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Tax on pension income: Calculation of discount amount| When an employee retires, the employer pays a certain amount to the regular employee considering his previous service. This periodic payment is paid by the employer to his employee and is referred to as his pension.

Once the National Pension Scheme is launched, employers will not only be able to pay pensions after retirement, the pension scheme can also pay pensions. Individual taxpayers can also invest in a pension plan that will pay their pension after retirement. Such investment in pension plans can be claimed as a rebate under Section 80CC and Section 80CCD.

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The amount received as pension from the employer or pension fund or from any other source as pension will be liable to income tax. The article on calculating income tax on pension income is explained below.

Before focusing on the calculation of duties on pensions, it is important to understand that there are 2 types of pensions: -

1) Commuted pension: Commuted pension refers to the pension received in phases. The amount received as a commuted pension is fully taxable in the hands of both public and private employees.

2. Changed Pension: Changed money exchange. Many employers allow an employee to give up a portion of the pension by surrendering a portion of the pension and receiving a lump sum. This amount is known as Commuted Pension. The pension can be changed in whole or in part.

For example, suppose a person is entitled to a fifth pension. 2000 for life. He can travel 1/4 of this amount and get 25% in a single amount. After 30,000 journeys, his pension will now cost Rs5%. 2000 pm i.e. Rs. 1500 hours

Income tax on current pension

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Salary Structure of the Bihar State Employees

The calculation of income tax on Commuted Pension at the time of filing income tax return under section 10 (10a) will be as follows: -

Commuted Pension Received 8,00,000 / -

- (Less) Amount Discount 2,00,000 / - = ,,,00,000 / -

Amount to be taxed as tax slab = 56,000 / -

Calculate the amount of pension

1. Received from Government Employer: Complete exemption from income tax. In other words, no income tax was levied on pensions from the government.

2. Received from private employer: The following amount will be exempted from tax collection on pension income

Tax on pension income

The pension received will be "taxable under the principal salary" in the manner described above

However, under section 5 ((ii) (a), if the family members receive the family pension without permission after the death of the employee, the pension received will be taxable under the head - in this case, the employer-employee relationship does not exist as "income from other sources". Where unregistered family pension is received by family members - 1 / 3 of the pension of Rs. 2,000 / - Rs. 15,000 whichever is less.

However, according to Circular No.573 dated 21/08/1990, if any modified pension is given to the family members, no tax will be levied on the enhanced pension.

Related points related to tax on pension

1. Judges of the Supreme Court and High Court will be allowed as a waiver of the Fifth Pension (Notification No.2322 dated 06-01-1993)

2. No tax will be levied on pension income on any amount received from UNO

Rs 50,000 can also be claimed from the standard discount pension income of Rs 3.50 as it also comes to mind - income from salary. This discount is applicable from the financial year 2019-20.

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Feature of this Excel Utility:-

1) This Excel utility prepares at a time 50 Employees Form 16 Part A&B for the F.Y.2021-22 as per new Budget 2021

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3) This Excel Utility has an option where you can choose your option as New or Old Tax Regime

4) This Excel Utility has a unique Salary Structure for Government and Non-Government Employee’s Salary Structure.

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8) This Master of Form 16 can use both Government & Non-Government Concerned.

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Tax Benefits of Home Loan: Sections 24, 80EEA and 80C |There are two segments to home installment: Principal implies head's installment and reimbursement of interest. Since there are two separate parts to the second installment, the tax benefits on home advances are represented by various sections of the Income-tax Act and are liable to tax exemptions under various sections when recording an annual tax return.

Home loan tax benefits

The benefits of a home advance can be guaranteed as follows

Section 24 (b) – H.B.L. Interest. Maximum of Rs. 2 lakhs

Section 80 C-H.B.L Principal most extreme Rs. 1.5 lakh

Section 80EEA-H.B.L's interest installments

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Coming up next are the tax benefits that can be asserted on a home under these classes: -

Section 80C: Tax benefits on home apparatuses (principal amount)

The amount paid by an individual/HUF as an installment of the principal amount of lodging is permitted as tax exemption under Section 80C of the Income Tax Act. The greatest tax exemption permitted under Section 80C is Rs 1,50,000.

This tax exemption incorporates absolute exemptions supported under section 80C and incorporate tax amounts put resources into PPF accounts, tax-saving fixed stores, value arranged common assets, public reserve funds testaments, senior resident security plans, and so on

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Under Section 80C this tax the exemption is paid based on installment for the year fixed for stamp obligation and the amount paid as the enrollment expense is likewise permitted as tax exemption under section 80C regardless of whether the appraiser has not taken a credit.

Notwithstanding, the home credit office under this section for reimbursing the key piece of the home advance is permitted solely after the culmination of the development work and the issuance of the fulfillment testament. No waiver will be taken into consideration the impotent’s installment for the year where the property was under development under this section.

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Furthermore, in the event that you want to buy an under-development property, it is estimated lower than the finished property, you are likewise mentioned to note here that GST is additionally collected on the under-development property. Nonetheless, no help charges are exacted on properties on which development has been finished.

House property ought not to be sold inside 5 years

Section 80C additionally expresses that for the situation where the assessee has claimed the monetary establishment under which the property has been moved under section 80C before the expiry of the time of 5 years from the finish of the monetary year. No markdown or tax advantage can be given on a home credit under 80C. The aggregate sum of all-out tax exemption previously asserted in earlier years is the amount of property sold for the current year and the assessee will be obligated to pay tax on such public pay, for example,

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Tax advantage on home advance (amount of interest)

The home tax advantage can be asserted as a refund under the recently embedded section 80EEA (2020 Budget Amendment) under Section 24 to pay interest on the home advance.

Section 24: Income tax advantage on interest on buy/development of the land

Tax benefits on homeowners are permitted to be absolved under Section 24 of the Income Tax Act for installment of interest. Pursuant to Section 24, the pay got from the home property will be decreased by the amount of interest paid on the advance taken with the end goal of procurement/development/fix/reestablishment/reproduction of the property.

The greatest amount of tax exemption permitted under section 24 of a self-involved property ought to be a limit of Rs. 2 lakhs (Increased from 1.5 lakhs in the 2014 spending plan to 2 lakhs)

In the event that the property for which the house has been obtained isn't self-involved, as far as possible has not been fixed for this situation and the taxpayer will actually want to benefit tax exemption in the amount of full interest under section 24.

If it's not too much trouble, NOTE: If a property isn't self-involved by the proprietor because of the way that it is because of his work, business, or calling somewhere else, he should be in a spot not possessed by him somewhere else. The amount of tax exemption permitted under section 24 ought to be Rs. Just 2 lakh rupees.

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It is likewise critical to take note that this tax deduction on interest under section 24 is deductible based on payable, for example, based on withdrawal. In this way, the exemption under section 24 can be guaranteed on a yearly premise despite the fact that no installment has been made for the year when contrasted with Section 80C which permits exemption just based on installment.

Moreover, if the property isn't gained/worked after the finish of the procured monetary year, the interest advantage will be diminished from Rs 2 lakh to Rs 30,000. (Expanded cutoff from 3 years to 201 years-1. Five years from monetary year).

Classification 80EEA: Income Tax Benefits on Home Interest (First Time Buyers)

Interest discount can likewise be asserted under 8080EEA, which is more than the refund or more, Rs 24,000/ - is permitted to be guaranteed under section 24. Rs 2 lakh or more Rs 1.5 lakh under deduction section 80C is likewise permitted

This exemption from Section 80EEA will be relevant just in the accompanying cases: -

1. This markdown will be permitted if the stamp obligation worth of the bought property is not as much as Rs. 45 lakh.

2. The note ought to be supported between first April 2019 and 31st March 2021. The over 3 sections identifying with Home Benefit Tax Benefit are summed up as follows: - 1) Discount 24 (B) Rs. 2 Lakh 2) Exemption U/s 80 C Rs. 1.5 lakh as the amount of HBL The principal amount and 3) Exemption U/s 80EE Rs. 1.5 lakh at home loan interest

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