I need to understand valid salary structure & its components along with its parameters as per current applicable income tax rules.
From India, Nagpur
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From India, Nagpur
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In India, the salary structure is composed of multiple components that are used to calculate the Gross Salary, Net Salary, and the Income Tax. As per the current income tax rules, here's what you need to consider:
1. Basic Salary: 💰 This is the most important part of the salary structure as all other components depend on it. The basic salary is fully taxable as per the tax slab of the employee.
2. House Rent Allowance (HRA): 🏠 Tax benefits can be claimed for the rent paid for accommodation. The exempt part of HRA is calculated as the minimum of:
- Rent paid annually minus 10% of basic salary
- 40% of basic salary (50% for metros)
- Actual HRA received
3. Leave Travel Allowance (LTA): ✈️ This component covers the travel expenses of the employee and is tax-free, subject to certain conditions.
4. Medical Allowance: 🏥 A fixed amount provided to the employee to cover medical expenses. It is tax-free up to INR 15,000 per annum.
5. Conveyance Allowance: 🚗 Used to cover travel expenses from home to work. As per the current rules, it is exempt up to INR 1,600 per month.
6. Performance Bonus and Special Allowance: 💰 These are fully taxable and vary from company to company.
7. Provident Fund (PF): 💸 12% of basic salary and dearness allowance is deducted as contributory provident fund which is tax-free.
8. Gratuity: 🎉 It is paid at the time of retirement or when you leave the job, and is exempt from tax up to a certain limit as per the Gratuity Act.
To calculate income tax:
- Identify tax slab based on income
- Calculate gross taxable income (all income - deductions)
- Apply tax rates to calculate tax
Remember, planning your salary structure wisely can help you maximize your take-home salary and minimize your tax liability. Always review the components periodically to align with the current tax rules.
From India, Gurugram
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1411. Basic Salary: 💰 This is the most important part of the salary structure as all other components depend on it. The basic salary is fully taxable as per the tax slab of the employee.
2. House Rent Allowance (HRA): 🏠 Tax benefits can be claimed for the rent paid for accommodation. The exempt part of HRA is calculated as the minimum of:
- Rent paid annually minus 10% of basic salary
- 40% of basic salary (50% for metros)
- Actual HRA received
3. Leave Travel Allowance (LTA): ✈️ This component covers the travel expenses of the employee and is tax-free, subject to certain conditions.
4. Medical Allowance: 🏥 A fixed amount provided to the employee to cover medical expenses. It is tax-free up to INR 15,000 per annum.
5. Conveyance Allowance: 🚗 Used to cover travel expenses from home to work. As per the current rules, it is exempt up to INR 1,600 per month.
6. Performance Bonus and Special Allowance: 💰 These are fully taxable and vary from company to company.
7. Provident Fund (PF): 💸 12% of basic salary and dearness allowance is deducted as contributory provident fund which is tax-free.
8. Gratuity: 🎉 It is paid at the time of retirement or when you leave the job, and is exempt from tax up to a certain limit as per the Gratuity Act.
To calculate income tax:
- Identify tax slab based on income
- Calculate gross taxable income (all income - deductions)
- Apply tax rates to calculate tax
Remember, planning your salary structure wisely can help you maximize your take-home salary and minimize your tax liability. Always review the components periodically to align with the current tax rules.
From India, Gurugram
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SALARY CALCULATOR & INCOME TAX.zip
Income tax declaration & Salary structre 2012-13.xls