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Reverse mortgages for senior citizens don't attract capital gains taxes when assets are transferred. In addition, the loan amount is tax-free.

In India, everyone with taxable income goes to great lengths to minimise their tax burden. He or she seeks to take advantage of as many deductions as possible under the Income Tax Act of 1961, namely sections 80C to 80U. The Income Tax Act exempts some categories of income earned in India from being subject to taxation.

Tax-free income is the term used to describe these types of earnings. In India, there are a number of different ways to earn money that isn’t subject to taxes. Let’s take a look at a few tax-free income:

Income from agriculture

In this country, agricultural income is not subject to income tax. However, if you have non-agricultural income as well, your agricultural income will be considered for rate purposes for calculating the tax on non-agricultural income. Keeping records of your agricultural income and spending is recommended even if your income is only from agriculture.

Scholarships

Under section 56 (ii) of the Income Tax Act, the income earned on scholarship is tax-free. Further pension and family pension of Gallantry Award Winners such as Paramvir Chakra, Mahavir Chakra, and Vir Chakra, as well as other Gallantry Award winners notified by the Central Government, are also exempt from this tax.

Gift tax exemption

As per section 56(2)(v) was introduced under the Finance Act 2004 for taxing gifts only in the hands of the receiver. The current law, revised in 2017, mentions gifts received by any person or individuals are taxed at the recipient’s normal tax rate under the heading ‘Income from other sources.’

Today, any gifts received in whatever form, such as cash, cheque, draft, movable property, or immovable property that exceed Rs 50,000 are fully taxable in the recipient’s hands.
For instance, if you get a gift worth Rs 80,000 during a tax year, you must pay tax on the entire amount. However, if the total worth of your presents is less than Rs 50,000, you will be exempt from paying tax.

However, gifts of any value received from relatives (such as spouse, parents, in-laws, etc.) mentioned in the law are exempt, while the same is true for gifts received from non-relatives (excluding employer) only if received on a defined special occasion of marriage, etc.

A relative for this purpose is defined as brother/sister, son/daughter, and any of the individual’s lineal descendants or ascendants, as well as his or her spouse. A parent who gives his son or daughter Rs 85,000 or a plot of land is tax-exempt. However, a gift of up to Rs 85,000 from a friend or colleague is taxed. In short, gifts received from non-specified families or acquaintances are taxable.

Salary elements

It is tax-free to receive portions of your salary in the form of reimbursements such as transportation allowance or lunch vouchers or mobile phone bills or internet bills or books and magazines.

Reverse Mortgage Scheme

Reverse mortgages for senior citizens don’t attract capital gains taxes when assets are transferred. In addition, the loan amount is tax-free.

Provident fund

An Employee Provident Fund (EPF) offers tax-free returns after five years of active participation by employees. This is true even if the person has worked for several different organizations/employers over the previous five years.

Gratuities

Gratuities paid by government employees upon the death or retirement of the employee are not subject to income tax taxation because of their nature. Employees in the private sector who retire, become incapacitated, or are terminated get a tax-free gratuity up to a maximum of ten lakh rupees. The exemption is subject to additional restrictions imposed by the Income Tax Act.