Earning money is always a task be it India or any other country. You can get a good job or start a new venture to gain as much profit possible but will need to pay taxes to the government for the betterment of the nation. But we all try and find out ways to save tax as much possible. This is a way to make more savings and invest for our future. Taxation laws in India are vast in nature and have many sections which bind the individual to pay taxes on their income. But what if you are told that income tax is not applicable on certain incomes? You would jump out of curiosity and wish to save some more income tax, right?
So, let’s know about the 11 tax-free income sources in India which can be of great help to you.
Gifts Received at Marriage
Any amount or anything given as a gift in marriage is the property free from tax liability for the individual. Even a property, which is precious in monetary terms, is considered as tax-free property in India. However please ensure that the gift date is on or after the marriage date. It should not be almost a year after the date and you may keep on justifying the receipts.
Any amount or property received as inheritance is completely tax-free property in India. Only the profit amount invested will be taxable from such an inheritance amount. So people who receive property in huge amount as inheritance is a property that gives you more profit if put to use as you don’t have to pay any extra tax for owning it.
Savings Bank Interest
Banks offer interest on your money which you deposit in the savings account. From the year 2013, a new rule under the section 80TTA has been passed which offers the individuals to tax-free interests up to Rs.10,000 per year. So, if you have been receiving an interest of say Rs. 15,000/- then only Rs.5,000/- will be taxable and rest of the amount will be tax-free.
An NRE account has the option to get tax free returns on any interest earned either by fixed deposits or by bank account interest. It provides a lot of returns. Many individuals take a loan from their working nation’s banks as it is available at 2% -3% only and invest in India where they get around 8% – 9% as interest. As there is not a tax on the income, TDS is also not applicable to such individuals. Also, all these interest-free amounts can be taken back to your country where you work.
Profits paid to partners
A partnership firm has already paid taxes to the government and therefore any profits when paid to the partners are free from tax. This can be a great way to save tax. However, any salary paid to the partner will be taxable as per the laws of the income tax department.
LIC maturity or claim amount
Any amount that you receive from LIC is tax-free only to the extent the premium being 10% of the sum assured. In case if this amount exceeds then you will need to pay tax on the entire amount received.
LTA from Employer
Employers pay LTA benefits to their employees if they produce the bills from their travel. This amount is completely tax-free. So check with your company and get yourself LTA in your compensation to enjoy this benefit.
An employee from a public sector company or a central or state government is entitled to Voluntary Retirement Scheme (VRS) for up to Rs. Five Lacs which is entirely tax-free.
EPF Proceeds Post 5 Years
The amount received from EPF post 5 years of service is tax-free. So ensure to time your service to get the benefits of taxation in India.
Profits from Long-term Capital Gains
Any profit made from equity shares and mutual funds that have been invested for more than a year are exempt completely from taxation. However, it is necessary for you to pay the STT which is Security Transaction Tax. This is paid when you buy recognized stock from the stock exchange. So, if you have done exchange sales then it is likely you would not have paid STT. In such a case you will be charged income tax.
Dividends are always tax-free for all individuals. However, all the dividends are paid post making a tax payment and hence, you get lesser dividends from the company.
Learning the above points, you can be relaxed about what to have and what not to. It is your money and property after all with which you want to double your income rather than paying more taxes.