Tuesday, August 2, 2016

Whether income tax is calculated in respect of money withdrawn from the bank?

Question: In case I withdraw an amount of Rs. 1.00 lakhs from my bank account and after some time, I deposit some amount in the same account, whether such transactions can be taken into account for income tax purposes?

Income tax is related to the income earned by the individual and it is connected with the debit and credit transactions in the bank account

In order to calculate the income tax, one has to add income earned by him through several sources as mentioned below:
1. Income earned by way of salaries
2. Income earned through rent by letting out house property
3. Interest income from bank deposits
4. Dividend income on account of investment in shares

The above list is illustrative and not exhaustive

Out of the above, dividend income is not taxable.
For the total income earned, tax exemptions are available for interest on savings deposit amount of Rs. 10000.00 and income tax rebate is available for some specific investments like amount remitted into public provident fund; investment in tax saving bonds etc.,

The individual can withdraw any amount from his account and he can also deposit any amount and they are mere banking transactions and not income.

No comments: