Employees in private companies and government offices are being asked to submit investment proofs as March 31 approaches. If you do not submit the proof, then tax will be deducted from the salary. You can make maximum income tax free by submitting proof under Section 80C and 80U of Income Tax.
Income from agriculture
Income from agriculture comes first in tax free income. There is no tax on the income earned from agriculture in the country. If you have income from other sources also, then the income from agriculture will be used to decide the tax slab. Even in this situation, tax will be levied only on income from other sources.
PF and Gratuity
PF amount has also been kept tax free. However, the condition in this is that it has been more than five years since your PF was deducted. Similarly, gratuity is also out of the purview of tax. Private sector employees do not have to pay tax on gratuity up to 10 lakhs.
Gift
During the time of former Prime Minister Jawahar Lal Nehru, gifts were taxed. In 2017, it was decided that tax would have to be paid on expensive gifts. In this, gifts up to Rs 50,000 do not come under the purview of tax. But you have to pay income tax on gifts above this. Cash received in gift or cheque, draft, movable and immovable property, they are exempted from tax up to the limit of 50 thousand. In ITR, they have to show income from other sources.
B part of salary
Many components of salary are tax free, which is called B part of salary. Such as: Conveyance allowance, food voucher, mobile or internet bill, LTA and money received for buying magazines etc. However, in these components, companies give the amount according to their own.
Perhaps you will be surprised to know that scholarship money is considered as income under the Income Tax Act. But it is exempted from scholarship money under section 56 (ii) of income tax.
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