Introduction
When charging tax on income, all the taxpayers cannot be treated alike. Some taxpayers may need to be given tax benefits. Tax benefits are provided based on the status of the taxpayer, nature of business of the taxpayer, or any other basis as considered legit by the government.
What is Income Tax Benefit?
In India, tax benefits are different based on the status of the taxpayer, i.e. individual, HUF, company etc. The tax benefit can be a tax rebate or deduction. Tax rebate means a specific amount will be deducted from the tax payable. Deduction means deducting an eligible amount from the taxable income.
Who is eligible to pay?
Individual taxpayers whose taxable income is less than Rs 5 lakh p.a. are eligible to get a tax rebate of Rs 12,500 for the AY 2020-21. Individuals can also claim tax benefits, in the form of a deduction, if they qualify for any of the following: house rent allowance; standard deduction leave travel allowance (LTA),mobile reimbursement,Section 80C, 80CCC and 80CCD(1), medical insurance deduction (Section 80D), interest on home loan (Section 80C and Section 24), loan taken for higher studies (Section 80E), deduction for donations (Section 80G).
Corporate taxpayers are also eligible for various tax benefits in the form of tax holiday, deductions for specific industries as mentioned in Section 35AD of Income Tax Act 1961, and income-based deductions as mentioned from Section 80 IA to 80 RRB and other deductions as per the act.
A detailed breakdown of the procedure for filling the tax
The tax benefit in the form of tax rebates or deductions from total income will help reduce taxpayers tax burden.
A taxpayer has to follow the below steps to claim income tax benefit while filing income tax return. 1. Deduct the eligible deductions from total income. 2. Arrive at tax payable from taxable income. 3. Deduct eligible tax rebate from tax payable to get the net tax liability. 4. File the return of income along with required details.
