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sunshineweb · 5 years

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Budget 2020 Highlights – 5 Changes you must know

So finally the Budget 2020 is out. Whether you expected a lot from this budget? It is natural for all individuals to expect something from each budget. However, all expectations will not turn into realities. Let us see the Budget 2020 Highlights.

Budget 2020 Highlights – 5 changes you must know

1. Income Tax Slabs changed

There is a big change in individual tax slabs. I think this new change made life complicated to many than simplifying the tax. In one way Government is forcing us to SAVE more. However, with this new change, I think the Government is more concerned with making us to SPEND more.

There will be two types of tax slabs.

For those who wish to claim IT Deductions and Exemptions.

For those who DO NOT wish to claim IT Deductions and Exemptions.

Let me explain both the slabs as below.

Now, if you wish to choose the new tax regime, then you have to forget the below deductions or exemptions.

(i) Leave travel concession as contained in clause (5) of section 10; (ii) House rent allowance as contained in clause (13A) of section 10; (iii) Some of the allowance as contained in clause (14) of section 10; (iv) Allowances to MPs/MLAs as contained in clause (17) of section 10; (v) Allowance for income of minor as contained in clause (32) of section 10; (vi) Exemption for SEZ unit contained in section 10AA; (vii) Standard deduction, deduction for entertainment allowance and employment/professional tax as contained in section 16; (viii) Interest under section 24 in respect of self-occupied or vacant property referred to in sub-section (2) of section 23. (Loss under the head income from house property for rented house shall not be allowed to be set off under any other head and would be allowed to be carried forward as per extant law); (ix) Additional deprecation under clause (iia) of sub-section (1) of section 32; (x) Deductions under section 32AD, 33AB, 33ABA; (xi) Various deduction for donation for or expenditure on scientific research contained in sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35; (xii) Deduction under section 35AD or section 35CCC; (xiii) Deduction from family pension under clause (iia) of section 57; (xiv) Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). However, deduction under sub-section (2) of section 80CCD (employer contribution on account of the employee in notified pension scheme) and section 80JJAA (for new employment) can be claimed.

However, there are certain deductions you can still claim using the new tax regime and they are as below.

Retirement benefits, gratuity etc.

commutation of pension

leave encashment on retirement

retrenchment compensation

VRS benefits

EPFO: Employer contribution

NPS withdrawal benefits

Education scholarships

Payments of awards instituted in public interest

Which one to use for the highest tax benefits?

It is not yet clear and hence it is hard for me to say anything BLINDLY. However, going by changes, I assume it changes from individual to individuals. Hence, you have to calculate on your own and adopt the one which is more beneficial for you.

CONFUSING RIGHT? YES, as per me, this new tax slab regime is the most complicated tax slab rate any government introduced. Now many individuals will be in a dilemma of which one to use, the ADDITIONAL one along with the existing headache for taxpayers of HOW TO SAVE MORE TAX.

Refer a detailed:-Latest Income Tax Slab Rates FY 2020-21 (AY 2021-22)

2. Bank Deposit Insurance raised from existing Rs.1 lakh to Rs.5 lakh

Many Bank Depositors lost faith when the PMC kind of banks goes on financial issues. Many individuals started to fear to keep more than Rs.1 lakh in a bank. Because, as per the DICGC ( Deposit Insurance and Credit Guarantee Corporation), the maximum guarantee a depositor receive was Rs.1 lakh. However, to increase the faith among the depositors, the Government increased the limit to Rs.5,00,000.

This I think a good move. However, the Government must increase the cover with certain frequency as the inflation increases and income increases, even this Rs.5,00,000 increase may be peanut after certain years.

3. Affordable home loans under Sec.80EEA extended for one more year

To understand more on this aspect, refer my last year post Budget 2019-20 – Tax Incentive for affordable housing.

4. Dividend Distribution Tax Abolished in the hands of Companies BUT NOT FOR INDIVIDUALS!!

Many rejoiced with the news that DDT was abolished for all. However, it is abolished in the hands of companies. Hence, tax on dividends from shares and mutual funds (both equity and debt) will be taxed as per slab of the recipient.

Going forward companies will not deduct the DDT but as an investor, you have to pay the DDT as per your tax slab. Hence, this leads to many Mutual Fund investors to move to the GROWTH option than the DIVIDEND option. Because as of now, even the companies used to deduct the DDT, we as investors have no need to pay the tax. Hence, many felt it is tax-free DIVIDEND.

5. Definition of NRI is changed

Earlier the NRI status was defined if an Indian Citizen who resides in India for less than 182 days during the course of the preceding financial year. This is now reduced to 120 days.

One more change is if you are a citizen of India, but not a tax resident (on account of domicile or residence or similar exemption) in any other country, you will be deemed to be a resident in India.

6. TDS on Mutual Funds for Resident Indians

There is no clarity on fully in this front. However, I assume that Resident Indians have to have TDS if your gain from mutual funds (both equity and debt) is more than Rs.5,000.

They have introduced the new Sec.194k. This I think created the difference between equity mutual funds and direct equity investment. Rather than promoting the Mutual Funds, they are discouraged by inserting such a move of TDS. But do remember one thing always, AVOIDING TDS DOES NOT MEAN AVOIDING TAX.

Except for these five changes, I am unable to find any other new moves in the Budget 2020. So the dust and NOISE is over now. Calm down and relax and enjoy the realities 🙂

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jobkatta · 5 years

Link

ITR-1

Who is Eligible to File ITR 1 for AY 2019-20?

ITR -1 Form is a simplified one-page form for individuals having income up to Rs 50 lakh from the following sources :

Income from Salary/Pension

Income from One House Property (excluding cases where loss is brought forward from previous years)

Income from Other Sources (excluding winning from Lottery and Income from Race Horses)

In the case of clubbed Income Tax Returns, where a spouse or a minor is included, this can be done only if their income is limited to the above specifications.

Who cannot file ITR 1 for AY 2019-20

An individual having income above Rs 50 lakh cannot use this form.

An individual who is either a director in a company and has held any unlisted equity shares at any time during the financial year cannot use this form.

Residents not ordinarily resident (RNOR) and non-residents cannot file returns using ITR -1

Also, Individuals who have earned income through the following means are not eligible to file form ITR 1

More than one House Property

Lottery, Racehorses, Legal Gambling etc.

Taxable capital gains (Short term and Long term)

Agricultural income exceeding Rs. 5,000

Business and Profession

Individual who is a Resident and has assets (including financial interest in any entity) outside India or signing authority in any account located outside India.

Individual claiming relief of foreign tax paid or double taxation relief under section 90/90A/91.

ITR-2

Who is eligible to file ITR 2 for AY 2019-20?

ITR Form 2 is for Individuals and HUF receiving income other than income from “Profits and Gains from Business or Profession”. Thus persons having income from following sources are eligible to file Form ITR 2:

Income from Salary/Pension

Income from House Property(Income Can be from more than one house property)

Income from Capital Gains/loss on sale of investments/property (Both Short Term and Long Term)

Income from Other Sources (including winning from Lottery, bets on Race Horses and other legal means of gambling)

Foreign Assets/Foreign Income

Agricultural Income more than Rs 5000

Resident not ordinarily resident and a Non-resident

A Director of listed and unlisted companies will be required to file their returns in ITR-2.

Who cannot file ITR 2 for AY 2019-20?

Any individual or HUF having income from Business or Profession

Individuals who are eligible to fill out the ITR-1 Form

The ITR 3 is applicable for individual and HUF who have income from profits and gains from business or profession.

ITR-3

The persons having income from following sources are eligible to file ITR 3 :

Carrying on a business or profession

The return may include income from House property, Salary/Pension and Income from other sources

ITR-4

What is the ITR 4?

The ITR-4 Form is the Income Tax Return form for those taxpayers, who have opted for the presumptive income scheme as per Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act. However, if the turnover of the business mentioned above exceeds Rs 2 crores, the taxpayer will have to file ITR-3.

Who is required to file ITR 4?

ITR 4 is to be filed by the individuals/HUF/ partnership firm whose total income of AY 2019-20 includes :

Business income under section 44AD or 44AE

Income from profession calculated under section 44ADA

Salary/pension having income up to Rs 50 lakh

Income from One House Property having income up to Rs 50 lakh (excluding the brought forward loss or loss to be carried forward cases under this head);

Income from Other Sources having income up to Rs 50 lakh (Excluding winning from lottery and income from horse races).

Note :

Freelancers engaged in the above profession can also opt for this scheme if their gross receipts don’t exceed Rs 50 lakhs.

Who is not required to file ITR 4 for AY 2019-20?

An individual having income from salary, house property or other sources above Rs 50 lakh cannot use this form.

An individual who is either a director in a company and has invested in unlisted equity shares cannot use this form.

ITR-5

What is the ITR-5 Form ?

This income tax return is meant for firms, LLPs, AOPs (Association of persons) and BOIs (Body of Individuals), Artificial Juridical Person (AJP), Estate of deceased, Estate of insolvent, Business trust and investment fund.

Who is eligible to file the ITR-5 Form ?

This form can be used a person being a firm, LLPs, AOP, BOI, artificial juridical person referred to in section 2(31)(vii),estate of deceased, estate of insolvent, business trust and investment fund, cooperative society and local authority.

However, a person who is required to file the return of income under section 139(4A) or 139(4B) or 139(4C) or 139(4D) shall not use this form.

#taxation course in nagpur accounting course in nagpur taxation training in nagpur accounting training in nagpur

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tax2win · 5 years

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What else can be more important than calculating your tax liability for the year?Use the best Income Tax Calculator to know your tax liability for the AY 2019-20(F.Y.2018-19).https://tax2win.in/tax-tools/income-tax-calculator #IncomeTax #ITR #Taxcalculation #TaxLiability #WinTax #Tax2win

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untitled74444-blog · 5 years

Link

ITR-1

Who is Eligible to File ITR 1 for AY 2019-20?

ITR -1 Form is a simplified one-page form for individuals having income up to Rs 50 lakh from the following sources :

Income from Salary/Pension

Income from One House Property (excluding cases where loss is brought forward from previous years)

Income from Other Sources (excluding winning from Lottery and Income from Race Horses)

In the case of clubbed Income Tax Returns, where a spouse or a minor is included, this can be done only if their income is limited to the above specifications.

Who cannot file ITR 1 for AY 2019-20

An individual having income above Rs 50 lakh cannot use this form.

An individual who is either a director in a company and has held any unlisted equity shares at any time during the financial year cannot use this form.

Residents not ordinarily resident (RNOR) and non-residents cannot file returns using ITR -1

Also, Individuals who have earned income through the following means are not eligible to file form ITR 1

More than one House Property

Lottery, Racehorses, Legal Gambling etc.

Taxable capital gains (Short term and Long term)

Agricultural income exceeding Rs. 5,000

Business and Profession

Individual who is a Resident and has assets (including financial interest in any entity) outside India or signing authority in any account located outside India.

Individual claiming relief of foreign tax paid or double taxation relief under section 90/90A/91.

ITR-2

Who is eligible to file ITR 2 for AY 2019-20?

Income from Salary/Pension

Income from House Property(Income Can be from more than one house property)

Income from Capital Gains/loss on sale of investments/property (Both Short Term and Long Term)

Income from Other Sources (including winning from Lottery, bets on Race Horses and other legal means of gambling)

Foreign Assets/Foreign Income

Agricultural Income more than Rs 5000

Resident not ordinarily resident and a Non-resident

A Director of listed and unlisted companies will be required to file their returns in ITR-2.

Who cannot file ITR 2 for AY 2019-20?

Any individual or HUF having income from Business or Profession

Individuals who are eligible to fill out the ITR-1 Form

The ITR 3 is applicable for individual and HUF who have income from profits and gains from business or profession.

ITR-3

The persons having income from following sources are eligible to file ITR 3 :

Carrying on a business or profession

The return may include income from House property, Salary/Pension and Income from other sources

ITR-4

What is the ITR 4?

Who is required to file ITR 4?

ITR 4 is to be filed by the individuals/HUF/ partnership firm whose total income of AY 2019-20 includes :

Business income under section 44AD or 44AE

Income from profession calculated under section 44ADA

Salary/pension having income up to Rs 50 lakh

Income from One House Property having income up to Rs 50 lakh (excluding the brought forward loss or loss to be carried forward cases under this head);

Income from Other Sources having income up to Rs 50 lakh (Excluding winning from lottery and income from horse races).

Note :

Freelancers engaged in the above profession can also opt for this scheme if their gross receipts don’t exceed Rs 50 lakhs.

Who is not required to file ITR 4 for AY 2019-20?

An individual having income from salary, house property or other sources above Rs 50 lakh cannot use this form.

An individual who is either a director in a company and has invested in unlisted equity shares cannot use this form.

ITR-5

What is the ITR-5 Form ?

Who is eligible to file the ITR-5 Form ?

However, a person who is required to file the return of income under section 139(4A) or 139(4B) or 139(4C) or 139(4D) shall not use this form.

#free jobs in nagpur #jobs in nagpur

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bloggermotion-blog · 5 years

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SALARIED INCOME TAXPAYERS – NEVER FORGET 10 WARNING POINTS

Income Tax Department issued a cautionary advisory to salaried income taxpayers on 16 April 2018 about under-reporting of income and inflating exemptions/deductions while paying taxes.

Why You Should NOT Report Under-State Income Or Wrong Exemptions?

You should not do so because when caught you would have to do a lot of runs around and it’s legally wrong. Some cases can tend to heavy fine and jail.

Here Are Some 10 Points Which Salaried Income Taxpayers Should Not Do

Non-reporting of interest income for saving account/fixed deposit

Always check your form 26AS while filling your tax returns. This is essential because form 26AS records of most of your recurring/fixed deposits and TDS deducted. You need to calculate your taxes on FD/RD/Saving Account because TDS is not the final tax.

Fake bills for HRA claim

By salaried income taxpayers, this is the most abused income tax exemption. The income tax department has tightened this exemption in the last few years. To link both the transactions, the new ITR Forms now also ask for a tenant PAN number.

Must Read: INCOME TAX RETURN FORMS, ITR, TAX SLAB FOR AY 2019-20

False 80C and other Tax Exemptions

While filing income tax returns income tax department allows salaried taxpayers to claim tax exemption. This has been misused because ITR no proof is required while filling.

Ignoring Clubbing of Income

If you have invested in the name of your children or spouse, then the income will be clubbed to your income. Here exception is available in certain conditions.

False or Wrong Donations

Some tax professionals use donations to listed institutions, political parties, NGOs. This is done to lure unsuspecting taxpayers to lower the claim tax refunds or tax outgo.

Not showing rental income

Many landlords take rent but do not declare it as income. The income tax department is tightening the rental income by asking for PAN number of landlords because they know of this leakage.

Not declaring business/freelancer/part-time income

Some people other than just salary income also work part-time or as a freelancer and earn money. You must show these incomes in the appropriate sections.

Must Read: FIVE BEST WEBSITES TO FILE INCOME TAX RETURNS ONLINE

Not showing multiple employment

If you change your job then you must put details of both the employers and respective income while filing your income tax return.

The claim of home loan interest

There are situations where some citizens purposefully or generally guarantee intrigue exclusion for a home advance which may not be legitimate. For example, intrigue paid on advance for plot or for the under-development house isn’t exempted according to salary charge rules.

Not declaring Capital Gains

Many salaried income taxpayers in a bid to save tax on their capital gains made false claims. They should fill complete details of investment in the new ITR form.

As you can see with new technology, the income tax department is able to track the income and expenses for most especially salaried as the income always passes through banking channels. However, the department is lagging behind in tracking people income from an unorganized business, rent etc.

#tax

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themoneybhai · 5 years

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Income Tax Calculator for FY 2019-20 [AY 2020-21] – Excel Download https://t.co/K86M1zbh0v https://t.co/DUweinZccb

Embed code not available

from Twitter https://twitter.com/AshishBhalla_ May 15, 2019 at 11:34AM via IFTTT

#AshishBhalla #Ashish Bhalla #Finance #Money #The Money Bhai

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sunshineweb · 4 years

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List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Due to the introduction of new tax regime in the Budget 2020, many are not confused which are the Income Tax Deductions are available for them. Let us see the complete list of Income Tax Deductions FY 2020-21 under both old or new tax regime.

Tax Planning is an important part of financial planning. However, while investing or choosing the deductions, our idea should be to concentrate at first on our financial goals rather than just concentrating on tax saving. Hence, understanding the available options is very much important.

Income Tax Slab Rates for FY 2020-21 AY 2021-22

You may be aware that during Budget 2020, Government introduced the two types of tax regimes. As per that, the income tax slabs are as below.

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020 – 21. I will divide them as new and old tax regime for your simplicity.

List of Income Tax Deductions FY 2020-21 under New Tax Regime

I have already written a detailed post on this, where I mentioned that which deductions are not available under new tax regime. You can refer the same at “New Tax Regime – Complete list of exemptions and deductions not allowed“. In this post, I am concentrating on the available deductions.

# Section 80CCD(2)

Under this section, employer contribution on account of the employee in notified pension schemes like EPF, NPS, and/or Super Annuation Account can be claimed up to Rs.7.5 lakh limit.

An employer can contribute an amount equal to 12% of the employee’s basic monthly salary to his/her EPF account. Similarly, an employer can contribute an amount equal to 10% of the employee’s basic salary to the Tier-I account of NPS (For Central Government Employees it is now 14% of Basic+DA effective from 1st April 2019). In a superannuation account, an employer can contribute a maximum of Rs 1.5 lakh exempted from tax in a financial year.

Refer the detailed post on NPS Tax Benefits at “NPS Tax Benefits 2020 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

The Budget 2020 restricted the tax-exempt superannuation, NPS and EPF account contribution by the employer to maximum of Rs 7.5 lakh in a financial year. Further, the budget states that any interest or gains earned from the excess contribution will also be taxable in the hands of an employee.

# Section 10(15)(i)

Interest received on post office savings account balance is exempted up to Rs 3,500 under section 10(15)(i) of the Income-tax Act. The exemption limit is Rs.7,000 in case of joint savings account.

# Gratuity

Gratuity is tax-exempt up to Rs 20 lakh in a lifetime for non-government employees. For government employees, all gratuity received is tax-exempt, irrespective of the amount received by them. (Refer my post “Gratuity – New Limit, Eligibility, Formula, Taxation and Calculator“)

Below benefits up to certain threshold limits (if any) are allowed under new tax regime as well;

Commutation of pension

Leave encashment on retirement

Retrenchment compensation

VRS benefits

NPS withdrawal benefits

Education scholarships

Payments of awards instituted in the public interest

# Interest on EPF Account, SSY and PPF

The interest received from the EPF account continues to be exempted from tax in the new tax regime as well as the old tax regime.

The Interest and maturity amount received on the Sukanya Samriddhi account, PPF account are tax-free in both old and new tax regimes.

# Sect.87A

Individuals having taxable income of up to Rs.5 lakh will be eligible for tax rebate under section 87A up to Rs 12,500, thereby making zero tax payable in the new tax regime.

# Conveyance Allowance

You can claim income tax exemption for conveyance, travel, and other allowances given by your employers under the new tax regime as well.

List of Income Tax Deductions FY 2020-21 under Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020-21 under the old tax regime. Before proceeding further, first, let us understand the difference between deductions and exemptions.

Exemption :- It is nothing but an income which is not subject to tax. There are certain exemptions which are applicable only towards certain heads of income. Hence, you have to be cautious while claiming such exemptions.

There are mainly five sources of incomes which IT Department categorized and they are Salary income, Business of Professional Income, Income from House Property, Income from Capital Gains and Income from Other Sources.

Take for example like HRA, Gratuity can be claimed as tax-exempt against your salary income. Agriculture income, dividend income, or Sec.54 of IT act against long term capital gains on the sale of the property.

Deductions:-

Income Tax Deductions means you may deduct the amount that is eligible for reducing your tax liability. Income Tax Deductions can be deducted from the Gross Total Income. There are various options of investing or expenditure, which can be claimed as Tax Deductions.

Allowances available under old tax regime:-

# Mobile/Telephone Reimbursement

If your employer offering you the mobile/telephone connection or internet connection which requires for work, then you can claim 100% of such cost. However, you have to produce a bill. Only the postpaid connections are allowed for reimbursement.

# Leave Travel Allowance

The bills for your travel against LTA can be claimed for exemption. It is allowed to be claimed twice in a block of four years. The current block is 2014 to 2017. You can carry forward your unclaimed LTA to the next year. You can request your employer to not deduct tax on it and allow you to claim it next year.

# Entertainment Allowances

You may be getting this allowance. However, the exemption is available only for Government employees. The amount of exemption is least of the following.

a) Rs 5,000

b) 1/5th of salary (excluding any allowance, benefits or other perquisites)

c) Actual entertainment allowance received

# House Rent Allowance (HRA)

This is the famous exemption which is used by many salaried individuals. However, the wrong belief is that whatever the rent they pay is actually exempted from their income. The reality is different. The amount of exemption is least of the following.

a) Actual HRA Received

b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)

c) Rent paid minus 10% of salary

(Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission)

# Children Education Allowance

If your employer providing this allowance, then you can take exemption up to Rs.100 per month per child (maximum of up to 2 children). Therefore, monthly you can save Rs.200 from this allowance. The exemption may seem so low. But why to pay the tax?

# Hostel Expenditure Allowance-If your employer providing this allowance, then you can take exemption Up to Rs. 300 per month per child up to a maximum of 2 children is exempt. Therefore, you can save around a maximum of Rs.600 from this allowance.

# Conveyance Allowance

This is a different allowance than a transport allowance. It is the expenditure granted to an employee to meet the expenses on conveyance in performing his official duties. There is no limit for this. If such conveyance allowance is Rs.5,000 a month, then the whole allowance is exempt. Hence, you may this may be exempt to the extent of expenditure incurred for official purposes.

# Any Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Daily Allowance

If you are not placed in normal duty place, then your employer may provide you such allowance. The employee can claim exempt to the extent of expenditure incurred for official purposes.

These are the major allowances, which can be utilized to save tax on salary income. There are few other allowances also to claim the exemption. But many of such allowances are not so famous. Hence, I left them to list.

Deductions available under old tax regime:-

The complete of sections can be listed as below.

# Standard Deduction of Rs.50,000

Actually, I have to put this under Deductions. However, this standard deduction replaced the existing allowances. Hence, I placed it here for better understanding.

Earlier you used to claim Rs.15,000 under Medical Allowance and Travel Allowance. With effect from FY 2018-19, you can claim the direct Rs.40,000 deduction instead of these two allowances. However, the same is increased now to Rs.50,000 from FY 2019-20 and the same is applicable for FY 2020-21.

This deduction obviously for salaried and pensioners. This is irrespective of the amount of taxable salary you will be receiving to get a deduction of Rs.50,000 or taxable salary, whichever is less.

Hence, let us assume for FY 2019-20, you worked only for a few days. Your taxable salary is Rs.50,000. In such a scenario, you can directly claim the deduction of Rs.50,000. However, if your salary is less than Rs.40,000 (say Rs.20,000), then you have to claim only Rs.20,000 but not Rs.50,000.

# Section 80C

This is the famous section which often used by all of salaried. The maximum limit for the current year is Rs.1,50,000. Therefore, up to Rs.1,50,000, you can save tax on salary income from this section alone. The different investments you do and can also be claimed under Sec.80C are listed below.

Life Insurance premium (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

EPF-Employee contribution can be claimed for deduction.

Public Provident Fund (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

National Savings Certificate (NSC).

Sukanya Samriddhi Account

ELSS or Tax Saving Mutual Funds.

Senior Citizen Savings Scheme.

5-Years Post Office or Bank Deposits.

The tuition fee of kids.

Principal payment towards the home loan.

Stamp duty and registration cost of the house.

Any contribution towards NPS Tier 2 Account by Government employees is also eligible for deductions under Sec.80C.

# Sec.80CCC

Deduction under Sec.80CCC is available only for individuals. Contribution to an annuity plan of the LIC of India or any other insurer for receiving the pension. Do remember that the amount should be paid or deposited out of income chargeable to tax.

The maximum amount deductible under Sec.80CCC is Rs.1.5 lakh. Do remember that this is also the part of the combined limit of Rs.1.5 lakh available under Sec.80C, Sec.80CCC, and Sec.80CCD(1).

# Sec.80CCD1

The maximum benefit available is Rs.1.5 lakh (including Sec.80C limit).

An individual’s maximum 20% of annual income (Earlier it was 10% but after Budget 2017, it increased to 20%) or an employees (10% of Basic+DA) contribution will be eligible for deduction.

As I said above, this section will form the part of Sec.80C limit.

# Sec.80CCD2

There is a misconception among many that there is no upper limit for this section. However, the limit is least of 3 conditions. 1) Amount contributed by an employer, 2) 10% of Basic+DA (14% of Government Employees) and 3) Gross Total Income.

This is an additional deduction which will not form the part of Sec.80C limit.

The deduction under this section will not be eligible for self-employed.

NPS Tax Benefits under Sec.80CCD (1B)

This is the additional tax benefit of up to Rs.50,000 eligible for an income tax deduction and was introduced in the Budget 2015

Introduced in Budget 2015. One can avail the benefit of this Sect.80CCD (1B) from FY 2015-16.

Both self-employed and employees are eligible for availing this deduction.

This is over and above Sec.80CCD (1).

I explained all three sections of NPS (Sec.80CCD1, Sec.80CCD2 and Sec.80CCD(1B) in below image for your reference.

You can also refer my latest post on the changes “NPS Tax Benefits 2019 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

NOTE:- PLEASE NOTE THAT THE COMBINED LIMIT OF DEDUCTION UNDER SEC.80C, SEC.80CCC AND SEC.80CCD(1) TOGETHER CAN NOT EXCEED RS.1,50,000 FOR FY 2020-21.

#Sec.80D

Deduction under this section is available if you satisfy the following conditions.

The taxpayer should be an individual (resident, NRI or Foreign Citizen) or HUF.

Payment should be made out of income chargeable to tax.

Payment should be in NON-CASH mode (for preventive health check up, you can pay either through cash or non-cash mode).

Changes from Budget 2018-

In Budget 2018, the maximum tax deduction limit for senior citizens under Sec.80D is raised to Rs.50,000. The earlier limit was Rs.30,000.

In case of single premium health insurance policies having a cover of more than one year, it is proposed that the deduction shall be allowed on a proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit.

I will try to summarize the whole benefit from the below image.

# Sec.80DD

A resident individual or HUF is allowed to claim the deduction under Sec.80DD. You can claim the deduction if you incurred an expenditure for medical treatment, training, and rehabilitation of dependent relative (being a person with a disability).

A deduction can also be claimed if an individual or HUF deposited or paid for any approved scheme of LIC (or any other insurance) or UTI for the maintenance of such a dependent relative.

Here, dependent means spouse, children, parents, brothers, and sisters, who is wholly and mainly dependent upon the individual.

You can claim fixed duction of Rs.75,000 under this section. A higher deduction of Rs.1,25,000 is available if such dependent relative is suffering from severe disability.

# Sec.80DDB

An Individual’s of HUFs expenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions can be claimed under this section.

The maximum deduction is Rs. 40,000. This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens and very Senior Citizens (above 80 years) is now revised to Rs 1,00,000.

With effect from the assessment year 2016-17, the taxpayer shall be required to obtain a prescription from a specialist doctor (not necessarily from a doctor working in a Government hospital) for availing this deduction.

You can claim the deduction for the medical treatment of self, spouse, children, parents brothers, and sisters of the individual.

The ailments covered under this section are as below.

# Neurological Diseases where the disability level has been certified to be of 40% and above;

(a) Dementia (b) Dystonia Musculorum Deformans (c) Motor Neuron Disease (d) Ataxia (e) Chorea (f) Hemiballismus (g) Aphasia (h) Parkinson’s Disease

# Malignant Cancers

# Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

# Chronic Renal Failure

# Hematological disorders

a) Hemophilia

b) Thalassemia

# Sec.80E

An individual can claim deduction under Sec.80E. If the loan is taken by an individual for any study in India or outside India, then they can claim the deduction. The interest part of the loan on such education loan can be claimed for the deduction for pursuing individual’s own education or for the education of his relatives (Spouse, children or any student for whom the individual is a legal guardian).

The entire interest is deductible in the year in which the individual starts to pay interest on the loan and subsequent 7 years or until interest is paid in full (i.e for a total 8 years). But do remember that interest should be paid out of the income of chargeable to tax.

# Sec.80EEA

Along with tax deductions under Section 80C and 24b, an individual can claim up to Rs 1.5 lakh under Section 80EEA from FY 2019-20. The same is continued for FY 2020-21. However, there are certain conditions are there for the same, and they are as below:-

The home loan should have been sanctioned between 1st April, 2019 to 31st March 2020.

The Stamp duty value of the property should not exceed 45 Lakhs.

Taxpayer should not own any other residential property on the date of loan sanction.

This tax benefit will be available from 1st April 2020 (AY 2020-21) and till the end of the home loan tenure (closure).

The total interest deduction is now Rs. 3.5 lakh (Rs 2 Lakh +

Rs 1.5 Lakh).

Note that the deduction under Section 80EEA is available for home loans from banks and approved financial institutions only. To claim tax benefit under Section 24, you should have received possession of your house (interest paid before possession is eligible for deduction over the next 5 years in 5 equal installments). Section 80EEA do not impose any requirement of possession or completion of construction. Therefore, Section 80EEA provides you immediate tax relief even if you have purchased an under-construction property.

Both resident Indians and non-resident Indians (NRIs) can claim the deduction u.s 80EEA.

Section 80EEB

A Tax deduction of up to Rs 1.5 lakh can be claimed on Interest paid on Loans taken to purchase Electronic Vehicles.

# Sec.80G

Donations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc can be claimed as a deduction under this section. This deduction can only be claimed when the contribution made by cheque or draft or in cash. In-kind contributions like food material, clothes, medicines etc. do not qualify for deduction under this section.

The donations made to any Political party can be claimed under section 80GGC.

From FY 2017-18, the limit of deduction under section 80G / 80GGC for donations made in cash is reduced from current Rs 10,000 to Rs 2,000 only.

If you wish to donate to any political party of your choice, then you are allowed to donate up to Rs.2,000 only in cash. However, if you wish to donate more than Rs.2,000, then you can donate it using Electoral Bonds.

# Sec.80GG

I have written a complete post on this section. Refer “Section 80GG Deduction-Get Tax Benefit on rent paid if not getting HRA !!!“. I will give you a brief about this section as below.

This section only applies to those who have not availed HRA in their salary or not claiming the deduction on their rent in any of the other sections of income tax. Below are a few conditions to avail the deduction under this section.

This section is only applicable to Individual or HUF.

Taxpayers may be either salaried or self-employed. However, must not be getting HRA.

Tax Payer himself or spouse/Minor Child/HUF of which he is a member should not own any accommodation at a place where he is doing a job or business.

If Tax Payer owns a house at a place other than the place noted above, then the concession in respect of the self-occupied property is not claimed by him [Under Section 23 (2) (a) or 23 (4) (a)].

Tax Payer has to file a declaration in Form No.10BA regarding the expenditure incurred by him towards the payment of rent.

How much amount of deduction one can avail under Sec. 80GG?

If the above five conditions are satisfied, the amount deductible under Section 80GG is LEAST OF THE FOLLOWING.

Rs.5, 000 per month;

25% of total income of taxpayer for the year; or

Rent Paid less 10% of total income (Rent Paid-10% of Total Income).

# Sec.80TTA

A deduction of up to Rs.10,000 can be claimed by an individual or HUB in respect of any income by the way of interest from a savings account with a bank, from a savings account with a co-operative society carrying on the business of banking or from a savings account with a post office but from FDs, RDs or other Term Deposits). From FY 2018-19, this benefit will not be available for late Income Tax filers.

# Sec.80TTB

This section is for Senior Citizens (Aged 60 years and above at any time during the financial year. The interest income earned from Bank FDs, RDs (including Post Office), will be exempt up to Rs.50,000.

This deduction can be claimed under new Section 80TTB. However, if the taxpayer claimed deducted under Sec.80TTB, then he can not claim the deductions under existing 80TTA.

# Sec.80U

To claim tax benefits under Sec.80U, the taxpayer should be an individual and resident of India. If he is suffering from 40% or more than 40% of any disability, then he can claim a tax deduction.

You can claim the fixed deduction of Rs.75,000. a higher deduction of Rs.1,25,000 is allowed in respect of a person with a severe disability (i.e. having a disability of 80% or above).

# Sec.24 (B)

The interest part of your home loan EMI will be claimed under this section. The maximum limit for the self-occupied property is Rs.2,00,000 per year (even if you have multiple houses). For let-out property, earlier the entire interest payment of home loan (Loss from House Property) can be allowed to set off against any other income source without any limit. However, effective from FY 2017-18, this set-off now limited to Rs.2 lakh per individual (irrespective of the number of properties you are holding).

The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of cases, this can be treated as DEAD LOSS.

No tax on notional rent on second Self-occupied house has been proposed in the Budget 2019. Hence, you can now hold two Self-occupied properties and don’t have to show the rental income from the second self-occupied property as notional rent. This is with effective from FY 2019-20.

# Rebate under Sec.87A

The tax rebate of Rs.12,500 for individuals with income of up to Rs 5 Lakh has been proposed in Budget 2019. This was the biggest change proposed in Budget 2019. I have written a detailed post on this. You can refer the same for more clarity. Refer the same at “Revised Tax Rebate under Sec.87A after Budget 2019“.

To avail this benefit, there are certain conditions and they are as below.

The taxpayer must be a resident individual.

Your Total Income (Less Deductions from 80C to 80U) is equal to or less than Rs.5,00,000.

The rebate is the 100% of income tax on such income or Rs.12,500 (whichever is less).

Conclusion:- The above List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime may not be full. However, I tried to cover all the important deductions available. Hope this may be helpful for you all.

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Income Tax Slab Rates For FY 2019-20/AY 2020-21 Interim-Budget 2019-20 Key Highlights

The Act of income tax makes it compulsory for all the citizens of India and business firms to pay income tax. They are liable to pay the tax if their income is above the tax slab’s minimum income. Tax Payers can avail of the benefits of the tax under several sections of the income tax act. If taxpayers checked their tax slab and planned at the right time, it will help them add more money to their deposits. So at first, you all have to know that what is Income Tax Slab?

Income Tax Slab

As an individual, everyone works hard to grow their incomes with time. If you are a salaried individual of government or non-government or a businessman in India, then you must have to pay the tax according to the total income tax slab rate that how much you will learn in a Financial year. According to the annual income, all the individuals are categorized within a system that every individual should have to pay tax accordingly to their income tax slab rates. In the tax slab, different tax is levied on different incomes. Furthermore, the income tax slab rates are rectified, improved, and may change during the central government’s budget sessions held every year. But during the central government budget session 2019, they announced no changes in the income tax slabs for the Fy 2019-2020.

In Terms Of The Age, Taxpayers Fall Into Three Categories:-

Any individual (resident or non-resident) is of fewer than 60 years on the last day of the relevance.

Senior citizens of India belong to the age group of 60 years to 80 years during the previous year.

Super senior citizen is a resident of India and has 80 years or more during the financial year.

Income Tax Slabs For Individuals Within 60 Years Of Age For FY 2019/2020

For your better understanding, look at an example:-

Let Mr.X is 42 years old and has an annual income of Rs. Seven lakh. How much income tax he has paid?

According to the income tax slab:-

Income tax on Rs 2.5 lakh is Nil so tax payable is 0

Income tax on Rs 2.5 lakh to 5 lakh is 5% , (5 lakh – 2.5 lakh) = 2.5 lakh

So tax payable is 12,500

Income tax on Rs 5 lakh to 7 lakh is 20% , (7 lakh – 5 lakh) = 2 lakh

So tax payable is 40,000b

Total income tax is ( Rs 0 + Rs 12,500 + Rs 40,000)

= Rs 52,500

Plus cess of 4% on Rs 52,500 = 2,100

So Total income tax payable Rs = 52,500 + 2,100

= 54,600

The income tax act, 1961, also allows for deduction under section 80(C) and 80(U). So for that case, tax is calculated after considering such deduction and cess added to arrive at the local tax payable.

Income-Tax Slab For Senior Citizens Aged Between 60 to 80 Years For FY 2019/2020

Like the previous point here also if someone’s income is 7 lakh in a year, he or she has to pay income tax Rs 54,600, but if someone between the age group 60 to 80 earns 3 lakh, then he or she don’t have to pay any tax that is a difference between the 1st and 2nd point. Where below 60 ages have to pay tax when the income goes 2.5 lakh but not for the age group between 60 to 80. They have to pay tax only when their income comes to 3 lakh.

Income Tax Slabs For Super Senior Citizens Aged Over 80 years:-

From these three points, everyone will get a clear idea about the income tax slab, and with the example which we described, every point would be cleared for everyone.

Some points which are related to the above income tax slabs you must have to know:-

The income tax slabs and rates for the financial year 2019-2020 are the same for both men and women.

If someone’s income lies in the tax slab of a maximum of 5 lakh rupees, then you will be available for the full tax rebate under section 87A.

The rates which we mentioned above of the income tax slabs do not suppress the cess and surcharge.

So now we will discuss the surcharges applicable for resident individuals:-

For the financial year, 2019-2020 new surcharges have also been put on for the rich. Here is a table for your understanding:-

Income Tax Slabs For The Other Entities For FY 2019/2020

Now we are going to discuss the other entities’ income tax slab –

1. For The Domestic Or Civil Companies-

For a domestic or civil company, the tax will be applicable for a given FYreclaineson the gross annual turnover which earned in the previous year –

According to the budget session’s announcement, the introduction of income tax slab 2019-2020 takes the new gross turn over Rs 400 crore limit for the purpose. Also, a surcharge will be applied if the income lies between 1 crore to 10 crores. And for the above 10 crore surcharge applies to 10%. With the health and educational cess of 4%.

2. For The Partnership Firms And LLP(Limited Liability Partnership)

There are no alternative income tax brackets for the partnership firms and LLPs as the total income is taxable at the rate of 30%. The surcharge levied on forms falls into two categories mentioned below –

If total income is between 1 crore to 10 crore, then the tax will be calculated at 7%.

And above 10 crores, the tax will be calculated at 12%.

With the health and education cess of 4%.

3. For the Cooperative Society:-

The income tax slab rates for the cooperative societies are given below in a table-

And also, a surcharge applies to 12% if income is above Rs 1 crore.

4. For Local Authorities:-

The local authorities, which they will earn, are also taxable, but there are no slab divisions. They are taxed at a flat rate of 30%, and a surcharge is also applicable if the income exceeds Rs 1 crore. With the health and Educational cess of 4%.

How To Increase Your Savings From The Income Tax For The Financial Year 2019-2020:-

It is an essential thing to know about the income tax slabs. It not only tells you about the tax slabs but also prepares you for various tax-saving investments.

Depending on the income tax slab for the assessment year 2020-2021, you can increase your savings and get the benefits of tax-saving investments. Many taxpayers, for their delaying tactics, they will get the results in a failing of saving tax. Investment in tax saving schemes and using a tax calculator wisely will make your total annual income fall into a lower tax bracket.

With exact planning for the AY’s income tax slabs, 2020-2021 gets deducted from the gross total income. If you have to know more details about it, then you can hire a professional.

1. Buy Life Insurance Or Health Insurance

It is important to have life insurance for providing financial security for your family. The donation you pay on your life insurance policy which is applicable for the deduction under section 80C. The health insurance will save your families from the unexpected financial impose that may arise in accidental purpose. Under section 80D, the donation you will pay in any mode except cash to defend your family partners. Then transmitted is available for a deduction of 25,000 maximum and 50,000 for the senior citizens.

2. Submit Rent Receipts

If you don’t have your own home and live in a rented house and get HRA from the employer, you will get a deduction under deduction 10(13A). You have to calculate and stop at the maximum rent that you can save under this section. The exemption will be based on the following factors : i. If you pay any home rent ii. If you receive HRA from the employees. iii. 50% of your salary if you live in a metropolitan city and 40% if you live in a non-metropolitan city.

3. In Case If You Give Any Charitable Donations

If you give any premium to the relief funds and charitable society, you will also be available for the deduction under section 80G. You have to calculate how much you can donate and make your income fall into a lower tax bracket.

4. Higher Education Loan For The Child

If you take an education loan to pay for your child’s higher education, then you can claim a deduction under section 80E. You can make available the deduction benefit for a maximum of 8 years or the time you will pay the interest for your loan.

5. A New Home Through Home Loan

If you take a home loan to buy a new home or build a new home, you will also be available to deduce up to 2 lakh on the loan interest paid during the FY. Also, you can take advantage of a tax calculator to find more things about this.

Frequently Asked Questions

1. How will the government collect income tax?

Tendentious payment which is made by the taxpayers into nominated banks as per their tax brackets. TDS( tax dedicated source) from an individual’s income source. TCS ( tax collected at source)

2. How is taxable income different from exempted income?

As per the income tax act, you will get the benefits of subtracting your total earnings in an FY. So your rescued income is the one from which you don’t need to give any tax. On the other side, taxable income from the ultimate part of your total earnings will throw out the rescued income; then, you have to pay the tax, depending on the tax liability as per the income tax bracket.

3. Who must have to pay the income tax?

Every Indian the citizen must have to pay tax as per the income tax slabs. It is our responsibility to pay the tax on time. Also, Hindu undivided families, firms, LLP, any companies, and the local authorities have to pay tax as per the income tax bracket.

4. Is filling income tax necessary if a person’s annual income is less than Rs 2.5 lakh?

No, you don’t have to pay tax if your annual income is less than 2.5 lakh. However, you can file a Nil return for that purpose.

5. Who is eligible to avail of the rebate under section 87A?

Any resident individual with a total amount of income less than 5 lakh can claim the tax deduction under section 87A.

6. Is it necessary to maintain all records or proof of the income?

While you pay the tax and filing the income tax return as per the tax slabs, you must have to maintain all proof of your income from several sourceifase you failed to den you need some reasonable records that may support your income declaration.

7. Do I get any benefit from filing ITR on time?

Paying tax on time is your contribution to the countries development. The ITRs you will fill as per the income tax bracket will support your creditworthiness, making you compatible with getting a bank loan to achieve so many goals you dreamed of.

Via http://invested.in/income-tax-slab-rates-for-fy-2019-20-ay-2020-21/

source https://investedin.weebly.com/blog/income-tax-slab-rates-for-fy-2019-20ay-2020-21-interim-budget-2019-20-key-highlights

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investedin · 4 years

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Tax Rebate Under Section 87A FY 2020-21: How To Check If You Are Eligible For The Tax Rebate?

Before knowing about the Tax rebate under Section 87A , it is important to know about the income tax rebate. Income tax rebate is a refund on the taxes a person gets when the tax liability is less than what the individual has paid. When you pay taxes more than the stated tax in simple language, you get a refund on taxes.

People get this refund at the end of the fiscal year. There are many ways through which you can avail of the tax rebate. There are various Sections under the Income-tax department, which focuses on who should get a refund and who should not. One of those sections is section 87A.

Tax Rebate Under Section 87A FY 2019-2020 (AY 2020-2021)

The revised section 87A of the Income Tax Act states that people who earn 5 lakhs are liable to get a full income tax rebate. It means that the tax rebate limit for this section is now increased from INR 2500 to INR 12500. The revised section 87A is made for workers who earn 5lakhs per year, claiming a tax rebate.

Important Points To Remember About Section 87A

However, before you proceed to claim your tax rebate, there are some important points which you should take note of.

i. Only those who are Indian residents and have Aadhar card and birth certificate stating the same can claim the tax rebate under section 87A.

ii. The Section 87A tax rebate is applicable for both men and women.

iii. People earning more than 5 lakhs cannot avail of the tax rebate under this section.

iv. Only individuals can apply for the tax rebate. No firms, companies, or industries can avail of this tax rebate.

v. Senior citizens are not eligible to apply for a tax rebate under this section.

vi. No NRIs are eligible to apply for this tax rebate.

These were some of the points which you need to take care of. Once you take care of these points, then you would be able to know whether you can apply for a tax rebate under Section 87A

Eligibility Criteria To Avail Tax Rebate Under Section 87A

There are certain eligibility criteria that every individual need to fulfill to claim the tax rebate under section 87A. Furthermore, the eligibility criteria are based on which sub-section of Section 87A the individual is claiming.

Eligibility Criteria For 87A FY 2019-20 (AY 2020-21)

If you apply for a tax rebate under section 87A for FY 2019-20, you need to fulfill the following criteria.

You are an Indian citizen. You need to have your birth certificate and Aadhar card for proving that you are an Indian citizen.

You are an individual applying for the rebate and not any firm or company.

Your total income, after all the deduction, as mentioned in VI-A, is INR 5 lakh and does not exceed the stated amount.

As the tax limit is INR 12,500, if your tax payable amount is less than this, you do not have to pay any tax.

Eligibility Criteria For 87A FY 2018-19 and FY 2017-18

If you apply for a tax rebate under section of 87A for the year 2018- 2019, you need to fulfill the below eligibility criteria.

The individual applying for the tax rebate should be a citizen of India and should have your Aadhar card and birth certificate ready for verification.

It would help if you were an individual applying for the rebate and not a firm or company.

Your total income should not exceed INR 3.5 lakh, after all the deductions.

If your net tax payable amount is not more than INR 2500, then you do not have to pay any tax.

Standard Deduction

The standard deduction is the amount of your salary, which is free from tax. It means you can even use this amount to reduce your tax bill. In 2018, the finance minister increased the standard deduction to INR 40,000, which everyone happily accepted.

However, in the year 2019, the standard deduction was again changed, and an additional amount of INR 10,000 was added in this amount. Currently, the standard deduction is INR 50,000. It means you can have INR 50,000 of your salary, which is free of taxes.

The standard deduction is important as it allows a person to use the money for his/her basic needs instead of paying all the amount for taxes. The standard deduction varies based on the salary, which means it might be less than INR 50,000.

Calculating Tax Rebate Under Section 87A

If you are wondering how to calculate the tax rebate and see whether you are eligible for the tax rebate under section 87A or not, then we are here to help you. Follow the steps below, and you would easily know if you are eligible to apply for a tax rebate or not.

i. Firstly, you need to calculate your Gross Total Income or the total income you receive per year. Just multiply your monthly salary by 12, and you would get your annual salary.

ii. The next step is to deduct the amount as per the standard deduction.

iii. Now, subtract the amount with the deductions, as mentioned in section 80C to 80U. Do this step only if they are applicable. Read the sections properly to know whether you need to do these steps or not.

iv. Next, you need to calculate the net income after all the deductions. This is the amount that is left after all the deduction and is applicable for paying taxes.

v. Calculate the amount of tax that you are paying as per the Income Tax Slabs.

vi. In this step, deduct the amount as stated in section 87A from your salary.

vii. Now calculate the amount of health and education cess payable at 4% from your tax payable amount.

If, after all the steps, your tax amount is INR 12,500 or less than that, then you can easily apply for the tax rebate under section 87A.

Claiming For Tax Rebate Under Section 87A

If, after all the calculation, you find yourself eligible for a tax rebate under section 87A, then you can claim for it. While you are filing for your tax return, you can even claim a tax rebate under this particular section.

However, there are certain dates on which you can claim the rebate. The last date to claim for a tax rebate under section 87A is 31st July every year for individuals. As the financial year is from 1st April to 31st March, it gives you 4 months to file your tax returns and claim the rebate. You can file for this by going to the Income Tax department and get the process done.

Tax Rebate Limit Under Section 87A

It is important to know the tax rebate’s limits under section 87A before applying for a claim. Previously, the limit for individuals was INR 2500, for an income of INR 3.5 lakh. This was the situation back in 2017-18.

However, in the revised section of 87A, the limit is now INR 12,500 for individuals with an INR 5 lakh income. It means that if your net tax payable amount is INR 12,500 or below it, then you can file a claim for tax rebate under the section of 87A FY 2019-2020/ FAY 2020-21.

Difference Between Tax Rebate, Tax Exemption & Tax Deduction

The terms tax rebate, tax exemption, and tax deduction may sound similar and are not the same. Here is the difference between these 3 terms

Tax Deductions

Tax deductions are the amount that is deducted from the Gross Total Income. This is the amount that is not eligible to use as taxes. However, the taxpayer can use this amount to pay the tax bills. The standard deduction is fixed for everyone. Previously, it was INR 40,000, but after revising the act, it is increased to INR 50,000. However, the standard deduction will vary based on the salary of the person.

Tax Exemptions

Tax exemption is the amount that one can claim from a specific income source and not from the GTI or Gross Total Income. This amount is not included in your GTI; it is the amount you get from your salary. It is the amount that you do not get to pay for taxes.

Tax Rebate

Tax rebate is the amount an individual can get in return if he/she has a tax payable amount of INR 12,500 or less. This specific amount is the amount, which you can claim if you are eligible for it.

If you find yourself eligible for claiming a tax rebate, then all you have to do is file your income tax files and claim for the rebate along with the details. Tax rebate is done to ensure that individuals will meager salaries are spared from the burden of paying huge taxes and using the amount for their own betterment.

source http://invested.in/tax-rebate-under-section-87a-fy-2020-21-how-check-if-eligible-for-tax-rebate/

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