Confused About Tax Exemptions on My IT Salary? Need Help with Calculations!

Hi All,

I am working in an IT firm, and my CTC is 400680/-. Here is the breakdown of my salary components:

BASIC: 114000
DA: 105600
HRA: 56400
MEDICAL ALLOWANCES: 31200
SPECIAL ALLOWANCE: 31200
CITY COMPENSATORY ALLOWANCE: 48600
PF CONTRIBUTION BY COMPANY: 13680

For the 2007-2008 period, how much can I show for exemption? Can anybody calculate my income tax? I am also paying an insurance premium of 36000/- per annum. Are city compensatory allowance and special allowances taxable?

Thank you.

Hi,

Based on the limited information given, I suggest that you may claim exemption under Section 80C of IT up to One Lakh in different investments (there is a long list). Please ask your accounts department to show that to you. CCL, SL, etc., are all taxable.

If you take medical insurance, and your company has not taken it, you may additionally get an exemption up to Rs. 15,000 as per the budget proposal for the financial year 2007-08.

Regards,
Rajpal

Hi Prashanth,

Your tax will be Rs. 50,476 on the basis of your PF and insurance premium. If you stay in a rented house and can produce house rent receipts, you could get an exemption on HRA received. For example, if you pay a rent of Rs. 10,000, then your HRA exemption will be Rs. 56,400, bringing your tax down to Rs. 33,556.

If you can also provide your medical bills, you can receive a further exemption. The maximum exemption on medical bills is Rs. 15,000. So, if you can produce medical bills for yourself or your dependents, then your income tax will be Rs. 29,056.

CCA and special allowance are fully taxable. You can save additional tax by investing in some of the investments eligible under Section 80C. Please find attached a list of investments eligible under Section 80C.

I hope this information will help you. If you need further clarification, feel free to email me at chandrakanth@halcyontek.com.

Hi Chandrakanth,

Thank you for your reply. Many of my doubts are cleared now. Actually, when I asked for the IT calculation sheet, my employer provided the IT sheet. I am attaching the sheet. Please verify it.

When I spoke to my employer, he mentioned a few points:
1. He is including the employer PF in the salary. When asked about the same, he mentioned that there is no exemption available for that amount. Is this correct?
2. Regarding HRA Exemption and Section 80C, the employer says that I have to provide the proofs now if I want exemptions under these sections. What about these exemptions? Do we really need to provide the proofs now, or can we submit them in January or February?

Please clarify the above points.

Thank you.