Tag Archives: Income Tax

Aaykar Setu App – An App that let’s you understand Taxes easily

The common people, either from a business background or the working class, face great difficulty in understanding matters related to tax and getting answers related to their tax related issues. Well, there is nothing to worry now, as the government has taken a firm step to ease of the burden.

IT Department’s Aaykar Setu App

The Aaykar Setu app is a new approach to reach the common man, which has been launched by the Central Board of Direct Taxes. The app comes handy for various tax-related operations such as, online filing of Income Tax Returns, locating nearest Tax Return Prepares, showcasing calculating tools for tax, help in managing PAN and TDS and paying tax.

The app is easily available for Android phone users and can be downloaded from the Google Play Store. It can also be downloaded, simply by giving a missed call on 7306525252.

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What can the Aaykar Setu app do?

The key objective of this app is to make its users understand the basics of income tax. The various services provided by the app are:

  1. TRP at your doorstep– this feature enables users to locate Tax Return Preparer. It provides name, contact and address of TRP along with their location on the Google Maps.
  2. Tax Tools – these are the various tools lined up for calculating tax by putting in some basic information.
  3. Tax Payment– this option allows easy tax payment. Calculate tax in real-time, file the rectifications for tax credit mismatch, inquiry for challan statuscan be handled here.
  4. Return Preparation– this option simplifies the task of filing income tax returns by providing TRP assistance, downloading IT form, calculate tax, etc.
  5. TDS/TRACES – check status for TDS statements; verify From 16 and TDS return filings, all within this section.
  6. Tax Gyaan – this section lets users learn about income tax. It has an MCQ based game which provides hands-on knowledge to the users.
  7. PAN/TAN–this menu allows application for PAN/TAN cards, reissuing, correction, verification of PAN/TAN cards and linking them with Aadhaar cards.
  8. Live Chat – use this space to get answers for all your queries, available between 10am to 6pm on all weekdays.
  9. Ask IT – this is a chatbot designedto provide answers to IT related queries in real-time.

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Why should the Aaykar Setu App be used?

The Aaykar Setu app is a plausible step taken by the government and has some positive aspects such as:

  • It steps-up the Digital India movement that the government intends to bring.
  • The user can carry out all tax related tasks on the go.
  • It is simple to clear any queries through the app’s chatbot feature.
  • The calculating tools of the apps are very accurate.

What needs to be improved?

There are a few things that need to be worked upon like:

  • The app works slowly, even on a fast internet connection.
  • The TRP location takes too long to load.
  • The app directs to webpages for a lot of tasks.

Conclusion

Although, the app makes the tasking process easier, a lot of areas need to be improved. The layout of the app is simple and can be understood by all types of users.

10 Tax Free Incomes in India

It is a general belief among people that the government of India takes away a lot from your income in the form of taxes. It is true that paying income tax is mandatory when you are earning above a certain limit. However, there are some types of income which are completely tax free and one does not have any liability to pay taxes on these incomes.  Here in this article we will discuss about 10 tax free incomes in India. This will help in determining the incomes on which you do not need to pay any taxes.

10 Tax Free Incomes in India

10 Tax Free Incomes in India

1) Agricultural Income

India is an agricultural country. As a measure to boost the agriculture economy, the Indian Income Tax Act of 1961 exempts any taxes of income generated through agriculture. However, the income generated through agriculture is included while computation, for the sole purpose of determining the tax rate if agricultural income exceeds applicable basic income exemption of Rs 2,50,000 in a financial year.

Also See : Income Tax Deductions and Exemptions

2) Receipts from Hindu Undivided Family

If one receives or inherits money as a member of a Hindu Undivided Family (HUF), it is exempted from any income taxes. Any amount one inherits out of family income or amount received out of income of family estate or in case of impartible estate or by any member of a HUF is exempted from tax as per the Section 10(2) of the Income Tax Act.

3) Interest Income on Savings Bank

At present, a maximum of Rs 10,000/ year as the interest earned on savings account is allowed as deduction under the Section 80TTA. To make this income exempted, one has to show this amount as ‘income from other sources’ in the ITR and then claim deduction under Section 80TTA . The cap of Rs 10000 is for the interest one receives from all accounts across all banks and not just with one bank.

Recommended Read : Top 5 Tax Saver ELSS Funds

4) Shares from a Partnership Firm

Any share a partner of a partnership firm may have in the total income of the firm is exempt from income tax obligation. Any partner or partners are not liable to pay any tax on income which is exempt in the hands of any partnership firm, says the section 10(2). However, any other funds received by the partner of a partnership firm or LLP other than the share of profits, like any remuneration or interests, remain taxable.

5) Long-term Capital Gains

At present, Long-term capital gains (LTCG) from the sale of equity shares and equity oriented mutual funds on which Securities Transaction Tax (STT) has been charged on sell transaction are exempted from tax completely. This means that any gains from sale of equity shares held for more than a year are not subject to any kind of taxes.

6) Allowance for Foreign Services

All Indian citizens residing in India who are rendering service outside the country and receiving any perquisites or allowances outside the country remain tax free.  This comes under the Section 10(7) of the Income Tax Act.

7) Income from Gratuity

Gratuity is defined as the money paid by an employer as a gratitude for awarding the employee’s long-standing meritorious association with the employer. The gratuity received by any government employee is completely exempted from income tax. The non-government employees are covered by the payment of Gratuity Act of 1972, which states that the least of the below three is exempted from income tax.

  • 15 days salary (based on the last drawn salary for each year of service).
  • Rs. 10,00,000
  • Total gratuity received.

8) Amount Received under Voluntary Retirement

Any amount received by an individual on terms of voluntary retirement under Rule 2BA of the Income Tax Rules gets a tax exemption of up to Rs 5 lakh from the amount received as voluntary retirement.

9) Scholarships and Awards

Any kind of scholarship awarded to a student for incurring the cost of studies is exempted from any kind of taxes under Section 10(16) of the Income Tax Act of 1961. The good thing is that there is no cap on the amount that is exempted.  The entire amount of scholarship is exempted. This is a very good for meritorious student who are not financially strong and require scholarships to continue their studies.

10) Compensation received in case of any disaster [Section 10(10BC)]

An amount received by an individual by the state or central government on account of a disaster is not subject to any kind of taxes.  Disaster here means any natural occurring like floods, earthquake or manmade harm like accidents etc which involves loss of property, life or harm to an individual where coping up with the disaster requires financial aid to the individual.

True that paying taxes is our duty. But the Government is considerate enough to allow exemption of any taxes on these 10 tax free incomes in India.

Income Tax Deductions under section 80c, 80ccd, 80ccc for AY 2018-19

Even though some of us might not like it, but paying taxes is very important in our country. Taxes account for a major portion of the income earned by the government. This income is utilized to provide certain basic amenities to citizens like roads, railways, clean environment etc. People who earn above a certain limit have to pay taxes defined as per the tax slabs. Though these taxes may seem a bit harsh on the bank balance of the tax payer, there are provisions by which one can save taxes legally.

Tax deductions can help in lowering the taxable income which in turn helps in reducing the total tax payable. One is eligible for different tax deductions which are based upon various factors. First let’s understand what is tax deduction? In one line, tax deduction helps in reducing your total taxable income. It helps you save tax by decreasing your overall tax liabilities. However, the amount of deduction varies depending on the type of tax deduction you claim. Some good examples of where one can claim tax deductions are tuition fees, medical expenses and charitable contributions etc.

Alse See : What Makes GST different from VAT and CST ?

Income Tax deductions under section 80c, 80ccd, 80ccc for AY 2018-19

To get tax deductions one can also invest in various schemes such as retirement savings schemes, life insurance plans and national savings schemes etc. The Indian government offers tax exemptions for expenses incurred in various activities to encourage individuals and commercial institutions to take part in activities that has social benefits. Many expenditures incurred are eligible for tax deductions. It is important to have knowledge of these. These expenditures are classified under certain sections. In this post you will get to know more about income tax deductions under section 80c, 80ccd, 80ccc for AY 2018-19 (FY- 2017-28).

Recommended Read : How to Link Aadhaar Card with PAN Card ?

Section 80C

A deduction of Rs 1,50,000 can be claimed from your total income under section 80C. In a simpler language, one can reduce up to Rs 1,50,000 from the total taxable income through section 80C. Under this section, an individual or an HUF (Hindu United Family) is eligible for a tax deduction. For the financial year 2017-18, the limit for deduction is Rs 1, 50,000. Expenses (investments) in the following are eligible for tax deductions. Please note that one can claim a maximum deduction of Rs 1,50,000 only.

  • Investment in PPF
  • Employee’s share of PF contribution
  • NSCs
  • Life Insurance Premium payment
  • ULIPS
  • ELSS
  • Sum paid to purchase deferred annuity
  • Five year deposit scheme
  • Senior Citizens savings scheme
  • Subscription to notified securities/notified deposits scheme
  • The contribution towards a notified Pension Fund set up by UTI or a Mutual Fund.
  • Children’s Tuition Fee
  • Principal Repayment of home loan
  • Investment in Sukanya Samridhi Account
  • Subscription to equity shares/ debentures of an approved eligible issue
  • Subscription of a Home Loan Account Scheme by the National Housing Bank
  • Subscription to notified bonds of NABARD
  • Subscription to deposit scheme of a public sector or company engaged in providing housing finance
  • Contribution to notified annuity Plan of LIC

Also Read : 5 Best ELSS Funds

Section 80CCD

This section refers to deduction for contribution to pension account. This section is divided in three categories.

Section 80CCD (1) – For an employee who deposits in his own pension account the maximum deduction allowed is 10% of gross salary.

For a self employed individual, the maximum deduction allowed is 20% of gross salary.

Section 80CCD (1B) – This section refers to deduction for self-contribution to NPS. This particular section has been introduced for an additional deduction of up to Rs 50,000 for the amount deposited by an individual towards their NPS account. Under this section contributions to Atal Pension Yojana are also eligible.

Section 80CCD (2)- This section refers to employer’s contribution to NPS. Under this section an additional deduction is allowed for employer’s contribution to employee’s pension account. This deduction has an upper cap of 10% of the salary of the employee.

Section 80CCC

This section refers to deduction in respect of contribution to certain pension funds.

The Section 80CCC provides an option for tax saving as per Chapter VI-A. This tax saving is from the gross total income of the individual for the financial year in which the contribution is being made. However, there are some terms & conditions applicable as mentioned. The deduction as per this section is on cost incurred towards buying a new policy or continuing with an existing policy for receiving pension from a fund under a pension scheme. These deductions are allowed to encourage the taxpayer towards long-term investments and savings as well as to involve contributions to specific pension funds.

Any individual who has bought annuity plans from either the Life Insurance Corporation of India Ltd or some other insurance companies can avail tax deductions of up to a maximum of Rs 1.5 lakh per year. An individual cannot claim tax deductions on the interests or bonuses accrued from the policy. The interests or bonuses accrued from the policy will be treated as income and a tax will be applicable as per the respective slab rate. Also, it should be noted that this policy should pay pension to the buyer from the accumulated funds based on terms and conditions mentioned in Section 10 (23AAB). If an individual has claimed a deduction for contribution towards a pension fund under Section 80CCC, then he cannot claim a deduction for the same under any other section of the IT Act. Taxes will be imposed on the surrender value of the annuity plan in part or in full.

Please note that, the combined maximum limit for tax deduction that can be availed under section 80C, 80CCC and sec 80CCD (1) is Rs 1, 50,000. Planning for tax saving is very important. With the government of India providing legitimate ways to save tax, people are encouraged to do more savings in the form of insurance, pension schemes etc. As a citizen of India, paying taxes is our duty. Let’s all be a good citizen and pay our taxes on time!

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