Boss2966
Industrial Relations
Prasad P K
Persuing Mba Degree In Hr
Neha Varma
Officer Hr (t&d) - Hero Group
Pon1965
Construction
Abbasiti
Assistant Engineer, Indian Telephone Industries,
JITENDRAPATEL
Asst Teacher
+4 Others

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Dear All
I want to know that which part of salary break up (i.e. basic, HRA, DA, allownces etc) is taxable..?
on which amount employee has to pay tax.?
Does Higher Basic leads to higher tax?
how to minimize the amount paying as a tax?
Please do help. ASAP.
Regards,
Neha Varma

From India, Delhi
hi neha,
as per my knowledge and payment of the wages rules , Basic+ DA and HRA is the taxeble income for employee.
if you add medical, transport allowences in salary stucture this is the also taxeble because P.T is calculate on Gross income.

From India, Nasik
Dear Neha Varma,
In general the income earned by employees are taxable.
But the employees can avail exemption permitted under the IT rules.
1. Conveyance allowance is exempt to the extent of Rs.800/ month. Amount paid over and above Rs.800/- is taxable.
2. Medical reimbursement is exempt from tax upto Rs.15000/- per annum against 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 for having availed travel (self and member of his family)
4. Interest on Housing Loan is exempt from taxable income.
5. Likewise if the employee invests maximum of 1 Lakh in the form of PF, LIC, Principal on Housing Loan, PPF, Children Education etc this is exempt from tax.
6. HRA is exempt from tax subject to certain conditions stipulated under IT rules.
The list is not exhaustive and only gives an overview.
Regards
M.V.KANNAN

From India, Madras
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, tution fee to 2 children etc. altogether subject to ceiling Rs.100,000.

5) In addition savings on infrastructure bonds upto Rs. 20,000.

6) Other than the above one lakh, 15000 to 20000 towards medi claim premium, 40000 to 60000 towards treatment on specified diseases like Motor Neuron disease, 75000 to 100,000 towards disabilty etc. are also admissible for deduction.

Now taxable income can be calculated as follows.

Gross salary - total deductions = Taxable income

Tax payee can be categorised into 3.

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 & Non Senior Male in excess of Rs.1,60,000.

Beyond the above income, one has to pay 10% upto Rs.5,00,000, 20% there after upto 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 on example.

Gross income of a Non Senior Male - Rs. 12,00,000

Deductions (actual) : Professional Tax - 12000, 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) - 12000+150000+100000+20000+50000 = 332000

Taxable income, 1200000 - 332000 = 868000

For Non Senior Male :

Rs. 1,60,000 is exempted.

For next 340000 (500000-160000), 340000x10% = 34000 -(1)

For next 300000 (800000-500000), 300000x20% = 60000 -(2)

For next 68000 (868000-800000), 68000x30%= 20400 -(3)

Tax - (1)+(2)+(3) = 114400

Also For Non Senior Female Tax is, 114400-3000 = 110400

and Senior Citizens Tax is, 114400-8000 = 106400

Education Cess, 114400*3% = 3432.

Total Tax - Rs. 1,17,832

See Excel Sheet. Enter gross salary and deductions/savings applicable in green colour column. Results will be occured in yellow colour. The red colour is used for static datas.

With regards,

ABBAS.P.S,

ITI Ltd, PALAKKAD - 678 623,

KERALA, INDIA.

Ph. +91 9447 467 667

From India, Bangalore

Attached Files
File Type: xls Income Tax Calculator.xls (17.0 KB, 5892 views)

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
The fees or expenses for club 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 I.T.Dept
regards
R.Ponraj

From India, Lucknow
Open attachment and calcuate it 2010-11 and form 16
From India, Mahesana

Attached Files
File Type: xls income tax and form 16 for 2010-11.xls (164.0 KB, 1000 views)

Greetings,
All portions of the salary are taxable. Some of the elements where tax deductions are exempted are the following:
  • 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 IT Act)
  • Production of bills for kids education (IT Act) etc. .
Please check out the IT Act and compare it to your salary structure.
Higher basic does not mean higher tax - it means higher HRA components and higher PF / Gratuity calculations.
Sreeja

From United Kingdom, London
Nowadays whatever air you are inhaling also taxable. With warm regards S. Bhaskar 9099024667
From India, Kumbakonam
OK I Agreed, but what basically salary contains (ie.. Basic, DA, HRA, Special Allowances, etc.) Shall we treated Traveling allowances also includes the salary?
From India, Bangalore

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