Understanding Salary Taxation in India: How Do You Handle Children's Education Allowance?

Hello Group Members,

I invite you to submit queries on the taxation of various salary components as per the Indian Income Tax Acts. I would also request members to give their advice/views on the subject to help solve the queries.

In my experience, I have found that understanding the taxation of salary components as per the Income Tax Act of India varies among individuals. Therefore, discussing this topic may help people resolve their differences.

My experience is based on a recent query on the forum regarding children's education allowance. Below, I am outlining the correct position on the taxation of children's education allowance as per the Income Tax Act of India.

As per the Income Tax Act of India, the position is as follows:
- Children's education allowance exemption is limited to Rs. 100 per month, per child, up to a maximum of 2 children.
- However, in cases where the child stays in a hostel, a sum of Rs. 300 per month is exempted.

Thank you,
Pankaj Patodi

Hello Patodi,

I have a vague understanding of income tax, especially on HRA, COA, and CLA. Please correct me if I am wrong:

1. HRA is a tax-free pay component.
2. CLA - no idea.
3. COA - no idea.
4. If the employee produces receipts of HRA, THAT IS TAX-FREE.
5. Otherwise, it is taxable.
6. If the employee has housing loans up to 1,50,000, it is tax-exempted on the condition that the employee should occupy his own house; otherwise, it is taxable.
7. If the employee has no HRA allowance but still pays rent, then 25% of the salary is exempted under HRA.

I would appreciate it if anybody could clarify the entire picture. Thank you.

Hi all,

Please find the attachment. This attachment will help you all with salary calculation for tax purposes. If anyone wants more information, you should contact a good salary consultant or your auditor.

Regards,

Kugan Paramasivam
09840485689

Dear Kugan,

Thank you for your contribution. The file attached has lots of information on the subject. I invite specific questions and special conditions to discuss and find the best answer on the taxation of salary.

Dear Group Members,

It is surprising that the attachment by Kugan has been downloaded 46 times, and no further comments have been added to the thread. We would be happy to see your active participation.

Thanks,
Pankaj

Dear All,

I have opened another topic on TDS on salary income issued by the Income Tax Department. I have uploaded the complete circular for the year 2006-07. The circular contains all details of taxable salary, exemptions, rebates, and tax calculations with examples of certain situations to aid better understanding.

You may view the topic.

Thanks,
Pankaj Patodi

Thank you for your valuable contribution.

I also have some queries and I would like to post them like you, but I am unable to do so. Could anyone tell me the process of posting queries? I would be very grateful to you.

Waiting for your response or comment on the same.

Regards,
Soma

Dear Kugan,

Thank you a ton for your exhaustive information. I have a query. If you can kindly help me, I am earning 7,20,000 per annum with no salary breakups. Can you please tell me how to design my CTC to get maximum tax benefits? Also, tell me which allowances are non-taxable and to what extent, for example, CCA, etc.

Please do reply soon. If possible, mail me at santijob@gmail.com.

Regards,
Capt Santosh