How Do You Calculate Income Tax on CTC? Seeking Clarity on Tax Slabs for Women

Dear all,

Can anyone tell how income tax is to be calculated? Should it be calculated on CTC? Please explain. I would be glad if you could provide the tax slab for women.

Regards,
Neelima

Hi Neelima,

The income tax is not computed directly on CTC, but it is calculated based on different heads such as Basic Salary, HRA, Conveyance, Special Allowance (any taxable head). All these heads are clubbed together to arrive at the annual gross salary, and then tax is calculated on that amount.

Regards,
Navroz

Hello, dear,

Please find enclosed the tax calculator. I hope this would help you.

Archna

Hi Navroz,

Thanks for the reply. If a woman is drawing a salary of 2.5 CTC and her gross income comes to 2.2, then income tax will be calculated on 2.2 according to the income tax slab. Is that so? If there is 10% to be paid, then 10% of 2.2 should be calculated. Please confirm.

Dear Neelima,

Income tax is calculated on the gross salary. In CTC, we add all the reimbursements. For reimbursements like Medical, LTA, Driver Salary, Petrol, etc., if the employee provides the bills, it will be tax-exempt.

Any unclaimed amount will be paid by the end of the financial year, i.e., with the March salary after deducting the tax. Bonus, Ex-gratia, and Variable Pay fall under the taxable salary.

HRA (In Metro) – 50% of the basic will be tax-exempt provided the employee produces the rent receipt. Conveyance Allowance - Rs 800/- monthly will be tax-free.

For calculating Tax for the year 2008-09, please find enclosed the Excel sheet. Tax slabs and exemptions for the year 2008-09 will be available by the end of May. After that, you can proceed with the actual calculation.

AMATYA

Hi! This is Bharat working in a Garments firm as an HR Head. I just have to confirm whether a firm can give an exemption of donation to its employee after taking necessary declaration. Please reply soon. Thanks, Bharat

You cannot give all exemptions in for 16, but an employee can claim the refund for income tax deposit. You need to check if the donations made under 80G are specified in the circular issued by the income tax in the month of November or December 2007. If you find a mention of it, then you can give the exemptions. For the donations which have no mention, advise him to claim directly from the IT department.

You can click on this link for more information.

Hope this has clarified your doubt.

Regards,
Jai
9963692016

The attached Tax Calculation of Economic Times shows the education and Pension limit of 24,000/- and 10,000/- which is no longer valid. Please clarify this for me.

Can anybody help me with what tax an executive at a higher level staff will pay for a gross salary of 9 Lakhs with all exemptions and rebates?

Hi, can anybody draft a CTC (Cost to Company) explanation? When we explain to employees how to present the CTC concept.

Regards,
Vishwanath