Income Tax News: Understanding the tax implications of different sources of income is crucial for effective financial planning. While many earnings are subject to taxation, there are certain instances where you can receive income without the burden of paying taxes. Let’s explore five such scenarios where you can enjoy tax-free income.
Profit Sharing in a Partnership Firm
As a partner in a firm, your share of the profits is generally tax-free because the firm itself has already paid taxes on those earnings. This applies only to profits, though. Salaries drawn from the firm are still taxable income.
Inheritance from Parents
Inheriting property, jewelry, or cash from your parents is a tax-free windfall. This applies whether you receive it through a will or not. However, remember that any income generated from the inherited property, like rent, will be taxable.
Long-Term Capital Gains (LTCG) from Shares/Mutual Funds
Sold some shares or equity mutual funds and made a profit? The good news is that gains up to Rs. 1 lakh from such long-term investments (held for over a year) are tax-free! This is a great incentive for long-term investing in the stock market. Remember, any gains exceeding this limit are subject to LTCG tax.
Life Insurance Maturity or Claim
Maturity benefits or claim payouts from your life insurance policy are tax-free! However, there’s a catch: the annual premium paid shouldn’t exceed 10% of the sum assured. If it does, the excess amount will be taxed. In some cases, the premium limit can be up to 15%.
Wedding Gifts
Showered with gifts during your wedding? You’re in luck! Gifts received from close family and friends on or around your wedding day are exempt from tax, but there’s a limit. Gifts exceeding Rs. 50,000 in value will be taxed.
By understanding these tax-exempt income sources, you can make informed financial decisions and potentially save money on your tax bill. Remember, consulting a tax advisor for personalized advice is always recommended.
