As per the Income Tax laws of India, anything received by person in monetary terms is treated as an income of that person. The income of source could be salary, income from house rent, gift from relatives, income from house rent and many more. Furthermore, if this income exceeds the exemption limit, then the person will have to pay taxes and file his Income Tax Return. In this blog, we will tell you in detail about the ways to save tax apart from claiming deductions under Section 80C.
Details of Income from sources and their limit for the ways to save tax
- Salary
Every salaried individual can save taxes on income of flat Rs. 50,000 by way of Standard Deduction on his taxable income. This amount of standard deduction is not dependent on any of the expenses of the individual. Earlier the limit of standard deduction was Rs. 40,000 but from Financial Year 2019-2020, it has been increased to Rs. 50,000/-. Also, now, the standard deduction is available under the old tax regime as well as new tax regime.
[wpdatatable id=120] - Income from interest on savings account
Interest on the savings account is treated as “income from other sources” and is added in the total income of the person. However, as per Section 80TTA, an individual below the age of 60 years can save taxes of upto Rs. 10,000 on this income earned from interest on the savings account. On the other hand, individuals above 60 years can save taxes of upto Rs. 50,000 through income from interest on savings account.
[wpdatatable id=27]Also Read: Deductions on interest earned by senior citizens under Section 80TTB
- Income from House Rent
As per Income Tax Act, rental income of a property is taxed under Section 24A in the hands of the owner, under the head ‘income from house property’. However, the rent earned by letting out vacant land is not taxed under this category, but is taxed under ‘income from other sources’. If an individual receives income from house rent, then he is allowed to deduct the municipal taxes payable for the property. As the rent is taxable on accrual basis, the law allows individual to claim deduction for the rent which he has not been able to realise, subject to the fulfilment of certain conditions. After deducting the above two items, what is left is the annual value, on which standard deduction of 30% of the annual value can be claimed and tax can be saved.
[wpdatatable id=121] - Gifts
As per the Income Tax laws, gift (cash or in kind) is also treated as “income from other sources” and is taxable if the value of the gifts exceeds Rs. 50,000/-. If the money given as a gift is above Rs. 50,000, then the whole amount becomes taxable and not the amount beyond Rs. 50,000/-
[wpdatatable id=122] - Gifts from specified relatives
As stated in the above point, money in the form of gift is treated as “income from other sources” and is taxable under the Income Tax Act. However, if the gift has been received from the specified relatives, then the whole amount of gift is exempted from Income Tax. So it is the ways to save tax.
These specified relatives are spouse, father, mother, brother and sister. They also include any lineal ascendant or descendant of the individual or his spouse as well as brother/sister of the spouse.
Also Read: Restriction On Cash Transactions Under The Income Tax Act
However, note that even though the gift itself is exempted in the hands of the recipient, the income generated from the gift may be taxable under the clubbing of income provisions of the Income Tax Act.
[wpdatatable id=123]
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