Income Tax News: People get money from a variety of sources. While some people make money through their work, others do business in other ways. These incomes are subject to taxation in accordance with the Income Tax Act’s provisions. While not all forms of income are exempt from taxes, some do not fall under this category but they do have different requirements. This exempts certain forms of income from taxes. Let us tell you about the various forms of income that are exempt from taxes and the applicable income tax regulations.
How many different kinds of income in India are exempt from taxes?
Agricultural income
According to the Income Tax Act, income from agricultural activity is exempt from taxes. It is crucial to remember that profits from businesses that are connected to agriculture, including the selling of agricultural products, are subject to taxes.
Gifts and Taxes
In general, gifts obtained through wills, inheritances, or other special occasions are not taxable as income. There is a cap on the amount of gifts that are tax-free, but there is also an exception.
Interest received on PPF and EPF
Taxes are not applied to interest received on investments made into Employees Provident Funds (EPF) and Public Provident Funds (PPF). Popular tax-free long-term savings options include EPF and PPF.
Dividends
In the recipient’s hands, dividends from stocks and mutual funds investments are tax-free. Nonetheless, dividend distribution tax must be paid by the distributing business.
Long-Term vs Short-Term Capital Gains
Profits from the sale of stock shares held for more than a year are not subject to taxation. Short-term capital gains, however, are taxable.
Tax Avoidance Penalties
Income Tax states that penalties ranging from fifty to two hundred percent might be applied to the total amount of taxes avoided. False information on an income tax return may result in a penalty up to 200 percent of the tax liability or any concealed sum, as stated in Section 270A.
On the other hand, there will be a 50% penalty on the liability or hidden amount if the separate income is underreported for any other reason. Furthermore, according to the IT department, the employers of these taxpayers will also be notified that the employee is filing incorrect income tax forms.
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