Outlook Money
If one has income only from salary, tax filing is relatively simple. However if one has multiple sources of income, filing and managing taxes is more complex.
1. Business Expenses; All the income that is derived from business can be claimed as deductions under the relevant provisions of the Act, provided the stipulated conditions are met.
The assessee can deduct expenses like municipal taxes, a 30 per cent standard deduction on rental income, and interest on home loans, in accordance with the relevant tax laws and conditions.
If borrowed money is used to invest in dividend-paying stocks, interest deductions of up to 20 per cent on the income from these investments can be permitted, provided certain conditions and regulations are met.
The Income Tax Act allows for deductions related to expenses including transferring of capital assets, including the cost of improvements and indexation benefits under certain conditions.
If an individual receives passive income, such as rental income or capital gains etc, they must estimate their earnings and make quarterly advance tax payments if the income tax due on these sources extends the specified limits outlined in the act. Failure may lead to interest charges.