New to Income Tax Calculations? Seeking Guidance from the Community!

Hi Guys, It's that time of the year again!  I'm very new to income tax calculations. Is there anybody out here who can lend a helping hand? It would be really great. Once I get a response, I'll share the specific query I have.

Thanks,
Vineeta

Hi Vineeta, Please share your query first, and you will definitely find some answers depending on the query. That's why we are here and the purpose of this forum.

With reference to the attached salary break-up, the queries are:

- How much is the taxable income in this salary? (How do you calculate it?)
- How much income tax will be deducted with and without saving/investment?
- Would PF be considered as an investment under 80C?

Regards

HRA and Tax Exemptions

HRA is 50% of the basic salary in metros or 40% in non-metros. The actual rent paid or HRA (whichever is lower) minus 10% of the basic salary is tax exempted.

Transport Allowance

Transport allowance of ₹800 per month is tax exempted.

PF Contribution

PF contribution is covered under Section 80C.

Thanks, Pon. However, I still need more clarity on my queries. Can anyone tell me how to calculate taxable income and what are the slabs of income tax deduction?

Hi Vineeta, based on your salary details, your taxable income is as follows:

Taxable Income Calculation

- Basic: 25,496 * 12 = 305,952
- HRA: (152,976 - 122,381) = 30,595
- Taxable Salary: 336,547
- Less Deduction Ch. VI: (3,060 * 12) = 36,720
- Deduction for AY 2013-14: 200,000 = -236,720
- Tax on Rs 99,827 @ 10%: Rs. 9,983
- Cess & H.S. cess: Rs. 300
- Total Tax: Rs. 10,283

HRA Exemption Calculation

HRA is the least of the below exempted:

1. HRA: 12,748 * 12 = 152,976
2. 240% of Basic: -122,381
3. As you have not mentioned the actual rent paid, it is not ascertained.

I hope this clarifies your query.

Regards,
Sanjeev

Thanks. It's much clearer than before.

Investment Queries

How about investments? How does it work? How much investment is required to save on taxes? What is the income tax deduction with and without investments? Investments here refer to insurance, NSC, tax-saving deposits, PPF, etc.

Regards.

The savings and investment limit is up to Rs. 1,00,000 under section 80C. In addition, you can have mediclaim up to Rs. 15,000 per annum under section 80D.

Regards,
Sonal

Basic Salary
1. Basic Salary - Fully taxable.

PF Contribution
2. PF Contribution (under section 80C Limit up to 1 Lakh) - Fully Exempted.

HRA (House Rent Allowance) Exemption
3. HRA (Under Section 10(13A)):
- (A) Actual HRA Received
- (B) 40% (Non-Metro) & 50% (Metro) of basic
- (C) Rent Paid - Minus 10% of Basic Salary
Whichever is less between A, B, and C is exempted.

Transport Allowances
4. Transport Allowances (Under Section 10(14)) - ₹800 per month (₹9600 per annum) Exempted.

Sure, Ms. Vini, anytime you can pop up, I am available here to help you with any topic related to HR, Labour Law, and Tax Management queries.

In furtherance of my previous query, I have another question regarding this matter.

Tax Deduction Without Savings or Investments

What will be the tax deduction if no savings or investments are made?