Income Tax Free Income: Taxpayers have to pay a part of their income as tax to the government. Different slabs have been made by the government in this regard. There is also some income on which no tax is levied. Today we are telling you about 5 such incomes on which you will not have to pay a single rupee as tax and also what action can the Income Tax Department take against you if you give wrong information about your income.
People have many sources of income. Some earn money by doing jobs while others make money from different businesses. Taxation on these incomes is as per the provisions of the Income Tax Act. Although not all types of income are tax-free, certain types of income do not come under its purview but their conditions are different. Under which some types of income are tax-free. Come, let us know here how many types of income are not taxed and what are the income tax rules for them…
How many types of tax-free income are there in India?
Income received from agricultural activities is considered tax-free under the Income Tax Act. However, it is important to note here that income from commercial industries related to agricultural activities, such as sale of agricultural produce, is taxable.
Gifts and Inheritance
Gifts received on occasions such as weddings or through wills and inheritances are generally not subject to income tax. Although there is an exception to the amount of tax-free gifts, a limit has also been set.
Interest received on PPF and EPF
Interest earned on investments in Public Provident Fund (PPF) and Employees Provident Fund (EPF) is tax-free. Both PPF and EPF are popular sources of long-term savings that do not attract tax.
Dividend received from investment in stocks and mutual funds is tax free in the hands of the recipient. However, the distributing company is liable to pay dividend distribution tax.
Long-term capital gains on equity
No tax is payable on profits made on sale of equity shares held for more than one year. However, short-term capital gains are subject to taxation.
This action will be taken on giving wrong information about income
On the other hand, if you make any wrong attempt to hide or save tax, it can create big problems for you. Income Tax Department has already issued a warning related to this. If any person does any such work then the Income Tax Department will charge a fine from him. In case of tax fraud, penalty can be imposed on the total amount avoided from tax.
Many times a taxpayer tries to reduce the tax liability by underreporting or misreporting the income, then the taxpayer will be held liable for penalty on the basis of Section 270A. Know that according to the Income Tax Act, there is a penalty provision for every mistake made by the taxpayer. Apart from penalties for non-payment of self-assessment tax, default in filing return of income, default in payment of tax and others, the Income Tax Department also imposes penalties for underreporting and misreporting of income.
Income Tax Department will take this action
According to Income Tax, there is a provision to impose a penalty of 50 to 200 percent on the total amount evaded from tax. According to Section 270A, if false information is given in the income tax return, a penalty of 200 percent of the tax liability or hidden amount can be charged.
However, if the separate income is underreported due to some other reason, then a penalty of 50 percent will be imposed on the liability or hidden amount. Not only this, the IT department has said that the employers of such taxpayers will also be informed that the person working for them is filing wrong income tax returns.
All these things are also included in the case of misrepresentation of income.
- Giving false information or concealing it
- Not providing correct investment records
- Exaggerated deduction but did not provide proof
- Any false entry in the account book
- Failure to provide records of any international or specific transaction