Types of incomes that are exempt under new tax regime

February 13, 2020 Finance Talk Valli Sarvani No comments

Taxpayers can have certain deductions and exemptions in the existing income tax regime.

However, a new income tax regime has been proposed in Budget 2020.

As per the new tax regime, certain incomes are exempted. In other words, they shall remain tax-exempt as usual.

Following is a list of different types of exempt incomes under the new income tax regime:

Income earned on post office savings account was tax-exempt up to ₹3500 for individual accounts and ₹7000 for joint accounts. Though the taxpayer shall not be allowed a deduction on interest earned from bank and post office account, he/she can avail exemption on interest realized on savings account with the post office up to the allowed limit.
Gratuity received from the employer is completely exempt for government employees but it is exempt up to ₹20 lakhs for non-government employees. The gratuity received on the death of an employee is completely tax-free without any limit.
Interest earned on EPF account is tax-exempt if the interest does not exceed 9.5% per annum.
The amount received on maturity of life insurance is tax-exempt.
Employer’s contribution to an employee’s account including EPF, NPS and other superannuation accounts shall remain tax-exempt. Yet, the annual contribution in all accounts should not exceed ₹7.5 lakhs in a financial year. Hence, people who have a basic salary of above ₹60 lakhs per annum shall be impacted by the new tax regime. There is no difference for other people below the threshold limit.
Though taxpayers cannot claim deductions on the amount invested in the PPF, they shall continue enjoying tax exemption on the interest earned on PPF as well as the maturity proceeding from this account.
Gifts under ₹5,000 from the employer remain tax-exempt as per the existing tax regime. It is same under the proposed new tax regime.

Know more things in the next article.

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Types of incomes that are exempt under new tax regime | Fusion - WeRIndia