ITR Filing: The government has proposed that individuals earning up to rs 12 lakh will not have to pay any tax under the new income tax system. While this claim appears beneficial, it is not the same for everyone. There is a high possibility that your taxable income is under rs 12 lakh, yet you will have to pay tax. Let us explore what the eligibility criteria are.Benefits are not available for everyone, try to understand why.Many individuals are under the impression that, while filing for ITR, they will not have to pay tax on income up to rs 12 lakh. This is not true at all. In this case, the new income tax system is proposing tax exemption on income up to rs 12 lakh limit starting the financial year 2025-26. The ITRs that are being filed now are for the financial year 2024-25.Now know who will not get the benefitIf you have some money and engage in stock trading or buying and selling real estate, you would not qualify for the benefit of tax-free income up to Rs 12 Lakh. In such a scenario, capital gains income will not be considered exempt from tax. Let’s understand with an example Let’s say, for the sake of an example, that your annual income is Rs 12 Lakh. To simplify, let’s assume that Rs 8 Lakh of that is a salary, and the remaining Rs 4 Lakh is a result of your capital gains. In this scenario, you would be eligible for claiming tax rebates for Rs 8 Lakh of income, but you would incur capital gains tax on Rs 4 Lakh. Hence, in this scenario your Rs 12 Lakh income will not be exempt from tax.What is capital gain? A salaried person can earn capital gain income in two different ways. One is financially in the stock market and the other is through acquisition and sale of a residential or commercial property. If you hold a share for more than a year and sell it, the income earned from it is referred to as long term capital gain. In the opposite scenario, selling it before a year would classify it as short term capital gain. What is the rule in case of property In the case of house or land, the definition of short term and long term differs a bit. For example, in case you sell the house or land after two years, the profit made will be termed as long term capital gain. Conversely, selling it before two years will categorize the profit as short term capital gain.What is the tax of capital gain? In the context of the stock exchange, the tax on short term capital gain will be at 20 percent. This tax was 15 percent before. In contrast, the tax on long term capital gain will be at 12.5 percent, which was 10 percent before. Nevertheless, in the case of long term capital gain, tax is exempted on the gain up to Rs 1.25 lakh. How will the tax be applicable on income from a house or land? In case of long term capital gain, the computation for house and land sales is different. A house bought before 23 July 2024 will attract a 12.5 percent tax but the seller does not need to account inflation (indexation) increases. However, the seller may choose to pay 20 percent tax with indexation under an older scheme. Out of the two, the seller can choose whichever tax is lesser.LTCG benefits will be given from this year onwardsIn the financial year 2024-25, do you have long-term capital gain of Rs 1.25 lakh? If yes, then the Income Tax Department has a special benefit for you. This will enable you to file an ITR much more painlessly. ITR-1, which has recently been issued, includes some special provisions for long-term capital gain up to Rs 1.25 lakh.The ITR Form will undergo some adjustments this yearA significant shift has been made in the ITR form this year. ITR-1 (Sahaj) will now be permitted to be used for the filing of long-term capital gain (LTCG) up to section 112A. However, the LTCG has to be capped at 1.25 lakh and the taxpayer in question shouldn’t have any losses in the capital gain category that need to be carried forward or set off.This facility has begun this yearFor individuals in this category, this year it has become simpler to file Income Tax Returns (ITR). We all know that there was no option to mention Capital Gain Tax in ITR-1. This special facility has been started from this year.Those with short term capital gain will not get the benefitAdditionally, ITR-1 cannot be availed by taxpayers who have realized short term capital gains from disposals of residential properties, shares, or through equity mutual funds.
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