Some Common Queries

1. Do I need to maintain any record or proof of earnings?

For every source of income, you have to maintain proof of earning and the records specified under the Income-tax Act. In case no such records are prescribed, you should maintain reasonable records with which you can support the claim of income.

2. What is Gratuity?

Gratuity is a lump sum amount paid by the employer to the employee as a token of appreciation for the services they have provided towards the company.

3. Is gratuity taxable income?

In case of a Government employee, whether it be a State Government employee or a Central Government employee, the whole of gratuity received at the time of retirement or death is fully exempt. However, in case of a non-government employee, a certain amount of gratuity is exempted and the remaining amount is taxed.

4. I am an agriculturist. Is my income taxable?

Agricultural income is not taxable. However, if you have non-agricultural income which exceeds the basic exemption limit, then for calculating tax on non-agricultural income, your agricultural income will be taken into account.

5. As an agriculturist, am I required to maintain any proof of earnings and expenditures incurred?

Even if you have only agricultural income, you are advised to maintain some proof of your agricultural earnings/expenses.

6. If I win a lottery or prize money in a competition, am I required to pay Income-tax on it?

Yes, such winnings are liable to flat rate of tax at 30% without any basic exemption limit. In such a case the payer of prize money will generally deduct tax at source (i.e., TDS) from the winnings and will pay you only the balance amount.