Govt exempts 11 more sources of income from taxation

China further clarified taxable items among individual earnings, with 11 sources of income exempted from taxation, according to a policy announcement issued by the Ministry of Finance and State Taxation Administration on Tuesday.

China's newly revised individual income taxation law came into force this year. Zhang Yiqun, an expert in finance and taxation, said the move has significantly scaled back tax burden for individuals, increased household's earnings, and played a great part in stabilizing economy, stimulating consumption and perking up confidence, according to Securities Daily.

Nevertheless, various explanation and enforcement still exist across the country, due to different understanding of the latest taxation law, Zhang added.

The new policy announcement pointed out three scenarios of property transfers, including parents granting housing ownership to their children, and discount coupons and hongbao, or red envelopes, stuffed with cash used by families and friends online, all should be free from taxation.

Six other taxation items which have been levied in the past have been left out. Stock investors will not have to pay tax for their transaction fee returns from securities firms, for instance.

Zhang said that the announcement reassures the revised individual taxation law would benefit households and individuals and dispels some unreasonable doubts, while eliminating unnecessary inconsistencies between current and previous tax policies and making tax more practical and effective.