Articles

Budget 2010-2011: More money for you due to Income Tax slab / bracket changes

This article tells you how much extra money you would get in your pocket because of the changes made in the personal income tax slabs in the Budget 2010-2011.

Highlights of the draft “New Direct Tax Code”

The draft “New Direct Tax Code” has been unveiled. And there are lots of proposals that should make you happy if implemented. Here are the salient features of the draft New Direct Tax Code.

Tax on gifts (Gift tax): When to pay, how much to pay and what is exempt

Gift tax is something that worries many of us. What is gift tax? When do we need to pay it? How much is the tax? Are any gifts exempt? Let’s find out.

Income Tax (IT) and death of a person – Responsibilities of legal heirs

Most people are confused about the procedures regarding income tax that need to be followed after the death of a person.

Do you still need to file an income tax return? Do you close the file permanently at the IT department? Are gratuity and pension taxable? Read on for all the answers.

[Article inspired by a query from reader Anand]

Budget 2009-2010: Personal income tax (IT) related changes and impact on you

The budget for year 2009-10 has some minor tinkering as far as income tax goes. Here are the details.

Taxation Regimes - EEE EET ETE TEE – What do these mean?

There are different systems for tax exemption / deduction of investments, and for taxation of the income earned from it, like Exempt – Exempt - Exempt (EEE) or Exempt – Exempt -Taxed (EET). What do these terms mean? What impact does it have on you? Read on.

Understanding the components of your salary and their taxation

Your salary consists of many components. This article explains what each component means. It also discusses the income tax applicability of each component.

[The article has been inspired by a query from reader Dinesh Kumar]

Saving tax on leave encashment amount – Section 89(1)

When you get leave salary (that is, when you encash your leaves) – either while in service or when you resign or retire, the amount is taxable in many cases.

Is there a way to save the income tax on this? Yes! Read on.

Leave encashment / leave salary - Is it taxable?

From time to time, you may encash your leaves – when they are due to expire at the end of the year, when you resign and leave a company, or when you retire.

Do you have to pay tax on the amount received from leave encashment? Is there any tax deducted at source (TDS)? Does the tax change if you are a government servant or working with a private firm?

Let’s understand what the income tax rules for leave encashment are.

Perquisite (perk) value of a company provided house

Many companies provide accommodation to their employees, which is either rent free or has subsidized rent.

Such accommodation is considered a perquisite (commonly known as perk), and is taxed in the hands of the employee.

So, what is the value of this perk? What is the income tax on it? How is the tax calculated? Read on…

[This article has been inspired by queries from readers Ravi and Partha]

How much should you invest to save income tax?

We all want to save income tax. After all, it is our hard earned money! If we can save income tax legitimately, why not?

But how much do you need to invest to save maximum income tax? Here is a guide that helps you find out.

[This article has been inspired by a query from readers Kamlesh, Ravikiran and Ashish]

Calculating your income tax liability – first step to saving tax

Are you totally new to the world of income tax? Don’t know how to calculate your income tax liability, and getting confused? Ever wondered “how much income tax do I need to pay”?

Here is a step by step guide that teaches you how to calculate your income tax – while also explaining the concept of income tax slabs / brackets. There is also an illustrative example!

Reached Section 80C limit? You can still save more income tax!

Most of us try to maximize our investments in section 80C instruments in order to maximize our tax savings. But the limit of investment under section 80C is only Rs. 1 Lakh.

Here are some other ways to save income tax.

Deduction of expenses on medical treatment – Section 80DDB

Did you know that amount spent on the treatment of certain diseases is deductible from your income, thus reducing your income tax? Read on, and also download the necessary form.

[Inspired by queries from readers Ritesh, Srinivas]

Are you disabled? Save income tax under section 80U

Do you have a disability? Are you handicapped in any way? If yes, you can have some benefit in income tax under sec 80U.

Deduction for rent paid – Section 80GG

Do you pay rent but don’t get a house rent allowance (HRA)? Don’t think you can not get any income tax benefit. You can qualify to save tax under section 80GG of the Income Tax (IT) Act if you satisfy certain conditions. Read on.

Fixed Deposits (FD) for saving income tax through section 80C

FDs are now included as eligible investments under section 80C. But is investment in all FDs eligible? What are the characteristics of these tax saving fixed deposits?

[This article as been inspired by a query from the user Dheeraj Rokade]

Make donations, save income tax – Section 80G

Are you interested in philanthropic activities? Do you donate money to charities? If yes, you could be saving income tax. You could save tax even if you contribute money for public purposes. Read on.

Income Tax (IT) Slabs / Brackets and rates

This article gives you the details of the most recent, currently applicable income tax slabs / brackets and the applicable income tax rates. The slabs for women and senior citizens are also covered.

The article also covers some historic slabs and tax rates.

Have a disabled dependent? Save income tax using section 80DD

Do you have a handicapped dependent? Do you incur expenses on his or her maintenance? Do you undertake expenditure for their medical treatment? Have you invested in an insurance policy, where the beneficiary is your disabled dependent?

If yes, you could be saving income tax under section 80DD of the Income Tax Act.

[Article inspired by a query from reader M K Pratap]

Income Tax (IT) benefit of an education / study loan – Section 80E

This article explains how you can save income tax under section 80E if you have availed of an education / study loan. It also tells you the nitty gritties: what is the process, how much you can save, who can benefit from this, etc.

[This article has been inspired by queries from readers Ravi Gunti and Subramanya]

Should you invest in Sec 54EC LTCG tax saving bonds?

When you earn long term capital gain (LTCG), you can avoid paying income tax if you invest the gain in Sec 54EC tax saving bonds.

But another option is to pay the income tax, and invest the balance amount in some other high-yielding avenue.

Which option makes more financial sense? What is better?

Insure your health, save your income tax

Did you know that just like life insurance premiums, even health insurance premium payments (including Mediclaim) can save you tax? Read on.

Income tax treatment of leave travel allowance / concession (LTA / LTC)

The government wants to encourage us to travel more and explore our country, and wants to assist us. That’s why it gives a favourable income tax treatment to allowance given to us for travel. We actually get income tax benefit for tourism! Read on.

Income Tax (IT) treatment of House Rent Allowance (HRA)

Most of the salaried people get an allowance for taking care of the rent that they pay for their home. This is called House Rent Allowance, or HRA.

HRA gets special treatment in income tax laws, and is exempt from income tax to a certain extent. Here are the rules explained in simple terms.