Income Tax is levied on your entire income. It does not include only salary. Apart from salary, many things like interest from savings, income from home, side business, capital gains are included in it.
But there are some sources from which the income does not come under the purview of tax. Apart from income from farming, there are many other incomes which are kept out of the tax purview. According to tax experts, section 10 of the Income Tax Act mentions such tax-exempt income. There are some incomes on which you do not have to pay any tax. Let us tell you about such income on which you can save tax.
- Amount deposited in EPF
The amount deposited by you in your PF account is exempted from income tax under Section 80C of the Income Tax Act. The amount deposited by your employer in your EPF account is also exempted from tax. The condition here is that this amount should not exceed 12% of your basic salary. If the amount is more than this, then you will have to pay income tax on the remaining amount. - Return of up to Rs 1 lakh from shares or equity mutual funds
If you have invested in shares or equity mutual funds, then the return of up to Rs 1 lakh on selling them after one year is tax free. This return is calculated under LTCG. In last year’s budget, LTCG tax has been imposed on returns of more than Rs 1 lakh from investment in shares or equity mutual funds. - Gifts received at weddings
If you receive a gift from friends or relatives on the occasion of a wedding, you do not have to pay tax on it. The condition is that you should have received the gift around the time of your wedding. If your wedding is on 16th March and the gift is given six months later, you will not get any income tax exemption on it. Also, the value of the gift should not exceed Rs 50,000. - Interest on Savings Account
If you get interest up to Rs 10,000 in a year from your bank savings account, then you get exemption from income tax on it under section 80TTA of the Income Tax Act. If the interest on the savings account is more than Rs 10,000 annually, then you will have to pay income tax on the additional amount. - Profit received from partnership firm
If you are a partner in a firm, then the amount you receive as Share of Profit is free from income tax liability. In fact, your partnership firm already pays tax on it. Income tax exemption is only on the profits of the firm, not on the salary you receive. - Life insurance claim or maturity amount
If you have bought a life insurance policy, then the amount you receive at the time of claiming it or on its maturity is completely free from Income Tax. The condition here is that the annual premium of your life insurance policy should not exceed 10% of its sum assured. If the premium in the life insurance policy is more than this, then you will have to pay income tax on the additional amount. If you have taken a life insurance policy for a disabled or seriously ill person in your family, then the premium amount can be up to 15% of the sum assured. - Amount received in VRS
Many people take voluntary retirement (VRS) from their job. If you have also taken VRS, then the amount of up to Rs 5 lakh received by you is free from Income Tax. This facility is only for employees working in government or PSU (public sector companies), not for working people in the private sector. - property inherited or bequeathed
If you have inherited property, jewellery or cash from your parents, then you do not have to pay income tax on it. If someone has made a will in your name and you have inherited property or cash from it, then also you do not have to pay income tax on it. You will have to pay tax on future income or interest income from such property as per your tax slab. - Agricultural Income
If you have agricultural land and you are earning from farming or related activities, then you do not have to pay any kind of income tax on that income. Agricultural income also includes the produce from it, the amount received as rent, etc. If you do farming by making an agricultural farm, then the income from it is also exempt from income tax. - The cost of feeding in business
If you are a businessman, you have to meet many people during your business. This includes customers, vendors and other employees. The cost of feeding them is also included in the business process. You should keep the bill for such expenses and present it as a business expense. If you follow this process, you can save income tax on this amount.
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