There will be no tax hereImage Credit source: AI
Most people think that the more they earn, the more income tax they will have to pay. But the truth is that some such income and investment methods have been given in the Income Tax Act, from which the government does not charge any tax on the income. If you have the right information and proper planning, a large part of your hard-earned money can remain with you.
Income tax law in India considers certain sources as completely tax-free. This exemption benefits everyone from farmers to employees, investors and parents. Let us know about 7 such income and investment methods, on which income tax is not levied.
Profit from partnership firm
If you are a partner in a partnership firm or LLP, then your share of profits from there is tax-free in your personal income. The reason is that the firm has already paid tax on its profits. However, it is important to understand a difference here. The profit share is tax-free, but if the firm pays you salary, interest or any kind of remuneration, it will be included in your taxable income.
Life insurance maturity amount
Life insurance not only provides protection but is also an important part of tax planning. Subject to certain conditions, the amount received on maturity of life insurance is completely tax-free. The important thing is to keep the premium and rules in mind while taking the policy. With proper planning, the money received from insurance can remain completely tax-free.
gratuity
Gratuity received at the time of retirement or leaving the job also provides relief from income tax. Private sector employees get full tax exemption on gratuity up to the prescribed limit, whereas government employees do not have to pay tax on the entire amount. This amount is a reward for long service during the job and the government gives great relief to the employees by keeping it tax-free.
Investing in PPF
Public Provident Fund i.e. PPF is one of the most trusted investment options among the common people. The investment made in it, the interest received on it and the entire amount received on maturity are not taxable. In the old tax system, tax exemption is also available on annual investment in PPF. If you want to grow your money safely for a long time and also want tax relief, then PPF is a strong option.
Sukanya Samriddhi Yojana for daughter’s future
If you have a daughter at home, then Sukanya Samriddhi Yojana is not only a savings scheme but also a great way to earn tax-free returns. The amount invested in this scheme gives good interest and it is completely tax-free. There is no income tax on the entire amount received from investment, interest and later. This is the reason why this scheme is very popular among parents for long term planning.
scholarship for studies
Many students do not know that there is no tax on the scholarship received for studies. Scholarships related to education in India are considered completely tax-free. Whether the scholarship is given by the government, a private organization or from abroad. If it is received for the purpose of education, then income tax is not levied on it. The same rule also applies to some government awards.
Income from farming is tax free
In India, income from agriculture has been kept completely tax-free. There is no tax on the income earned by selling crops grown in the fields like grains, vegetables, fruits, pulses or spices. Apart from this, rent received from agricultural land and profit from selling rural agricultural land are also tax-free. However, it is worth noting that this exemption applies only to agricultural land in India. If farming has been done abroad, then the income from there will be considered taxable in India.
Avoiding income tax is not illegal, but a matter of having the right information and choosing the right option. If you understand and adopt these tax-free income and investment methods, your financial planning will be stronger and more of your income will remain with you.
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