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<ul><li>Typically, a non-convertible debenture carries a fixed interest rate that has an inverse relationship to how credit worthy the borrower is. </li><li>NCDs are more liquid than corporate FD as they are traded in the secondary market on stock exchanges. </li><li>Each NCD undergoes assessment by multiple credit rating agencies, portraying the issuer's capacity to honour payment commitments. </li></ul>A non-convertible debenture, (NCD), is a type of debt instrument that lacks the option for buyers to convert it into shares or equities until its maturity. When investing in an NCD, buyers have the choice to purchase or sell the instrument and receive interest payments determined by the issuer's fixed interest rate. “But they are more liquid than corporate FD as NCDs are traded in the secondary market on stock exchanges,” says Abhishek Kumar, founder and chief<a href="https://business.outlookindia.com/invest/investment"> </a>investment advisor at SahajMoney, a financial planning firm. Interest rate: Typically, a non-convertible debenture carries a fixed interest rate that has an inverse relationship to how credit worthy the borrower is. An NCD from a highly rated issuer tends to offer a lower interest rate. Credit rating: Each NCD undergoes assessment by multiple credit rating agencies, portraying the issuer's capacity to honour payment commitments. Strong financials and a healthy cash flow of the issuing company result in higher ratings for the issued NCD. Should you invest? One should be very clear about the quality of the NCD, what is the cash flow of the company and what is the risk one is going to take. One should consider the credit rating of these NCDs before investing. However, that may not be foolproof. Do not invest in NCDs just for higher returns Investing in NCDs may not be a good idea, even if you are going with a AAA rating, say experts. Certain NCDs have left a bad taste in the mouth off late. One example is that of the default of the Dewan Housing Finance Corporation Ltd (DHFL) NCD which was AAA rated but was offering a higher interest rate than some AAA rated NCDs. Same was the case with Infrastructure Leasing &amp; Financial Services Limited (IL&amp;FS), whose NCS was also AAA rated. “Even HDFC has a AAA rating , why should someone have to pay you more than the other? So, there is a perceived risk in the NCD which is offering higher returns” says Srinivasan, director and founder, Shree Sidvin Investment Advisors. Numerous NCDs are now being offered at attractive yields as a result of the increase in interest rates. “However, one should be well informed about the company in which they want to invest, and they shouldn't base their investment decision solely on the basis of the high yields,” says Raghvendra Nath, MD, Ladderup Wealth Management. So higher interest rates of 9% or so should not be a reason to invest in NCDs. “We do tell our clients that for a difference of 2-3% in interest rate you should not take a principal risk,” says Srinivasan. Thus, when investing in NCDs, it pays to be careful. <meta content="cms.next" name="cmsei" />

NCDs may offer a higher interest rate than fixed deposits but experts advise caution

<ul><li>The Indian government has extended the income tax filing returns by three months from September 30 to December 31.</li><li>The deadline has been extended because of technical glitches on the new income tax portal managed by Infosys.</li><li>The new income tax e-filing portal was unveiled in June and has been facing continuous technical difficulties ever since.</li></ul>Deadline to file income tax returns (ITR) for assessment year 2021-22 has been extended by three months to December 31, 2021 from September 30, 2021, as per a press release by Central Board of Direct Taxes (CBDT). The government has extended the deadline because of continuous technical glitches reported on the new income tax portal handled by Infosys. This is the second time in this fiscal that the government has extended the deadline for filing ITR. Earlier, due to the second wave of the pandemic, the ITR filing deadline was extended by two months from July 31 to September 30. Apparently, Infosys has been receiving a certain <a href="https://www.businessinsider.in/india/news/income-tax-e-filing-portal-social-media-users-call-out-infosys-after-finance-ministry-summons-infosys-ceo-salil-parekh/articleshow/85556875.cms">backlash </a>for being unable to resolve the issues. Taxpayers have been complaining on social media about glitches with the new income tax e-filing portal for several weeks now. Due to the continuous technical difficulties, the Ministry of Finance had also summoned Infosys’ chief executive officer <a href="https://www.businessinsider.in/india/news/finance-ministry-summons-infosys-ceo-over-glitches-in-it-e-filing-portal/articleshow/85533986.cms">Salil Parekh </a>to explain why these issues have not been resolved yet. The Income Tax department had unveiled the new income tax e-filing portal in June this year as it sought to provide a “modern, seamless experience” to taxpayers. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/ford-motor-to-stop-manufacturing-cars-in-india-4000-employees-may-lose-jobs/articleshow/86065322.cms">Ford Motor to stop manufacturing cars in India; 4,000 employees may lose jobs</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/amazon-vs-future-retail-supreme-court-stays-delhi-high-courts-verdict-enforcement/articleshow/86064426.cms">Amazon Vs Future Retail: Supreme court stays Delhi High Court's verdict enforcement</a><meta content="cms.next" name="cmsei" />

Income tax filing deadline for FY21 extended to December 31

<ul><li>Form 26AS is an annual statement of how much tax you have paid to the income tax department.</li><li>A taxpayer has to ensure that the income tax return is in sync with form 26AS.</li><li>Since the tax department will consider form 26AS as its authentic document it becomes crucial for taxpayers to check if there is any mismatch in tax credits filed.</li></ul>If you have been paying income tax, there is something called 26AS you should be aware of. It is an annual statement that provides you with all the details of tax credit i.e., how much tax you have paid to the income tax department. It is basically a consolidated annual tax credit statement that has all the details of various taxes deducted on your income at source. Form 26AS is a very important document to check before filing income tax returns. It helps one check that the tax deducted or collected has been deposited on time. The form is available on the income tax website against a taxpayer’s permanent account number (PAN). The form also shows details of sale/purchase of immovable property, mutual funds, cash deposits or withdrawal from savings account etc. For example, cash deposits of over ₹10 lakh in your savings accounts in a financial year or if you purchased a property worth over ₹30 lakh, it will show up in this statement. An assessee can claim the tax deducted reflecting in their form 26AS while filing their income tax return for a financial year. Now, a taxpayer has to ensure that the income tax return is in sync with form 26AS. Another important aspect of form 26AS is that banks and other institutions can now ask for form 26AS for due diligence before lending money to the person/corporations. Details in form 26AS <ul><li>Tax deducted at source (TDS)</li><li>Tax collected at source (TCS)</li><li>Details of advance tax, self assessment tax</li><li>Information about income tax refund</li><li>Details of tax deducted on the sale of immovable property</li><li>Details of the high value transactions in respect of shares, mutual fund etc</li></ul>How to download the form <ul><li>Login to income tax new website <a href="https://www.incometax.gov.in/iec/foportal/">incometax.gov.in</a> with your PAN number</li><li>Go to ‘e-file’ menu and select ‘View Form 26AS (tax credit)’</li><li>You will be asked for confirmation to be redirected to the Traces website regulated by the government of India. Click on confirm button</li><li>Then click at 'View Tax Credit (Form 26AS)’ option</li><li>Select the assessment year</li><li>Click at 'View/Download'</li></ul>How to handle mismatch in the form 26AS is your tax passbook just like a bank passbook. Now, since the tax department will consider form 26AS as its authentic document it becomes crucial for taxpayers to check if there is any mismatch in tax credits filed. Mismatch or errors could occur because you may have missed paying tax on some capital gains or amount of tax deducted from salary is incorrectly reported by the employer, TDS deduction is reported in wrong section, incorrect PAN being punched in the TDS return by the deductor or your employer or client may have deducted tax, but not deposited. In either case, you must immediately take it up and get it rectified. Therefore, while preparing your tax returns, you must tally the income details and tax deducted shown in the form 26AS with the details as per your records. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/mukesh-ambani-enters-100-billion-club-as-ril-stock-hits-a-record-high/slidelist/85969961.cms">Mukesh Ambani enters $100 billion club as RIL stock hits a record high</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/careers/news/tcs-ceo-says-70-80-percent-employees-will-be-back-at-office-by-early-next-year/slidelist/85970869.cms">TCS CEO says 70-80 percent employees will be back at office by early next year</a><meta content="cms.next" name="cmsei" />

Do not forget to check form 26AS before filing your income tax return. Here’s why

<ul><li>If you did not file your tax returns in 2018-19, you may be stuck in pickle this season and have to pay double the applicable rate or 5%, whichever is higher.</li><li>This rule shall come into force starting 1 July 2021.</li><li>Deductors will now have to ask for proof of ITR submission for the last two years, increasing the burden of compliance, according to Archit Gupta, the founder and CEO of ClearTax.</li></ul>“Suppose you are making payment to a contractor. And, when you’re getting the work executed, you’re supposed to deduct TDS at 2% — that’s the normal rate. If I made a payment of ₹ 1 crore, I deducted TDS of ₹2 lakh and deposited it in his account.,” explained Ved Jain, former President of The Institute of Chartered Accountants of India (ICAI) told Business Insider. “Starting from December 2021-22, I will ask him if he has filed returns for the last two years or not. For years 2018-19 and 2019-20. If he has filed for any of these, I will continue to deduct 2%. But, if he has not filed returns of the last two years, then I need to deduct at 5%,” he said. This provision has been brought in by Finance Minister Nirmala Sitharaman in the latest budget to tighten the leash on those who haven’t filed their income tax returns. This new provision comes into effect from 1 July 2021. However, it may be the case that some of the stick may hit those making the payment to the lax taxpayer, and therefore collecting the tax at source. The burden of compliance is on the the person⁠— who may be a prompt filer of returns⁠— deducting the tax. Some will have no choice but to pay double the tax The new proposal means that those who haven’t filed their tax returns in 2018-19 and 2019-20 may be in trouble. Some corporates already take a declaration, before processing payments, from their usual vendors that they have filed their returns. For transactions involving individuals, like contractors, artists and freelancers, and businesses in the unorganised sector, the situation is a little more complicated. How do you know if the person you are transacting with has filed returns? Deductors can check whether or not returns have been filed on the Income Tax Department’s official website. There is a utility available where the PAN number can be given, and deductors can check the last returns filed by an individual. “That utility is in the public domain,” said Jain. <div type="image" title="Form 26AS" msid="80765867" hostid="261" caption="&amp;lt;p&amp;gt;Sample of Form 26AS&amp;lt;/p&amp;gt;"></div> Wherever TDS or TCS applies, it should automatically come in Form 26AS and return filing could be ascertained through it. But it is still easier said than done for most people. "This is an additional burden of compliance for deductors. No additional remedy has been provided for cases where ITR filing was not applicable in the two previous years. Taxpayers who foresee facing this issue should prepare to file ITR for FY 2020-21 in due course," Archit Gupta, founder and CEO, ClearTax told Business Insider. Unanswered questions about the new TDS rule* The primary challenge that emerges from the proposed amendment is the ability of the deductor to determine whether the deductee or collectee has filed their income tax returns for the previous two years, according to <a href="https://www.taxmann.com/budget-2021-22/budget-story/154/are-you-a-non-filer%3F-tds%2Ftcs-on-non-filers-at-higher-rates">Taxmann</a>. The onus will also be on the deductor to determine whether the aggregate TDS and TCS over the last two years was more or less than ₹50,000. Another uncertainty is whether the deductee was mandatorily required to furnish their income tax return. For instance, individuals who don’t fall under any taxable bracket or if they are an NRI earning only dividend, interest, royalty or fees for technical services — as specified in section 115A of the Act — will they also be penalised for not submitting their TDS or TCS over the last two years. Taxmann points out that in cases where the due date of filing of return has not expired, should a deductor obtain a declaration from the deductee that the income-tax return will be filed within the prescribed due date and will such declaration be admissible? “It is also possible that the deductee or collectee may refrain from furnishing particulars of their income tax return with the deductors/clients. As a result, the onus of gathering information from the deductee or collectee shall trammel the deductors from ease of functioning and may impose additional compliances in terms of revision of e-TDS returns in case the information is retrieved belatedly from the deductee,” says Taxmann. SEE ALSO: <a href="https://www.businessinsider.in/business/startups/news/meet-the-lawyer-turned-fitness-entrepreneur-who-is-training-alia-bhatt-ranbir-kapoor-kiara-advani-among-others/articleshow/80761071.cms">Meet the lawyer-turned-fitness entrepreneur who is training Alia Bhatt, Ranbir Kapoor, Kiara Advani among others</a> <a href="https://www.businessinsider.in/international/news/joe-biden-and-narendra-modi-spoke-over-the-phone-last-night-heres-what-they-discussed/articleshow/80759960.cms">Joe Biden and Narendra Modi spoke over the phone last night⁠— here’s what they discussed</a> <a href="https://www.businessinsider.in/thelife/personalities/news/meet-the-it-veteran-making-a-comeback-as-tech-mahindras-cfo/articleshow/80708957.cms">Meet the 63-year old making a comeback as Tech Mahindra's CFO</a> <meta content="cms.next" name="cmsei" />

With the new TDS rule, every time you make a payment, you must ask if the receiver has filed tax returns in last two years

The Indian government has extended the deadline income tax return filing has been extended from December 31 to January 10. The extension of the deadline is specifically for those individuals whose accounts do not require an audit and usually file their income tax returns using the ITR-1 or ITR-4 forms. <div type="twitter" handle="IncomeTaxIndia" handlename="Income Tax India" image="http://pbs.twimg.com/profile_images/662206045398237184/06GHxXSF_normal.jpg" favoritecount="3741" retweetcount="2072" status="In view of the continued challenges faced by taxpayers in meeting statutory compliances due to outbreak of COVID-19… https://t.co/sabAefM1qe" createdat="1609331632000" id="1344260412355665920"></div> This is the third time that the Income Tax Department that extended the deadline to file income tax returns this year. It was initially pushed forward from August 31 to November 30 this year on account of the COVID-19 pandemic. It was postponed again to December 31. The government has also extended other deadlines to file other tax returns for the year 2019-2020. New deadlines for filing tax returns: <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"><colgroup></colgroup><col /><col /><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Category </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Date </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Individual ITRs </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10 January 2021 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tax audit and other audits </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15 January 2021 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ITR audit cases </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15 February 2021 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Vivad se Vishwas scheme </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">31 January 2021 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">GSTR-9/9C </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">28 February 2021 </td></tr></tbody></table> According to the press release, over one crore ITR-4 applications have already been filed till December 29 — a marginal increase from 99.50 lakh who filed in August last year. The data shows that individuals filing for tax returns have slowed down so far this year but filings by businesses and trusts have increased. <meta content="cms.next" name="cmsei" />

Relief for taxpayers: Deadline to file income tax returns extended further to January 10

In a major relief for taxpayers, the Centre on Wednesday announced extension of the due date for filing income tax returns for assessment year 2019-20 by a couple of months to November 30, 2020. The decision has come in the wake of many taxpayers facing difficulty in filing their income tax returns due to the outbreak of Covid-19 pandemic. The last date for filing returns for AY 2019-20 was extended earlier till September 30, the third such extension during the pandemic. It has been further extended till November to provide more time to taxpayers. "On further consideration of genuine difficulties being faced by taxpayers due to the Covid-19 situation, CBDT further extends the due date for furnishing of belated &amp; revised ITRs for Assessment Year 2019-20 from 30th September, 2020 to 30th November, 2020," the Income Tax Department said in a tweet. The government has already extended the date for filing income tax returns for AY 2020-21 to November 30. SEE ALSO: <a href="https://www.businessinsider.in/business/news/reliance-retail-seals-its-third-deal-this-month-general-atlantic-to-invest-3675-crore/articleshow/78397878.cms" data-type="tilCustomLink">Reliance Retail seals its third deal this month – General Atlantic to invest ₹3,675 crore</a> <a href="https://www.businessinsider.in/business/auto/news/cars-and-tractor-sales-likely-to-remain-healthy-but-commercial-vehicles-may-feel-the-pain-in-september-month-sale/articleshow/78407001.cms" data-type="tilCustomLink">All eyes on September auto sales — Cars and tractor sales likely to remain healthy but commercial vehicles may feel the pain</a> <meta content="cms.next" name="cmsei" />

Centre extends deadline for IT returns filing for 2019-20 to November 30

<ul><li>The deadline for filing income tax returns has been extended to November 30 from July 31, 2020 while the documents for tax saving investments have to be submitted by June 30, 2020. </li><li>Those who are planning to get their PAN Card (Permanent Account Number) linked to Aadhaar will have to do it by June 30 — failing which, they will be required to pay a penalty of ₹10,000. </li><li>The last date to file the income tax returns for the financial year 2018-19 is also June 30.</li></ul>In the last two months under lockdown, the government has imposed several relaxations to the tax filing process for the last financial year FY20. This includes income tax return filing (ITR), submission of tax saving documents, linking aadhaar to PAN and others. The ITR filing and tax saving exercise The deadline for filing income tax returns has been extended to November 30 from July 31, 2020 — giving the taxpayers more time to prepare and file their tax saving investments. That means, the taxpayers will have to file their TDS (tax Deduction at Source) certificate before June 30 to proceed with the income tax filing process. Usually, the TDS returns are to be filed by May 31 as per the income tax laws — after which the Form 16 is issued. However, this time the government had extended the deadlines for tax saving submissions due to the COVID crisis, adding that this should not be taken as an extension to the financial year. Form 16 Form 16 is issued by the employer after the taxpayer files their TDS certificate for the given financial year. The deadline for the same has been extended to June 30. "The government has extended the date for filing TDS returns by the employer from May 31, 2020 to June 30, 2020 for the FY 2019-20. Similarly, the last date to issue Form 16 by the employer to employee has also been extended to June 30, 2020,” Saraswathi Kasturirangan, Partner, Deloitte India told ET. Linking Aadhaar to PAN Meanwhile, those who are planning to get their PAN Card (Permanent Account Number) linked to Aadhaar will have to do it by June 30 — failing which, they will be required to pay a penalty of ₹10,000, according to the Income Tax Act. The PAN Card will be considered inoperative, if it is not linked to the Aadhaar Card. Earlier, the deadline to link the two documents was March 31. Revised ITR for FY 2018-19 Given the coronavirus pandemic, the government extended the deadline for filing the ITRs for FY19 and FY20 both. While the last date to file income tax return for the last financial year is November 30, the revised ITRs for FY19 can be submitted by June 30. <meta content="cms.next" name="cmsei" />

June 30 is the deadline for tax saving investments and linking Aadhaar with PAN

Net salary is the take home salary that you will get after all the deductions, paying gratuity and EPF and the income taxes. Taxation laws in India require that the taxes are calculated on your gross salary. To know your net salary or take home salary, you must deduct the taxes payable as per your income tax from the gross salary. Here are the steps to calculate the net salary in India in 2019-20. Step-1 Know your CTC CTC which is cost to company is the total amount that a company is spending on you. You will find the CTC mentioned in your appointment letter in most cases. CTC includes the direct and indirect benefits the company gives you, your contributions towards savings, all kinds of allowances, incentives, bonuses, company given accommodation and others. Step-2 Calculate your gross salary To get your gross salary, you must subtract the EPF and Gratuity from the CTC. Case-1: The gross salary of X getting CTC of Rs. 4,00,000 is as follows: Gross Salary: CTC minus (Gratuity + EPF) Gross salary: Rs. 4,00,000 minus (Rs. 21,600 - Rs. 18,326) = Rs. 3,60,074 The gross salary of X is Rs. 3,60,074 Case-2: The gross salary of Y getting CTC of Rs. 6,00,000 is as follows: Gross Salary: CTC minus (Gratuity + EPF) Gross salary: Rs. 6,00,000 minus (Rs. 32,400 - Rs. 27,489) = Rs. 5,40,111 Y is getting a gross salary of Rs. 5,40,111 Step-3 Calculate your net salary Since net salary is the take home salary after paying your income tax, you must know your tax slab and calculate the taxes you will have to pay. Here let us understand how net salary is calculated in the above mentioned cases. Net Salary: Gross Salary minus (Income tax + Public Provident Fund + Professional Tax) Case-1: X is getting a gross salary of Rs. 3,60,074. The net salary in this case can be calculated as follows: From Rs. 2,50,000 to Rs. 5,00,000, taxes will be charged as 5% of the total income that is more than Rs. 2.5 lakhs plus 4% cess. X’s taxable income: 3,60,000 – 2,50,000 = 1,10,000. 5% of Rs. 1,10,000 = Rs. 5,500 4% cess of the income tax payable: Rs. 220 Total taxes payable: Rs. 5,720. Net salary: Gross Salary – taxes paid Net salary of X is 3,60,000 – 5,720 = 3,54,280. Case-2: Y is getting a gross salary of Rs. 5,40,111. The net salary in this case can be calculated as follows: Y comes in the tax slab of Rs. 5,00,001 to Rs. 10,00,000. In this case the income tax will be calculated as 20% of the total income that is more than Rs 5 lakhs + 12,500 + 4% cess of the income tax. Earning that is more than Rs. 5,00,000: 5,40,111 – 5,00,000 = Rs.40,111. 12% to 40,111: Rs.4,813 Add 12,500: Rs. 4,813 + 12,500 = Rs. 17,313. Cess (4% on the income tax): Rs. 692 Total taxes payable: 17,313 + 692 = Rs. 18,005 Net salary of Y: Rs. 5,40,111 – 18,005 = Rs. 5,21,995 <meta content="cms.next" name="cmsei" />

How To Calculate Net Salary In 2019-20

What has changed with taxation in the Union Budget 2020-21 is one of the most asked questions among the taxpayers. The latest budget has relaxed the burden of the taxpayers by providing two options to choose from like never before in history. Announcing a cut on the existing tax rates prevailing across four taxation slabs, Finance Minister Nirmala Sitharaman said the taxpayers can either choose to continue with the old tax regime bundled with concessions and deductions or go with the newly lowered tax rates. Changes you need to know in the new taxation regime 2020-21 Notably, only those taxpayers who do not have any income through business are allowed to move to the new tax regime. The lowered tax rates are applied on four tax slabs as given under. The lowering of tax rates applies to four tax slabs within the income range of Rs. 5 lakhs to Rs. 15 lakhs. The tax rate for incomes between Rs. 5 lakh and Rs. 7.5 lakhs has been lowered from 20 percent to 10 percent. The tax slab that covers incomes from Rs. 7.5 lakhs to Rs. 10 lakhs will invite a tax rate of 15 percent instead of the 20 percent tax rate levied earlier. The next tax slab of earnings from Rs 10 lakhs and Rs. 12.5 lakhs will be covered under 20 percent taxation instead of the previous tax rate of 30 percent. The same rate of tax is applicable to the tax slab referring to the earnings between Rs. 12.5 and Rs. 15 lakhs. There are no changes with regard to the tax rates applicable to the incomes below Rs. 5 lakhs and above Rs. 15 lakhs. How to choose between the two options for maximizing tax benefits As per the announcement by the FM Nirmala Sitharaman, it is evident that the taxpayers are given two options while paying taxes. Explaining the present change, she said, "An individual who is currently availing more deductions and exemption under the Income-tax Act may choose to avail them and continue to pay tax in the old regime." While choosing to remain with the older tax rates, the taxpayers will also enjoy the advantages of the deductions and concessions that are a part of the older tax regime. They can benefit from the lowered tax rates if they choose to be covered by it. However, in this case, the deductions and concessions that were granted by the older tax regime will cease to apply. Which option can fetch the maximum tax benefits to the taxpayers earning Rs 12.5 lakhs per annum One of the daunting questions in front of the taxpayers is whether to remain with the older tax regime or move on to the new tax regime so that they can reduce the taxes they will need to pay. The answer is not far to seek. If the taxpayer plans to make use of only the standard deductions and concessions under Section 80C (investments, expenses, and life insurance premiums of up to Rs. 1.5 lakhs) available under the old tax regime and nothing more, subscribing to the new tax regime will provide a significant tax saving advantage. In case, the taxpayers have ways to make claims also under other sections like Section 80D, Section 24, Section 80E, Section 16, and Section 10, it is better for them to remain with the older tax regime as they will have a number of ways to project a lower taxable income and hence will make a far better saving on taxes. Here is a case study that will help make an informed decision in this regard. Consider Ram is making a taxable income of Rs. 12.5 lakhs per annum. If he wants to make use of only the standard deductions under Section 80C, the comparative value of taxes he will need to pay while opting for the two options is given under. <table style="border-width: initial; border-style: none;"><colgroup></colgroup><colgroup></colgroup><col /><col /><col /><tbody><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">Description </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">Taxation under the old regime (In Rs.) </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">Taxation under the new regime (In Rs.) </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">Income </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">12,50,000 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">12,50,000 </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">Deduction applicable under Section 80C </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">1,50,000 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">Nil </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">Net Taxable income </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">11,00,000 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">12,50,000 </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">Net tax </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">1,48,200 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">1,30,000 </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">Saving you will make while opting for the new tax regime </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;"> </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:0pt 5.4pt 0pt 5.4pt;overflow:hidden;overflow-wrap:break-word;">18,200 </td></tr></tbody></table> <meta content="cms.next" name="cmsei" />

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