Dear Neetu,
The HRA shown above is 50%. It is the maximum limit to be exempted. To get full exemption on HRA, the House rent receipt @60% (Actual HRA + 10%) is to be furnished, i.e., 11333+2267 = 13600.
Balance salary is 22667x12 = 2,72,004.
Savings towards PF, 780x12 = 9360.
Taxable income (1)-(2) = 2,62,644.
In the case of a Male Employee, Tax = (2,62,644-1,60,000)x10% = 10264.4.
For Female employees, an additional exemption of 3000 on tax is applicable.
For further deduction on Tax, there are various provisions as detailed below.
I shall insert an Excel worksheet (but comparatively simple) 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 a ceiling equivalent to HRA
3) Interest on Housing loan subject to a ceiling of Rs. 1,50,000
4) Refund on Housing loan, savings, tuition fee for 2 children, etc., altogether subject to a ceiling of Rs. 100,000
5) In addition, savings on infrastructure bonds up to Rs. 20,000
6) Other than the above, one lakh, 15,000 to 20,000 towards mediclaim premium, 40,000 to 60,000 towards treatment of specified diseases like Motor Neuron disease, 75,000 to 1,00,000 towards disability, etc., are also admissible for deduction.
The details can be obtained from the following website:
CENTRAL GOVERNMENT EMPLOYEES NEWS: New Income Tax Slab for FY 2010-11
Now, taxable income can be calculated as follows:
Gross salary - total deductions = Taxable income
Taxpayers can be categorized into 3 groups:
1) Non-Seniors - Male
2) Non-Seniors - Female
3) Senior Citizens (65 years old and above)
If the taxable income is Rs. 2,40,000, a Senior Citizen is fully exempted from paying tax. Non-Senior Females have to pay in excess of Rs. 1,90,000 and Non-Senior Males in excess of Rs. 1,60,000.
Beyond the above income, one has to pay 10% up to Rs. 5,00,000, 20% thereafter up to Rs. 8,00,000, and 30% in excess of Rs. 8,00,000. In addition, an education cess of 3% will be charged on the Total Tax.
I shall provide an 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: 1,200,000 - 332,000 = 868,000
For Non-Senior Males:
Rs. 1,60,000 is exempted.
For the next 340,000 (500,000-160,000), 340,000x10% = 34,000
For the next 300,000 (800,000-500,000), 300,000x20% = 60,000
For the next 68,000 (868,000-800,000), 68,000x30% = 20,400
Total Tax = (1)+(2)+(3) = 1,14,400
Also, for Non-Senior Females Tax is 1,14,400 - 3000 = 1,10,400
and for Senior Citizens Tax is 1,14,400 - 8000 = 1,06,400
Education Cess: 1,14,400 * 3% = 3,432
Total Tax = Rs. 1,17,832
See Excel Sheet. Enter gross salary and deductions/savings applicable in the green color column. Results will be shown in the yellow color. The red color is used for static data.
ABBAS.P.S,
Secretary,
ITI Employees' Association,
ITI Ltd, PALAKKAD - 678 623,
KERALA, INDIA.
Ph. +91 9447 467 667