Tax related

Many of us have completed the computation form(ie, computation statement of income tax for the assessment year2020-2021) and submitted it to the specified office.

But some of us may be wrong. Today I will discuss the possible mistakes.

1.

We can use old or new income tax slabs. If we use the new income tax slab, the following deductions will not be available.

(i) Leave travel concession as contained in clause (5) of section 10;

(ii) House rent allowance as contained in clause (13A) of section 10;

(iii) Some of the allowance as contained in clause (14) of section 10;

(iv) Allowances to MPs/MLAs as contained in clause (17) of section 10;

(v) Allowance for income of minor as contained in clause (32) of section 10;

(vi) Exemption for SEZ unit contained in section 10AA;

(vii) Standard deduction, deduction for entertainment allowance and employment/professional tax as contained in

section 16;

(viii) Interest under section 24 in respect of self-occupied or vacant property referred to in sub-section (2) of section 23.

(Loss under the head income from house property for rented house shall not be allowed to be set off under any

other head and would be allowed to be carried forward as per extant law);

(ix) Additional deprecation under clause (iia) of sub-section (1) of section 32;

(x) Deductions under section 32AD, 33AB, 33ABA;

(xi) Various deduction for donation for or expenditure on scientific research contained in sub-clause (ii) or sub-clause

(iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35;

(xii) Deduction under section 35AD or section 35CCC;

(xiii) Deduction from family pension under clause (iia) of section 57;

(xiv) Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA,

80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). However, deduction under

sub-section (2) of section 80CCD (employer contribution on account of the employee in notified pension scheme) and

section 80JJAA (for new employment) can be claimed.

However, there are certain deductions you can still claim using the new tax regime and they are as below.

👉Retirement benefits, gratuity etc.

👉commutation of pension

👉leave encashment on retirement

👉retrenchment compensation

👉VRS benefits

👉EPFO: Employer contribution

👉NPS withdrawal benefits

👉Education scholarships

👉Payments of awards instituted in public interest

But if we use the old income tax slab, we can take advantage of all kinds of deductions.

Which slab will we get the most benefit from?

Check out the official site below
https://www.incometaxindiaefiling.gov.in/Tax_Calculator/index.html?lang=eng

I have decided by observation that if taxable income is below 15 lakh then we will have more benefit in the old slab.But if our taxable income is above 15lakh, the new slab will have more benefits.

2.
Many of us have the misconception that up to 5 lakh taxable income, tax should not be paid.This is a completely wrong idea.

However, up to 5 lakh income will get rebate up to Rs.12500.(u/a 87A)

3.
Total tax= Income tax+Surcharge 

(👉10% surcharge on income tax if the total income exceeds Rs.50 Lakhs but below Rs.1 Cr.

👉15% surcharge on income tax if the total income exceeds Rs.1 Cr.)+cess( 4%on income tax including surcharge.)

4.
Income Tax=Calculate the tax according to the slab(The taxable income should be calculated accordingly.)

5.
Taxable income= Total gross income- Deduction (Different types u/a).But not all deductions apply to the new slab.

6.
Total gross income= income from 5 head( Salary+House property, Rental+Business/Profession+Capital Gains+Others Sources)

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