Bifalgorithm post

There's a lot of confusion about the tax rebate which is allowed on income up to 12 lakh rupees during a tax year. So with the help of this comprehensive example, I will tell you how the tax rebate actually works. Now, Rahul and I example is a highly motivated individual who has various incomes. From salary, he earns 8 lakh rupees per annum. He has a house from which he gets a rent of 1 lakh rupees per year. He also has a business income which is a side hustle. The net profit of which is 1 lakh rupees. He also has capital gains from shares. Long term capital gains are 1,60,000 and short term capital gains are 50,000. And his interest income is 2 lakh rupees. Now under the provisions of new tax regime applicable for tax year 2526, there are certain deductions and exemptions allowed from this gross income. On salary income, there's a standard deduction of 75,000 Rs. On rental income, there's a standard deduction at the rate of 30%, which makes it 30,000 Rs. In our example, followed by a tax exemption of 1,25,000 Rs. on long-term capital gains. Therefore, Rahul's total income becomes 7,25,000 Rs. from salary, rupees, Rahul will be eligible for a tax rebate. Now under this tax rebate, his income from salary, house property, business and other sources would be allowed whereas capital gains would not be allowed. As special tax rates apply on capital gains. Now notice something very interesting. This 85,000 rupees worth of capital gains are included while computing the total income to determine the applicability of the tax rebate. However, while calculating the tax liability, the capital gains or other special tax rate incomes are to be excluded from the rebate. So in our example, the total income of 11,80 is only 11.8 lakhs can be applicable. Now from this 11.8 lakhs, 85,000 worth of capital gains have to be subtracted, since these are special rate incomes on which the tax rebate does not apply. So when you subtract this from this, you get 10,95,000 rupees. So that's how the entire concept of tax rebate works. I hope this video has given you some clarity. You can ask your queries in the comments section. Please like and share this video and don't forget to follow CA Talkies.

There's a lot of confusion about the tax rebate which is allowed on income up to 12 lakh rupees during a tax year. So with the help of this comprehensive examp…