Struggling with Income Tax Calculation? Help Me Understand This Example!

Dear all,

Can anybody please explain the income tax calculation? Many have attached an Excel sheet for calculation, but I didn't understand it properly. Here, I am providing an example. Please explain how to calculate income tax for the following:

Name: Shalini
Sex: Female
CTC: 2.20 per annum
Basic Monthly: 7000

I understand that for females, the exemption is 1.8 per annum. So, tax will be calculated on 40,000 (220,000 - 180,000), which is 10%. Will it be 4000 for the year? Please confirm if my understanding is correct.

Regards,
Bunny

Income tax (FOR Resident - Female) on Rs. 220,000 is Rs. 4,120.00. Surcharge is Rs. 0.00, Education Cess is Rs. 80.00, and Secondary and Higher Education Cess is Rs. 40.00.

Income tax (Income of Individuals as Resident - Female) on Rs. 220,000 is Rs. 4,120.00. Surcharge is Rs. 0.00, Education Cess is Rs. 80.00, and Secondary and Higher Education Cess is Rs. 40.00.

As an HR professional, it's important to ensure accurate reporting and calculation of taxes for all employees. Proper documentation and adherence to tax regulations are essential to avoid any discrepancies or issues. If you have any questions or need further clarification on tax matters, feel free to reach out for assistance.

Hi Bunny,

Under the IT Act, there are some tax benefit exemptions. Regarding HRA, there are 3 formulas to calculate the tax exemption amount:
1. How much rent are you paying?
2. HRA being paid by the company.
3. Rent paid - 10% of Basic. The least amount will be considered as an HRA exemption.

Other components for tax benefits include:
- PF
- Professional Tax
- Mediclaim up to 15000/-
- Section 80C: 100000 (all savings like NSC, LIC Premiums, Mutual funds, UPLP, etc.)
- Medical Reimbursement offered in the Payslip
- LTA

I believe that by examining her payslip, we can easily determine whether she is liable to pay tax or not.

Thanks and regards,
Sree

Dear Gupta,

It means what I have stated is correct: 10% on 40000 + 80 + 40. LIC and other savings are exempted till one lakh or more. Please clarify.

Thank you.