Salary Income for Individuals
Amendments in Budget 2019 –
- Individuals having a taxable income upto
Rs.5,00,000 will get full rebate of tax as per section 87A
Deduction for a Salaried Employee has been increased from Rs.40,000 to
- Capital Gain Exemption available on purchase of
two house properties as per section 54 and it can be availed once in lifetime
threshold for interest on bank and post office deposits has been increased from
Rs.10,000 to Rs.40,000 .
- Brief about
Salary and relevant topics –
1. Basic Salary
forms largest portion of Total Salary
general it will be the fixed Component in your pay slip
Rent Allowance will be on the basis of percentage of Basic Salary
Fund will be deducted at 12% of your basic salary
2. Leave Travel Allowance
employee can avail exemption if he travel within India for a short duration
- This allowance can only be claimed for a
trip taken with your spouse, children, and parents, but not with other
- This exemption
is available only up to actual expenses
has to submit the bill to Employer to avail exemption.
will be paid to the employee as per the Company Policy
will be paid once or twice in a Year
may be the name it will be 100% taxable
4. House Rent Allowance
Indiviual who lives in a Rented House can avail this exemption
- 50% of
Basic Salary and Dearness Allowances if an Individuals stays in Metro Cities,
if in case of non-metro 40%.
Rent received less 10% of Basic Salary.
Important points –
can claim both HRA and deduction on Home Loan at same time
- If the
amount of rent paid is more than Rs. 1 Lakh obtain PAN from Land Lord to get exemption.
of rent to NRI Land Lords assesse need to deduct TDS at 30% beform making
payment of rent.
rent and no HRA from employer, still you can claim deduction as per section 80
must be either a Self-Occupied / Salaried.
has not received HRA during the year
family and you do not own any Residential house at that Place
- Rs. 5000 per month
- 25% of Adjusted Total Income
- Actual Rent less 10% of Adjusted Total Income
Adjusted Total Income – Total Income less Long Term Capital
Gain , Short Term Capital Gain as per section 111A and Income as per section
115A or 115D and deductions os sec 80C to 80U ( except deductions as per
individual can claim HRA while living with parents also provided that they has
to enter into a Rental Agreement with Parents and transfer money monthly)
5. Employee Contribution to
employer and employee contribute a 12% equivalent of employee basic salary every
month towards employee Pension and Provident Fund.
the FY 2017-18 8.55% interest gets accrued on the amount deposited.
provisions are applicable for companies with more than 20 employees.
include deduction of Conveyance allowance and Medical allowance
can claim Rs.40,000 as standard deduction from total income there by reducing
7. Professional Tax
Tax is the tax levied by State Government
amount of tax that can be levied is Rs.2,500
tax will be deducted by employer and deposited with the State Government
as deduction from Salary Income
the Gross Total Income you have to deduct deductions of Chapter VI A the
resulting Income will be Net Total Income on which you have to pay tax.
- Your tax is calculated as per the slabs
Income Tax Rates for
Individual under 60 years of age in FY 2018-19 , FY 2019-20
to Rs 2,50,000 (Basic Exemption Limit)
2,50,000 – Rs 5,00,000
5,00,000 – Rs 10,00,000
10,00,000 and beyond
limit for senior citizens (age of 60 years or more but up to 80 years)
- For FY 2018-19 , FY 2019-20 is Rs.
limit for super senior citizens (age of 80 years or more)
- For FY 2018-19 , FY 2019-20 is Rs.
- At 10%
of tax if Net Total Income greater than Rs.50 Lakh but upto Rs.1 Crore
- At 15%
of tax if Net Total Income greater than Rs.1 Crore
Understanding the difference between
Take Home Salary and Cost to Company –
- Cost to Company means
- Total Salary received by an employee
- Any Non-monetary benefits such as an office cab service, medical insurance paid for by the company, or free meals at the office, a phone provided to you and bills reimbursed by your company.
- Provident Fund and Gratuity.
expenses incurred by the employer for employee
- Take Home Salary means
- Gross salary received each month.
- Minus allowable exemptions such as HRA, LTA, etc.
- Minus income taxes payable (calculated after considering Section 80 deductions).