Section 115E of the Income Tax Act, 1961, provides a special, concessional tax regime for Non-Resident Indians (NRIs) on income derived from foreign exchange assets, such as investment income and long-term capital gains. It aims to simplify taxation and promote investment by applying flat rates (generally 20% on investment income, 10% on long-term capital gains) rather than complex, progressive slab rates.
According to Section 115E of the IT Act, 'Investment Income' is taxed at 20% and 'Long Term Capital Gain' is taxed at a 12.5%. These are flat rates and the basic exemption (below which income is not taxed) is not available.
With the recent changes in the Indian Income Tax Act, it's now possible to pay zero tax on a salary of up to Rs. 7 lakhs. To pay zero tax on a 7 lakh salary using the old tax regime, maximize deductions: Claim Tax Rebate under Section 87A.
Qualifying for the exclusion
You're eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale. You can meet the ownership and use tests during different 2-year periods.
If your total income (including STCG) is under Rs. 2.5 lakh, you won't owe any tax. If it's above that, your STCG under Section 111A will be taxed at 20% For income under Rs.
Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
A common way to defer or reduce your capital gains taxes is to use tax-advantaged accounts. Retirement accounts such as 401(k) plans, and individual retirement accounts offer tax-deferred investment. You don't pay income or capital gains taxes on assets while they remain in the account.
The amount of tax-free capital gain depends on the asset, but the most common exemption is for your primary home, allowing single filers to exclude up to $250,000 (or $500,000 for married couples) of profit if you've lived there 2 of the last 5 years. Additionally, certain long-term investments in qualified small businesses or Opportunity Funds, plus gains on inherited assets (due to stepped-up basis at death), can also be tax-free, while lower income levels may qualify for a 0% long-term capital gains tax rate.
The "6-year rule" for Capital Gains Tax (CGT) in Australia allows you to treat a former main residence as tax-exempt for up to six years after you move out, even if you rent it out, enabling you to avoid CGT on any growth during that period. You qualify by moving out, choosing to treat it as your main home for tax, and can reset the rule by moving back in. If you rent it out for longer than six years, only the portion of the gain after the six-year mark becomes taxable.
Maximize Your Refund or Minimize Your Tax Liability with These Practical Tips
TDS on dividends is applicable when total dividend income during the financial year exceeds ₹5,000. TDS is deducted on dividend income at 10%, but if PAN is not provided to the paying institution, the TDS rate goes up to 20%. As we know, the tax exemption limit under the Income Tax Act begins from Rs 2.5 lakhs.
Section 115BAC of the Income Tax Act introduces the new tax regime, which offers reduced slab rates in exchange for forgoing most deductions and exemptions. Section 115BAC also has provided the option to the taxpayers to choose their most beneficial regime every financial year (subject to conditions as prescribed).
Capital gains tax on property depends on if it's your primary home (often excluded) or investment property, the holding period (short-term taxed as ordinary income, long-term at 0%, 15%, or 20%), and your income bracket; for primary homes, up to $250k (single) / $500k (married) profit is often excluded if lived in for 2 of last 5 years, while investment property gains are generally 0%, 15%, or 20% (long-term) or up to 37% (short-term), with potential 25% depreciation recapture.
The lifetime capital gains exemptions (LCGE) is a tax provision that lets small-business owners and their family members avoid paying taxes on capital gains income up to a certain amount when they sell shares in the business, a farm property, or a fishing property.
The primary "one-time" capital gains exemption in the U.S. allows single filers to exclude up to $250,000 (or $500,000 for married couples filing jointly) of profit from selling their main home, provided they've owned and lived in it for at least two of the last five years before the sale. While it's often called a one-time exclusion, you can use it multiple times, but you must wait two years before claiming it again on another property.
Failing to accurately report capital gains can lead to penalties, interest, or notices from the Income Tax Department. Many taxpayers unknowingly overlook capital gains, often due to a lack of awareness or confusion about which transactions require reporting.
The simplest way to avoid capital gains tax is to regularly use your capital gains tax allowance (officially known as your annual exempt amount or AEA). How easy this is to do depends on the assets you are selling.
Examples of income that are not taxable in India include agricultural income, gifts and inheritances, interest on EPF and PPF, scholarships and awards, life insurance proceeds, leave encashment, gratuity, Long-Term Capital Gains (LTCG), and interest on tax-free bonds.
Prior to FY21, his salary had been capped at Rs 15 crore annually since 2009. Despite forgoing a salary, Ambani earned Rs 8.85 crore in dividend income from his 1.61 crore directly held shares in Reliance Industries, based on the Rs 5.50 per share dividend declared for FY25.
Amitabh Bachchan tops the list by paying 120 crore in tax. Shah Rukh Khan, Thalapathy Vijay, Salman Khan, Virat Kohli and many others also pay huge amounts every year. These numbers come from public reports and estimates, but they clearly show how big the earnings of Indian superstars really are.