Dear All,
I want to know which part of the salary breakup (i.e., basic, HRA, DA, allowances, etc.) is taxable. On which amount does the employee have to pay tax? Does a higher basic lead to higher tax? How can one minimize the amount paid as tax?
Please do help. ASAP.
Regards,
Neha Varma
From India, Delhi
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I want to know which part of the salary breakup (i.e., basic, HRA, DA, allowances, etc.) is taxable. On which amount does the employee have to pay tax? Does a higher basic lead to higher tax? How can one minimize the amount paid as tax?
Please do help. ASAP.
Regards,
Neha Varma
From India, Delhi
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Hi Neha,
As per my knowledge and the rules for payment of wages, Basic+DA and HRA are the taxable income for an employee. If you add medical and transport allowances to the salary structure, this is also taxable because PT is calculated on the Gross income.
From India, Nasik
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As per my knowledge and the rules for payment of wages, Basic+DA and HRA are the taxable income for an employee. If you add medical and transport allowances to the salary structure, this is also taxable because PT is calculated on the Gross income.
From India, Nasik
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Dear Neha Varma,
In general, the income earned by employees is taxable. However, employees can avail exemptions permitted under the IT rules.
1. Conveyance allowance is exempt to the extent of Rs. 800 per month. Amounts paid over and above Rs. 800 are taxable.
2. Medical reimbursement is exempt from tax up to Rs. 15,000 per annum against the production of medical bills.
3. Leave Travel Allowance is exempt from tax if the employee avails LTA twice in a block of 4 calendar years. However, the employee has to provide proof of having availed travel (self and a member of his family).
4. Interest on Housing Loan is exempt from taxable income.
5. Likewise, if the employee invests a maximum of 1 Lakh in the form of PF, LIC, Principal on Housing Loan, PPF, Children's Education, etc., this is exempt from tax.
6. HRA is exempt from tax subject to certain conditions stipulated under the IT rules.
The list is not exhaustive and only gives an overview.
Regards,
M.V. KANNAN
From India, Madras
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270In general, the income earned by employees is taxable. However, employees can avail exemptions permitted under the IT rules.
1. Conveyance allowance is exempt to the extent of Rs. 800 per month. Amounts paid over and above Rs. 800 are taxable.
2. Medical reimbursement is exempt from tax up to Rs. 15,000 per annum against the production of medical bills.
3. Leave Travel Allowance is exempt from tax if the employee avails LTA twice in a block of 4 calendar years. However, the employee has to provide proof of having availed travel (self and a member of his family).
4. Interest on Housing Loan is exempt from taxable income.
5. Likewise, if the employee invests a maximum of 1 Lakh in the form of PF, LIC, Principal on Housing Loan, PPF, Children's Education, etc., this is exempt from tax.
6. HRA is exempt from tax subject to certain conditions stipulated under the IT rules.
The list is not exhaustive and only gives an overview.
Regards,
M.V. KANNAN
From India, Madras
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Dear Neha Varma,
I shall insert an Excel worksheet for Income Tax Calculation on salary for the Financial Year 2010-11 (Assessment Year 2011-12). Prior to that, I wish to explain some details to get an idea to enter the inputs.
On gross salary, the following deductions are applicable:
1) Professional Tax
2) House Rent in excess of 1/10th of salary subject to ceiling equivalent to HRA
3) Interest on Housing loan subject to ceiling Rs. 1,50,000
4) Refund on Housing loan, savings, tuition fee for 2 children, etc., altogether subject to ceiling Rs. 100,000
5) In addition, savings on infrastructure bonds up to Rs. 20,000
6) Other than the above one lakh, 15,000 to 20,000 towards mediclaim premium, 40,000 to 60,000 towards treatment on specified diseases like Motor Neuron disease, 75,000 to 100,000 towards disability, etc., are also admissible for deduction.
Now, taxable income can be calculated as follows:
Gross salary - total deductions = Taxable income
Tax payers can be categorized into 3 groups:
1) Non-Seniors - Male
2) Non-Seniors - Female
3) Senior Citizens (65 years old & above)
If the taxable income is Rs. 2,40,000, a Senior Citizen is fully exempted from paying tax. Non-Senior Female has to pay in excess of Rs. 1,90,000, and Non-Senior Male in excess of Rs. 1,60,000.
Beyond the above income, one has to pay 10% up to Rs. 5,00,000, 20% thereafter up to Rs. 8,00,000, and 30% in excess of Rs. 8,00,000. In addition, an education cess @ 3% will be charged on Total Tax.
I shall quote an example:
Gross income of a Non-Senior Male - Rs. 12,00,000
Deductions (actual): Professional Tax - 12,000, Housing loan interest - 2,00,000, Total savings/deductions - 2,50,000, Savings on Infrastructure bond - 25,000, other deductions over 1,00,000 - 50,000.
Admissible total deductions (subject to ceiling limits) - 12,000 + 150,000 + 100,000 + 20,000 + 50,000 = 332,000
Taxable income, 1,200,000 - 332,000 = 868,000
For Non-Senior Male:
Rs. 1,60,000 is exempted.
For the next 340,000 (500,000-160,000), 340,000 x 10% = 34,000 -(1)
For the next 300,000 (800,000-500,000), 300,000 x 20% = 60,000 -(2)
For the next 68,000 (868,000-800,000), 68,000 x 30% = 20,400 -(3)
Tax - (1) + (2) + (3) = 114,400
Also, For Non-Senior Female Tax is, 114,400 - 3,000 = 110,400
and Senior Citizens Tax is, 114,400 - 8,000 = 106,400
Education Cess, 114,400 * 3% = 3,432
Total Tax - Rs. 1,17,832
See Excel Sheet. Enter gross salary and deductions/savings applicable in the green color column. Results will be shown in the yellow color. The red color is used for static data.
With regards,
ABBAS.P.S,
ITI Ltd, PALAKKAD - 678 623,
KERALA, INDIA.
Ph. +91 9447 467 667
From India, Bangalore
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I shall insert an Excel worksheet for Income Tax Calculation on salary for the Financial Year 2010-11 (Assessment Year 2011-12). Prior to that, I wish to explain some details to get an idea to enter the inputs.
On gross salary, the following deductions are applicable:
1) Professional Tax
2) House Rent in excess of 1/10th of salary subject to ceiling equivalent to HRA
3) Interest on Housing loan subject to ceiling Rs. 1,50,000
4) Refund on Housing loan, savings, tuition fee for 2 children, etc., altogether subject to ceiling Rs. 100,000
5) In addition, savings on infrastructure bonds up to Rs. 20,000
6) Other than the above one lakh, 15,000 to 20,000 towards mediclaim premium, 40,000 to 60,000 towards treatment on specified diseases like Motor Neuron disease, 75,000 to 100,000 towards disability, etc., are also admissible for deduction.
Now, taxable income can be calculated as follows:
Gross salary - total deductions = Taxable income
Tax payers can be categorized into 3 groups:
1) Non-Seniors - Male
2) Non-Seniors - Female
3) Senior Citizens (65 years old & above)
If the taxable income is Rs. 2,40,000, a Senior Citizen is fully exempted from paying tax. Non-Senior Female has to pay in excess of Rs. 1,90,000, and Non-Senior Male in excess of Rs. 1,60,000.
Beyond the above income, one has to pay 10% up to Rs. 5,00,000, 20% thereafter up to Rs. 8,00,000, and 30% in excess of Rs. 8,00,000. In addition, an education cess @ 3% will be charged on Total Tax.
I shall quote an example:
Gross income of a Non-Senior Male - Rs. 12,00,000
Deductions (actual): Professional Tax - 12,000, Housing loan interest - 2,00,000, Total savings/deductions - 2,50,000, Savings on Infrastructure bond - 25,000, other deductions over 1,00,000 - 50,000.
Admissible total deductions (subject to ceiling limits) - 12,000 + 150,000 + 100,000 + 20,000 + 50,000 = 332,000
Taxable income, 1,200,000 - 332,000 = 868,000
For Non-Senior Male:
Rs. 1,60,000 is exempted.
For the next 340,000 (500,000-160,000), 340,000 x 10% = 34,000 -(1)
For the next 300,000 (800,000-500,000), 300,000 x 20% = 60,000 -(2)
For the next 68,000 (868,000-800,000), 68,000 x 30% = 20,400 -(3)
Tax - (1) + (2) + (3) = 114,400
Also, For Non-Senior Female Tax is, 114,400 - 3,000 = 110,400
and Senior Citizens Tax is, 114,400 - 8,000 = 106,400
Education Cess, 114,400 * 3% = 3,432
Total Tax - Rs. 1,17,832
See Excel Sheet. Enter gross salary and deductions/savings applicable in the green color column. Results will be shown in the yellow color. The red color is used for static data.
With regards,
ABBAS.P.S,
ITI Ltd, PALAKKAD - 678 623,
KERALA, INDIA.
Ph. +91 9447 467 667
From India, Bangalore
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now a days we can save 20000/- above 100000/-. condition apply is the amt whould be invested in infrastructure bonds. Please clearify me if I am not right. Regards, P K Prasad
From India
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From India
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The fees or expenses for the club are also exempted from tax.
"The initial one-time deposits or fees for corporate or institutional membership, where the benefit does not remain with a particular employee after cessation of employment, are exempt," as per the I.T. Department.
Regards,
R. Ponraj
From India, Lucknow
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"The initial one-time deposits or fees for corporate or institutional membership, where the benefit does not remain with a particular employee after cessation of employment, are exempt," as per the I.T. Department.
Regards,
R. Ponraj
From India, Lucknow
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Greetings,
All portions of the salary are taxable. Some of the elements where tax deductions are exempted are as follows:
- Production of receipts for 50% or 40% of basic as HRA (depending on Metro or Non-Metro)
- Production of bills for fuel reimbursement (based on the limits in the IT Act)
- Production of bills for kids' education (IT Act), etc.
Please check out the IT Act and compare it to your salary structure. Remember, higher basic does not mean higher tax; it means higher HRA components and higher PF/Gratuity calculations.
Sreeja
From United Kingdom, London
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All portions of the salary are taxable. Some of the elements where tax deductions are exempted are as follows:
- Production of receipts for 50% or 40% of basic as HRA (depending on Metro or Non-Metro)
- Production of bills for fuel reimbursement (based on the limits in the IT Act)
- Production of bills for kids' education (IT Act), etc.
Please check out the IT Act and compare it to your salary structure. Remember, higher basic does not mean higher tax; it means higher HRA components and higher PF/Gratuity calculations.
Sreeja
From United Kingdom, London
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SALARY CALCULATOR & INCOME TAX.zip
EMPLOYEE SALARY INCOME TAX CALCULATION.xls x