Budget 2024: As the anticipation builds for the presentation of the Interim Budget for the fiscal year 2024-25 by Finance Minister Nirmala Sitharaman, it’s crucial to grasp essential income tax terms. These terms play a pivotal role in comprehending the budget and its implications on taxpayers’ finances.
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- New Tax Regime: Introduced in the 2020 Budget, the new tax regime brought significant changes to tax slabs, offering concessional rates. However, opting for this regime means forgoing various exemptions and deductions like HRA and 80C, impacting its widespread acceptance.
- Old Tax Regime: Before the new regime, the old tax system provided over 70 exemptions and deductions, including HRA and LTA. Taxpayers have the flexibility to choose between the old and new regimes based on their financial considerations.
- Virtual Digital Assets: These are digital representations of value exchanged electronically, including codes and tokens used in financial transactions or investments.
- Tax Deducted at Source (TDS): TDS involves deducting tax from certain payments at prescribed rates and depositing it to the Central Government promptly.
- Tax Rebate: A refund of taxes when an individual’s tax liability is less than what they’ve paid. If tax liability falls within the rebate limit, a full refund of the tax amount is expected.
- Tax Saving Instruments: PPF, NSC, and NPS are tax-saving instruments providing opportunities for taxpayers to claim deductions.
- Assessee: One who must pay taxes under the Income-tax Act.
- Capital Asset: Property held by an assessee, including securities and certain insurance policies.
- Short-term Capital Asset: Assets held for less than 36 months, except for certain types like unlisted shares and immovable property.
- Income Escaping Assessment or Reassessment: Review of tax returns by tax authorities to check for understated or unreported income.
- Revised Return: Filed to correct errors or omissions made in the original return.
- TDS Return: A statement filed by taxpayers for deducting tax at source, providing details about deductions made during a quarter.
- Unit Linked Insurance Plan (ULIP): A hybrid investment combining insurance and investment components.
- Total Income: Includes all income received or deemed to be received in India.
- Advance Tax: Income tax paid in advance instead of a lump sum payment at year-end, as per due dates provided by the income tax department.
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