Income Tax Exemptions for Salaried Employees

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Income Tax Exemptions for Salaried Employees / Individuals

Every year most of the people eagerly wait for the budget proposals to be announced for various reasons. The most important one is on the Exemptions permitted for salaried employees and individuals.
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As income tax is major component of the salary, the change in income tax rates has major impact on the savings and expenses of salaried employees as they have a fixed source of income. Income tax exemptions and deductions are introduced to boost savings of employees on one side and save tax on the other side. Income tax exemptions for salaried employees are revised every year in the budget proposals but the changes are not significant as compared to change in tax slabs. Standard Deductions that were applicable upto Year 2006 has been converted to Basic Exemption, and the amount allowable under this basic exemption has been raised in almost every budget.

Income tax slab for ay 10-11 Income Tax Slabs for ay 10-11 for Resident Senior Citizens (FY 2009-10) S. No. 1 2 3 4 1 2 3 4 1 2 3 4 Income Range Up to Rs 2,40,000 2,40,001 to 3,00,000 3,00,001 to 5,00,000 Above 5,00,000 Up to Rs 1,90,000 1,90,001 to 3,00,000 3,00,001 to 5,00,00 Above 5,00,000 Up to Rs 1,60,000 1,60,001 to 3,00,000 3,00,001 to 5,00,000 Above 5,00,000 Tax percentage No tax / exempted 10% 20% 30% No tax / exempted 10% 20% 30% No tax / exempted 10% 20% 30%

Income Tax Slabs for ay 10-11 for Resident Women (below 65 years) (FY 2009-10)

Income Tax Slabs for ay 10-11 Others & Men (FY 2009-10)

Revised income tax slabs for the financial year 2010 and 2011 Income tax slab for ay 11-12 New Income Tax Slabs for ay 11-12 for Resident Senior Citizens (FY 2010-11) S. No. 1 2 3 4 1 2 3 4 1 2 3 4 Income Range Up to Rs 2,40,000 2,40,001 to 5,00,000 5,00,001 to 8,00,000 Above 8,00,000 Up to Rs 1,90,000 1,90,001 to 5,00,000 5,00,001 to 8,00,00 Above 8,00,000 Up to Rs 1,60,000 1,60,001 to 5,00,000 5,00,001 to 8,00,000 Above 8,00,000 Tax percentage No tax / exempted 10% 20% 30% No tax / exempted 10% 20% 30% No tax / exempted 10% 20% 30%

Income Tax Slabs for ay 11-12 for Resident Women (below 65 years) (FY 2010-11)

New Income Tax Slabs for ay 11-12 Others & Men (FY 2010-11)

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4/26/2011

Income Tax Exemptions for Salaried Employees

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Apart from the above-mentioned exemption, there are some more Statutory exemptions available for salaried employees applicable under Section 10.

HRA Exemption
HRA allowance received by the employee Or Actual rent paid (10% of Basic + D.A.) Or 50% of (Basic + D.A.) incase the location is (Mumbai, Kolkata, Chennai, Delhi) or 40% of (Basic + D.A.) in case of other cities. Or whichever is less of the above three.

Conveyance Exemption
Maximum Exempted u/s 10 upto Rs.9600 p.a. (i.e. @ Rs. 800 per month when paid along with the salary)

Medical Exemption
Maximum Exempted u/s 10 upto Rs.15000 p.a. based on the bills produced by the employee (i.e. @ Rs. 1250 per month when paid along with the salary)

Education Exemption
Maximum Exempted u/s 10 upto Rs.2400 p.a. based on no of dependent childrens declared by the employee (i.e. @ Rs. 200 per month when paid along with the salary)

Telephone Exemption
Maximum Exempted u/s 10 upto Rs.18000 p.a. based on the bills produced by the employee (i.e. @ Rs. 1500 per month when paid along with the salary)

Petrol and Vehicle Maintenance Exemption

For Car: Rs. 1200 p.m. * 12 months = 14,400 For Driver: Rs. 600 p.m. * 12 months = 7,200 These are the sum total of all the exemptions allowable for Salaried Employees. However there are many Deductions, Tax Benefits & Tax Breaks under various sections, which are permissible for computation of Income Tax. This will be dealt in a separate article.

LTA Exemption
LTA is exempt to the tune of ecomony class airfare for the family to any destination in India, by the shortest route. For Assessment Year 2010 2011 the applicable Block is Year 2006 2009. LTA can be claimed twice in a block of 4 calendar years. The Next block is from Jan 2010 to Dec 2013.

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4/26/2011

Income Tax Exemptions for Salaried Employees

Questions Education Living TechnologyAstrology Travel Online Finance & answers Share Translate 19 Indian

Page 3 of 3

On 26th August 2010, the Finance Minister of India has proposed a set of New Direct Tax Codes, which when passes the parliament, will become the New Direct Tax Code, which would be effective from Financial Year Continue reading New Direct Tax Code for 2011... 5. Income Tax Slabs for ay 11-12 and 12-13 Income Tax Slabs for ay 12-13 / fy 11-12 The Income Tax Slab for ay 12-13 are not much different from tax slabs for ay 11-12. In the newly proposed income tax rates the slab ranges have been revised upwards but the changes are not much significant other than for citizens above 80 years of Continue...
Tags: Personal Income Tax | Category: Personal Income Tax

5 comments to Income Tax Exemptions for Salaried Employees

Deepak Singh Rawat
Reply Dear, Please advise regarding the detail information about Infrastructure bond which is having Rs.20,000 exemption in Income tax annually. Is these bond are readily available in the market. How can i go ahead about the same. Thank You Deepak Singh Rawat

C P JAYADEVAN
Reply In my opinion, for employees of Central and STate Government exployees, including Public Sector Undertakings, the amount realised due to VRS upto the extent of Rs.25 Lakh should be exempted from payment of Income Tax, from the existing level of Rs.5 lakh. The limit fixed is long back and considering the hike in salary and increase in cost of living etc., Finance Ministry should sympathetically consider my suggestion. If this limit is raised upto 25 Lakh, more and more employees will opt VRS and get out from the government employment. This will help the youngsters, who are more talented, to get an opportunity to serve the nation more efficiently.

Rajpal Singh Sansanwal

Reply There are many ELSS Infrastructer Bonds in Bazar, but govt exempt all ELSS saving fund from tax benifit, then how Infrastructer Bond will growth for next years ? Can you send solution ?

HARI SINGH SHARMA

Reply sir, I am Physically Handicapped employee. As handicapped how much rebate is possible to me in my salary. Income Slabe rate may be given.

Prashant Joshi
Reply Dear Sir, My office deducted tax without considering my Housing Loan and savings for this financial year 2010-11. For the same i got last year excemption. Please tell me what should I do, to get excemption from my tax for HRA and savings., Prashant

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4/26/2011