 80D for expenses incurred on preventive health check-ups. Taxpayers can claim up to ₹5,000 per financial year for themselves, their spouses, children, and parents. Overall Limit: The deduction for preventive health check-ups is part of the overall limit for medical insurance premiums paid under Section

Section 194C of Income Tax Act, 1961 deals with the TDS that has to be deducted from specific payments made to resident contractors and sub-contractors. Generally, individuals paying the contractors or sub-contractors are entrusted with the responsibilities of deducting TDS.  As a result, both parties involved, i.e. a contractor and a payer (party or person) need to be aware of this Section of ITA to avoid the implications of not deducting the same. Also, contractors should find out about Nil or lower TDS provisions to protect their earnings from eroding.  What is Section 194C? Section 194C of the Income Tax Act mandates that any person making payments to resident contractors or subcontractors for performing work, including labour supply, must deduct TDS. This requirement applies when the contract is with entities such as: The central government The state government Statutory corporations Any local authority Cooperative societies Societies registered under the Societies Registration Act, 1980, or similar laws in India Corporations established under the central act, the state act, or provincial act Companies Trusts Foreign governments, enterprises, or associations outside India Authorities constituted under Indian law for housing needs, urban planning, or development Universities or deemed universities Firms Individuals, HUFs, AOPs, or BOIs with total sales exceeding Rs. 1 crore or Rs. 50 lakh in the previous financial year Who is a ‘Person’ Under Section 194C? Under Section 194C, a ‘person’ can be described as an individual who enters into a contract to get work done against payment. In general, a person can denote any of these following – A company Trusts Firms A university A local authorised body The Central Government or the State Government  A corporation A co-operative society A registered society Other than these, an authority that has been incorporated to fulfil household requirements can be termed as a person under Section 194C of Income Tax Act. What Constitutes as Work Under Section 194C? As per Section 194C, ‘work’ may constitute any of these following – Advertising Broadcasting and telecasting Catering Carriage of passengers or goods by any transportation mode besides railways. Supplying or manufacturing goods as per the specifications or requirements shared by the customer. It includes goods that have been manufactured using the materials purchased from customers or their associates. However, it does not include supply or manufacturing of goods made using materials that are not purchased from the customer or its associates.  Also, Section 194C TDS elaborates that any person paying a resident individual to carry out a specific work as per an agreement in exchange of payment is liable to deduct TDS. The Section also defines the contractor and states that it is an individual who agrees to become a part of a contract to carry out work or supply workforce. On the other hand, a sub-contractor is an individual who has decided to enter into a contract to either carry out a part or entire work. Also, a subcontractor may enter into a contract to supply the workforce to a given project.   What is the meaning of contractor and subcontractor? Contractor means any person who enters into a contract with the central/state government; corporation; company; local authority, or a cooperative society to conduct any form of work (including the supply of manpower). Subcontractor means a person who engages in a contractual agreement with the contractor to perform, or provide labor for the execution of all or a portion of the work undertaken by the contractor under a contract with any of the authorities, or to supply labor, in whole or in part, as specified in the contractor’s agreement with any of the authorities mentioned in this section. Conducting either all or part of the work, which the contractor has agreed to complete Supplying manpower for all or part of the work taken by the contractor. Provisions for TDS Deductions Under Section 194C The concerned contractor should be a resident Indian as per Section 6 of the Income Tax Act’s guidelines. Payments made to contractors must be carried out by individuals mentioned in the provision of Sec 194C.  Payment made should be to conduct any work that includes the supply of workforce. Concerned entities must pay as per the clauses mentioned in their contract that is agreeable to both the contractor and the payer. Notably, such a contract can either be in a written or oral format.  At any time, the amount of payment between the two parties should not exceed Rs. 30,000. When the advance payment made to a contractor is more than Rs. 30000 the payer has to make sure that TDS is deducted from the paid amount. If at any time the payment made by the payer to the contractor exceeds Rs. 75000 in a fiscal year, the payer must ensure that TDS is deducted from the payment. Deposit of TDS under Section 194C – Time Limit This table below highlights the time limit when TDS has to be deposited – Category of payer Date of deposit The government or an entity who pays on behalf of the government. The same day of payment. When the payment is forwarded by an entity other than the government or on its behalf –   When payment is made in March.  Other months.  Either on or before the 30th of April. Within a week from the end of the specific month in which TDS is deducted  What is TDS on Contractor Rate Under Section 194C? This table highlights – Particular  194C TDS Rate  Payment to entities other than a HUF or individual 2% Payment to HUF or individuals  1% Notably, if the contractor fails to furnish PAN, the deductor has to deduct TDS at the rate of 20%. Also, TDS will not be deducted on credits or payments made to transporters.  When are the exemptions to TDS payments under Section 194C? TDS under Section 194C is not required to be deducted in the following cases: The amount of payment made to the contractor in a single contract does not exceed Rs.30,000.If the aggregate amount of such contracts in a financial