INCOME FROM SALARY

What is Income Tax?

Who is Liable to pay Tax?

What are the sources of Income?

Who Is Liable to Pay Income Tax?

Every person whose taxable income for the previous financial year exceed the Minimum taxable limit is liable to pay income tax to the central Government during the Assessment year.

Taxable Income
Income From Salary 2. Income From House Property 3. Profits & Gains from Business & Profession 4. Capital Gains 5. Income from Other Sources Gross Total Income Less- Deduction U/S 80C to 80U Taxable Income
1.

RS.

Rates of Tax for an Individual

For Individuals below 60 years age

Income Range
Up to Rs. 2,00,000 Next on Rs. 3,00,000 Next on Rs. 5,00,000 On Balance

Tax %
NIL 10% 20% 30%

For Individuals aged 60 to 80 years (Senior Citizen)

Income Range
Up to Rs. 2,50,000 Next on Rs. 2,50,000

Tax %
NIL 10%

Next on Rs. 5,00,000

On Balance

20%
30%

For Individuals aged above 80 years (Super Senior Citizen)

Income Range
Up to Rs. 5,00,000
Next on Rs. 5,00,000 On Balance

Tax %
NIL
20% 30%

Income From Salary

Any Remuneration paid by an employer to his employee in consideration of his services is called salary. It includes monetary value of those benefits and facilities provided by the employer which are taxable.

Basic Salary

Profits in Lieu of Salary

Gross Salary

Allowanc e-s

Perquisites

 Gross Salary

...

Less- Deductions u/s 16

Entertainment Tax (For

Govt Employee) Employment Tax ... Taxable

. .

Salary

Allowances
Fully Taxable Allowance Partially Taxable Allowance Exempted Allowance

Fully Taxable Allowance

Medical Allowance Dearness Allowances Non- Practicing Allowance Tiffin Allowance Warden Allowance City Compensatory Allowance Deputation Allowance

Overtime Allowance Etc.

Partially Taxable Allowance

House Rent Allowance Special Allowances for meeting certain

expenditures: 1. Exclusively to be incurred in the performance of the duties 2. To meet the personal expenses

House Rent Allowance

If Employee lives in Own house: Fully Taxable If Employee lives in a rented house : least of the

following amount shall be exempted1. Actual amount of HRA received 2. Rent Paid - 10% of Salary 3. 50% or 40% of salary Salary= Basic Salary, Dearness Allowance (under the terms of retirement benefit), Commission based on fixed % of turnover

Q. Basic Pay Rs.2,000 p.m., Dearness pay @ 10 % of basic pay, commission based on fixed percentage of turnover Rs. 12000 for whole year, House rent allowance Rs. 500 p.m., Actual rent paid by the assessee Rs. 400 p.m. House situated at Agra

Special Allowances
Allowances Children Education Allowance Children Hostel Allowance Tribal Area Allowance Exempted Amount Rs. 100 per month, per child Rs.300 per month , per child Rs.200 Per month Condition Max.2 children Max.2 children In MP, UP, Karnataka, Assam, Tripura, Bengal. Bihar, Orissa,Tamilnadu

Transport Allowance

Rs. 800 Rs. 1600

in case of handicapped employee Whichever is less, is exempt

Allowance to an employee working in any transport system

10,000 per month Or 70% of such allowance

Exempted Allowance
Foreign Allowance Allowance from U.N.O. Daily Allowances to High Court or supreme court

judges.

Perquisites
All the benefits received by employer and which are convertible in terms of money as known as perquisites.

Taxable for All Taxable for Specified person Exempted

Taxable Perquisites
Value of Rent Free Accommodation
Value of concessional Rent Accommodation Any sum paid by the employer which are payable

by the employee.

Value of Rent Free House

Government Employees- As per the rules of

Government Non Government Employees 1. If house is owned by employer 2. If house is taken on rent by employer

If House is owned by employer (Unfurnished House)

City in which accommodation is provided
Cities having population more than 25 lacs Cities having population 10 to 25 lacs Cities having population less than 10 Lacs

Value of Perquisite

15% of salary 10% of Salary 7.5% of Salary

If House is taken on Rent (Unfurnished House)

Actual Rent paid by Employer

Or 15 % of Salary (Whichever is less is taxable) Salary= Basic Salary, Dearness allowance (under the terms of employment), bonus, commission, taxable allowances, any other monetary payments.

Value of Furnished House

Value of Unfurnished House Add: 10 % cost of furniture or Hire charges (if any) Value of furnished house

Value of Concession Rent House

Value of Unfurnished/ Furnished House

.. Less- Amount Paid by Employee .. Taxable Value of concessional rent house

Perquisites For Specified Persons

Specified Person A Director A person who have more than 20 % voting Power

in company. An employee whose monetary receipts exceed from Rs. 50,000.

Taxable Perquisites for Specified Employee

Facility of Car
Sweeper, watchman, Gardner, and personal attendant Gas, Electric energy and water Education facility to the members of employees

household Transport facility

Tax Free Perquisites

Medical Benefits

Tea or snacks provided in office

Residential accommodation provided at site Rent free house and conveyance facility provided to

High court & Supreme court judges. Tax paid by the employer on the value of perquisites. Scholarship to employees or their children paid by employer

Deductions U/S 16
I. Entertainment Tax:
For Non Government Employee: Fully Taxable
For Govt Employee: Least of the following will be

exempted1. Actual Amount Received 2. 1/5 of Basic Salary 3. Maximum Rs. 5,000 II. Employment

Tax: Fully Exempted

Computation of Income from Salary

Salary/Wages 2. Advance Salary 3. Dearness Pay 4. Bonus, Commission 5. Fees 6. Allowances ( Taxable Part) 7. Value of Taxable Perquisites 8. Profit in lieu of or in addition to Salary (Amount of Compensation) ... 9. Amount received in respect of encashment of earned leave during service. 10. Contribution of Employer in RPF in excess of 12 % of salary.
1.

Thank You