Income Tax Exemptions For Salaried People

[abhishreshthaa]

Income Tax Exemptions For Salaried People In India


All income received as salary under Employer-Employee relationship is taxed under this head. Employers must withhold tax compulsorily, if income exceeds minimum exemption limit, as Tax Deducted at Source (TDS), and provide their employees with a Form 16 which shows the tax deductions and net paid income. In addition, the Form 16 will contain any other deductions provided from salary such as:


1. Medical reimbursement: Up to Rs. 15,000 per year is tax free if supported by bills. (Company pays Fringe Benefit Tax on this amount)


2. Conveyance allowance: Up to Rs. 800 per month (Rs. 9,600 per year) is tax free if provided as conveyance allowance. No bills are required for this amount.


3. Professional taxes: Most states tax employment on a per-professional basis, usually a slabbed amount based on gross income. Such taxes paid are deductible from income tax.


4. House rent allowance: the least of the following is available as deduction


1. actual HRA received

2. 50%/40%(metro/non-metro) of 'salary'

3. rent paid minus 10% of 'salary'. Salary for this purpose is basic+DA
forming part+commission on sale on fixed rate.

Income from salary is net of all the above deduction.

 

[rosemarry2]

Income Tax Exemptions For Salaried People In India


All income received as salary under Employer-Employee relationship is taxed under this head. Employers must withhold tax compulsorily, if income exceeds minimum exemption limit, as Tax Deducted at Source (TDS), and provide their employees with a Form 16 which shows the tax deductions and net paid income. In addition, the Form 16 will contain any other deductions provided from salary such as:


1. Medical reimbursement: Up to Rs. 15,000 per year is tax free if supported by bills. (Company pays Fringe Benefit Tax on this amount)


2. Conveyance allowance: Up to Rs. 800 per month (Rs. 9,600 per year) is tax free if provided as conveyance allowance. No bills are required for this amount.


3. Professional taxes: Most states tax employment on a per-professional basis, usually a slabbed amount based on gross income. Such taxes paid are deductible from income tax.


4. House rent allowance: the least of the following is available as deduction


1. actual HRA received

2. 50%/40%(metro/non-metro) of 'salary'

3. rent paid minus 10% of 'salary'. Salary for this purpose is basic+DA
forming part+commission on sale on fixed rate.

Income from salary is net of all the above deduction.

Hey abhi,

Here I am sharing Notes on Taxation of Salaried Employees, so please download and check it.