We all are united by the country and divided by its taxation brackets. No pun intended here. But seriously, taxation is such a unique feature in every earning citizen's life that simply differentiating it by income brackets leaves room for more to think about.
We have compiled a list of 10 questions that puts light on the diversity of tax used cases in India:
Question 1: My income is taxed in India and abroad. Any relief possible for me from double taxation?
Answer: Yes, you can claim relief in respect of income in such a case. Relief is either granted as per section 91 of the Act in respect of tax paid in the foreign country. or per the provisions of double taxation avoidance agreement entered into with that country (if any) by the Government of India
Question 2: I won prize money in Kaun banega crorepati. Do I need to pay tax on the price money?
Answer: Yes, such winnings (lottery or prize money) are liable to flat rate of tax at 30% without any basic exemption limit. The payer of prize money will generally deduct tax at source (i.e., TDS) and will pay you only the balance amount.
Question 3: I am a decently wealthy farmer. How much tax would have to pay for my farming income?
Answer: Agricultural income is not taxable. Good reason to be happy? Maybe not. Read more.
If you have non-agricultural income too, then while calculating tax on non-agricultural income, your agricultural income will be taken into account for rate purpose (refer section 2(IA) of the Income-tax Act for more details)
Question 4: Is monetary gift from my friend taxable?
Answer: Gifts received from relatives are not charged to tax. Friend is not a relative, and hence, gift received from friends will be charged to tax.
Gift received only on the occasion of marriage of the individual is not charged to tax. Apart from marriage there is no other occasion in which gift received by an individual is not charged to tax. Hence, gift received on occasions like birthday, anniversary, etc. will be charged to tax.
Question 5: Are gratuity and PF taxable?
Answer: In the hands of non-Government employee, gratuity is exempt subject to the limits prescribed in this regard and PF receipts are exempt from tax, if the same are received from a recognised PF after rendering continuous service of not less than 5 years.
In the hands of a Government employee Gratuity and PF receipts on retirement are exempt from tax.
While all these taxation instances are standard, they reinforce the diversity that exist in the taxation use cases. More on taxation in our blogs.