Sometimes one get mistake in calculating the tax liability and ends up with mentally harassment as well as financial loss. This may be due to ignorance. One needs to know the income tax liability on different income and percentage of income tax payable to help him with no hassle what so ever. So these are the points a person must know for calculating the tax liability.
Agriculture land income and property income: - if somebody has some land and he does farming and construct a building in a part and rent out. Suppose he earned 27 lakhs (20 lakhs as agriculture farming and 7 lakhs a rent). What is tax free income?
As per income tax law, only agriculture income means 20 lakhs is tax free but he need to show this income on income tax rent. The remaining 7 lakhs income is taxable.
In the case of selling this land, he need to pay the capital gain on that income as it will not be treated as agriculture income but income from capital gain.
Keyman insurance policy: - keyman insurance policy is the policy which is taken by a person for another like employer taken the insurance policy for employee. On the maturity, the amount received is not tax free but is a part of salary. This is not tax free as it is in the case of self insurance policy which is exempted under section 10(10D) of income tax act.
Gifts: - any gift received by the non-relative is fully taxable if the value exceeds Rs. 50000. However this rule will not apply on the occasion of marriage.
Loan against FDR: - any loan which is taken against the fixed deposit, the interest of loan cannot take off against the interest earned on FD. However there is an exemption when the loan against FD is taken for the business.
Income from betting lottery etc: - any income earned from racing, lottery or betting is fully taxable. On this income the income tax rate is 30% and on this income no deduction or carry forward is allowed. Even one cannot adjust the lottery ticket price with the lottery earnings.
Clubbing provision: - there are some provisions in income tax in which income is clubbed. Like A from his fund make a fixed deposit of Rs. 20 lakh in the name of his wife. With this fds she earns 2 lakhs interest and invested in some business and makes a profit of 50000. In this case the interest income will be clubbed with A and the business income relates to his wife.
Income from sale jewellery and painting: any income from sale of jewellery and painting is comes on head capital gains. The word jewellery is not only ornaments but all the things made of precious metals like gold, silver, diamond or platinum.
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