Understanding Monthly Salary Tax: How Are Different Components Taxed in Your Workplace?

Dear Friends,

What is the tax imposed on various components of the salary per month? You can provide examples or share according to the company norms in your workplace. I would be grateful if you could answer my question. Please reply.

Regards,
Anu

Dear CITE HR Team,

Tax imposed on Conveyance Allowance. So if you want to make a salary component, then it should be assured that "Conveyance Allowance" should be fixed up or less than 800/-.

Thank you.

Dear Anu,

Yes. Conveyance allowance is exempted from IT up to a maximum of Rs. 800/- per month. So, you can fix it up to Rs. 800/-.

I am outlining below the practices that I have implemented in my organization:

1. HRA - Exemptions should be provided as per the IT Act (which you may be aware of. Otherwise, I can assist you in updating). If the employee is paying rent, they must produce the rent receipt. If the employee is residing in their own house or unable to produce the rent receipt, we cannot allow the exemption.

2. Conveyance - as mentioned above.

3. LTA - Exempted from tax if claimed twice in a block of 4 years, subject to providing valid bills to support the claims.

4. Medical expenses - allowed as per the IT Act.

5. Food coupons - fully exempted from IT or FBT up to a certain limit.

Regards,

BHAVAN

Dear Anu,

Yes, Conveyance allowance is exempted from IT up to a maximum of Rs. 800/- per month. So, you can fix it up to Rs. 800/-.

I am giving below the practice which I have implemented in my organization:

1. HRA - Exemptions to be given as per IT act (which you must be aware of. Otherwise, I will help you to update). If the employee is paying rent, he has to produce the rent receipt. If the employee is staying in his own house or if he can't produce the rent receipt, we can't allow exemption.

2. Conveyance - as given above.

3. LTA - Exempted from tax if claimed twice in a block of 4 years, subject to producing valid bills to support the claims.

4. Medical expenses - allowed as per the IT Act.

5. Food coupons - fully exempted from IT or FBT up to a certain limit.

Regards,
BHAVAN

Hi,

I have a question related to tax exemption. What is the "other Allowance category" in the salary breakup? Is it fully exempted from tax? My Manager's CTC is 7.2 Lac per annum and he gets "other Allowances - Driver Salary, Books Purchased & Seminars".

I want to know what all is included in other allowance and if this is fully exempted?

Regards,