Income Tax Return: strong return in equity, income is not taxable; What ITR should be filed?

Income Tax Return: The days of filing Income Tax Return (ITR Filing 2023) have come. This time you will see the rules regarding capital gains tax changed, although a lot will be seen changed. The new tax regime is now the default tax regime.

The new rules regarding capital gain tax rule on debt mutual funds have come into effect from April 1, in which you will not get the benefit of long term capital gain on returns on debt funds. But the focus of this article is on the taxation of any kind of investment in equity. If you earn money from equity (equity investment tax rule), but your income is not taxable, then what will be the rule regarding it? Know all these things before ITR filing.

What are the tax rules on equity investment? (Equity Investment Taxation)

If you make equity investments, such as investing in shares listed in the stock market, or investing in mutual funds, and maintain your investment in them for more than 1 year, then this is a long-term capital gain. comes and long term capital gain tax is applicable on it. But you get tax exemption on long term capital gain up to Rs 1 lakh. On returns above this, you will have to pay tax at the rate of 10%.

If you file ITR…

If you do equity investment and you have to file ITR, then you have to disclose this source in your income tax return form. You should also check your Annual Information Statement, it contains all the information related to your income and tax returns.

When will you not have to pay tax?

But if your entire tax liability is zero, then you are not bound to file ITR. It is another matter that despite not coming under the purview of taxable income, you are advised to file ITR.

Why should ITR be filed?

According to the Income Tax Act 1961, you are exempted from paying tax if there is no tax liability, but still you should file ITR due to various reasons. First of all, it is a legal proof of your income. If TDS has been deducted from your salary, then you should file ITR to claim TDS. It also helps in taking loan. You need to show documents related to income proof for passport or visa etc., in which case ITR proves to be a big proof.

What is the scope of taxable income?

There are two tax regimes in the country – old and new. There is a lot of difference between the two. The scope of taxable income is also different in this. If you file ITR in the old tax regime, then you do not have to pay any tax on gross total income up to 2.5 lakhs. On top of this, you can save tax up to two lakhs by taking rebates and exemptions. This reduces your tax liability.

Scope of taxable income in the new tax regime

In the new tax regime, in this budget, income up to Rs 3 lakh has been completely exempted till the tax is paid. At the same time, along with rebate, tax exemption is also available on income up to 7 lakhs, this reduces your tax liability.

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