What Is Exempt Income And Taxable Income
Views: 6 | Updated On: | By Jitu Jangir
Exempt income refers to certain types of income that are not subject to tax under the income tax laws of a country. This means that the individual or entity earning the income does not have to pay tax on it. Examples of exempt income include certain types of agricultural income, long-term capital gains from the sale of certain assets, and income from certain types of bonds and government securities.
Taxable income, on the other hand, refers to income that is subject to tax under the income tax laws. This includes income from salary, business, capital gains, and other sources. Taxable income is calculated by subtracting any eligible exemptions, deductions, and credits from the total income earned during the fiscal year.
For example, an individual earning a salary of Rs. 10,00,000 in a fiscal year may have Rs. 1,50,000 as exempt income which is not subject to tax, and the remaining Rs. 8,50,000 will be taxable income. The taxable income is then subject to the applicable tax rate to determine the tax liability.
It's important to note that the laws regarding exemptions and taxable income may vary from country to country and may change over time. Taxpayers should stay informed of the current laws and regulations to ensure compliance and to take advantage of any eligible exemptions or deductions.
It's also important to note that different types of income have different tax treatment, for example, long-term capital gains from equity shares and mutual funds are tax-free, but short-term capital gains are taxed at a flat rate of 15% regardless of the income slab.
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Taxable income, on the other hand, refers to income that is subject to tax under the income tax laws. This includes income from salary, business, capital gains, and other sources. Taxable income is calculated by subtracting any eligible exemptions, deductions, and credits from the total income earned during the fiscal year.
For example, an individual earning a salary of Rs. 10,00,000 in a fiscal year may have Rs. 1,50,000 as exempt income which is not subject to tax, and the remaining Rs. 8,50,000 will be taxable income. The taxable income is then subject to the applicable tax rate to determine the tax liability.
It's important to note that the laws regarding exemptions and taxable income may vary from country to country and may change over time. Taxpayers should stay informed of the current laws and regulations to ensure compliance and to take advantage of any eligible exemptions or deductions.
It's also important to note that different types of income have different tax treatment, for example, long-term capital gains from equity shares and mutual funds are tax-free, but short-term capital gains are taxed at a flat rate of 15% regardless of the income slab.
Stay Tuned To Sacnilk For More Income-Tax Related Information!
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